Self-Defeating Economics

Economists lament the fact that most people don’t care about economics. It’s worse than that: a lot of people are downright skeptical!

And why shouldn’t they be? How many economists warned of the Great Recession? And who hasn’t learned that most economics forecasts are less reliable than weather forecasts?

The problem is that economics has over promised and under delivered.

Consider this statement:

Raising the minimum wage will decrease employment.

Many economists and students of economics would nod their heads in agreement. But they’re wrong. Here’s what’s right:

Raising the minimum wage will reduce the incentive for employers to create and maintain jobs.

See the difference? The first statement predicts what will happen. The second does not. Using the second statement, we understand that what actually happens will depend on circumstances. Heck, employment could actually grow under the right circumstances! We still can understand that raising the minimum wage is probably a bad idea, but we also avoid being overly predictive and then looking stupid when circumstances don’t align.

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