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Sunday, February 22, 2004

Meanwhile, over in the Econ department

Rick Perlstein writes (to me and to Andrew Sullivan) to say:

Stop me if you’ve heard this one, but: this argument about anti-right bias on campus will only get interesting once people start talking about what happens to the left-leaning in economics programs-- you know, where the people who actually run the world get trained. And public policy programs, which are quite in thrall to microeconomics thinking. Someone close to me is in a public policy Ph.D. program at a very prominent university (apologies for vagueness), and was asked in one of her problem sets in a labor economics class-- taught by a prof considered moderately liberal by the standards of the field-- the following:

“In April 1992, childcare workers in Seattle, Washington, went on strike for one day protesting their low wages and poor benefits. They noted that while their hourly wages ranged between $5 and $6 per hour, the wages of zookeepers in the Seattle zoo averaged $12 per hour. Because care givers of children were being paid less than half the pay received by care givers of monkeys and tigers, they argued that the ‘free market’ was not functioning in the child care industry. Does this outcome mean that something is wrong with the free market?”

The answer from the professor? Hint: it isn’t that human caregivers are predominantly women, simian caregivers predominantly men, and that any profession that is female-dominated tends to pay less, holding skill constant. It isn’t that caregiving is undervalued by the market because of a distortion in information: the incorrect assumption that “anyone can do it.” It isn’t the public goods problem: that people don’t want to pay higher taxes to pay caregivers in the public sector better because they can free ride on the services either way. It isn’t the negative externality problem: that the long-term social cost of inadequate care isn’t accurately reflected in the price we pay for caregiving, just as the long-term social cost of extractive industry isn’t accurately reflected in the price of petroleum. It certainly isn’t any possible long-term market failure associated with trying to keep a consumer economy going when workers only make $5 an hour. All of the above suggest that, yes, something is wrong with the “free market.”

No. The “correct answer” provided on the answer sheet is that, well, the laws of supply and demand dictate that it must be so, and there is no alternative. Well, actually, the alternative is to make it harder to children to get adequate care: “One solution to the caregivers’ problem would be to cut back on the number of ‘qualified’ persons able to do the task. This result might be achieved by convincing the state to license persons as ‘qualified’ after a rigorous and time-consuming testing process. Such a licensing procedure would reduce the supply of ‘qualified’ workers and industry wages would rise. Alternatively, if as many persons were qualified to care for monkeys and tigers (more supply) or if Seattle did not have a zoo (less demand) the wages of zookeepers would be lower.”

Voila! The optimal solution! Kill half the babysitters, free the tigers, and everyone wins!

Many thanks, Rick.

All I can add to this is that it’s a good thing Perlstein’s friend didn’t have one of those “rational choice” theorists who dominate so many conservative economics departments-- that is, the kind of economist who suggests that the solution here would be to let the tigers do the babysitting, thus moving everyone’s cheese and freeing both childcare workers and zookeepers from the burdens of employment.

Posted by Michael on 02/22 at 05:51 PM
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