Friday, February 28, 2014

Tax (or arbitrarily raise the price of) something, and you get less of it...

This morning's Seeking Alpha's Wall Street Breakfast: Must-Know News reads:
Japanese economic activity bumps up ahead of sales-tax hike. Japanese industrial production grew at the fastest pace since June 2011 in January, jumping 4% on month after a drop of 0.9% in December. Retail sales leapt 4.4% vs +2.5%. The strong figures are not a total surprise, as a bump in economic activity has been expected ahead of a rise in sales tax in April, which is forecast to then drag on the economy. Core inflation held steady at 1.3% on year in January, while the unemployment rate was unchanged at 3.7%.

So "a bump in economic activity has been expected ahead of a rise in sales tax in April, which is forecast to then drag on the economy." Well, of course, that's a no-brainer: you tax---or arbitrarily raise the price of---something, and you get less of it. I mean it doesn't take a PhD in economics to figure that one out, right?

So why then would anyone in his right mind, let alone an economist, suggest that a hike in the minimum price of labor would not result in less labor? Well, when we're talking economists, it almost has to be purely political.

No comments:

Post a Comment