We humans are always trying to understand our world by asking why, why, and why? And sometimes people look at the same set of facts and come up with exactly opposite answers as to what is going on.
For example, probably the fundamental difference between my own world view and that of progressives is found in our respective views of what drives economic growth and wealth creation. Are economic growth and wealth creation driven principally by the the striving of millions of individuals working in their own self-interest under conditions of private property and free exchange? Of are economic growth and wealth creation driven principally by government spending and programs that “create” the jobs and the wealth? Supporters of the Green New Deal, for example, clearly subscribe to the latter view.
The progressive confusion of cause and effect reached a true high water mark with a famous series of New York Times articles about crime and incarceration rates, written by then reporter Fox Butterfield between about 1997 and 2004. The November 8, 2004 iteration had the headline “Despite Drop in Crime, an Increase in Inmates.” Butterfield noted that, “[t]he number of inmates in state and federal prisons rose 2.1 percent last year, even as violent crime and property crime fell, according to a study by the Justice Department released yesterday,” a phenomenon Butterfield labeled “the paradox of a falling crime rate but a rising prison population.” James Taranto of the Wall Street Journal proceeded to get a lot of mileage by identifying and calling out one example after another of what he called the “Butterfield fallacy.” Here is a January 2013 WSJ piece by Taranto containing a history of the subject. As to the seeming “paradox” of the crime and incarceration rates, Taranto writes: “The Butterfield Fallacy consists in misidentifying as a paradox what is in fact a simple cause-and-effect relationship: [As Butterfield himself recognized at one point,] ‘Of course, the huge increase in the number of inmates has helped lower the crime rate by incapacitating more criminals behind bars.’”
Aficionados of the Butterfield fallacy have been able to spot numerous examples in the intervening years. For example, Taranto’s own January 2013 piece quoted a headline and lede sentence from a New York Times article that had appeared just two days previously:
Despite New Health Law, Some See Sharp Rise in Premiums. Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.
Scott Johnson of the Power Line Blog came up with this classic example (from Pat Kessler of Minneapolis tv station WCCO) in January 2018:
“More people are carrying guns than ever before, but the crime rate remains relatively low. . . . Minnesota’s violent crime rate hit a 50-year low in 2016, according to the FBI. And in 2017, the state set a new record for firearms background checks.”
Which brings me to the lead headline in Saturday’s New York Times, “Weak Job Gains, But Better Signs On Wage Growth.” (different headline in online version) The article by Patricia Cohen delves deeply into the supposed paradox of small job gains said to be signaling “sluggish” economic growth, even as wage gains accelerate:
The economy’s remarkably steady job-creation machine sputtered in February and produced a mere 20,000 jobs. It was the smallest gain in well over a year and came on top of other signs that the economy was off to a sluggish start in 2019. . . . Carl Tannenbaum, chief economist at Northern Trust in Chicago, said Friday’s news from the Labor Department was worrisome. “This is a disappointing report,” he said. “I don’t think there’s any way to sugarcoat it.”
But then there is this as to wage rates:
Beyond the month’s payroll figure, the report offered some unambiguously good news, including 3.4 percent year-over-year wage growth, the strongest in a decade.
Whoa! Of course, if you think about it for even a minute, what seems like an inexplicable paradox to a Times reporter is not a paradox at all. The important aspect of a successful economy is not that it creates “jobs,” but rather that it allows the people to create wealth by working and being paid well for it. What has happened is that the economy has reached full employment. (The February unemployment rate is given as 3.8%, with the number of job openings (about 7 million) substantially exceeding the number of people reported as unemployed (about 6.2 million).) Effectively, there’s nobody left to hire, except by luring someone away from a previous job. And thus we have reached the point where the strong economy can’t “create jobs” any more, and instead induces employers to bid up wage rates if they want to hire the people they need away from other employers.
Really, getting to this point should be the ultimate goal of economic policy. Only in the progressive press would they report this as some kind of paradox, let alone a problem.