Catherine Rampell at Economix is somewhat surprised that some employers have signed a petition supporting today's increase in the minimum wage.  Put aside the fact that this so-called petition is coming after the law is already passed–can anyone say cheap talk–it's really not surprising that some employers support the minimum wage.  Rather than a violation of Econ 101, as Rampell suggests, it's more an implication of Econ 101.  Simply take a look at why the employers say they are supporting the law.  Uniformly the responses go like this:

Social justice, honest day's labor, inequality…. followed by:

I have always paid above minimum wage.

I’m a small business owner but don’t have any minimum wage employees, nor would I ever.

I’ve always paid my workers, even unskilled laborers, more than minimum wage …

I’m one of those businesses that supports a so-called “living wage” and refuse to pay less than $12/hour…

Note that I don't think that these employers are being dishonest in their support for "social justice" but I do think that it's easy to be in favor of the minimum wage when it doesn't cost you anything. 

Indeed, these employers will benefit from an increase in the minimum wage because it will raise the costs of their rivals.  This is why unions have typically been in favor of the minimum wage even when their own workers make much more than the minimum.

Finally, note that the opinions of employers are quite irrelevant as to the effects of the minimum wage.  

Here is the abstract to a new paper by Angus Deaton and Raksha Arora.

According to the Gallup-Healthways Well-Being Index daily poll of the US population, taller people live better lives, at least on average. They evaluate their lives more favorably, and they are more likely to report a range of positive emotions such as enjoyment and happiness. They are also less likely to report a range of negative experiences, like sadness, and physical pain, though they are more likely to experience stress and anger, and if they are women, to worry. These findings cannot be attributed to different demographic or ethnic characteristics of taller people, but are almost entirely explained by the positive association between height and both income and education, both of which are positively linked to better lives.

 Now if I were in favor of redistribution…

Many excellent comments in this thread.  Nick Rowe was the first to post a correct solution.  Take one bottle from the first machine, two bottles from the second, three from the third and so forth.  If the weight on the scale is off from the expected total by say 6 oz then you know machine 6 is the culprit.  Note that this procedure will work whether the machine is putting in 1 oz too much or 1 oz too little – but not, of course, if it randomizes.  (I tried to make clear the machine was always doing one or the other but perhaps this could be worded even better.)  

In one of his books on lateral thinking, de Bono talks about the student who when asked how would you use a barometer to measure the height of a building said he would take it to the top of the building, drop it off, time it till it hit the bottom and then use Newton's laws to calculate the height.  The student's teacher was not amused but de Bono thought this was great.  In anycase, Alex J offers a similarly clever and lateral solution this puzzle which I believe also works. 

Matt Yglesias May 30, 09:

This goes back to a point I was making a while ago about how dangerous it is that the public discourse is so dominated by low-quality freelance philosophy done by people with PhDs in economics. I’m fairly certain that if Mankiw were to walk over to Emerson Hall he could find some folks (possibly T.M. Scanlon who I know sometimes reads this blog) who could explain to him that there’s little grounds for the belief that a commitment to utilitarianism is the main justification for redistributive taxation.

Matt Yglesias July 20, 09:

…the point here is that the marginal utility of money income declines as it grows. This is also a strong argument for believing that redistributing money from wealthy or high-income individuals to the poor or to public services will be welfare-enhancing.

Economic populist William Greider, writing in The Nation, makes the case against the Fed. 

Six reasons why granting the Fed even more power is a really bad idea:

1.†ˆIt would reward failure. Like the largest banks that have been bailed out, the Fed was a co-author of the destruction …The Fed instead allowed, even encouraged, the explosion of debt and inflation of financial assets that have now collapsed….

2.†ˆCumulatively, Fed policy was a central force in destabilizing the US economy. Its extreme swings in monetary policy, combined with utter disregard for timely regulatory enforcement, steadily shifted economic rewards away from the real economy of production, work and wages and toward the financial realm, where profits and incomes were wildly inflated by false valuations…

3.†ˆThe Fed cannot possibly examine "systemic risk" objectively because it helped to create the very structural flaws that led to breakdown….

4.†ˆThe Fed can't be trusted to defend the public in its private deal-making with bank executives…

5.†ˆInstead of disowning the notorious policy of "too big to fail," the Fed will be bound to embrace the doctrine more explicitly as "systemic risk" regulator. A new superclass of forty or fifty financial giants will emerge ….The Fed, having restored and consolidated the battered Wall Street club, will doubtless also shield a few of the largest industrial-financial corporations, like General Electric (whose CEO also sits on the New York Fed board). Whatever officials may claim, financial-market investors will understand that these mammoth institutions are insured against failure…

6.†ˆThis road leads to the corporate state–a fusion of private and public power, a privileged club that dominates everything else from the top down….

