Saturday, July 17, 2021

The minimum wage – a different perspective

Peter Baker's long essay "How much is an hour worth? The war over the minimum wage" originally appeared on The Guardian's website in 2018. I happened to listen to it last night on their Long Reads podcast, as it was being repeated.

The new edition of the Anti-Textbook updates the examination of the minimum wage, including the debate on the effects of a $15 minimum wage in Seattle, but I realized on listening to the podcast that the discussion fell entirely into the framework that is shared by almost all economists studying the question. This focuses on a narrow set of questions dealing with how hours of work change and whether workers end up with higher paychecks when the dust has settled.

The point that Peter Baker makes is that a broader question is being overlooked. It is nicely encapsulated in a couple of quotes that he gives near the beginning and the end of his essay.

When the minimum wage was being introduced in the United States under Franklin Roosevelt's administration (long after it had been initially introduced in New Zealand and Australia), Roosevelt had this to say in 1933: “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.” Baker writes that Roosevelt "openly declared his desire to reshape the American economy by driving out 'parasitic' firms that built worker penury into their business models." (I know, it is almost unimaginable that an American president could have said and thought such things, but those were very different times.)

Then at the end of his essay he returns to this theme: "I met with Kshama Sawant, the socialist economist who [as a member of the Seattle city council] had been so instrumental in passing the $15 wage." Baker writes that "her most impassioned argument wasn’t about the studies [of the effects of the change in the minimum wage in Seattle]– and it was one that Roosevelt would have found very familiar.

“'Look, if it were true that the economic system we have today can’t even bring our most poverty-stricken workers to a semi-decent standard of living – and $15 is not even a living wage, by the way – then why would we defend it?' She paused. 'That would be straightforward evidence that we need a better system.'”

Seattle Councilmember Dr. Kshama Sawant

Thursday, July 8, 2021

The Microeconomics Anti--Textbook is in production

I finished correcting the first draft of the page proofs a few days ago, so things are proceeding at last. I will post an update once I know when the book will be in print. The index has not yet been created, so more work remains to be done.



Friday, January 1, 2021

Schumpeterian competition in wind turbine production

 Good riddance to 2020. An article in today's New York Times stood out for me as a hopeful story to start out the new year: "A Monster Wind Turbine is Upending an Industry". 

The monster in question is General Electric's, produced in a bid to challenge the dominance of Siemens Gamesa Renewable Energy in offshore wind turbines. It is 260m high and the blades are 220m in diameter. Some test versions, pictured below, are on land along the harbour at Rotterdam.

Joseph Schumpeter claimed that understanding the importance of such dynamic competition was critical in understanding how the capitalist system generates new processes and products, something about which the traditional static models have nothing to say. With rare exceptions, the introductory textbooks' discussion of oligopoly focuses on price competition.

While the tone of Schumpeter's discussion was optimistic understandable given that he was writing in the 1940s – it's now by no means clear that monopolies will be relatively short lived in a process of 'creative destruction', as the Big Tech monopolies of today look quite well entrenched. As well, it's now also abundantly clear that oligopolies can compete to produce better useful processes and products as well as harmful ones. (We could have done without the technology to extract bitumen from Alberta's tar sands – excuse me, "oil sands" is the politically correct terminology. The same goes with the development of 'forever chemicals' like PFOA, PFOS that contaminate the bodies of virtually everyone on the planet. And so on.)

But for today, I'm focusing on the positive. At last, it seems that the tide is turning against the fossil fuel industry.

The Microeconomics Anti-Textbook and The Macroeconomics Anti-Textbook: updates

 I delivered the (extensively) revised edition of the Microeconomics Anti-Textbook to the editors at Zed/Bloomsbury in late November. I'm hoping that it will be in print by about the middle of the year, but the editors have not yet given me a timeline.

Tony Myatt, who has been working on the Macroeconomics companion tells me that he is now working on the last chapter so, all going well, it will appear in 2021 too.