Tags: Conard | disadvantaged | workers | tax

AEI's Conard: Standard Solutions for Helping Disadvantaged Are Ineffective

By    |   Wednesday, 31 December 2014 11:54 AM

The conventional wisdom for solving the problems of the disadvantaged is wrong, says Edward Conard, a visiting scholar at the American Enterprise Institute and author of "Unintended Consequences: Why Everything You've Been Told About The Economy Is Wrong."

"We are eager to believe that we can help disadvantaged workers by raising minimum wages, even though the law of supply and demand counsels us otherwise," he writes in an article for Real Clear Markets.

"We are quick to deny immigration's adverse effect on low-skilled wages. We are keen to believe we can raise the wages of women, despite employers logically hiring lower-priced women to do the equivalent work of men until they are no longer available."

Some of our tax assumptions don't fly either, Conard says. "We are inclined to believe the gains of those more successful than ourselves are ill-gotten and therefore can be taxed and redistributed without diminishing incentives to take entrepreneurial risks that grow our economy."

Europe and Japan provide cautionary tales, he writes. "Entrepreneurialism and employment growth are greatly diminished [there,] where incomes are more equally distributed."

Meanwhile, Federal Reserve Chair Janet Yellen has expressed "great concern" about the increase of income inequality. But Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute for Policy Research, thinks that's a mistake.

"It would have been far better for those on the bottom of the economic heap if Yellen had spoken about how to increase economic growth" instead, Furchtgott-Roth writes in an article for MarketWatch.

She cites several factors that have boosted income inequality but shouldn't worry Yellen.
  • Women moved into the workforce in record numbers in the 1980s.
  • The size of households has changed since 1980.
  • Many analyses of income inequality use income before taxes are subtracted and transfers are added.

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The conventional wisdom for solving the problems of the disadvantaged is wrong, says Edward Conard, a visiting scholar at the American Enterprise Institute and author of "Unintended Consequences: Why Everything You've Been Told About The Economy Is Wrong."
Conard, disadvantaged, workers, tax
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2014-54-31
Wednesday, 31 December 2014 11:54 AM
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