Dean Baker has a post today critical of the concept that economists praise the shipment of jobs overseas because it improved the lives of people in poor countries, and are at the same time pushing for welfare programs to improve the lives of people in this country who were impoverished by the loss of those jobs.
“Let's imagine,” he says, “that mainstream economics wasn't a make it up as you go along discipline,” stating a position that I have held for several decades.
Economists have these mathematical formulas which they claim can foretell how the economy will perform, but I maintain that the claim is laughable since they developed those formulas by concocting the formulas to fit an aggregation of present facts.
Based on that process I could concoct a formula to determine who will win the Super Bowl based on scores in the first eight games of the season. That team would, of course, probably not even win their division.
Baker had a post yesterday which rather proves that economists are making it up as they go along, in which he claims that the failure to increase productivity is caused by low wages. WalMart, he points out, is hiring lots of workers such as greeters who do not do anything productive, and they do that because wages are low. If wages were higher, he claims, they would no longer hire these workers and productivity would improve.
He has, however, been claiming for years that raising the minimum wage would not cause employers to lay off any workers, so he sort of needs to make up his mind.