The fourth and final lesson in The Jenny Beth Show's economics course is about the things most of us were taught that are not true. Lawrence Reed, president emeritus of the Foundation for Economic Education, and Jenny Beth Martin work through the myths one at a time, in plain English.
It starts with the minimum wage. Wages are the price of labor, Reed says, and you cannot make a person worth $15 an hour by making it illegal to pay him $8; the job is still worth $8, so it disappears. Jenny Beth Martin remembers the Radio Shack coworker who kept her job at the old minimum, saw the sales quota rise when the wage did, and was let go four months later.
Then the Great Depression. It was not capitalism, Reed argues, but the Federal Reserve inflating and then contracting the money supply, the Smoot-Hawley tariff of 1930, and a 1932 law that doubled the income tax, followed by seven years of Franklin Roosevelt doing the opposite of what he ran on. From there: why a trade deficit is as harmless as Reed's own deficit with Walmart; why higher tax rates can bring in less revenue; the 91 percent bracket a Democrat named Kennedy wanted cut; why Upton Sinclair's The Jungle was fiction; why blaming greed for prices is like blaming gravity for plane crashes; who Elon Musk ever harmed; what roughly $7 trillion in anti-poverty spending bought; why money taken by force is not charity; and why a government cannot be both big and good.
Reed closes with the books to read next: Frederic Bastiat's The Law and Henry Hazlitt's Economics in One Lesson, both available at fee.org.
Guest: Lawrence W. Reed, economist, president emeritus of the Foundation for Economic Education, and author of Born of Ideas, Was Jesus a Socialist?, Are We Good Enough for Liberty? and Real Heroes.
In this episode:
• Minimum wage: wages are the price of labor, and $15 by decree does not make a job worth $15
• Jenny Beth's Radio Shack coworker, four months after the raise
• The Great Depression: the Fed, Smoot-Hawley and a doubled income tax, not capitalism
• Trade deficits, the Laffer curve and the 91 percent bracket
• The Jungle, greed and profit: who did Elon Musk harm?
• Poverty programs, the NGO racket, and big government run by bad people
Catch up on lessons one through three of the economics series at jennybethshow.com.
The Jenny Beth Show airs live Monday through Friday at 1:00 PM ET. Hosted by Jenny Beth Martin, co-founder of the Tea Party movement and Chairman of Tea Party Patriots Action. Subscribe for daily analysis of politics, policy, and the fight for constitutionally limited government.
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00:00 — Cold open: does the minimum wage help workers?
00:48 — Lesson four of four: the myths of economics and economic history
01:32 — Recap of lessons one through three
02:25 — Myth: the minimum wage helps workers
05:40 — Jenny Beth's Radio Shack coworker, four months after the raise
08:07 — Why fast food costs $15, and the value of a first job
12:01 — Myth: capitalism caused the Great Depression
16:46 — Myth: the trade deficit is a problem (the Walmart test)
18:31 — Myth: higher taxes bring in more revenue
20:06 — Tariffs before the income tax, and the 91 percent bracket
23:54 — Myth: The Jungle and the men in the meat vats
26:02 — Myths: capitalism fosters greed, profit is exploitative
30:55 — Myth: government solves poverty
35:36 — Myth: a government can be both big and good
38:41 — Books to read: Bastiat, Hazlitt, Sowell and fee.org
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