Wise Words on Minimum Wage, Jim Buchanan edition

While the ignorant and those with their own hidden agenda are out celebrating the imminent introduction of minimum wage in Hong Kong starting this May, I dig out this reader's opinion by my former teacher Jim Buchanan to share with you to celerbrate (?!) the occasion:


"The inverse relationship between quantity demanded and price is the core proposition in economic science, which embodies the presupposition that human choice behavior is sufficiently rational to allow predictions to be made. Just as no physicist would claim that "water runs uphill," no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teaching of two centuries; we have not yet become a bevy of camp-following whores."

James Buchanan Wall Street Journal 1996

Here is a story on HK's minimum wage:

http://economictimes.indiatimes.com/news/international-business/Hong-Kong-OKs-minimum-wage-law/articleshow/6180516.cms

A Very Interesting Interview of Uzawa

Here are some interesting bits:

On Joan Robinson and James Meade:

We had the first Far Eastern Meeting of the Econometric Society, in the summer
of 1971 or thereabout, inviting James Meade, Michael Bruno, and Joe Stiglitz
from abroad. After the meetings were over, I organized a three-day seminar
meeting at the gracious villa of the Development Bank of Japan in Hakone. James
Meade gave an opening lecture, really a beautiful lecture, typical of him. Then
Joe Stiglitz asked him, “What Joan Robinson would say if she were here?” Meade
was quite upset and replied, with a stern voice. “I have not come this far to
hear that name!”

On Friedman and Lloyd Metzler

No, before that. When I had an offer from the University of Chicago, I was very
concerned with [Milton] Friedman. I did not want to do anything with Milton
Friedman. But Lloyd Metzler was very insistent that I come to Chicago. One day,
Metzler came to Stanford to urge me to accept the offer from Chicago. We had
lunch together and I asked him how things were done in Chicago. I asked him the
most important thing to me, that is, what were the relations between him and
Milton Friedman. Metzler said “Oh, I am getting along with Milton very well,
because I don’t pay any attention to what he says.” That was a classic statement
typical of Metzler. A few year before that, about four years before that,
Metzler suffered from a serious disease, a brain tumor, and he had a major
operation. That was the reason why I was invited to come to Chicago, because he
was the House Keynesian. So, I was invited to come to Chicago to work with him.

Here's the link.

I am back!!!!

I know, it has been a while. Just realize that the last post I have here is back in March, almost half a year ago.

In this WSJ piece, apparently some Basel Committe economists have done regression work which shows that imposing higher capital standard on banks will bring in long-term benefits which outweigh short term costs....

Since I am not an econometric expert here, I would not quibble with their results. But then again at least I know this: imposing higher K-standard would likely raise the bar for entrants in the banking industry. And this in turn means the banking sector would be less competitive than it would have been if the K-requirment has not been lifted. Now that has got to be costs to the economy as a result of this reduction in competitiveness in the economy, and I am not sure that this costs of the unintended consequence of an apparently "beneficial" policy have been taken into account by the researchers.

A Harvard Undergraduate Cracked the Secret Code behind the Mortgage Backed CDO

The story is in WSJ's blog, details here.

Why Economists Have So Little to Say About the Crisis

That's a topic Nobel Laureate Jim Buchanan recently talked about at a lecture at U of Richmond.

The Paul Krugman Test

"My attitude is this: if you are getting attacked by Krugman, you must be doing something right. "

That is one of very interesting lines from this excellent interview with Chicago's Gene Fama.

John Taylor on Rose Friedman

At the memorial for Milton three years ago, Allyn and Rose were talking. Allyn said how I liked to tell students about the MV=PY license plates when I introduced the quantity equation in myclasses—undergraduate and graduate. Rose told Allyn “We should get those plates for John”. Well several months later, Cindy Sparks called and said she had these plates. “Did I still want them?” she asked. Of course, I said and in a few weeks they showed up to my great delight.

That's from Stanford's John Taylor on Rose Friedman, read it here.

Thanks Milton and Rose for their unfailing efforts to promote the cause of free markets. In times like this, where everyone thinks Keynes is the economist to turn to, we free market economists need to follow the footsteps of Milton and Rose in resisting the temptation to let the government take over affairs which should remain in the private domain.

Best Line I Have Read This Morning

"做人唔係壞人已經開心"

Who said this?

Wong May-wan, wife of newly minted Nobel Lauerate (Physics) Charles Kao. The line is taken from this story.

For those who do not read Chinese, let me try to translate this line:

"One should be thankful for being a good person."