Monday, December 23, 2013

Criticism of my "Learning Economics Through Pictures" series

On Saturday, a comment was posted criticizing my "learning economics through pictures" series.  (See here for my most recent post in the series.)  I had posted a link to one of the posts on the "teaching economics" page on LinkedIn and she provided a comment.  It was by Karen Reid (who I don't know).  I'll post her comment here, and my response below

Not sure what you’re going for with this chart and accompanying comments. I never hide my political leanings when I teach – the students deserve to know any potential bias I may bring to the material. In that light, I’ll reveal my position now. I am tend to be liberal, especially on social policies, but I am also an economist which brings balance to my poor bleeding heart. That said, I strive to present both sides of the issues accurately if I have to enter the political realm. Generally I try to remain in economic land. 
I looked at your other two pages on minimum wage and poverty to try to get a clearer picture. First let me say that I am not a fan of using secondary, tertiary (or beyond) data. Not familiar with or, but am opposed to using Wikipedia as a reliable source for anything. 
Looking at the minimum wage page, you say that you are framing an “economic” argument, assuming discrepancies in unemployment particularly during the last recession offer sufficient proof. You mention the damaging effects of the forty five cent minimum wage increase. Over a year, working 40 hours for 50 weeks that increase will cost the employer an additional $900.00 per worker. Is that an onerous burden? It doesn’t necessarily seem to be, at least to me. I don’t think it would hurt McDonald’s bottom line at all. Since employees (especially at the lower end of the wage scale) are likely to have a marginal propensity to consume near one, that extra money will be spent, thereby increasing GDP. If we’re looking at strictly economic effects that should be considered. Finally, on the minimum wage, I fear that the important discussion is not only economic, it is a question of values, of how people survive, of what kind of country we want to live in, of equity. There are many valid points on both sides of the issue which bear discussion. I realize that these pages you present are only a part of the discussion and that during class you have the opportunity to present a more complete picture. 
Briefly, in your War on poverty presentation, 15% poverty is a large enough number to warrant LBJ’s attention and I think it was commendable of him to take action. The problem is, as it so often is with politicians, that they neglected to consider incentives. In this case, these policies did often create a disincentive to work. The interesting question is how much abuse of the system actually occurs. Many people justifiably deserve some help, and we all know that the majority of those living in poverty are children. Should we penalize them for the assumed sins of their parents? Or create other programs that are child specific, bypassing the parents completely. Again, this issue transcends economics and goes to the question of what kind of country we want to live in. 
Finally, what bothers me about the federal government spending page –besides the fact that the chart is from Wikipedia – is that your points have a more normative than positive flavor. Simply presenting the numbers should be enough to provoke thought and discussion among your students. Commenting with one opinion on balancing the budget, the efficacy of other federal programs, and the horrors of the debt belong somewhere else, not on a page that is trying to present information. Unless, of course, your true intent is to make points of another kind.

Here was my response on the LinkedIn page 

1. I use secondary charts/data often on my blog. I only allocate a small amount of time for blogging, as I don't want it to interfere with my teaching, research, and personal time. I’m familiar enough with all this data where I'm comfortable with it’s accuracy. If you think any is inaccurate, please let me know. But as long as its accurate, using secondary charts/pictures in a blog seems perfectly appropriate to me. 

2. On the general idea of normative vs. positive economics. In introductory classes, I agree that we should teach positive analysis. That’s what I teach, and my normative views are not taught in the class. However, for my blog (which isn't required), I use positive analysis to help make normative recommendations. I see that the unemployment rate among teenagers is 25% and know that the literature generally shows that minimum wage increases cause unemployment (positive analysis) and therefore think that is a reason we should (normative analysis) lower the minimum wage. 

3. More on the minimum wage. I don't know that a picture will ever provide sufficient proof of an (economic) consequence.  But a picture is simple, easy to understand, but can make some good points. That's why I like this series. If you want "sufficient proof" of minimum wage increases harming society, see the book that reviews all the literature by Newmark and Wascher. Regarding a minimum wage increase boosting the economy, I disagree. While some would keep their jobs and make more, others would lose their jobs and earn nothing. 

4. On the values of a minimum wage. I think a set of rules that allows people to be able to work to gain marketable skills is good and reflects good values. Related to this, a minimum wage decrease would be the "right" thing to do, strictly from a human rights perspective. Being able to obtain a job (or keep it) is crucial. With our current minimum wage and the high teenage unemployment rate that comes with it, many who are now unemployed will be worse off throughout their whole lives based on not being able to obtain an entry-level job now. That is a travesty. 

5. More later on the War on Poverty …

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