The Power of Arbitrary

Greg Mankiw gets off a good one at the expense of former Clinton Labhor Secretary and weekly Kudlow Guest, Robert Reich.

Robert Reich says that, as a requirement for free trade deals, we should tell developing countries to "set a minimum wage that's half their median wage." The proposal raises two questions in my mind:

1. Does Reich pay his nanny, cleaning person, and gardener more than half the median wage of members of his family?

2. If not, should I refuse to buy his books?

"Half the median" has a nice academic ring to it, but it is yet another example of an arbitrary number that can be pulled out of one's ass. The Reich constant: under which it is moral to refuse to trade with members of another nation. No word on how people from sub-Reichconstantian nations will raise their incomes without access to trade.

A current ballot initiative in my hometown questions whether land (pretty close to my house) will be annexed into the city to house open space and a Lowe's store. Opponents have a lawn sign" "No on A: Enough is Enough."

I see those signs and ask "who put you in charge of enough?" Business developers will invest their own capital, believing enough is not yet enough.

Economics and Markets Posted by jk at February 21, 2007 3:46 PM