James Crook Econ 151 Section 1 | 10.21.2016 | Analytical Essay 2 | Economic Myths of the Presidential Candidates

True economic principles have become so far removed from the words and minds of today’s

politicians that one has to wonder if any of those elected to office will ever know that an invisible

hand operates with more efficiency in one of its finger tips than they do throughout their entire

bodies. In this election cycle, we have heard numerous claims from our presidential candidates that

should be examined and made vulnerable to rebuttal. Hillary Clinton, in her hypocritical idealism,

has said that, “Of course we want to raise the minimum wage!” Donald Trump, in one of his usual

bombasts, said of trading with China, “they suck us dry … take everything. We get nothing!” And

Bernie Sanders, mouth dripping with the wild dreams of an entitled four year old, claimed that

“Ordinary Americans are working longer hours for lower wages.” Each and every one of these

claims is refuted with ease and proves that our political elite suffer from a serious deficiency in

economic intelligence.

In the first few chapters of any macroeconomic text book, passages are found explaining

that when minimum wage is raised above the equilibrium price point, a surplus of labor occurs and

causes unemployment. To so cavalierly state that, “of course we should raise the minimum wage!”

shows a severe degree of ignorance on the part of Hillary Clinton. While it is true that a minimum

wage set underneath equilibrium won’t necessarily cause problems in the community, market

analysis should be conducted to understand where the equilibrium point is. Of course, to set a

minimum wage underneath equilibrium is unnecessary, as the market will correct for those

employees being paid underneath equilibrium through the natural laws of supply and demand.

Arguing that international trade is something to be avoided is extraordinarily ignorant of the

economic principle of comparative advantage. Comparative advantage is defined in Economics

Today as “the ability to perform an activity at a lower opportunity cost.” Individuals take advantage

of this concept every day by exchanging what they do well for money. When nations use

comparative advantage and trade with each other, both nations are able to expand their production

possibilities curve to consume more. Trading goods with China allows us to consume more;

maximizing our utility as a society.

Finally, Bernie Sanders argued that “Ordinary Americans are working longer hours for lower

wages.” As the article points out, Sanders’ facts are off. On average, Americans work fewer hours

for more money. Sanders’ other claims should be questioned as well. In fact, two macroeconomic

professors from the University of California, Berkeley examined a study (done by Gerald Friedman

from the University of Massachusetts) claiming that Sanders’ policies would cause an economic

boom. They found some basic economic inconsistencies in Mr. Friedman’s study. Mr. Friedman

ignored basic economic principles that made his projection of the USA ten years after Sanders’

election look like a wealthy socialist utopia.

All of these claims ignore basic macroeconomic principles; a disturbing trend to be sure. It

leads one to wonder how such ignorant economic policy makers ever rose to their positions of

power. Perhaps this argument made by George Washington can help us learn how to move

forward, "Human rights can only be assured among a virtuous people. The general government . . .

can never be in danger of degenerating into a monarchy, an oligarchy, an aristocracy, or any

despotic or oppressive form so long as there is any virtue in the body of the people." It is clear that

the way to prohibit inconsistent and dangerous economic thinkers from rising to power is to

educate ourselves. Let us never again vote for a politician that has failed to become educated about

the basic laws of economics; laws that allow our society to flourish.

New York Times article explaining flawed Sanders’ study:

http://www.nytimes.com/2016/02/27/upshot/uncovering-the-bad-math-or-logic-behind-bernie-

sanderss-economic-plan.html?_r=0