Monday, June 21, 2010

Why Study Economics?

From Practical Economics by Dean Kalahar

The first question that needs to be answered is why do you need to learn economics and what relevance does it have to your life? A simple analogy can be used to capture the life and death nature of economics.

Understanding economics is analogous to piloting an airplane that is flying in the fog. To be successful, a pilot must stop looking out the window for easily seen visual clues and put aside his instincts, feelings, common sense, and conventional wisdom. Instead, the pilot must rely solely on the instruments to safely fly and land the plane. To ignore the data, calibrations and technological concepts of aeronautics is to fly blindly in the fog.

The costs of flying “by the seat of one’s pants” will lead to immediate and deadly consequences not only for the pilot, but the passengers as well. Because of the relationship between pilot and passenger, unknown scores will have their livelihood, well being, and quality of life profoundly influenced by decisions made by the pilot. Relying on cold, impartial, instruments that go against what feels so certain may look like behavior of an overly trusting pilot, but this will prove to be the most successful and effective strategy for making decisions that affect so many people. Although the pilot will be motivated by self-interest, namely to save his own life; this will drive them to act in efficient and productive ways that benefit the greatest number of people, most notably the passengers.

“Piloting” economics works in the same way. The successful economist and economy must also be steered toward efficient decisions and outcomes based on facts, empirical evidence, and sound economic principles. True compassion for the greatest number of people lies in decision making that is based on economic reality and not on what sounds, feels or looks correct. Improper economic decision making has long term ramifications and far reaching effects on unknown scores of others within the society; the impact of which can be of tragic proportions.

The tools of economics offer all members of society the greatest chance of survival as well as the highest possible standard of living. The big question is: can you override your instinctive emotional decision making processes to engage in actions based on economic principles, formulas, functions, and paradoxical truths; or will you pilot the economy by flying by the seat of your pants?

Your decisions carry a weight and responsibility that you probably have not realized up to now. If you are ready for some formal instruction, this text should serve to enlighten and provide you with the cognitive skills necessary to use economic thinking to promote not only beneficial ends for yourself, but for others as well.

Tuesday, June 8, 2010

Kids must "shakedown" parents for teacher pay

This story may make your head explode.

Selections: Basic lessons of cash grab
, By Michael Graham

And you thought liberal public schools didn’t believe in making kids work hard. Why they’re ready to bring back indentured servitude!

That’s what a mom named Laura Wellington just found out. Her daughter came home from school with instructions to “accomplish chores around the house with the goal of being paid by me for those chores the sum of $20,” Wellington wrote on her blog. “She would then have to hand the full $20 over to the school to make up for the shortfall in their overall budget.”

Her daughter’s participation, according to the information the school sent home, was mandatory. So you’re supposed to shake mom down for $20 and give it all to the teachers - no questions asked?

You’ll be stunned to learn this happened at a school in New Jersey.

And isn’t it interesting that this school was sending its little Johnnies and Julies home to collect, not for a field trip or class pizza day, but for the actual operating budget of the school. As in teacher salaries and benefits. This puts even more pressure on the kids. After all, now it’s nice Mrs. Johnson’s paycheck at stake.

This trend in public school fundraising is on the rise. According to The Boston Globe-Democrat, private donations to Massachusetts public schools have jumped from $10 million to $27 million in the past decade. . .

It could be worse. The New York Times reports that parents in the Cupertino, Calif., school system were hit up for contributions of $375 directly (cash or credit card) to avoid any cuts. . .

Unfortunately most teachers unions are happy to throw the taxpayers overboard at the first opportunity. Stuffing the kids’ backpacks with high-pressure fundraising appeals

Smaller pie and people die

From Carpe Diem Blog, Mark Perry

Moral hypocrisy

Classic Thomas Sowell
Just as the American Left has adopted blacks as mascots, so the international Left has adopted Palestinians as mascots. In both cases, the actual well-being of the mascots is not the point.

After North Korea torpedoed a South Korean ship, killing 46 sailors, was there even one-tenth the outrage that is ringing out loudly around the world because of nine deaths that resulted from Israeli commandos intercepting a ship headed for the Gaza strip?

Political and intellectual bankruptcy

Rich Lowry, excerpts: Spent:

Rahm Emanuel wants to allow federal agencies to redirect half of any unnecessary, unspent money in their budgets to other initiatives and half to deficit reduction. Currently, agencies must return all money they don’t spend, giving them an incentive to spend it all.

“The president’s goal has been to change Washington’s focus from figuring out how to spend money to how to save money,” Emanuel explained to the Journal, a statement that suggests he has taken leave of the reality-based community. Perhaps he has been too busy managing the hectic trade in White House job offers to notice the administration has added $2.4 trillion in debt in 500 days. . .

The House recently considered another $200 billion “jobs bill. . .

Late in the Great Depression, Franklin Roosevelt’s Treasury secretary, Henry Morgenthau, told Congress, “We are spending more than we have ever spent before and it does not work.” Democrats have made Morgenthau’s plaint their governing ethic. In so doing, they are demonstrating their political and intellectual bankruptcy even faster than they are bankrupting the country.

The left flunks Econ 101

Selections: Self-identified liberals and Democrats do badly on questions of basic economics. By DANIEL B. KLEIN, Wall Street Journal

Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey . . . the answer is unequivocal: The left flunks Econ 101.

