Her column today examines the limitations of the discipline of economics, and she asks if many economists aren’t just letting faith get in the way of facts.
It would be nice to think that economists had become more humble about the limitations of their field.She points to the latest example of blind faith, John Key’s claim that increasing the minimum wage to $15 an hour will lead to 6000 job losses. It turns out that the projection was between 4280 to 5710 jobs, but that the report urged caution in relying on these figures.
Yet economic myths (that tax cuts lead to growth, or magically "pay for themselves") continue to be trotted out as scientific truth, rather than articles of faith.
Many studies exist around the world casting doubt on the claim that increasing the minimum wage has a negative effects on employment.
It is no longer an accepted fact that minimum wage growth leads to job losses. The truth appears somewhat more complicated.
It is unarguable, however, that increasing the minimum wage will give many people in low paying jobs a higher standard of living.
So why doesn’t the Government highlight that benefit? Perhaps because most of the recipients don’t vote for National.