http://www.businessweek.com/articles/2014-02-27/pssst-dot-some-economists-for-10-dot-10-an-hour-are-marxists

Policy

Pssst: Some Economists Favoring $10.10 an Hour Are Marxists


Karl MarxPhotograph by Roger Viollet Collection/Getty ImagesKarl Marx

You don’t have to be a Marxist to support a higher minimum wage, but it turns out that some of the 600 economists who signed a letter to President Obama in January advocating a federal minimum wage of $10.10 an hour are indeed followers of the bushy-bearded 19th century economist who said religion is the opiate of the masses and the proletarians have nothing to lose but their chains.

A full-page ad today in the New York Times, placed by the business-backed Employment Policies Institute, which opposes a higher wage floor, features choice quotes from eight of the letter’s signers. Among them:
 
“As Marxists we are committed to a rejection of capitalism, ‘root and branch’….”
— Arthur MacEwan
 
“The particular model of socialism pioneered by the Soviet Union undoubtedly brought significant economic and social progress ….”
— David Kotz
 
“Marxist analysis is as useful today as it ever was.”
— Renee Toback
 
Is this ad fair play? From one point of view, it certainly is. People who were impressed by the big numbers supporting $10.10 might be less impressed once they know that some of the signers are on the radical fringe of the economics profession. The Employment Policies Institute also found out, according to its ad, that a bunch of other signers are full-time employees of union-backed groups, and 45 percent don’t specialize in labor economics.

“The idea is to show that a lot of the folks on this list hold very unconventional economic ideas that are far outside the mainstream,” Michael Saltsman, the organization’s research director, said in an interview.

From another point of view, “Marxist” is such a radioactive term in America that even applying it accurately could unfairly discredit the entire raise-the-wage movement through guilt by association. The vast majority of the letter’s signers, organized by the labor-backed Economic Policy Institute, are in the mainstream of the profession. They include some of the most prominent living economists, including seven Nobel Prize winners and eight former presidents of the American Economic Association.

I spoke today with one of the radical economists who was called out by the Employment Policies Institute, Julie Matthaei, a Wellesley College professor and self-described “Marxist-feminist-anti-racist-ecological economist.” I asked her what she thought of the New York Times ad. “I think it’s Red-baiting,” she said. “It reminds me of the McCarthy era.” She was happy to defend a higher minimum wage using class theory. “If you look at how the top, top few are getting more and more of the pie and controlling more and more of the government,” she said, “I think it’s an exact example of Marxist class struggle.”

Added Matthaei: “I don’t have fangs.”

I asked Saltsman if he thinks the ad is Red-baiting. “Not at all,” he said. “It’s just, that’s not somebody we should be listening to as an expert as to whether we should raise the minimum wage.”

Wait, that’s not all. The ad concludes by advising readers to “listen to the consensus of 85 percent of the best economic research,” implying that the seven Nobelists and eight former AEA presidents who signed the letter are in a tiny minority. I asked Saltsman where the 85 percent came from, and he pointed me to a literature review by two economists who have written against a higher minimum wage, David Neumark of the University of California-Irvine and William Wascher of the Federal Reserve Board. According to their paper (pdf), 28 of the 33 studies “that we regard as providing the most credible evidence” point to negative employment effects.

Two points to make there. One is that Neumark and Wascher, while highly respectable economists, may not have the last word on which studies are most credible. Second, it might be a good idea to raise the wage floor even if there are negative employment effects, as long as they’re not too large. In fact, that’s pretty much where a lot of the economists surveyed last year by the University of Chicago’s Booth School of Business came down when surveyed last year.

Never mind, though. Let’s talk about the Marxists.

Coy_190
Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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