Progressives Ignoring Settled Science
I hate to quote almost all of someone's blog post but hopefully Todd Zywicki will treat it as a compliment
Some of the results in this new article by Zeljka Buturovic and Dan Klein in Econ Journal Watch (a peer-reviewed journal of economics) are startling:
- 67% of self-described Progressives believe that restrictions on housing development (i.e., regulations that reduce the supply of housing) do not make housing less affordable.
- 51% believe that mandatory licensing of professionals (i.e., reducing the supply of professionals) doesn't increase the cost of professional services.
- Perhaps most amazing, 79% of self-described Progressive believe that rent control (i.e., price controls) does not lead to housing shortages.
Note that the questions here are not whether the benefits of these policies might outweigh the costs, but the basic economic effects of these policies.
...
It would be hard to find a set of propositions that would meet with such a degree of consensus among economists to rival these propositions"“which boils down to supply restrictions raise prices and price controls create shortages. These are issues on which economic theory is exceedingly clear, well-confirmed over decades of empirical support, and with a degree of unarguable consensus among trained scholars in the field. Apparently the existence of a "consensus" among trained scholars on certain policy issues is less important on some issues than others.
Bill L:
Progressives also downplay or ignore the link between illegal immigration and unemployment. There are 15 million unemployed and 12 to 20 million illegal immigrants.
May 7, 2010, 6:52 amanon:
Yeah, but I don't think this shows that "conservatives" are that much better.
As Ilya Somin added (in the same blog):
http://volokh.com/2010/05/07/ideology-and-economic-ignorance/
"First, as Buturovic and Klein themselves point out, the Zogby survey they relied didn’t ask questions about issues where conservative rather than left-wing positions are likely to be at odds with basic econoimics. For example, I expect that many more conservatives than liberals deny that the War on Drugs creates black markets and violence, believe that immigration is a zero-sum competition for jobs between immigrants and natives, and deny that laws banning prostitution and gambling have various negative economic side-effects (black markets; domination of these activities by organized crime, etc.). Thus, the study doesn’t really allow us to say whether liberals or conservatives are the ones who with the greatest levels of economic ignorance. Survey data shows that ignorance about politics is widespread on both sides of the political spectrum. The same thing is likely to be true of economic ignorance."
May 7, 2010, 7:41 amanon:
Bill L -- I've now read your comment and I think it illustrates Prof. Somin's point.
May 7, 2010, 7:43 amFred:
Progressives have a hard time with reality but are really good at "knowing" how things "should" be.
They also have very fond memories of Peter Pan and hope some day to find a Unicorn in their backyard.
May 7, 2010, 9:02 amDKH:
Bill's comment is not a precise illustration of Prof. Somin's point. Bill claims only a link between illegal immigration and unemployment, not that they are zero-sum. Illegal employment definitely provides a cheaper substitute to legal employment; an argument grounded in economics could point out the substitution effect, even if the strength of the effect is not such that the situation is zero-sum and the strength is unknowable.
May 7, 2010, 10:10 amrxc:
This is not the only area where consensus is ignored by progressives. I am sure that the overwhelming majority of practicing nuclear engineers agree that nuclear power plants are safe enough to be more widely used, and there are only a small number of skeptics who naysay it.
But this is common political tactic, correct?
May 7, 2010, 10:18 amMJ:
Bill,
Richard Dawkins estimates that there are also about 20 million atheists in the US. Does that mean that they are causing unemployment?
May 7, 2010, 10:51 amPSC:
DKH is right. It's not the anti-illegal immigration populists who are the economic illiterates, but the pro-all-immigration elites who ignore the supply-vs-demand reality with respect to labor economics. The "zero sum" comment by Somin is a great strawman...
It may not be zero-sum, when an otherwise 3rd-world-country resident can get a middle-class US salary as an H1B visa holder; that's a big plus and the negatives for others may be minor. And yet, H1B visa employees make less than US born professionals and there are many US born engineers whose wages and opportunities are impacted.
In short, even if immigrants gain a lot more than native-born folks 'lose' wrt job opportunities, its econ-101-defying folly to think it doesnt depress wages and take jobs that would otherwise be given to native-born folks.
May 7, 2010, 11:14 amanon:
Restricting immigration is exactly the same as restricting any other sort of trade.
Your arguments are no different than a protectionist arguing that we should put quotas on the number of automobiles imported into the US.
Just substitute "General Motors" and "Ford" for "US-born workers" -- and have them sell cars instead of labor.
May 7, 2010, 11:31 amRick C:
MJ: It depends. Do these atheists come from other countries, by and large, and are they (theoretically) displacing native workers? If not, then your analogy is not particularly useful.
May 7, 2010, 12:31 pmanon:
Rick C:
May 7, 2010, 1:33 pmNo, but they are displacing believers. If we just got rid of all the atheists (assuming that 15M of the 20M are employed), we'd have 100% employment, correct?
ADiff:
DKH, The relationship could also exist in the opposite direction. It's easy to postulate perfectly rational and plausible mechanisms by which the availability of undocumented labor could actually increase employment of documented labor. In fact, as a long-time student of economics I'd even argue such relationship far more likely the case, in that it provides a way to avoid the business formation minimizing impacts of many regulator restrictions on business operations, allowing businesses to exist where they could not otherwise and hence providing employment to documented labor that would not exist in the absence of that undocumented labor. This isn't an argument for illegal immigration, but rather a suggestion that relationships are sometimes not exactly what might be assumed.....
May 7, 2010, 4:42 pmmesaeconoguy:
It would be hard to find a set of propositions that would meet with such a degree of consensus among economists to rival these propositions–which boils down to supply restrictions raise prices and price controls create shortages.
Hmmm.
