In a recent lecture at the London School of Economics, Prof. Alan Manning, a British economist who has done extensive research on the impact of the national minimum wage in the United Kingdom, said something that caught my ear. Manning was closely involved with the launch of the national minimum in 1999, and in reflecting on the debate at the time, he pointed out that once research about the positive impact of the minimum began to show that it raised low wages without leading to many job losses, “scare stories” about how the increase would kill “millions of jobs” lost credibility.
That got me thinking about what seem like salient differences between the U.K. minimum-wage debate and our own, where non-credible critics continue to hold forth and command considerable influence in blocking an increase in the minimum, at least at a national level. House Speaker John A. Boehner (R-Ohio) consistently rails against the policy as a “job killer.” There’s even a whole “think tank,” backed by the fast-food lobby, that exists to oppose minimum-wage increases and refute research like that of Manning as well as many others here in the United States (heading on the think tank’s anti-minimum wage Web page: “Playing politics with a million jobs” — note the repeated use of “millions” in this context).
Paul Krugman recently went on a similar tear regarding those who predicted that because of monetary and fiscal stimulus, runaway inflation was poised to burst out at any moment. Yet even as inflation has decelerated, these voices still badger the Federal Reserve to preemptively act against this phantom menace. I could make precisely the same case for the deficit hawks who assured us that spiking deficits in 2009-10 would push interest rates up and jam the recovery. Or the climate-change deniers.
As Krugman put it:
Along with this denial of reality comes an absence of personal accountability. If anything, alleged experts seem to get points by showing that they’re willing to keep saying the same things no matter how embarrassingly wrong they’ve been in the past.
All of which raises the question: What is it about our economic debates that often insulates them from facts? Why do views that are known to be wrong or overblown — it’s not that the minimum wage never costs anyone a job, but that the beneficiaries far outweigh the losers — continue to get an equal hearing?
First, media outlets and journalists whose job it is to report on these issues do not want to be labeled as biased, so they feel they must report both sides. Thus, as long as the opponents of a policy, be it a minimum-wage increase or putting a price on carbon to limit global warming, can generate “research” — as long as they can gin up another side to the debate — outlets feel compelled to present that side. You can blame the news media for this, and certainly many venues are guilty because they prefer an exciting fight to the boring truth. But many others don’t have the time or the firepower to figure out who’s right.
Money interacts in important ways here, more so here than in the United Kingdom and other advanced economies. People tend to think the problem of money in politics is that it buys politicians. But that’s an old problem. Today, money also buys policies — it buys think tanks that provide the answers it wants to “scientific” questions and casts doubt on the answers it doesn’t like.
But still, once the evidence comes in, why doesn’t anyone ever lose credibility? On the minimum wage, we have exhaustive empirical evidence from the United Kingdom and the United States, including the 29 (!) states that have raised their minimum wages. Surely, if the policy were the disaster that those with whom I debate the issue on TV and radio say it is, we would know it. Surely, with all this state variation, big problems would have vividly shown up somewhere.
Perhaps the British minimum-wage debate holds some answers.
One factor that seems to have made a big difference there is the Labor government’s formation in the late 1990s of the Low Pay Commission, a nonpartisan group whose members represent business, labor and academics. The LPC advises the government on the impact of minimum wage and on periodic increases, and its recommendations are generally heeded.
Now, those of you who remember the Bowles-Simpson commission set up by the Obama administration to make recommendations on budget sustainability can legitimately argue that was a failed endeavor in that it inflamed partisanship and was unable to agree on a recommended path forward. But unlike the LPC, Bowles-Simpson was staffed largely by politicians and chaired by former politicos.
So perhaps truth over truthiness would be aided by more truly nonpartisan commissions staffed by academics and other non-political stakeholders. On the one hand, I’m skeptical because some egg-headed commission report can easily be crushed by gridlocked, unrepresentative politics.
On the other hand, as a D.C. policy wonk who participates in lots of policy debates in many different arenas, often with those who do not share my view, I’m increasingly hearing this mantra of late: “You know, I’m sure that if we sat down in a room for a few hours, we could hammer out a compromise on this.”
That, along with similarly plaintive cries I’m hearing more when I talk about this stuff outside of the Beltway, leads me to wonder if perhaps there’s an untapped, growing demand for solutions out there.
Something else from Manning’s talk was striking to me. Conservative British politicians who once opposed the minimum wage now support it. In 2005, David Cameron said, “I think the minimum wage has been a success.” George Osborne later pronounced that “modern conservatives acknowledge the fairness of a minimum wage.”
Let’s not get carried away here. U.K. policymakers have of course shown themselves capable of making bad economic moves based more on ideology than fact, most notably in the sphere of austere fiscal policy. But at least regarding the minimum wage, policy there has in no small part been driven by facts, compromise, collaboration and acknowledgement that in the face of those facts, a formerly held position was wrong.
Why, oh why, does that sound so incredibly out of reach in today’s American politics?