Monday, October 09, 2006

The War Against Studying Economics

So this Krugman article on WalMart its "war against wages" has been circulating among classmates of mine.

I'm a Krugman fan although I haven't really kept up with him recently because I'm too cheap to pay for "Times Select" (which was a really dumb idea IMHO) and too lazy to constantly troll the internet for re-postings.

If you know anything about Krugman and anything about WalMart, you won't really have to read his article. It is as you would expect... WalMart sucks and is making money by paying people a pittance. There, I saved you a few minutes of basking in Krugman's glory (again, I'm only being hard on his because I love him.)

Anyway, in this case a re-posting was handed to me on a silver platter, so I hereby post it here.

And in the spirit of studying for my upcoming economics mid-term, here is an attempt at what might be a rebuttal from an economist with an opposing point-of-view.


Without the wage rigidity of unions and (to a lesser extent) of a dominant minimum wage the market can reach an equilibrium where the demand by WalMart for cheap labor is met by a supply of people willing to work at those wages. If this market-clearing equilibrium is not reached, than WalMart would hire fewer people. So the question then become what would you rather, more people hired at some sort of "artificially" increased wage, or some sort of full employment at the market-clearing, but lower, wage.

So waddia, think? Full marks?

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