Friday, 8 October 2010

Steve Landsburg's specious argument against Equal Pay

The Big Question about Steve Landsburg blog- thebigqestion- is why he's pushing specious arguments which he must know are specious.
Here's his latest- To believe that the gender gap in wages is driven by employer discrimination, you don’t just have to believe that everyone’s ignoring a profit opportunity — you have to believe that everyone’s ignoring an opportunity to kick their profits up by thirty percent. That number is large enough to strike me as wildly implausible. Might employers ignore a profit opportunity? Sure. Might they ignore a chance to kick up their profits by thirty percent overnight? Seems bloody unlikely.

No, Prof Landsburg, you utter asshole, you don't have to believe anyone's ignoring a profit opportunity. All you need is Imperfect competition in the labour market- i.e. an upward sloping Supply curve of labour and hence a steeper Marginal Cost curve. (To raise the wage to attract a new worker you have to raise wages for all existing workers. Thus the marginal cost is more than the average cost i.e. the wage rate).
If Landsburg believes there is perfect competition in the labour market then could the cunt kindly explain how wage discrimination could arise in the first place?
Clearly, in his example, everyone would only hire women since they are paid less. But this would cause either
men to lower their rate to the same wages as the women so as to get a job
the wage rate for women to rise to that of the men.
something in between.

This is High School Economics. Why is Landsburg peddling this shite? How stupid are the people reading his crap?

1 comment:

Anonymous said...

Then why don't you take advantage of all that available labor - those who are being underpaid and discriminated against - hire them and put them to work being more productive than the underpaid ones? You will get lots of people eager to join your company, while the discriminators will lose their workers. Wow!