Wall Street Journal editor, Stephen Moore articulates basic economic principles in a concise way I hope to emulate. In this article entitled "Why Americans Hate Economics," there are a couple nuggets of economic truths I'd like to pull out. As for the basic message of the article as the title implies, I wasn't particularly swayed. But that's not important.
"Economic bimboism is rampant in Washington. The Center for American Progress held a forum earlier this summer arguing that raising the minimum wage would create more jobs. For this to be true, you have to believe that the more it costs a business to hire a worker, the more workers companies will want to hire."
Indeed.
"A few months ago Mr. Obama blamed high unemployment on businesses becoming "more efficient with a lot fewer workers," and he mentioned ATMs and airport kiosks. The Luddites are back raging against the machine. If Mr. Obama really wants to get to full employment, why not ban farm equipment?"
This reminds me of an anecdote I have heard regarding a trip Milton Friedman took to China. (It may be true or not, but the moral remains the same): A Chinese government official was taking him around, showing him the wonders of the industrious People's Republic. They came up on a canal project where there were hundreds of workers digging the canal with shovels. Milton asked why they were using shovels and not bulldozers. The official said this method created more jobs, to which Milton replied, Why not make them use spoons?
The notion that technological advances are "bad" includes the use of technological advances, such as shovels or some sort of filing system by a clerk whom an ATM "replaced." Also inherent in that assumption is this romanticism of the technology from yesteryear, but not too far back or too current. Just that technology in the middle, "when there were the good times."
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