Reich vs Reich

Yesterday, I blogged about Robert Reich’s Luddite concerns regarding technology.   Today, I came across a Facebook post from him regarding teacher pay.  What struck me about the two pieces is his contradictory conclusions.

Let me explain:

In the Alternet article, Mr. Reich is concerned technology is making labor obsolete, that more and more can be provided by fewer and fewer.  In the Facebook post, he lays out a logical scenario (presumably one he supports) that would lead to exactly the same conclusion he decries at Alternet.

In the Facebook post, he talks about how increasing the pay of teachers would lead to more people seeking teaching positions.  This is true: a minimum wage does indeed increase quantity supplied of a good/service.  But, as Mr. Reich says “the law of supply and demand isn’t repealed at the classroom door.”  The effect of such a minimum wage on quantity demanded is to lower it.  Higher wages mean schools will be unable/unwilling to higher more teachers.  Assuming no one shuts down and schools still want to service the same number of children, this means there will be fewer teachers educating the same number (or more) students.  These teachers would likely have to rely on technology to help them meet demand, lest they face overcrowded classrooms.  So, we can see that, by advocating a minimum wage in teaching, Mr. Reich would ultimately lead us down the path to “production [in this case, of education] by a handful” that he claims is “a recipe for economic and social collapse.”

I’ve written an email to Mr. Reich asking him to reconcile these two views.  if I hear back, I’ll be sure to post the response.

HT: Robert Murphy via Don Boudreaux.

15 thoughts on “Reich vs Reich

  1. Did you know I can reply to your post without signing in each time, but I can’t simply like your post without signing in? That seems a bit strange to me.

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  2. Is it possible that an increase in teacher wages might encourage schools to cut spending on other, more wasteful fronts? I’m a high school math teacher– I see schools pour money into Smartboards that are literally never used, among other wasteful investments. Perhaps higher teaching wages would let schools hire better teachers while encouraging the schools to cut costs elsewhere.

    No guarantee that this would happen, of course, but it seems possible.

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    • Chris, as I am sure you know, a dollar is not a dollar within a school system account.

      You can’t hire extra teachers without building them extra classrooms, and that requires a capital investment that is frought with the strings of finance and politics. Who is floating the bonds? We had to vote on it? And which well-connected developer is going to win the battle of where the new school (and adjacent subdivisions) will be built? (not to mention the extra benefits, pensions…)

      A smartboard is a piece of technology that fits in existing classrooms, and visibly demonstrates to outsiders that there is a Commitment to Learning, or something to that effect.

      The hurdles for the spending of the smartboard are far easier to clear, and have very few negative externalities.

      Other than not being used, of course.

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    • It certainly is possible. I wonder, though, how many of those wasteful things are paid for by the school and how many are paid for by grants. I remember my high school got a grant from the state that could only be used to buy laptops.

      Just a thought.

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  3. I’d bet dollars for donuts that Mr. Reich’s argument is that there won’t be less demand for teachers as the extra money needed to pay them higher wages can easily be obtained by raising taxes.

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    • In Robert Reich’s magical world, the extra money necessary to pay higher minimum wages – whether for teachers or busboys – comes from the Money Fairy. Just like higher taxes on the rich – it won’t induce those rich to work less, or invest less, or consume less, and it won’t induce them to throw up there hands and emigrate to a friendlier tax climate. It all comes from the Money Fairy.

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  4. Jon:

    Reich’s arguments are notional political arguments. One is not supposed to apply economics to notional political arguments. One is suppose to view notional political arguments as fact. The non-fact fact needs to become policy. Without reliance on non-fact facts how in the world can one create cascading negative unintended consequences?

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  5. Does that imply that if we raise minimum wages outside the classroom businesses will be unable/unwilling to higher more workers. Assuming no one shuts down and businesses still want to service the same number of customers, this means there will be fewer workers serving the same number (or more) customers. These workers would likely have to rely on technology to help them meet demand, lest they face overcrowded businesses. So the way to prevent technology from replacing labor is to lower the minimum wage?

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