On August 19, the Cato Institute released a study by me and Charles Hughes, The Work vs. Welfare Trade-Off, 2013: An Analysis of the Total Level of Welfare Benefits by State, showing that a family collecting welfare benefits from seven common programs – Temporary assistance for Needy Families (TANF), food stamps, Medicaid, WIC, public housing assistance, utilities assistance (LIHEAP) and free commodities – could receive more than what a minimum wage job would pay in 35 states. Critics responded: so raise the minimum wage.

Making work pay better, including the sort of entry level jobs that people leaving welfare can expect to find, is a terrific goal. Unfortunately, government has very little ability to force such increases. Attempts to simply mandate that businesses pay more, through increased minimum wages or living wage laws, as well as attempts to mandate employee benefits like health insurance (see Obamacare), primarily result in fewer jobs.

The amount of compensation a worker receives is more or less a function of his or her productivity. As Greg Mankiw, Chairman and Professor of Economics at Harvard University explains, “Economic theory says that the wage a worker earns, measured in units of output, equals the amount of output the worker can produce.” This somewhat oversimplifies, of course. There are other factors involved. But one can’t just arbitrarily declare a worker’s value.

The academic evidence on this point is pretty clear. A comprehensive review of more than 100 studies on the minimum wage by David Neumark and William Wascher for the National Bureau of Economic Research found that 85 percent of the studies they reviewed found negative employment effects. Newmark and Wascher concluded, “the preponderance of the evidence points to disemployment effects… [and] studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.”

Indeed, evidence of employment losses goes all the way back to 1938 and first federally imposed minimum wage. The U.S. Department of Labor concluded that that first 25-cent minimum wage resulted in the loss of 30,000 to 50,000 jobs, or 10 to 13 percent of the 300,000 workers affected by the increase.

More recently, Michael Hicks of Ball State University looked at the impact of the July 2008 minimum wage increase on unemployment rates in the United States and concluded that a 10 percent increase in the minimum wage results in a roughly 0.19 percent increase in unemployment, meaning the loss of about 160,000 jobs.

And, a study by Joseph Sabia and Richard Burkhauser for the Employment Policy Institute concluded that an increase in the federal minimum wage to $9.50 would result in the loss of 1.3 million jobs, primarily low-skilled jobs. Moreover, Sabia and Burjhauser concluded that there would be very little gain in exchange for this pain. According to their research, state and federal minimum wage increases between 2003 and 2007 had no effect on state poverty rates.

Or simply look at how Obamacare’s employer mandate is causing businesses to shift workers to part time or to reduce hiring in response to higher labor costs.

We should understand that for most low skilled workers, such as the hypothetical mother in our welfare study, a minimum wage job is a starting point, not a destination. Nearly two-thirds of minimum wage workers receive a raise within one year, with the median hike for full-time workers about 14 percent. Indeed, we know that just 2.6 percent of full-time workers (including minimum wage workers) live in poverty.

That is not to say we shouldn’t try to increase entry level wages. But the best way to accomplish that goal is to create a climate that leads to greater economic growth overall. Greater prosperity eventually finds its way into higher wages for workers, including those at the bottom of the ladder. That means reducing taxes and regulations to encourage people to invest and expand their businesses.

Somehow, I don’t think that is what most critics of our study have in mind.

Richard Lindzen, Professor Emeritus at MIT, and now a Distinguished Senior Fellow in the Center for the Study of Science here at Cato, has just published a paper called “Science in the Public Square: Global Climate Alarmism and Historical Precedents.” The paper is in the Journal of American Physicians and Surgeons.

Lindzen begins with what he calls “The Iron Triangle,” an analog to a very popular aphorism coined by Ronald Reagan, that describes the generic and mutually beneficial relationship between Congress, the media, and special interest groups. Lindzen’s version is between scientists who make “meaningless or ambiguous statements” on climate change, which are translated into alarmist declarations by the global warming lobby, to which politicians respond by shoveling more money to the scientists. Dr. Lindzen cheekily calls this version the Iron Rice Bowl, the same phrase coined by Mao Zedong to describe lifetime employment in exchange for support of the communist state.

Lindzen, whose article is available here, notes this type of symbiosis supported two other particularly bad ideas. One was early 20^th Century eugenics, which was enshrined by law in the United States, politically very useful in 1920s Germany, and institutionalized into the holocaust in the succeeding decade. For an exhausting and exhaustive insight on this process in Germany, you still can’t beat Robert J. Lifton’s 1986 book, The Nazi Doctors.

A similar dynamic surrounded the institutionalization of the obviously incorrect paradigm of  “the inheritance of acquired characteristics,” championed by Soviet agronomist Trofim Lysenko, under the enthusiastic support of Josef Stalin, who thought it would help bring about “The New Soviet Man,” by changing human nature genetically through physical experiences of the organism. The logic is as simple as this: if one, say, pumped iron incessantly with just the left arm, your children would be born with muscular left arms. Hogwash, but effective for a public that both feared its government and was scientifically illiterate. 

“The Situation in Biological Science,” published (and translated) by the Lenin Academy of Agricultural Sciences of the U.S.S.R. in 1949 sits very close to Lifton’s book on my shelf at Cato. It is an exhaustive compendium on Lysenko’s “new genetics.” It claims authority, and if you spoke against it as a scientist, a trip to Siberia (or worse) wasn’t far away. With global warming alarmism, we are much more humane. Speak against it, and you will lose your government funding and maybe your job, but not your life.

Lindzen finishes with a bit of optimism, noting that the eugenics and Lysenkoism lasted about thirty years, which would mean that the Iron Triangle of climate alarmism is getting a little long in the tooth (it started in1988). 

Methinks Professor Lindzen is a bit optimistic. After all, most regulation of ionizing radiation and carcinogens is based upon the obviously wrong notion that a single photon or a single molecule can induce cancer. That was enshrined in the 1950s and lives on today.