[quote=CA renter]Seriously, reading James Dorn’s drivel makes me wonder how he ever managed to get an audience outside of those whose interests he is serving.
Look at this nonsense (from the linked article, above):
A higher minimum wage—without a corresponding increase in the demand for labor caused by an increase in labor productivity (due to more capital per worker, better technology, or more education)—will mean fewer jobs, slower job growth, and higher unemployment for lower-skilled workers. Higher-skilled workers and union workers will benefit, but only at the expense of lower-skilled workers, especially the young and minorities. There is no free lunch.
He doesn’t even seem to get the irony there. If you increase labor productivity, all else being equal, it will result in a *reduction* in the demand for labor. The ONLY things that will increase demand are changes in fashion/trends, or having a customer base that grows in population, or whose wealth/income increases, or some combination of these things.
Lowering taxes for the wealthy does NOT increase demand, nor does it benefit the economy. Increasing the wealth of the already wealthy does NOT stimulate the economy. History shows us this time and time, again. Increasing the wages of the greatest number of people (usually via taxes or other regulations), and reducing the wealth/income gap DOES stimulate the economy.[/quote]
Thank you SK and CAR. You are both revealing two common mistakes about the economy that cloud your thinking. One is that the economy’s output is a fixed amount to be divided up, like a pie. That’s true in the short run, but in the long run, which is what really counts, it is dynamic and grows. So increased productivity tends to benefit all groups, albeit disproportionately. Your comment about wages being flat or declining for three decades shows this mindset. Total compensation, including health and other fringe benefits are clearly up, and actual living standards, which include technological changes in goods and services we buy push up living standards further. Secondly, you are ignoring incentives, for both workers and employers. Supply-side advocates, like myself, stress incentives and expanding the overall economy, while your demand-side approach only divides what exists in the short run.
We have now had six years of demand side monetary and fiscal policies, begun by Bush and expanded by Obama. We all know the dismal results in terms of employment, the growth in poverty, and weak increase in living standards. The increased taxes and regulations are the exact opposite of what supply-siders advocate. Result–1/10 of one percent growth in the latest quarter. Perhaps it is time to try something different.
