In the physical sciences, the best
discoveries are made when scientists pursue a line of inquiry, fail to find
what they are after, but in the process, stumble on a discovery they never suspected
was there.
In the social sciences, the most authentic
discovery is made when someone pursues a line of inquiry, fails to prove what
he was after, but in the process, proves the opposite and not even know it.
This is what happened to David Harsanyi
who was trying to prove that Bernie Sanders was wrong, but ended up proving him
entirely correct. Harsanyi recorded his failed intellectual journey in a column
that came under the title: “Bernie's Wrong: We Are Better Off Today Than We
Were 45 Years Ago,” and the subtitle: “Wage stagnation is a myth, we live
longer, there's much less crime, and the environment is cleaner.” It was
published on February 20, 2020 in National Review Online.
To begin with, Harsanyi's failure of logic
is shown in the subtitle where he acknowledges that Bernie's point was to the
effect that wages have stagnated for the last 45 years, but goes on to make it
sound like wages have not stagnated because, “we live longer, there's much less
crime, and the environment is cleaner,” when in fact, Bernie Sanders had said
that wages stagnated despite the progress made in those other areas.
But there is worse than this failure of
logic. It is that David Harsanyi has dug up a whole bunch of numbers from the
archives which, on the surface, look like they might support his theory, but look
different when assessed forensically. In fact, when you subject them to that
treatment, they turn out to prove that Bernie Sanders was correct. Here is the
passage, in condensed form, articulating Harsanyi's point of view:
“The alleged wage stagnation is a myth.
For one thing, that argument fails to take into account the health-care
benefits, pensions, vacations, family leave, and other perks now embedded in
job packages. Once those benefits are added, Americans probably have seen about
a 45-percent wage increase since 1964. Does anyone believe that a dollar spent
on medical care in 1975 equals a dollar spent today?”
All you need is a simple calculator to
establish that there are 55 years between 1964 and 2019. With a calculator
that's a little more sophisticated, you can calculate that an increase of 45
percent in 55 years means an average annual compounded increase of less than
one percent. The exact number is two thirds of one percent.
According to Harsanyi's numbers, this is
what the workers received as reward for the increase in productivity. But given
that real productivity has increased by about 3 percent a year on average, to turn
around and give the workers less than one percent is meager indeed.
As to the effect of inflation, the average
increase during those years has been a little more than 3.5 percent. This means
that in 55 years, prices have increased about 6.7 folds. So, the bottom line is
this: Someone earning 7.5 dollars an hour today is standing at the same place
as someone earning 1.12 dollars an hour in the late 1960s and early 1970s. Was
that the minimum wage at the time?
And that's not even the whole story because
when you combine the rate of inflation and that of productivity, the picture
looks considerably worse. It turns out that someone earning 7.5 dollars an hour
today, is in reality as badly served as someone earning 80 cents an hour during
those years. Was it like that at the time?
Given that hefty increases cannot be
sustained in a globalized economy where low-wage jurisdictions are engaged in
cutthroat competition with the advanced economies, no one expects to see the
workers make advances as rapidly as they did in the past. But Sanders is
arguing that America's corporations are making big profits, and their
managerial class is getting handsome increases. They can certainly give higher
increases to their workers and still run a profitable enterprise.