It's a pretty good list especially the points that too big to fail will be embraced even more under the idea of a "systemic risk regulator" and that this road leads to the corporate state.  Just consider the implications of Gary Gorton's proposal for the government to guarantee "senior tranches of securitizations of approved asset classes."

The natural conclusion of Greider's damning list would seem to be a monetary system truly independent of politics such as a commodity standard or free banking. Sadly, but not surprisingly, Greider's own proposal for a Congressional Monetary Office, something like the Congressional Budget Office, solves none of the fundamental problems. 

A number of prominent economists have signed a petition calling for Congress and the Executive Branch to reaffirm their support for and defend the independence of the Federal Reserve System."  The petition is disingenuous. 

The petition argues that "central bank independence has been shown to be essential for controlling inflation."  "Essential," is a big exaggeration.  There is evidence that more independent central banks are better at controlling inflation (e.g. Alesina and Summers 1993).  Consider, however, New Zealand's central bank; it has been very successful at reducing inflation but in some ways it is one of the least independent central banks in the world precisely because (unlike in the U.S.) the governor can be fired if inflation moves outside of a target region.

Furthermore, the petition says that central bank decisions should not be "politicized."  Again,this is disingenuous.  Why are more independent central banks better at fighting inflation than less independent central banks?  There is nothing magical about independence that makes for low-inflation.  Suppose we pick someone at random and give them complete power over monetary policy.  Such a central banker would be very independent but I wouldn't count on this policy resulting in much in the way of systematically lower inflation.

The primary reason that independent central banks are better at controlling inflation is that absent direct political control the default selection mechanism favors bankers, i.e. lenders, people whose interests make them more favorable towards lower inflation.

Thus, independence is a political decision that favors lenders in the decisions of monetary policy.  Now, depending on the alternatives, there may be good reasons for making this choice but we should not fool ourselves into thinking that we have depoliticized money.  We should not be surprised, for example, that "independent" central banks tend to make lender of last resort decisions that protect banks and bankers.

Addendum: See also Robert Higgs on the petition and Arnold Kling offers cogent comments on the closely related issue of whether the Fed should be "audited," whatever that means.

In a post from a few years ago titled, Do you love cats?, I wrote this:

Toxoplasma gondii is a favorite parasite of evolutionary biologists because it has an incredible property.  The parasite lives in the guts of cats where it sheds eggs in cat feces that are often eaten by rats.  Now how to get back from the rat to the cat?  Amazingly, Toxoplasma gondii infects the brains of rats making them change their behavior in a subtle way that increases the genetic fitness of the parasite.  Toxoplasma makes the infected rats less scared of cats and so more likely to be eaten! 

Now here is the kicker.  Toxoplasma gondii also infects a lot of humans.

Now here is the latest research finding;

Toxoplasma gondii infects 20–60% of the population in most countries…We confirmed, using for the first time a prospective cohort study design, increased risk of traffic accidents in Toxoplasma-infected subjects…Our results show that …subjects with high titers of anti-Toxoplasma antibodies had a probability of a traffic accident of about 16.7%, i.e. a more than six times higher rate than Toxoplasma-free… subjects.

People with RhD blood factor have some protection – see the article for more.  No word yet on whether this increases the probability of being eaten by cats although I suppose it would have to.

Tyler blogged this earlier (of course!) but it's worth another post.  Sum is a peculiar book, it's forty stories, each a page or two in length about a possible scenario for the afterlife. Some of the stories are like Zen koans, others have the flavor of O. Henry or Jeffrey Archer's A Twist in the Tale.  Here's is one of the lighter pieces which features wry theological commentary, an astute understanding of human psychology and, as if that were not enough, an appreciation of free market economics.  It's called Great Expectations.

Hat tip to Robin Hanson who lent me the book.

Here's the WSJ article on economics blogs (subs.) and here is the list.  I was pleased to see this shout-out to Marginal Revolution commentators.  Keep up the good work!

One of the things that makes Marginal Revolution good is that where other economics blogs are plagued by rude comments (Greg Mankiw has shut down the comments section on his blog) commentators on Marginal Revolution are usually civil and often thought provoking.