Wednesday, January 24, 2007

A case for income equality?

Dan Klein, whom I found through Tyler Cowen, asks those economists who believe in minimum wage laws to justify their beliefs. Answers fall into a few general categories:

1. A nod toward cultural beliefs and expectations

2. An attempt to improve democratic institutions

3. An expression of solidarity

4. Simple arithmetic: higher pay for low-income workers means fewer families on the government dole

As Professor Cowen points out, there is little mention of economics.

As philosophical statements go, # 1 is amateurish and # 4 is downright ghoulish. Cultural beliefs should not drive philosophy; the reverse should be true (and mathematics should not drive philosophy either). # 2 has a sort of reversed Law of Unintended Consequences vibe that turns me off, meaning # 3 is my favorite answer by default, in spite of its rather eerie scent.

George Will wrote on equality earlier this week.

And I find it interesting that top-down economies such as Venezuela and Zimbabwe have higher income inequalities than does the United States, which, in turn, has more inequality than does New Zealand, for example. Wasn't that the point of central planning in the first place? To reduce inequalities?

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