Perhaps such a learned Progressive as Rick Perlstein, author of “Nixon Is Evil, plus he’s short, like me†could enlighten us. Theoretically speaking.
Or maybe not, since Rick’s Easily Confused By Economics ™
May 7, 2010, 11:38 pmmesaeconoguy:
(morganovitch, I'm watching you there)
May 7, 2010, 11:50 pmtehag:
The repudiation of economics in favor of ordering society by a fanciful morality has a name: Socialism. There are many other moral hallucinations imposing social and person order. The question isn't (yet) are the distortions worth it (no, in the cases of the Jew-Free EU or socialism; yes, in the cases of suppressing rape and murder), but whether we recognize that people want to take drugs, rape children, kill Jews, and regulate housing. The poll (a poor measure, btw), shows only the denial of reality (presumptively--economics is a long way from math and physics), not the apparent justification that the moral distortions may be (to someone's mind) worth the cost.
" I expect that many more conservatives than liberals deny that the War on Drugs creates black markets and violence,..."
How could you expect this? I expect that conservatives admit the war on drugs creates crime: black markets and their associated violence, just as I expect that conservatives admit the war on murder requires police and prisons.
May 8, 2010, 4:03 amjlss:
dear anon: why is it that when people complain about illegal immigration
May 8, 2010, 7:27 amthat they are for Restricting immigration. what part of illegal do you not understand. By using your thinking bank robbing (which is illegal)
is the same as restricting any other sort of trade.
John David Galt:
I mostly agree, but have to go slightly devils-advocate on rent control.
Not only you but many economists seem to miss out on the difference between theory and practice regarding rent control, as it is in most of the US. Only a few places (like New York City, Berkeley, and Santa Monica) actually use rent-control laws to hold rents below what they would be in a free market.
In most other US cities that have it (for instance San Francisco, where I lived for 5 years) the rent control law is there in order to make possible a set of "renters rights" laws, which basically prohibit a landlord from evicting a tenant for any but a short list of reasons. In SF you can evict a tenant if he doesn't pay the rent, damages the place, or creates a nuisance, or (once every 5 years) if you the landlord want to move into it yourself and live there. But those are the only reasons -- and in the first three cases the tenant gets a "trial" before the rent board in case the landlord is lying about the reason for wanting him out.
The rationale for this law is that voters in that city want many categories of "lifestyles" protected against discrimination, and I mostly sympathize with that view, though its merit is arguable. But my point is that once such a law is in place, the city also has to limit rent increases or a landlord will easily evade the "rights" law just by raising the rents of those he doesn't like until they can't pay them.
The reason this doesn't result in below-market rents is that increases up to the cost of living are automatically allowed once a year (but must be uniform across all tenants of that building/complex), and there is no price limit when a vacant unit is rented to a new tenant.
I don't claim this is a great system from a libertarian perspective (reactions to it will certainly separate the "propertarians" from the "cultural libertarians", and I'm somewhere in between the two). But economists should avoid assuming that the only purpose and/or effect of rent control is to get below-market rents, at least unless they are willing to address the question of whether such a "tenants rights" law reduces the value of property. In the case of San Francisco at least, I'm confident it does not.
May 8, 2010, 4:43 pmMJ:
MJ: It depends. Do these atheists come from other countries, by and large, and are they (theoretically) displacing native workers? If not, then your analogy is not particularly useful.
Rick,
They could also be Unitarians or Freemasons. I just used "atheists" to indicate that the name of the rose does not matter.
There are not a fixed number of jobs in the economy. Even if there were, scarcity would still dictate wages. "Depressed" wages is simply a normative way of saying that there is too much supply relative to demand in one particular job class or industry. Low wages are also a nice way of labor markets telling you that your skills are not worth as much as you might have thought.
Labor markets are becoming increasingly global, as anyone who has talked to an computer support service representative can tell you. You can either decry immigration now, or decry trade later, when high wages relative to labor supply lead to the "outsourcing" of jobs. Markets have a way of extending beyond political boundaries. In that case, it will be protectionism, rather than immigration reform, that is the government tool of choice to restrict competition in labor supply. When it comes down to it, are these restrictions fundamentally any different from minimum wage laws, which most of us here agree are a bad idea?
May 9, 2010, 1:02 pmMJ:
In short, even if immigrants gain a lot more than native-born folks ‘lose’ wrt job opportunities, its econ-101-defying folly to think it doesnt depress wages and take jobs that would otherwise be given to native-born folks.
PSC,
Econ 101 also tells us that wages are the "price" of labor. It is hard to think of a pro-growth policy that would promote artificially high input prices. No one is "given" a job (well, most people anyway), they find employment by arriving at mutually beneficial agreements with their employer over the terms on which their labor is sold. If they don't agree to the terms, they are free to seek employment elsewhere.
"Native-born" or not, more people create more demand for goods and services, not to mention more innovation. It was Simon Kuznets, the nobel laureate, who did the definitive work showing that more people do not lead to economic decline or a lower standard of living.
May 9, 2010, 1:13 pmBill L:
MJ, you wrote:
>Bill,
>
>Richard Dawkins estimates that there are also about 20 million atheists in the US. Does that >mean that they are causing unemployment?
The correlation is not between 20 million Atheists/20 million illegal immigrants, but between adding millions of non citizen workers by government decision to do nothing and millions of unemployed citizens. There are 15 million Americans unemployed, the vast majority collecting government benefits. I don't claim that each illegal immigrant that departs the US will result in another US citizen employed, but it will certainly have an effect. If the actual numbers were known to be that for each 10 lawn care workers that left the country, only one US citizen would get a job (and a lot of people would cut their own grass!) would you defend leaving a US citizen unemployed to benefit the citizens of another country?
May 9, 2010, 6:40 pmFrink:
@MJ -- Excellent posts.
May 10, 2010, 7:08 am