You might wonder what kids are learning in school these days, but one thing's certain: it's not economics.
Consider the widespread support for minimum wage hikes.
It may seem like workers making the current minimum would be better off making more, but even a cursory consideration of the implications of raising the rate would give pause to a thinking person.
Isn't moving up to a more responsible position the best way to secure a higher wage? Won't a hike in the rate lead to an increase in the price of the goods or services being sold and possibly a drop in sales? Won't the increased cost of worker wages affect employers' hiring decisions and possibly decrease job opportunities?
Those are just some of the basic questions that too many supporters of minimum wage hikes fail to reflect upon.
Popular opinion regarding pensions for government workers reveals a similar ignorance of economics. Basic questions – such as whether or not benefits are reasonable and properly funded, and what will happen when state revenues decline, when the number of retirees swells, when life expectancy increases, etc. – are ignored or glossed over.
In a recent web post, Mark Glennon of WirePoints quotes actuary Steven Bourg's comments on the bill passed this weekend by the General Assembly to reduce Chicago's contribution to the pensions of public safety workers:
“Private sector taxpayers are choking on taxes,” Bourg warns. “None of them have even a fraction of these Rolls-Royce benefits, they’re not affordable, they’ve never been affordable, and the starting actuarial assumptions were never conservative enough to begin with. . . .”
Bourg insists that “it's not that contributions haven’t been large enough; it’s that these pension benefits are too big and payable much too early.”
The bill does nothing to address the long-term problems of extravagant, improperly funded pensions, problems that require changes in our state constitution. The Democrats responsible for this farce should be sent back to school to study economics.