High teenage unemployment? There's a four-word solution.

CNN Money reports high unemployment--approaching 25%--among teenagers.

The four-word solution: Eliminate the minimum wage.

There is no economic rationale--zero--for the minimum wage. It exists simply to satisfy those who think it somehow indecent to pay someone below a certain amount--when I entered the workforce, $4.25, but now it's much higher--per hour. But it doesn't merely raise the $5/hour worker's wages, because it doesn't magically increase productivity. Surely, those who keep their positions have higher wages. But as a prohibition on selling one's labor below the minimum, it has been documented to keep low-skilled and low-experience people out of the workforce.

In Arizona, back when voters raised the minimum wage above the Federal rate, it was documented to cause increased unemployment among teenagers and the retarded.

"But would you want to work for below the minimum wage?," advocates of it ask. No, I wouldn't. But of course one wants a high wage. That want cannot be satisfied by fiat; the Left is simply lying when it pretends that there are no tradeoffs. There is no such thing as a "decent" or a "living" wage, only a fair wage, and a fair wage is that which is arrived at by mutual consent. Those who support a high minimum wage--who oppose lowering the minimum wage-- oppose giving people the opportunity to enter or re-enter the workforce and put themselves on the path to a dignified, self-sufficient living.

Query about "Austrian Economics": ("Bleg".)

From the perspective of modern economic science, as opposed to a provincial "Austrian" perspective, what, if any, were the lasting contributions of Ludwig von Mises?

The difference between Democrats and the rest of us.

Democrats, like presumed President-Elect Barack Obama speak of "creating jobs". The rest of us: classical-liberals, conservatives, Libertarians, Republicans, moderates, speak of prosperity and wealth.

If increasing the quantity of "jobs", whatever that even means, is the proper object of economic policy and the route to prosperity, then I recommend that the Federal government fund a major public works program. Create a five hundred foot tall memorial to Franklin Roosevelt, out of Lego (green lego, if you like), atop Mt McKinley. Then coat it with silver and put it into orbit at L2.

Milton Friedman Insitute controversy continues.

For fellow spectators of the tempest in a teapot at the University of Chicago, a few updates from around the Web:

It appears that the name of the institute has been changed to the Milton Friedman Institute for Research in Economics. That doesn't look like much of a change to most of us, but perhaps it will mollify the paranoid sort who thought that the Milton Friedman Institute would be some "right-wing think tank". Nevermind that the Institute was being established for economics research even before the name was extended. Nevermind that Milton Friedman can hardly be considered "right-wing". The complainers' position didn't make sense from the start, so perhaps what is a non-change to sensible people will look like substantiative change to them.

If I could buy stock in silly remarks about the economics profession, it would be a great countercyclical asset. The recent economic downturn has brought out the bozos and resulted in all sorts of strange categorical pronouncements about free markets, the Chicago School, or some special "free market economics" separate from the rest, that nobody knows about. This piece from Al-Jazeera English is representative; search the blogosphere or even the newspapers and you will find many more just like it.

Therein, Robert Lucas says what needs to be said:

...Why don't you ask these guys [critics] what should be done specifically and what should be done now?

People like [Josef] Stiglitz [the US economist and critic of free markets] use name-calling instead of just diagnosing the problem and saying what should be done.

Should there have been regulation to prevent this? Well sure, but what sort of regulation? Let them spell out what regulation we should have in place.

These are the questions any reporter who wishes to be an asset to his profession (Ms. Brown at Al-Jazeera, take note!) must ask. If the Chicago School is to blame, what peculiar normative advice was given that was wrong and resulted in the financial situation we are now facing? Did Milton Friedman and his fellows at the University of Chicago (hardly a single-minded group!) advocate for the peculiar FNMA (Fannie Mae) policies that largely caused the housing bubble? Did they advocate against splitting up "too big to fail" Fannie Mae and Freddie Mac? Did they say that the systemic risk problem didn't exist in the credit-default swaps market or elsewhere? Why blame the house Frank Knight built?

Elsewhere, Gary Becker makes a strong case for naming such a research institution after Friedman the man. Richard Posner addresses the concerns of those who think that the Institue will reflect poorly on the University or produce only servile work in honor of Friedman, and takes a great jab at the "'Free market' econ is dead" set:

If the religion professor who is leading the movement against the naming is right that "Friedman's over"--that the current economic crisis has consigned Friedman, along with Greenspan, to the dustbin of economic history--he should have no fear that the new Institute will be biased in favor of Friedman's views. If a physics institute were named after Albert Einstein, would the institute's researchers reject quantum theory?

Trite, and in bad taste.

It is neither witty nor accurate nor fair to refer to economics as "something that we thought was good until a couple of weeks ago", as though the banking crisis reveals some serious flaw in economic science, as though economic scientists were caught by surprise by the systemic risk problem, or as though we can simply start ignoring economists' advice and let ideology hold sway.

Scenes from a game of Settlers (2 of 2)

Last Saturday's Settlers of Catan was between four physicists, an astronomer, and a classical musician. MF is the astronomer, WF is one of the physicists; YHN is "your humble narrator":

MF: There should be a computer program to tell us the prices of the commodities.
YHN: But the value of each is subjective; why would you trust a computer program to value them for you?
MF: It's just supply and demand!
YHN: So you're going to assume the players are rational and devise a utility function for Settlers?
WF: By that point, you might as well let the computer play for you.

"It's supply and demand" is a slogan, not an answer. Should I take it as a good sign, though, that economics has injected something of that sort into the popular consciousness?

Scenes from a game of Settlers (1 of 2)

...and I'll trade you three sheep if you exchange two through your port for one bricks and then give me the bricks...

It looks obvious now, to trade for use of ports in Settlers of Catan, but last weekend's game was the first time I'd seen it. The rules make no mention of trading for services, but it appears to emerge naturally. The rules of Go don't mention deadly shapes or ko threats, either.