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Looks like help is really needed here... Charles Mudede

Coral Garnick of Puget Sound Business Journal reports that the consensus of "a group of restaurateurs and executives who gathered for a panel last week hosted by Yelp and restaurant marketplace" is that the biggest crisis facing their businesses is not high wages. It is stubborn staffing shortages that have the booming economy and rising rents as their cause. But if you read the UW study on high wages (which was unknowingly prompted by what Joseph Schumpeter called "vision"—more on this in a moment), you would think that the main thing bugging "restaurateurs and executives" is the $15 minimum wage. But it sounds like wages in the city need to rise, not fall.

What Carissa Linn, director of human resources at Compass Group USA, said during the panel discussion:

"We have some of our staff traveling almost two hours by bus to make it to work.... When you’re considering that they’re making $15 or $16 per hour and spending four hours on their commute, it really wears on them.”

Now, why was the UW study of the impact of high wages on Seattle very much about "vision," as described by Joseph Schumpeter? First, an explanation of what Schumpeter meant by this word, which can be found in his masterpiece, History of Economic Analysis: "The way in which we see things can hardly be distinguished from the way we wish to see them." Vision conditions all forms of economic analysis, on the left and right. But economists on the right (or orthodox economists) claim they have removed vision from their analysis and can see how wealth is generated and distributed with scientific objectivity. This means that the way one frames the economic problem can actually be separated from the problem itself. As Maurice Dobb's writes in Theories of Value and Distribution Since Adam Smith, "this conception of the pure economist's role has, naturally, been furthered by the vogue of mathematical methods and forms of statements in economics."

But the reason why someone on the left frames the problems in, say, Seattle's job market as one of low wages is because their vision includes a more flexible image of equilibrium. The UW study does not, which is why it assumes that high wages will cause imbalances. But the image they have of equilibrium is a very poor and common one. They picture it as a balance between "two bodies in space" (read Joan Robinson's Accumulation of Capital, chapter 6). Equilibrium also has the word "equal" in it. So, the image is that of equality: Everyone gets out of the system exactly what they put in—labor, capital, ideas. But "equilibrium" only means a point at which things come to a rest. And how this rest is achieved, in an overdeveloped economy such as ours, is conditioned by culture and not by nature.

You can establish a perfect equilibrium with incredible imbalances: soaring rents, galactic CEO salaries, the price manipulations of stock buybacks, and very low wages. All of this can balance out, and economists with their models and mathematics can claim that this order has been established by the natural laws of supply and demand.

In this state of things, CEOs are entrepreneurial geniuses who are intrinsically worth the hefty bonuses they receive, landlords follow prices like stars in the sky and adjust their rents accordingly, and investors must be rewarded for the risks of waiting, and wages should always be rationalized by market forces. But all of this is a vision of one form of equilibrium and not much else. This equilibrium is conditioned by political pressure from right, the representatives of the rich.