Saturday, February 25, 2017

The Lament of a Harvard "Economist"

Today's NY Times has an article written by Harvard Professor Sendhil Mullainathan lamenting the fact the Council of Economic Advisors is no longer represented in the cabinet.  The Trump Administration has booted the CEA down a notch.  This disturbs Mullainathan because he thinks the economics profession needs to be represented at the cabinet level.

It is easy to see why "academic economics" is accorded so little respect in the world of practical people these days, leading to this cabinet rebuff.

Every small child can tell you that if a price goes up, you will buy less of the product.  No surprise here.  But, what do academic economists have to say when asked if minimum wage increases lead to employers hiring less labor?  At least half of these academics say that increasing the minimum wage either has no effect on hiring or actually increases hiring!

Is it any wonder that this type of nonsense loses credibility in the real world.  But, that is the state of modern "academic economics."  It is mostly political and mostly nonsense.

President Trump did the right thing in excluding these absurdities from the cabinet.

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