The general approach that I use in deciding what policies I favor vs. policies I disagree with is the rabbit statue approach. Do you know how you carve a statue of a rabbit? Take a block of stone. Now cut away everything that doesn’t contribute to a general effect of rabbititity.
I start with what kind of country I want to live in, what kind of world I want to live in. What effects will a policy have on my country? On my world? Does the policy tend to move my country or my world in the direction that I believe it should go? That’s the reason I think the Kyoto Protocol isn’t a good idea. It advocates a steep reduction in greenhouse gas emissions for some countries e.g. the United States while exempting others from reductions e.g. India, China, etc. Mr. Kerry has recently said much the same thing.
The problem with this is that greenhouse gas emissions have been going down in the United States and going up sharply in India and China. India and China are both huge countries with enormous numbers of people and substantial economic growth right now. Wouldn’t it be better if they were “green” from the get-go? Kyoto just doesn’t contribute to a general effect of rabbititity.
Not actually achieving its purported goals is one problem that a policy can have. But another problem is referred to as unintended consequences:
The law of unintended consequences, often cited but rarely defined, is that actions of people—and especially of government—always have effects that are unanticipated or “unintended.” Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it.
Several problems with an increase in the minimum wage have been brought to my attention lately. The first is that quite a few union contracts peg their wage rates to a fixed multiple of the minimum wage. An increase in the minimum wage then grants an automatic pay increase to all of the above minimum wage workers governed by these contracts. This could result in reductions in employment, failure of marginal businesses, and other deleterious effects far beyond those directly effected by the increase in the mininum wage.
The second problem is discussed in a various interesting article today by Alan Reynolds (whom I admire but with whom I frequently disagree). In the article Mr. Reynolds points out that while an increase in the minimum wage may result in a decrease in the number of workers being paid the minimum wage it may result in an increase in the number of workers being paid less than the minimum wage:
Whenever the minimum wage is pushed up faster than the market would have moved it, the effect is to greatly increase the proportion of jobs paying less than the minimum. Employers offering less than the minimum, legally and otherwise, suddenly find themselves blessed with a flood of applicants whenever the minimum wage goes up. These people were displaced from dwindling job opportunities among the larger, more formal businesses that are uniquely affected by the federal law.
That doesn’t sound like the rabbit I’m trying to make. Perhaps I need to consider another alternative: increasing the Earned Income Tax Credit (EITC). Let me work on that one for a while and I’ll get back to.
