Mr Economist goes to Washington!

12/06/2014 § 1 Comment

Well, may go to Washington.

The big news from my home state of Virginia (sic semper tyrannis!) is the primary to select the Republic candidate for the 7th congressional district. Eric Cantor, leading Republican, lost the primary to David Brat, economist. Way to go, bro’! Let’s see you stick it to those lawyers up on the Hill.

But then one digs a little deeper, and….

“So should there be a minimum wage in your opinion?” Todd pressed.

“Um, I don’t have a well-crafted response on that one,” Brat said, haltingly.

Sorry, what? An economics professor without an opinion on the minimum wage? Such a beast does not exist. That’s like a baseball fan with no thoughts on the designated hitter rule, a physicist with no opinion on string theory.

But then he goes on to explain himself a bit:

“All I know is that if you take the long-run graph over 200 years of the wage rate, it cannot differ from your nation’s productivity. Right? So you can’t make up wage rates.”

Oh, right, that clears it up. Wages cannot differ from productivity, at least not in the long run. Well, that’s easy enough to look up — the Bureau of Labor Statistics does the work for us:

wageproductivity

from: Updated charts and data associated with the paper “The compensation-productivity gap: a visual essay,” by Susan Fleck, John Glaser, and Shawn Sprague.

Hey, look at that. Productivity has been running faster than wages since the First Oil Shock Recession, especially since the Volcker vs Inflation Recession of the early 1980s. Well, given the good professor’s theory, we should be expecting a regression to the mean anytime.

Soon.

In the medium term.

And raising the minimum wage shouldn’t be a problem for the economy, since the productivity is there and has been for 30 years.

I look forward to him sponsoring that bill.

****

Bonus points: apparently, he is facing off against another professor from the same college, a sociology professor! Disciplinary disputes go prime-time! I’m praying for a cage match.

Bonuser points: as one does, I looked Brat up on Google Scholar, and ran him through Publish or Perish. Professional curiosity. It looks like an h-index of 2? Based on work in the 1990s? Honey, that would get you an R ranking in the PBRF. Not a good look.

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§ One Response to Mr Economist goes to Washington!

  • Paul Walker says:

    The point about productivity he is trying to make is one that even Paul Krugman has managed to realise

    “Economic history offers no example of a country that experienced long-term productivity growth without a roughly equal rise in real wages. In the 1950s, when European productivity was typically less than half of U.S. productivity, so were European wages; today average compensation measured in dollars is about the same. As Japan climbed the productivity ladder over the past 30 years, its wages also rose, from 10% to 110% of the U.S. level. South Korea’s wages have also risen dramatically over time”. (“Does Third World Growth Hurt First World Prosperity?” Harvard Business Review 72 n4, July-August 1994: 113-21.)

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