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Unequal links

January 31, 2014

Thomas Picketty has written a book providing a long-term and pessimistic view of economic inequality. In his view, the decline in inequality from the start of the 20th c. (corrected: not 19th) through about 1970 was the exception, rather the rule.

Adam Ozimek looks at why economists disagree about the disemployment effect of the minimum wage. Mike Konczal argues that economists agree that raising the minimum wage increases aggregate wages for those on the lowest labor rung. They both might be correct, because one is looking at the cost of minimum wage (disemployment), while the other is looking at its net benefit (increased wages, less those lost through disemployment.) Conservatives are wrong, of course, when they pretend that the former is the sole question. Saying the minimum wage is bad because it has some disemployment effect is like saying a cellphone is bad because it has a price. The question isn’t whether there is a cost, but whether the cost is outweighed by the benefit. Would you rather work 48 weeks a year at $10/hr, or 52 weeks at $7/hr?

Bill Davidow points out how the internet increases inequality. He argues against the minimum wage on trade grounds, wanting instead a bump in the earned income tax credit. To phrase it differently, he thinks we should subsidize Walmart more.

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