Posted on 01/20/2016 4:51:45 AM PST by Kaslin
Hillary Clinton: "Of course we want to raise the minimum wage!"
Donald Trump: If we trade with China, "they suck us dry ... take everything. We get nothing!"
Bernie Sanders: "Ordinary Americans are working longer hours for lower wages."
But it's not true! Politicians are so ignorant about economics.
On his blog, Cafe Hayek, George Mason University professor Donald Boudreaux says his main job is showing students that much of what they believe about economics is wrong. I wish he taught presidential candidates.
Sen. Sanders simply gets facts wrong. Today Americans work fewer hours -- down from about 2,000 hours per year to 1,800 over the past 60 years -- and earn more. It's true that the rich got even richer, but the poor and middle class have done better, too, with about 40 percent higher salaries for the middle class and 48 percent more for the poor over the past 35 years. Politicians lie.
Donald Trump doesn't understand trade. Even if China "dumps" goods on America, we don't "get nothing" -- we get the goods. As Trevor Woolley posted on my Facebook page, "The fact that the free market is based on consensual transaction means that no trade can decrease anyone's wellbeing."
Right. Since trade is voluntary, no trade happens unless both sides think they will gain. Trade may eliminate jobs in some industries, but it creates jobs elsewhere, more jobs, and creates wealth for the vast majority.
Helping some American companies by restricting foreign imports, as Donald Trump vows to do, sounds nice, but you can't restrict goods available to American consumers without reducing competition. Protected from competition, companies get lazier, less productive. They innovate less. Prices rise.
Hillary Clinton's minimum wage will help some workers, but overall, it should be obvious it's a job killer. If a minimum really could increase wages without harm, why are politicians so cheap? Let's have a $1,000 minimum wage! But it's just basic economics: If you increase the price of something, people buy less of it. That applies to workers hired, not just goods.
More myths:
--Prices and wages are simply "set" by businesses.
--The rich get richer at the expense of the poor.
--Price increases after natural disasters are caused by "greed" and should be stopped by laws against "gouging."
--Rent control makes housing affordable.
--Business taxes are paid by business.
--Supporters of free markets are "pro-business" and (hence) "anti-consumer."
These are simple notions about economics into which our brains lazily fall. But none is true.
For example, supporters of free markets (like me) don't necessarily support business. I won 19 Emmy awards criticizing businesses. Corporations can be enemies of free markets because they don't want competition. They routinely lobby politicians to squelch it.
Boudreaux says his students arrive on the first day of class thinking businesses just "set" prices and wages. But businesses can't do that. Companies lose customers if they price goods higher than competitors do.
Wages can't be set at will either. Sure, what boss wouldn't like to pay a workforce one dollar per year? But other companies need laborers too, and those that underpay lose good workers. So the bidding process continues endlessly -- it's why the median household income in the U.S. is more than $50,000 a year. That wouldn't happen if bosses could just wake up and decide, "Let's pay workers less!"
The credit for good wages doesn't go to labor unions or politicians' passing a minimum wage, though they sure hog the credit. The credit goes to market competition and a growing economy. After all, 95 percent of workers earn more than minimum wage, and most jobs aren't unionized.
Politicians can't see the wonders that the market provides, but they somehow see everything government does as a blessing -- taxes that cut into people's pay and regulations that make it more expensive to produce. They don't see that their well-intended "pro-consumer" rules raise prices and reduce choice.
I wish more Americans learned basic economics from economists like Boudreaux -- or from me! At StosselintheClassroom.org, I offer teachers free videos that illustrate economic principles and debunk myths like the ones listed above.
Politicians, on the other hand, are lousy teachers.
All nations, political systems and cultures are not the same and are part of the economic equation even if the pointed headed economists don't thin so.
When gas prices are high, everyone yells gouging. If gas companies could set the price, why don't they always keep it high? (rhetorical question - I know the answer)
“Politicians are so ignorant about economics.”
Not really. HRC fully understands supply and demand. Bernie does too. Trump understands that if he puts a 50% tariff on Chinese imports that US prices will explode.
It’s not that politicians are ignorant about economics, they know that if they tell the truth about economics, they won’t get elected.
“When gas prices are high, everyone yells gouging.”
And when someone charges a lower price, it’s called “predatory pricing.”
A 50% tariff is not an explosion especially if it is phased in 10% a year for 5 years.
Economists are so ignorant about politics;
not politicians are so ignorant about economics.
If the prices of everything in the shops goes up an extra 10% a year, that’s pretty damn bad. Never mind if it’s an ‘explosion’ or not.
(Note to thread: before we get letters, we all know that 5 years of 10% increases is not a 50% increase. Just going with the OP)
And they get the factories, and then they get to buy our assets at low prices because the trade is one way and we borrow to buy.
Predatory pricing is illegal for damn good reasons. It is a tool to create monopolies which are set up to subvert the free market, not to compete in it.
So now we import everything? There are no more domestic manufacturers? Who knew?
I was quoting the article. I noticed you switched it.
There is a theory that says money and prices are a form of voting for a product.
“A 50% tariff is not an explosion especially if it is phased in 10% a year for 5 years.”
OK, now explain why a 50% increase in consumer prices is great for you and the economy?
“You cannot separate politics from economics and vice versa.”
Absolutely, but too many people believe you can separate them. They think doubling the minimum wage won’t affect employment, etc. The problem isn’t that politicians don’t understand economics, the problem is too many voters don’t.
Tariffs are form of border control and can be used to retaliate against countries that are placing duties on our exports, which is almost all of them.
Sadly (and Stossel knows this), if the majority of voters believe them, the fact that they are wrong is irrelevant.
Domestic manufacturers carry the burden of crushing corporate taxation, massive legal liability and ludicrously restrictive environmental legislation. This is why they can't compete in the first place.
Instead of funneling more money and power to the Government in the form of tariffs, why not be a Conservative and reduce the barriers to domestic production?
“Tariffs promote domestic manufacturing and raise revenue without the need for taxing directly with income taxes. Both of those things are very beneficial.”
That’s nice but it doesn’t answer the question of why a fifty percent price increase for consumer goods is good for you or the economy.
Pause and reflect for a moment. Are you paying 50% in income taxes? If not, then increases in tariffs sufficient to lower your income taxes to zero would not offset the fifty percent increase in goods would it?
People said the same thing about the Japanese in the 1980s. They bought iconic properties in the US with the trade surplus of the time, and then had to ditch them at fire-sale prices a few years later.
bfl
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