Murray Rothbard vs. Paul Krugman on $9 Minimum WageSubmitted by MarcMadness on Mon, 02/18/2013 - 13:15
One of the big progressive talking points coming out of the President’s recent “State of The Union” address is his proposal of once again raising the Federal minimum wage, this time to $9. The minimum wage is one of many political proposes designed specifically to make anyone that opposes it look like greedy and heartless. Why, who can argue that people should be able to make enough money to meet their needs? Why surely $9 is a reasonable amount of money to pay someone, the argument goes, and if you oppose that, well then you just must be a heartless soul who doesn’t understand the plight of the “working man”!
In defense of policies such as these, liberals will often trot out their favorite Nobel Prize Winning Economist, Paul Krugman, so they can point to him and say “Hey, Stupid! This guy won a NOBEL PRIZE! You’re just some libertarian blogger, how you gonna argue with THAT!”. And right on cue, there is a post from Paul Krugman’s blog “Conscience of a Liberal” currently being spread around the social media that deals with the minimum wage issue.
From the top Krugman takes the wrong approach, attempting to disprove simple logic through empirical studies:
So what should you know? First, as John Schmitt (pdf) documents at length, there just isn’t any evidence that raising the minimum wage near current levels would reduce employment. And this is a really solid result, because there have been a *lot* of studies. We can argue about exactly why the simple Econ 101 story doesn’t seem to work, but it clearly doesn’t — which means that the supposed cost in terms of employment from seeking to raise low-wage workers’ earnings is a myth.
As Bob Wenzel recently explained on his blog Economic Policy Journal, it is fallacious to attempt to use empirical studies to prove or disprove something that is based on irrefutable logic. Wenzel sums it up in his typical hard-hitting no-nonsense fashion:
The simple fact is that if you force people to pay more for something, they will buy less of it.
There are no empirical studies that can refute this. It is pure logic. And no empirical studies are needed to prove the argument. They can’t.
Anyone using empirical data to try and prove or disprove logic is a quack.
Not to let Wenzel take away the spotlight from the real star of this weekly feature, here is Murray Rothbard on the minimum wage from his book, Making Economic Sense: