Over on Cafe Hayek, Don Boudreaux has yet another gem on the minimum wage. I love his economic work so much that I am almost despondent that I’ll never be as logically articulate as he is. But I’ll keep trying. In that article I offer an extended quote for the day:
One of the greatest services that economics offers to humankind is the demonstration that prices set on markets are not arbitrary dictates.
Instead, prices (1) reflect underlying realities and, in doing so, (2) inform producers and consumers about how best to coordinate their actions with each other and (3) give incentives to countless producers and consumers to adjust their actions to each other in coordinating ways. In short, prices reflect, inform, and incentivize…To understand these facts about prices is to deepen your understanding of economic reality. To understand the formation and role of prices is to take what is perhaps the single biggest step toward understanding the core logic of a market economy. To understand prices is to take what is perhaps the single biggest step toward understanding how today billions of millions of strangers, spread around the globe and speaking dozens of different languages and each looking out chiefly for welfare of his or her own family, can choose and act in ways that make modern prosperity possible – to make possible the reliable presence on store shelves of fresh meats, bread, beer, eggs, and blueberries (year round!).
I am always amazed at those on the left that want to insist that we must bow down to science in every phase of life–even when the bulk of the data flatly contradict their theories and models–yet they will do anything to grasp at one report here, there or yonder that seems to show no significant effects from minimum wage hikes. In other words, economics is a science that is up for debate, but not their pet theories.
In an even more provocative piece, former Reagan Budget Director David Stockman is excoriating the Fed’s easy money policy of the last 30 years. While I might not agree with all his cause and effect, there is enough smoke in his analysis that a fire is burning. Markets are not yet in full scale alarm right now, but we should all pay attention to what’s going on in debt markets–sovereign debt interest rates have risen dramatically over the last two months. No doubt there is significant pain going on in the leveraged speculating community.
Finally, Mr. Stockman links to zero hedge to help us understand Keynesian economics in a nutshell, with this amazing photo: