By Gustavo Indart, Letters to the Editor, Globe and Mail, May 7, 2012
Gustavo Indart is a senior lecturer in the economics department at the University of Toronto
Orthodox economic theory suggests that price flexibility ensures economic efficiency, where the latter is considered an end in itself rather than a means to an end (that is, people’s well-being). Thus, orthodox economists oppose the implementation of minimum-wage legislation since it might create inefficiencies in the form of unemployment (that is, an excess supply of labour).
Curiously, when labour markets exert upward pressure on wages, these same economists call for government intervention to increase the supply of labour through greater immigration. But how can they project that a million jobs will go unfilled across Canada between now and 2021? I would suggest exerting intellectual consistency here and conclude that price flexibility will clear all markets – including this “excess demand for labour.”
Of course, we must also conclude that, in the absence of government intervention, by 2021 the income of the average Canadian worker will be greatly improved – an outcome to celebrate given that the share of labour income in total income has continuously fallen for three decades.
Sometimes, a brief, succinct, cogent statement, like this one by Mr. Indart, cuts through so much of the current political rhetoric that passes as political debate, one is left wondering if only individuals without a political "axe" to grind or constituency to seduce are the only reliable source of insight.
Imagine thinking of the economy as a means to the end of people's well-being again!
Imagine hearing from an economist who still imagines that potential!
Imagine that economist/lecturer taking the time and the care to pen his thoughts for a daily paper that considers itself a national publication!
Thank you, Sir.