Mon, 29 Oct 2007

Economics versus Finance and Business

Three people walk into a bar: a financier, a businessman and an economist. The businessman says that a minimum wage hike is bad because they couldn't afford to pay their workers any more and stay in business. The financier says that it distorts the market and causes them to move investments to socially-disoptimal areas. The economist disagrees with them both because they're arguing for their own interests. The economist says the hike is bad because a minimum wage only makes low-wage workers better-off if the demand curve is vertical -- as unlikely as a frictionless surface or a universal solvent.

No joke.

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