Liveblogging World War II: March 17, 1944
Monday Smackdown: Mike Konczal Points Out Adolph Reed's Lack of Contact with the Real Reality

Right-Wing Economists Phone It in!: Live from The Roasterie CXX: March 17, 2014

Eric Lipton: Industry Behind Anti-Wage-Hike Letter: "The [letter] was distributed to prominent economists nationwide under the name of Vernon L. Smith,

a Nobel Prize-winning professor of economics and law at Chapman University in Orange, Calif., concluding that the minimum wage “is a poorly targeted antipoverty measure.”... But the statement itself and the news release heralding the effort made no mention of the fact that the statement had been initiated by staff at the restaurant association, who through an intermediary asked Mr. Smith if it could be distributed under his name, the association and Mr. Smith acknowledged in interviews Friday.

“If that was not made clear, I will apologize for that,” said Sue Hensley, the senior vice president for public affairs at the National Restaurant Association. She said the restaurant association had distributed the statement the way it had because it was technologically the easiest method, not because of any intentional effort to hide the organization’s role.

Mr. Smith and several of the other economists who signed the statement said in interviews Friday that they had agreed to support it based on the merits of the argument, and that who had initiated it was unimportant. “I am only interested in the ideas and the content,” Mr. Smith said, adding that “I really don’t know” who originated the statement. But several others whose signatures are included, while saying they still agree with the message, acknowledged that they regretted that they had not been told who was behind the effort, with one calling such a move typical of “phony Washington.”...

The National Restaurant Association... distanced it[self] from the role it played in creating the statement... asking a former Treasury Department official, James E. Carter, to approach Mr. Smith... and then paying him to use a database of conservative economists that Mr. Carter maintains to ask them to sign the statement.... Mr. Smith said he had been asked for input but had not written the statement, which was sent out with an opening that said, “Message from Vernon L. Smith.”

The statement was then distributed through an Internet site, economistletter.com, which is controlled by the Washington lobbying firm Urban Swirski. The firm’s clients include Darden Restaurants, the owner of chains including Red Lobster, Olive Garden and LongHorn Steakhouse. Asked about the statement, Sandra Swirski, a former Senate aide who is a lobbyist at the firm, confirmed her role in helping gather signatures. “I did circulate the letter for signatures, and I did it for the restaurant association,” she said in an email. “No one else.”...

Robert E. Lucas Jr., another University of Chicago Nobel Prize-winning economist who signed the statement, said he, too, had been unaware that the National Restaurant Association had initiated it. But that does not bother him, he said, as he still opposes raising the minimum wage.

“I was convinced that the minimum wage was not a good idea in Milton Friedman’s class in 1960,” he said, referring to the University of Chicago economist, whose classes he took as a graduate student. “I don’t feel hoodwinked.”

A Statement to Federal Policy Makers: "The 'recovery' from the Great Recession has been anemic.

Business growth, job creation, and consumer spending remain tenuous. Since the official trough in June 2009, median income has fallen, real wages have barely risen, unemployment remains elevated, and because so many Americans have left the workforce entirely, the fraction of the population working is below the pre-recession level.

To address the very real concerns of out of work and low-wage workers, many of our nation’s policymakers point to raising the minimum wage as a “silver bullet” solution. Although increasing wages through legislative action may sound like a great idea, poverty is a serious, complex issue that demands a comprehensive and thoughtful solution that targets those Americans actually in need.

As economists, we understand the fragile nature of this recovery and the dire financial realities of the nearly 50 million Americans living in poverty. To alleviate these burdens for families and improve our local, regional, and national economies, we need a mix of solutions that encourage employment, business creation, and boost earnings rather than across-the-board mandates that raise the cost of labor.

One of the serious consequences of raising the minimum wage is that business owners saddled with a higher cost of labor will need to cut costs, or pass the increase to their consumers in order to make ends meet. Many of the businesses that pay their workers minimum wage operate on extremely tight profit margins, with any increase in the cost of labor threatening this delicate balance.

The Congressional Budget Office’s (CBO) most recent report underscores the damage that a federal minimum wage increase would have. According to CBO, raising the federal minimum wage to $10.10 per hour would cost the economy 500,000 jobs by 2016. Many of these jobs are held by entry-level workers with limited experience or vocational skills, the very employees meant to be helped.

The minimum wage is also a poorly targeted anti-poverty measure. Extra earnings generated by such an increase in the minimum wage would not substantially help the poor. As CBO noted, “many low-wage workers are not members of low-income families.” In fact, CBO estimates that less than 20 percent of the workers who would see a wage increase to $10.10 actually live in households that earn less than the federal poverty line.

For these reasons, we encourage federal policymakers to examine creative, comprehensive policy solutions that truly help address poverty, boost incomes from work, and increase upward mobility by fostering growth in our nation’s economy.

Vernon Smith, Edward Prescott, Robert Lucas, Eugene Fama, & more...

Would it be too much to ask for a benefit-cost analysis of the relative weight to be assigned to income distribution and to employment? Would it be too much to ask for a reason why Card and Krueger--and Dube, Lester, Reich, and company--are wrong in their analyses? And would it be too much to ask for an answer to this question: if, after all, you don't care enough about the issue to draft your own letter or to volunteer to collect your own signatures, why should anyone else care what you say?

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