Four policies better than the minimum wage

Some of my friends are joining the “fight for 15”, a campaign to raise the minimum wage to $15 an hour. I expect the campaign will succeed in many states and maybe at the federal level, and I commend their apparent desire to help poor people. However, if the goal is to help poor people, the minimum wage is an inferior policy tool.

Here are four alternatives that I think would help poor people more than raising the minimum wage:

1. EITC - Expand the eligibility or generosity of the Earned Income Tax Credit.
2. HCVP - Fully fund the Housing Choice Voucher Program, which currently assists just one out of four people who are eligible for assistance.
3. SNAP - Expand the eligibility or generosity of the Supplemental Nutritional Assistance Program.
4. Personal exemption - Raise the personal exemption on federal income tax, or convert the personal exemption into a refundable tax credit. A refundable tax credit with universal eligibility would be equivalent to a basic income.

These policies share the feature that their cost is visible in the form of higher government spending or reduced tax revenue. Raising the minimum wage might be more palatable to Congress because it has no direct budget impact. The cost of the minimum wage is less obvious.

One cost of the minimum wage is borne by employers who pay employees a higher wage. The burden on employers deserves consideration but doesn't bother me. What bothers me is the social cost of the minimum wage, which is borne partially by poor people.

Consider the following thought experiment. If raising the minimum wage is good, why should we stop at $15? Why not $20, or $50, or $500? It would be wonderful for everyone to earn $500 an hour, but I suspect that many employers who pay lower wages now would employ fewer people rather than raise wages to $500 an hour. Losing jobs is bad for poor people.

This intuition is consistent with basic economic theory, which suggests that raising the minimum wage (a price floor) is good for some workers but reduces overall employment. The empirical consensus among economists is that the short run effect on employment is small. I think we should care more about the long run effect on employment, which my colleague Isaac Sorkin argues hasn't really been measured empirically.

The minimum wage helps some poor people and hurts others. Raising it a little would probably on balance be good but not great for poor people. The alternative policies I suggested are better at helping poor people and put the burden where it belongs: taxpayers.

Hamilton, Babylonia, and antibiotics

Again, this blog post is due to encouragement from my brother Yonah, who blogs at meiselspot.blogspot.com.

Listening to Lin-Manuel Miranda's excellent new musical Hamilton reminded me of a lesson from American history. Americans did not suddenly begin governing themselves with no prior experience after a successful revolution. The capacity for self-government developed over the course of decades, aided by the British policy of salutary neglect. Selective British law enforcement facilitated the institution of American self-government.

Another institution--mobile identity--received similar assistance from repression that was only partial. This may be a conceit of my Jewish education, but I am currently under the impression that Jews were the first group with a mobile identity.* The story is that most gods were local, so when a person moved to a new place she would discard the gods of her origin and worship the gods of the new locality. Monotheism helped change that. When a Jew moved to a new place she could continue worshiping the god of her origin, who she believed was also present in the new locality.

The partial repression that aided mobile identity was the Babylonian exile.** Ancient empires that conquered new areas sometimes deported the local population to quash rebellion. There were two unusual features of the Babylonian exile. First, it was incomplete. Many Jews remained in the Kingdom of Judah. Second, it was brief. Jews were permitted to return from Babylonia after about 50 years. The Babylonian exile made Jewish identity mobile by:

• establishing a myth of exile and return (or strengthened it if you believe the exodus from Egypt is actual history), and
• establishing a model for a permanent diaspora community.

Partial British repression fostered American self-government, and partial Babylonian repression fostered Jewish mobile identity. And since I like comparing human institutions to biological phenomena, I'll conclude with the observation that a partial course of antibiotics can foster antibiotic-resistant superbugs.

* In this post I use Jews interchangeably with Hebrews and Israelites, which I'm sure is wrong but I doubt is consequential.
** I'm not sure where historical myth ends and actual history begins, but I believe the exodus from Egypt is probably historical myth and the Babylonian exile is actual history.

Why does AIPAC love the Purim victim narrative?

My brother Yonah over at meiselspot.blogspot.com encouraged me to get back in the blogging game.

This week, Jews observed one of the happier holidays, Purim. Traditionally, Purim is observed by reading the story of Esther, dressing in costumes, getting drunk, delivering goody bags to friends, performing farcical skits, and baking triangular pastries--variously called hamantashen (Haman's pockets) or oznei haman (Haman's ears). The observance is something like American Halloween meets American St. Patrick's Day.

The story of Esther goes something like this: King A* of Persia summons Queen Vashti to strip at his party and executes her when she refuses. To replace Vashti, King A holds a beauty pageant, which is won by Esther, a nice Jewish girl. Esther's cousin Mordechai refuses to bow down to the King's chief minister, Haman. Haman gets very pissed off, learns Mordechai is Jewish, and decides to kill all the Jews. Haman gets a rubber stamp from King A for his murderous plan. Meanwhile, Mordechai discovers a plot to kill King A and turns in the conspirators. King A rewards Mordechai, which adds salt to Haman's wound. Mordechai informs now-Queen Esther of Haman's plan to kill all the Jews. Esther fasts then invites King A and Haman to dinner. She reveals she is Jewish and that Haman is trying to kill all the Jews. King A executes Haman and tells the Jews to defend themselves, which they do.

There's an old joke that the summary of every Jewish holiday is, "They tried to kill us. We survived. Let's eat." Purim fits that mold probably more than any other, but I would say that Passover does not fit that mold. Passover commemorates the exodus from Egypt. "We were slaves to Pharoah in Egypt, and now we are free." The theme of Passover is freedom, and it is used all over the place as a justification for other ethical requirements. "Do not oppress the stranger, for you were strangers in the land of Egypt." I'm a Passover Jew. I think collective memory of oppression and appreciation for freedom is inspiring and meaningful.

Purim is different. The lesson from Purim is that they're out to get us. Powerful villains in general want to kill all the Jews, and a Persian villain in particular wants to kill all the Jews. This lesson is not entirely wrong. Some people hate Jews. Antisemitism is real. But that is a terrible starting point for building identity.

On the other hand, it is a great starting point for AIPAC. Thematically, Purim is spot on for AIPAC lobbying Congress about Iran in so many ways. Persian villain who wants to wipe Israel off the map? Check. This year the role of Haman was played by the Ayatollah. (Mahmoud Ahmadinejad was a better fit, but he left office two years ago.) Well-placed safe Jew who has the opportunity to defend Jews in danger? Check. The role of Esther is now played annually by American Jews at the AIPAC policy conference. The religious resonance is deafening.

So, are American Jews reenacting a biblical story as spokesperson-defenders of Jews against a determined Persian villain, or dressing up in costumes for a farce? It depends how you view the threat from Iran. I believe Israel's security professionals when they say that "deterrence works against state-like entities" and that ISIS is scarier than Iran.

* The king's name is Achashverosh in Hebrew, which for some reason is written as Ahasuerus in English. Either way it's too complicated, I'll use King A.