Note: This article is co-authored with Steven G. Horwitz, the Charles A. Dana Professor and Chair of the Department of Economics at St. Lawrence University.
With the Republican victory on November 2 fading into the distance and the new Congress preparing to get to work, and with little prospect of really meaningful change on the horizon, we do well to think about the allegedly superior worldviews of those who criticized the Tea Parties responsible for Novembers change in power. It is apparent that the blue state elite sees the Tea Partiers as modern-day Know Nothings wallowing in the ignorance produced by a steady diet of Rush Limbaugh, Fox News, and their internet echo chambers. This contrasts, of course, with the sophisticated, rational, and scientific worldview of their leftist critics.
But how scientific are these critics? For a group that sees Tea Partiers as Know Nothings and prides itself on a rational, scientific worldview, its interesting to see how little they know about economics. Without the economic way of thinking, you are almost certainly framing the issues incorrectly. Thats not to say economics is sufficient to answer important social questions, but we would argue that is necessary. Left-wing elites inability or unwillingness to engage the economic way of thinking often turns them into the enemies of both social science and good critical thinking, not to mention those they claim to be helping.
Soft-heartedness wont make up for soft-headedness, and a lot of the policies people support on humanitarian grounds actually hurt the people they are enacted to help. For example, consider how many on the left think about working conditions and wages. On these issues, a lot of our friends on the left unwittingly expose themselves to their own critique by failing to seriously consider what economics has to teach.
Consider sweatshops, the icons of capitalist imperialism. Yes, it is true that people working in what we call sweatshops earn atrocious wages by our standards. By local standards, however, these sweatshop jobs are the best opportunities available.
Consider what happened in South Africa after the government decided to be strict about enforcing minimum wages. Those who protested were the workers themselves who didnt know what they would do without their less-than-minimum wage jobs. This, we should note, is why minimum wage (rate for the work) laws were part of the original apartheid legislation passed by white South Africans. They knew that minimum wage laws would hurt lower-skilled workers and the lower-skilled black South Africans who opposed the laws knew that wage competition and capital accumulation were the real paths to higher pay. Whether we like it or not, minimum wages create unemployment for the poorest among us.
But why, you ask, does this have to be the best of all these workers options? Its a good question, and its one we ask ourselves. Our answer is that it doesnt have to be: if we eliminate restrictions on immigration, competitive pressure would raise wages for workers worldwide. The great thing is that since immigrants skills tend to be complements rather than substitutes for native workers skills, native workers incomes will tend to rise, as well. This, after all, is the story of how the standard of living as grown by a factor of perhaps 30 or 40 (thats a factor of 30 or 40, not 30 or 40 percent). since the industrial revolution. Understanding what economic historian Deirdre McCloskey calls The Big Fact is the starting point of any scientific analysis of how free markets benefit the average person.
Judging a policy by its advocates stated intentions and values is an unscientific habit common to the left and the right. Thinking that we can just mandate higher wages or better working conditions as if we were waving a magic wand and thereby reduce poverty is indulging a belief in magic, not science. Higher standards of living took time to develop in the Western world and they will take time elsewherealbeit a lot less timethanks to the very capital that markets created in the West.
Another unscientific habit is the tendency to think critically about markets but uncritically about governments. Leftist critics fall too easily for the fallacy that the imperfections of markets ipso facto mean government intervention will improve matters. By so doing they commit the grievous error of acknowledging that while markets might not be perfect, governments are usually less perfect.
A truly scientific worldview is one that takes account of the economic way of thinking and recognizes that the imperfect humans who populate the markets are the same ones populating the government. That simple truth is one that many Tea Partiers do know, at least implicitly, and that their elitist critics on the left are prone to unscientifically ignore.
This is the third in a trilogy of articles about the Tea Party movement and its discontents. The first two installments are here and here. Ive mentioned that one of my New Years Resolutions was to make better use of Twitter. You can follow me here.