Four Fundamental Econ Facts Missed By Economist Cantor-Slayer David Brat

AP Photo, P. Kevin Morley/Richmond Times-Dispatch

Dave Brat speaks to hundreds of supporters after beating Republican Congressman Eric Cantor in Tuesday's Republican primary for the 7th Congressional District in Virginia, June 10, 2014. 

On MSNBC Wednesday morning, Chuck Todd asked David Brat, the Eric-Cantor-slayer, Ayn Rand acolyte, and chairman of the economics department at Randolph-Macon College, about his viewpoint on the minimum wage. Here’s their exchange:

TODD: Should there be a minimum wage in your opinion?

BRAT: I don't have a well-crafted response on that one. All I know is if you take the long-run graph over 200 years of the wage rate, it cannot differ from your nation's productivity. Right? So you can't make up wage rates. Right? I would love for everyone in sub-Saharan Africa, for example— children of God—to make $100 an hour. I would love to just assert that that would be the case. But you can't assert that unless you raise their productivity, and then the wage follows.

So you raise a nation’s productivity rate and its wages follow, huh? Does Professor Brat pay even the slightest attention to the figures on productivity and wages in the United States? If he did, he’d know that between 1947 and 1973, productivity in the U.S. increased by 97 percent and median compensation (that’s wages plus benefits) increased by 95 percent—almost exactly in accord with Brat’s assessment. Since 1979, however, productivity in the U.S. has grown by 65 percent and median compensation by just 8 percent.

That is to say, during the pre-globalization post-World War II decades—the only time in American history when unions were strong enough to ensure widespread collective bargaining—wages did indeed reflect productivity levels. Since then, as the economy has gone global, as American corporations have offshored jobs and as private-sector unions have all but vanished from the landscape, productivity has increased but all the economic gains that have come from that increase have gone to the wealthiest tenth of Americans—and since 2009, according to University of California economists Emmanuel Saez and Gabriel Zucman, all income growth has gone to the top 5 percent. That’s why wages now constitute the lowest share of the nation’s economy since the government began measuring such things in the mid-1940s, and profits the highest share.

These facts have not been kept secret. They’ve been widely published in popular media and in economics journals. Somehow, they’ve either failed to come to David Brat’s attention or are so at odds with his views of heaven and earth that he has resisted taking them in. Which suggests that while his election to the Congress will be bad for the county, it may well be good for students at Randolph-Macon. At least the chairman of their economics department won’t be an utter ignoramus.

 

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