The broken window fallacy – first expressed by the French economist Frederic Bastiat – is often used, by critics of the Keynesian school of thought, to reject the notion that state fiscal policy can play a role in stabilising the economy.Read More »
Few aspects of our economy are as gravely misunderstood among politicians, media pundits and the general public as our public finances. Indeed, public discourse on the national debt is luxuriant with myths and fallacies. This piece offers a rebuttal to three widely held beliefs regarding public debt which, I hope, will lead to greater honesty in discussions, and debates, on the state’s finances.Read More »
The debate over the impact of the minimum wage has been one of the most intense and most controversial in the field of economics. This is in large part because the literature on the subject is contested.
On the one hand, critics argue that a price floor in the labour market would result in greater unemployment, since an increase in the wage rate will increase the cost of hiring an additional worker, so firms would employ less (Leamer et al, 2017). Conversely, proponents of the minimum wage assert that the resulting unemployment is inconsequential in comparison to the benefits gained (Cengiz et al, 2017; Allegretto et al, 2018; Rinz and Voorheis, 2018). The supposed benefits include: poverty reduction, improving worker morale (and, thus, raising labour productivity) and offsetting the negative impact of employers with market (monopsony) power.