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A Taste of Bastiat

Summary:
Whenever I praise Tyler, I vaguely fear that I'm speaking a self-defeating prophesy.  But this is so good I can't resist:Sometimes you hear Texas described as a "low-wage" economy, perhaps contrasted with the high wages of California.  But there are some subtle wage effects from the Texas approach that often go unnoticed.  By drawing people out of high-rent areas, Texas keeps the lid on land rents elsewhere, thereby boosting real wages in say San Francisco.  Furthermore, San Francisco employers must pay their workers more, the more attractive is the "move to Texas" option.  So the full positive effect of the Texas model on wages is considerably higher than you can see by looking at Texas wages

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Whenever I praise Tyler, I vaguely fear that I'm speaking a self-defeating prophesy.  But this is so good I can't resist:
Sometimes you hear Texas described as a "low-wage" economy, perhaps contrasted with the high wages of California.  But there are some subtle wage effects from the Texas approach that often go unnoticed.  By drawing people out of high-rent areas, Texas keeps the lid on land rents elsewhere, thereby boosting real wages in say San Francisco.  Furthermore, San Francisco employers must pay their workers more, the more attractive is the "move to Texas" option.  So the full positive effect of the Texas model on wages is considerably higher than you can see by looking at Texas wages alone.  Once again, the distinction between the seen and the unseen turns out to be relevant.
Tyler's last line is, of course, a Bastiat reference.  Read his words, and dwell upon his profundity (and occasional error).


Bryan Caplan
Bryan Caplan is Professor of Economics at George Mason University and Senior Scholar at the Mercatus Center. He has published in the New York Times, the Washington Post, the Wall Street Journal, the American Economic Review, the Economic Journal, the Journal of Law and Economics, and Intelligence, and has appeared on 20/20, FoxNews, and C-SPAN. Bryan Caplan blogs on EconLog.

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