That was pretty much my thought. Like this one:
Where’s the “lowers the price in some cases but you wouldn’t want to buy because it would be garbage or outright dangerous” option? if just anyone regardless of training or lack thereof can call themselves a doctor, sure you’ll have a lot of really cheap “doctors” but so what?
Seriously, how is this study anything other than trolling on the part of the authors? “Tendentious and churlish” indeed.
Not to mention “enlightened” and “unenlightened”.
When I was young, it was possible for a janitor to live on his pay.
Rent. Food. Clothes Medicine.
Now, no.
You quite certainly could afford rent, food, clothes and medicine on a janitor’s salary today. You couldn’t afford much else, but you couldn’t have afforded much else 30 years ago, either. In 1980 people were not encouraging their children to grow up to be janitors, for the same reason they don’t today; it paid crap.
Sure is a good thing we don’t need anybody like that, huh? Huh?
In my own industry (Consulting), a PMP (Project Management Professional) certification has become a de facto requirement for much of the industry. The direct cost of this certification is generally no lower than $500 and often over $2000 (pre-test education credits are required). This direct cost does not include time spent. On-going cost is generally a bit lower, but the CE requirement/membership fee does impose an on-going cost. In spite of all of this, hourly rates for PMs are no lower than they were 5 years ago (when a PMP was nice, but rarely required). As with all things economic, there are external factors that come into play.
I would hypothesize that “left” for many values of “left” correlates highly with poverty, & poor people probably didn’t go to business school. Also B-schools do a pretty good job of indoctrinating their students with right-wing assumptions. (Economics is still a young science, & their are those who would make religion of it.) So of course a lot of, say, labor-union members, will come off as untutored in Econ.
This does not mean, “the more you lean left, the less you know about economics.” Karl Marx knew a hell of a lot more than any of us, & than some modern doctors of econ, about classical economics, & he defined the far left in his day. Use statistics properly please.
On several of these, I at first thought the agreement was the “unenlightened” stance. Which was confusing…OK, 1 & 2 seem reasonable enough.
Number 5 is definitional nitpickery; monopoly & monopsony power are identifiable in companies with a market share above, say, 75%.
4 & 8 are positions where the “enlightened” position is actually a right-wing position. I think the wartime economy of 1942-45 disproves the universality of 8, & I’m not completely confident 4 has been proven.
I’m not sure whether 3 is even supportable in 2010; that’s a question of fact, & to assume its truth is mere piety.
7, while not true in general, has a counterfactual in the particular; NAFTA did create economic insecurity for Mexican corn farmers. But of course NAFTA is not pure free trade either.
6 is hilarious. Of course they’re being exploited. That’s what employees are for. All market behavior is the exploitation of others for your own benefit, why are they pretending otherwise? Oh, wait, different sense of exploited. Um, well, yeah, actually, some are. I think there’s some convincing journalism on this.
I agree with you on both the reasoning and conclusions. The assumption of the authors of the article is that people who value things like people above money don’t know that they are doing that. I do understand that I’m doing that, and why.
Again, you’re missing the point. All of those “basic economic principles” could easily be twisted and debated, with a reason given why each are wrong.
From the perspective of an economics professor, these 8 questions would at some point get discussed in such a way that students (left or right) would be enlightened enough to concluded, “standard of living has increased over the past 30 years.”
The question isn’t, “is a janitor better off now.” And as a result your answer reflects a liberal bias towards the question. The correct answer is, “obviously standard of living has improved, but so what.”
As a very basic example, “Raising the price of a product will lower demand.” We should all agree, and this question is neither liberal nor conservative. Anyone that took first year economics knows this one. Someone that is educated, but didn’t take economics would probably say something along the lines of: “This is deranged, lots of products increase their demand by raising the price.” That fact is true, but not the point of the principle behind supply and demand.
Describing this paper as “trolling” is probably the most accurate. It seems like an economics professor set out to embarrass a bunch of ivory-tower-libruls, and try to make economics 101 a required course.
Well, I have had a number of cleaning professionals as clients over the years. I assure you that managed correctly, their businesses thrive. Managed poorly or working for a company that pays crap is a risk in any line of work.
I’ve been thinking about this, and it is possible to make the argument on sound economic principles that mandatory licensing can lower costs. It’s based on the concept of a market for information. Given there are costs to the provision of information, and possession of a government license is a way of providing information that a professional is competent. Now, you can argue that economies of scale permit savings if there is a single, compulsory licensing agency. If it is left to the private sector with multiple competing agencies, the higher costs of information may cause higher overall prices.
I don’t understand what you are saying here.
No, I actually remember the licensing of doctors being discussed in first year economics. It was shown as a barrier to entry–which elevates prices.
Better example is a cab driver. Without licensing anyone with a vehicle (car, motorcycle, bike) and be a cab driver. Without that barrier to entry, you have more players, bringing down costs. If there is profit to be made, players will enter and bring down prices until there isn’t enough profit to make it worth while.
If suddenly you make it a requirement to have a license, you make it harder to enter the market, so prices drift up. Require a special yellow car, prices go up a bit more. Require insurance, prices go up a bit more.
The question was designed to trap college students. Instinctively they’d come up with a liberal reason why the statement is false, but a conservative would instinctively agree–regardless of education.
These questions are all tricks meant to trap left-leaning college students into guessing wrong, and without a background in economics, that’s what their answer were. Notice that right-leaning but completely uneducated individuals were able to “guess” correctly. The study makes it look like a NASCAR watching, high school drop out, making less than $20k a year knows MORE about economics than “liberals.” But that’s not the case, that group was able to “guess” correctly at these 8 questions.
