Here, in this article, Tim, the writer makes the point about too much faith in apriori reasoning and that perhaps economic thinkers in the past relied upon what some might term magical thinking. Even many classically trained economists and policy-makers are now skeptical of claims that low taxation and low minimum wage rates do anything except give you low growth. Look at the state of Kansas. At a time when prices for their agricultural goods went down, the state didn’t increase or even stabililze tax rates; the state lowered taxes. When a state has low growth and high debt to growth ratio, lowering taxes is akin to magical thinking.
As to the minimum wage, the writer, perhaps unintentionally or not, has stumbled onto a truth. There is no empirical evidence that raising the minimum wage anywhere will always lead to job loss. None. For some people who have been to business school, and been socialized to accept the “fixed costs “ management creed, they irrationally accept the dictum that raising the minimum wage always leads to job loss. But job losses, unemployment or underemployment, these things are what can be classed as overdetermined: five, ten, twenty, thirty factors figure into a full explanation and description of the phenomenon. Any data that purports to show job losses after a raising of the minimum wage must also set that data within the historical context.Most if not all of that type evidence, job losses linked to minimum wage raises, occurred during a dip or recession in the economy. Ask Liz Clayman at Fox Business; her statistics she trots out routinely to repudiate a priori faith in the maxim that raises in wages always lead to job loss show a 4/7, 3/7 ratio ( 4/7 times there is loss, but the loss can explained via recession in the economy; 3/7 times, no job loss whatsoever. Clayman isn’t exactly a bastion of anti-capitalist sentiment. ).
As to the writer “willfully misunderstanding” economic thinking, perhaps he does, but the really interesting notion is that of his citation of Buchanan, who compares supply and demand to a force of nature. The analogy is rather ludicrous, since the only force of nature there in economic exchanges or determining whether something has an intrinsic or extrinsic value, or use or exchange value, is the brain that creates the models and methods to make such exchanges possible. Anything else, assuming supply and demand of produced goods, or assuming marginal productivity operates like a force of nature in every sector of the economy, is nonsense. Equating supply and demand to a force of nature just doesn’t work functionally; there is nothing natural about a shoe factory, or a blacksmith’s shop, or a person making bullets, unless you make the bland generalization that anybody creating something in order to make a living is doing something natural. But saying that isn’t the intention of somebody making the naturalistic fallacy argument.
I also like what the writer says about deification of assumptions. Assuming that some cultural product or method is natural, or assuming that there is an invisible hand that literally or figuratively transforms all transactions for everybody’s collective benefit isn’t just magical thinking, but is itself apotheosizing things. And the writer is correct to note that what may seem like the truth of received wisdom is often repudiated by later advances or later critiques of said received wisdom. Instead of citing Luther, however, I’d summon Reformation era thinker Sebastian Casteillo ( see Carlos Eire’s tome on the Reformation…), who in addition to denouncing the practice of executing heretics, stated the necessity to theology of doubt and the “folly” of rigidly doctrinal propositions. Note that though Casteillo is a humanist who abhors executions, he also deems that the business of theology needs to guard against the arrogance of certainty. And that, in my mind, is what Nick Cassella is after here.
