Schiff vs. Ritholtz: Political Correctness vs. Law of Supply and Demand

Townhall.com ^ | February 2, 2014 | Mike Shedlock

[Kaslin]

PolicyMic says There's a Good Reason Why Everyone's Criticizing Peter Schiff.

Jon Stewart's Daily Show mocked Schiff in an amusing video interview Wage Against the Machine. The video allegedly explores "the devastating economic effects of raising the minimum wage to the poverty level."

Schiff's opponent in the interview was Barry Ritholtz at the Big Picture blog. Before the show aired, Barry explained How I Ended Up On The Daily Show.

The feedback against Schiff was enormous. Ritholtz has the details in Follow Up: Daily Show Blowback.

Political Correctness Points

I am no fan of Schiff. We have radically different views on the inflation-deflation debate. And I do find the way he stated his case to be very distasteful.

That said, it's clear the Daily Show was out to score political points, not explore economic reality.

Given that Schiff was purposely displayed in the worst light possible and Ritholtz the best light possible (Ritholtz admits retake after retake) it is not shocking in the least to see all this blowback.

Merits of the Debate

Political correctness or not, I want a sound discussion of economic principles.

[Foundahardheadedwoman]

We have a paper here in Ky. that is considered the same as the Times as the paper of record in Ky. I and others that I know were interviewed and what we said was so twisted as to be unrecognizable. I have not bought the Ky. paper in over 30 years and never will again, the Times I only read snippets of if it is embedded in a story I do want to read. Have never purchased this paper and never will. Serves the same purpose that Pravda did in the old Soviet Union.

[Kid Shelleen]

For full disclosure I wonder if The Daily show would publish the salary’s of all its employees?

[USFRIENDINVICTORIA]

It seems that the “living wage” idea is having its moment. The appeal to leftist politicians is obvious — wave a magic wand, and eliminate poverty. However, even most leftist politicians know that minimum wage laws trigger “unintended consequences” — because professional economists on staff will have told them so.

Besides the obvious political motive of creating a “wedge issue” between the socialists and conservatives everywhere, I’m beginning to think that this might be a strategy to create inflation. When you increase the minimum wage a lot, you put a lot of pressure on the whole spectrum of wages, especially at the lower end. For instance, supervisors have to be paid more than the employees they supervise, otherwise who would be motivated to take on the extra responsibilities? Deflation has been the big bugbear for economists for a couple of decades now. If raising minimum wages can create a little inflationary pressure, that’s a good thing right? (Just channeling leftist economics there.)

Oh, and BTW, unions will have a field day for this, as they agitate for the traditional relative wages, whereby their members make X percent more than the minimum wage. Expect round after round of strike threats, etc., while the impact of these changes works its way through the system.

In the end, the least skilled workers, who are supposed to benefit from higher minimum wages, will find themselves no better off, in relation to other workers — or, they will find themselves unemployed.

One far better way to get to “living wages” would be greater support for skills training. More practical college courses, more apprenticeships, etc. With more marketable skills, workers would be able to command a living wage in the marketplace. Higher minimum wage laws will just result in fewer employment opportunities for the unskilled.