May God Have Mercy on You, Sowell

Commenting on an article by Thomas Sowell I called him a liar.  I have been challenged to back up that claim, and will do so here.  The entire article from which I will quote may be found here: http://townhall.com/columnists/thomassowell/2013/09/17/minimum-wage-madness-n1701840/page/full

First let us agree on a definition of lying.  A handy online dictionary offers several options, but “something intended or serving to convey a false impression,” or to “convey a false impression” are the ones we need.  As an example, if I ask if you stole my wallet, and you tell me: “I didn’t steal your wallet this morning,” the fact that it might be literally true (because you stole it last night) does not make it true; it is a lie.

Secondly, standards differ.  The person who posted the article did so in good faith.  He is not an economist, indeed, he knows next to nothing about economics.  He has no training and no aptitude for critical reading or analytical thinking.  Perforce he posts nothing original, yet even if he attempted to do so we may cut him quite a bit of slack.  By contrast, Thomas Sowell earned his undergraduate degree from Harvard, his Master’s from Columbia, and a Doctorate in Economics from the University of Chicago.  He has taught at Cornell and UCLA, and is affiliated with a think tank at Stanford. Because of these credentials he must be held to a much higher standard.  If he conveys a false impression it is not due to sloppy writing or simply not knowing better, it is deliberate.  When he does it, he is lying.

Sowell’s article contains a number of deceptions, but I need discuss only one to make my case.

However, there was a time when there was no federal minimum wage law in the United States. The last time was during the Coolidge administration, when the annual unemployment rate got as low as 1.8 percent.

A bit later we have this:

Minorities, like young people, can also be priced out of jobs. In the United States, the last year in which the black unemployment rate was lower than the white unemployment rate -- 1930 -- was also the last year when there was no federal minimum wage law. Inflation in the 1940s raised the pay of even unskilled workers above the minimum wage set in 1938. Economically, it was the same as if there were no minimum wage law by the late 1940s.

That last paragraph is chock full of confusing factoids, but we will focus on the parts relevant to the first quote.  Summarizing we learn that: 1) The “last time” there was no federal minimum wage was “during the Coolidge administration;” 2) When the annual rate was “as a low as 1.8%;” 3) The “last year with no federal minimum wage” was 1930. 

The impression Sowell wishes to convey is that we had low unemployment; that a minimum wage was instituted; and that unemployment soared.

First, that annual rate of 1.8% is either simply wrong or yet another deliberate attempt to deceive.  Here is a chart showing unemployment since 1890:

http://en.wikipedia.org/wiki/File:US_Unemployment_1890-2008.gif

There is a dip in the middle of Coolidge’s second term (circa 1926) where unemployment seems to be around 4%, much higher than 1.8%. Overall, unemployment was reasonably low, especially when compared with the recession preceding Coolidge’s term, and more so with what followed, but hardly exceptional. Eyeballing the chart we see terrible unemployment in the 1890’s, well before any minimum wage laws, and horrendous numbers during the Great Depression, with the lowest rates occurring during the Second World War, and low ones during the First World War, and Korean War.  (I was born in June, 1953, the last really good month, so perhaps I caused unemployment to spike. ;-))

The year 1930 is well into Hoover’s term, so Coolidge’s was not the last administration with no federal minimum wage.  We could be charitable if that were all Sowell was up to, and say that he meant to write “last full administration,” since even academics may grow sloppy when cranking out a quick piece for the OpEd pages.  But even that year, chosen apparently because it was the “last year the black unemployment rate was lower than the white unemployment rate” (I will let someone else fact check that), was not the year a federal unemployment law was instituted.

The original impetus came from Massachusetts, back in 1912 (where, coincidentally, Calvin Coolidge was serving in the state senate before becoming governor in 1914), and a number of states had passed minimum wage laws by 1920.  But these were shot down. As was the first federal attempt, in 1933, after Hoover left office, which makes the Hoover administration the last one with no minimum wage.  The first law was struck down by the Supreme Court in 1935, but in 1938 a law that stuck was finally passed.

http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_States

To see what Sowell was up to take a look again at the unemployment chart.  In 1930 as the economy sank, unemployment hit 8.7%.  That number would be damaging enough for Sowell and his attempt to link unemployment and the minimum wage, but the law was actually passed in 1933, the worst year in US history, when it approached 25%, and may have been as high as 80% in some cities, such as Toledo, Ohio.  If Sowell used 1933, or even 1938, US unemployment would have been less in every year since! No wonder he fudged the data.  

I am not arguing here about whether or not minimum wage laws have a causal relationship with unemployment, and certainly am not claiming that anyone who makes such a claim is a liar.  Economists are split on this issue, with slightly more arguing that it does, than that it does not.  But other economists manage the trick without deliberately misleading their readers.  Sowell is a liar, and should never be trusted.