The point of the study was to show that left-leaning college graduates aren’t as well versed in economics as they should be.
I hate to break it to you, but not everything taught in first year economics is indisputable fact. Not even the little I remember of grad school economics is indisputable fact.
I know what the point of the question was. But answering in the negative to it only makes one poorly versed in economics if one assumes, even given the strictures of free market economics, that everything one is told in first year economics is gospel. And it ain’t. As I showed, you can make a free market based argument that mandatory central licensing reduces prices.
The “point” is that people who work for an hourly wage are indeed worse off, & quite often much worse off.
And Economics is hardly a science. No physical model. Not even close.
Indeed, during the Cold War, Economics degenerated into a cheerleading section for the two sides.
Today, it has yet to regain objectivity.
Again, you are missing the point of the study. A student graduating from college, having taken first year economics would read the question:
“2. Mandatory licensing of professional services increases the prices of those services.”
They would recognize licensing as a barrier to entry, which artificially elevates prices, and know to agree with the statement. It’s not about something being an indisputable fact, it’s about a topic learned in first year economics.
A student that did NOT take economics, but reads a lot of message boards, would WORK to disagree with the statement. They would use some twisted tortured logic to find a reason why mandatory licensing MIGHT lower prices. They would think through a handful of professions and try to find a reason why the price of services was lowered because for one of them the $2000 a year licensing fee was tax deductible.
The point of the study was to show that college grads without economics training were guessing wrong on rather basic questions.
Okay, here are the questions, followed by the answers based on first year economics:
-> restrictions represent reduced supply, if you reduce the supply, the cost goes up, if the cost goes up, housing is less affordable. Law of supply and demand.
-> the point isn’t to think about a way in which a restriction made housing more affordable, it was to regurgitate the law of supply and demand.
-> again, as mentioned earlier, licensing is a barrier to entry, which keeps prices elevated.
-> the question isn’t “is someone you know better off?” It’s a pretty straight forward definition of standard of living. It doesn’t matter if someone working a shitty job is unhappy with their life.
-> Again, supply and demand.
-> basic definition of monopoly, one operator without competition, it’s not based on market share. Having market share at all implies there are other competitors, and hence, not a monopoly.
-> in the “real world” we would say that once a company dominates the market share (think Microsoft) we call them a monopoly, but that’s just us misusing the term.
-> if they are working, they are not really being exploited. Their life might suck, their working conditions might suck, but that’s not the point.
-> in the short term, probably, but free trade is about reducing the barriers to entry. make it cheaper to export goods to another country, and you have the ability to hire more staff. I believe this topic was in macroeconomics.
8. Minimum wage laws raise unemployment.
• Unenlightened: Disagree
-> again, supply and demand. if you make it more expensive to hire employees, you’ll hire fewer of them.
These are all trick questions, designed to elicit a specific response. My initial reading of them was, “these aren’t basic economics.” Now that I’ve read the whole study, and looked back at the questions, it’s clear they are actually supposed to be this easy.
The survey was designed to test kids coming out of college, not people with “real world experience.” Those that took econ 101 would know the answers, the kids that didn’t would tend to guess wrong.
Nope. I can easily choose metrics (such as average weekly wage) and conclude that the standard of living is worse off. You can conclude that the standard of living is better if you choose certain metrics, such as per-capita GDP, but there’s no reason anyone has to use those metrics. If the question asked about per-capita GDP, we’d have a factual answer, but it didn’t.
You yourself state that “raising the price of a product will lower demand” is not a true statement, but then you still try to turn around and claim it as a true statement. This makes no sense.
Again, this is completely dependent on how you construct your theoretical models, and I can easily construct a model under which a licensing regime doesn’t raise prices. And I don’t have to use any sort of tortured logic to do it.
But the more glaring error here is that even if I use the model you want to use, than the correct statement is that licensing raises the marginal costs, not that licensing raises prices. Did your first year econ class really not distinguish between marginal costs and prices? Because I find that a bit hard to believe.
This is not the law of supply and demand. Here’s Wiki’s definition: “in a competitive market, price will function to equalize the quantity demanded by consumers, and the quantity supplied by producers, resulting in an economic equilibrium.”
That’s good enough phrasing for me. Wiki points out that generally, because most goods/services have a specific type of S-D curve, you can reduce the law of Supply and Demand to the principle you are trying to state. But, again, I really find it hard to believe you weren’t taken through different types of S-D curves in your first year econ course (since that’s a pretty standard way to introduce people to the law).
I don’t have to get to real world experience. Most of the questions asked are not correct from an economics perspective at all, for the reasons I pointed out in my original post (and which you seem to have hand-waved away).
Okay. I see what you’re saying.
But you haven’t necessarily eliminated, or possibly even reduced, the costs of information at all. What you’ve done instead is modify the asymmetric information of willing market participants with an additional bit of asymmetric information of inflexible government-regulated barriers to market entry–said regulation, I must note, being practically always designed by currently practicing professionals whose interest is not to inform the public, but rather to protect their own market power. So yes, if you have an exceptionally well-designed regulatory system of professional licensing, it could maybe decrease costs on net. My earlier point was, simply, that there is no evidence for this benefit. Zippo.
You’re still dealing with an obvious direct cost, and a murky indirect benefit which might not even exist. Maybe it really does balance out, even to the point of lowering costs for consumers, on net, with all the extra factors considered. But at this point, we have no reason to believe that’s true. It’s a nice thought that a magic law can just possibly, maybe, within the realm of reason, make things better. But unless it’s demonstrated with more than wishful thinking, I think the question in the survey as it stands is totally fair. There actually is an empirical debate for the minimum wage. The same is not true for professional licensing. Captured governments regulate first, then don’t ask questions later.