Don Boudreaux confuses a shift in production functions - that is an innovation - with a choice among techniques in response to changes in relative factor prices. Not only that, he is simply incorrect about the analysis of the choice of technique.
Gabriel Mihalache also pretends that the logic of perfect competition with ideal rational behavior supports his exploded ideas about the minimum wage.
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12 years ago
5 comments:
Robert,
I count nine sentences in Dr. Boudreaux's post. The fourth, fifth and eighth are autobiographical. Of the six that remain, which one makes any claim that you believe is false?
James objects: Boudreaux is not even wrong.
If that technique was not available back in the day and it is now, then it could be both, right?
(I feel like I should add something about skill biased technological progress but'll skip it)
Yes, Radek. But notice that Boudreaux provides no evidence that billboards are being automated in response to relative price changes. Likewise he is just wrong to suggest that firms respond to increased minimum wages by "substitut[ing] capital for labor" (given technology, enough time to replace capital goods currently existing, no barriers to entry or exit, etc.) My link in the post shows that. Boudreaux, like so many mainstream economists, just refuses to accept the logic of maximizing behavior.
Well the idea that technological innovation is driven by a desire to economize on an expensive factor is pretty old but yeah, it's always been fuzzy - what Acemoglu calls the "Habakkuk thesis". But like Acemoglu points out even within the context of neoclassical economics it could go either way. Like I said somewhere before, I don't know if I'd consider Boudreaux "mainstream" - 's far as I can tell he's an Austrian + fuzzy stuff.
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