Alan Blinder's Bad Article
By David Henderson
Princeton economist Alan Blinder, who has often written very good work–I’m a fan, with qualifications, of his book Hard Heads, Soft Hearts and he has two excellent entries, here and here, in The Concise Encyclopedia of Economics–has written a bad article. In it, he essentially takes off his economist hat and becomes a pundit–and not a good one.
Blinder is one of the most articulate and clear defenders of free trade. So when I saw that he had written an article critical of Trump, who is awful on trade, I hoped that he would do a good job of taking apart Trump’s weak case. He doesn’t. He does point out that Trump’s trade policies would have bad effects, but he gives no reason for why. Instead, he spends most of the piece talking about how Trump’s views are at odds with those of the American public. Even if that’s true–and I’m not as convinced as Blinder is about that–so what? What if the American public is wrong on many of these issues? Blinder thinks they’re wrong on trade. What else might they be wrong on?
But instead of doing any real economic analysis–and Blinder has shown in the past that he can do so beautifully in a short article–he writes as if he’s not even an economist. Here’s one of the items that stood out:
Labor standards: Trump’s choice for Secretary of Labor, Andrew Puzder, is a CEO in the fast-food industry. Never mind that he uses crass sexual imagery to sell hamburgers. What’s more germane is that he prefers robots to human workers, doesn’t want to raise the minimum wage, and opposes the Department of Labor’s attempt to raise the salary level below which companies must pay extra for overtime.
The public could not disagree with him more. Raising the minimum wage has been winning in polls consistently for decades, and by wide margins – generally even among Republicans.
Yes, it has been winning. I bet that if Alan surveyed a bunch of Princeton students coming into their first economics class, he would find that they support the minimum wage. Would he then say, “Ok, then, we’ve got that one solved; let’s raise the minimum wage.” Or would he point out that the wage for a worker tends to come close to the value of what he produces? Would he then go on to point out that a higher minimum wage doesn’t magically make low-skilled people more skilled? Would he, finally, show his students a supply and demand curve and then show them that some of the people whom minimum wage supporters want to help with a higher minimum wage will end up with a zero wage? I hope so. The Alan Blinder whom I met in November 1975, who gave me some tips about my career, would have done so.
Also, Alan Blinder is a very smart guy. So it’s shocking that he doesn’t see the irony in this sentence segment in his own article:
What’s more germane is that he [Puzder] prefers robots to human workers, doesn’t want to raise the minimum wage,
Does Alan not see any connection between those two things? Does he not see that the higher the minimum wage, the more businessmen will start to prefer robots to human workers. It’s called substitution. In any introductory microeconomics class, we talk about how people respond to incentives. Make one option more expensive, and you give people an incentive to switch to another option. Blinder, in this sentence segment above, has actually, and, apparently, unwittingly, said why the U.S. government, if it wants people not to be replaced by increasingly sophisticated robots, should favor cutting or even abolishing the minimum wage.
Like the late Vince Lombardi, I wonder.