Did We Do That?

Much hay has been made of McCain’s ignorance of economics, but I submit that neither candidate has any grasp of the basics. Both bloviated today about the latest unemployment figures—pegged at 6.1%, which used to be considered full employment—and bemoaned the problems of the American economy. Further, this morning on NPR some pundit was wailing about how this trend was very unusual since it was a 0.4% jump in a single month and a lot of the “lost” jobs occurred in service sectors.

Warren Meyer hit it on the head: the federal minimum wage was increased on July 24th so August would have been the first full month under the new rate. Minimum wage laws have the natural effect of shedding jobs.

Politicians, however, are not fans of cause and effect. They like effects—we want higher wages for workers—without enacting the proper causes—ending regulation and taxation on businesses. The degree to which government interferes in the employer-employee relationship is the degree to which jobs and wages are depressed.

It’s basic economics and neither candidate has a monopoly on ignorance of it.

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