How did the six ideological groups do overall? Here they are, best to worst, with an average number of incorrect responses from 0 to 8: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26.

Americans in the first three categories do reasonably well. But the left has trouble squaring economic thinking with their political psychology, morals and aesthetics. . .

The survey also asked about party affiliation. Those responding Democratic averaged 4.59 incorrect answers. Republicans averaged 1.61 incorrect, and Libertarians 1.26 incorrect.

Adam Smith described political economy as "a branch of the science of a statesman or legislator." Governmental power joined with wrongheadedness is something terrible, but all too common. Realizing that many of our leaders and their constituents are economically unenlightened sheds light on the troubles that surround us.

Monday, June 7, 2010

Understanding the Austrian School of economics in 3 minutes

The Austrian School of Economics
Jonathan M. Finegold Catalan, (no pun intended)

Austrians distinguish between a rise in the supply of loanable funds as a result of an increase in savings and the rise resulting from an increase in the supply of money. The latter is what leads to the business cycle. Providing a complete understanding of the Austrian business-cycle theory would require a deeper foray into Austrian capital theory, which unfortunately is something outside the scope of the present essay. Regardless, using what has been established thus far, the business-cycle theory can be explained as one that predicts dis-coordination in the market resulting from an artificial decrease in the cost to borrow money. This decrease in the rate of interest is artificial in the sense that it came as a result, not of an increase in loanable funds through an increase in savings, but an increase in loanable funds through an increase in the supply of money.

Given that a decrease in the market rate of interest will lead to an increase in the quantity demanded of loanable funds, this leads to an increase in investment. Investment leads to the lengthening of the structure of production in the hope of producing future goods.

Dis-coordination is caused by the fact that, given that the supply of money was increased artificially, consumers have not generally sacrificed present consumption for future consumption. Thus, existing capital is divided between continued production of consumer goods, for present consumption, and capital goods, which will be used to finance projects dedicated towards satisfying future consumption. This dis-coordination leads to widespread malinvestment (sic), and when this dis-coordination is revealed it leads to an inevitable bust.

Thus, Austrians hold that business cycles are caused by inter-temporal dis-coordination, caused by artificial increases in the supply of loanable funds without an equal fall in present consumption. . .

Apart from the school's valuable insight in academics, how is the Austrian School relevant to current events? What makes Austrian theory important to the common man?

The answer to these questions can be deduced praxeologically, beginning with the axiom of human action.

If we accept society as merely a web of purposeful interactions between individuals, then we begin to realize the potential distortions caused by exogenous factors — namely government through regulation. As a value-free science, praxeology cannot tell you whether or not government intervention is good or bad but it can tell you the consequences of exogenous distortion of human action.

"Austrian" ethics, on the other hand, do serve the purpose of deciding between "good" and "bad," but in the purest sense the Austrian School can at least enlighten the layman by suggesting what effects certain economic policies will have.

This idea that government distorts, for better or for worse, is important. In a world where government is an irrefutable reality.

The edu-union's dirty little secret

Selections: Storming the School Barricades: A new documentary by a 27-year-old filmmaker could change the national debate about public education. By BARI WEISS

In the spring of 2008, Ms. Sackler, then a freelance film editor, caught a segment on the local news about New York's biggest lottery. It wasn't the Powerball. It was a chance for 475 lucky kids to get into one of the city's best charter schools (publicly funded schools that aren't subject to union rules).

"I was blown away by the number of parents that were there, recalling the thousands of people packed into the Harlem Armory that day for the drawing. . .

"Going into the film I was excited just to tell a story," . . . a really beautiful, independent story about four families that you wouldn't know otherwise" in the months leading up to the lottery for the Harlem Success Academy.

But on the way to making the film she imagined, she "stumbled on this political mayhem—really like a turf war about the future of public education." Or more accurately, she happened upon a raucous protest outside of a failing public school in which Harlem Success, already filled to capacity, had requested space.

"We drove by that protest," Ms. Sackler recalls. "We were on our way to another interview and we jumped out of the van and started filming." There she discovered that the majority of those protesting the proliferation of charter schools were not even from the neighborhood. They'd come from the Bronx and Queens.

"They all said 'We're not allowed to talk to you. We're just here to support the parents.'" But there were only two parents there, says Ms. Sackler, and both were members of Acorn. And so, "after not a lot of digging," she discovered that the United Federation of Teachers (UFT) had paid Acorn, the controversial community organizing group, "half a million dollars for the year." (It cost less to make the film.)

Finding out that the teachers union had hired a rent-a-mob to protest on its behalf was "the turn for us in the process." That story—of self-interested adults trying to deny poor parents choice for their children—provided an answer to Ms. Sackler's fundamental question: "If there are these high-performing schools that are closing the achievement gap, why aren't there more of them?"

Using children to destroy a civilization

From Canada's NATIONAL POST:
In yet another nod to the protection of fledgling self-esteem, a Canadian children’s soccer league in Ottawa has introduced a rule that says any team that wins a game by more than five points will lose by default. The league has 3,000 children enrolled ranging in age from four to 18 years old.

One father, Bruce Cappon, called the rule ludicrous: “I couldn’t find anywhere in the world, even in a communist country, where that rule is enforced. Everybody wants a close game, nobody wants blowouts, but we don’t want to go by those farcical rules that they come up with. Heaven forbid when these kids get into the real world. They won’t be prepared to deal with the competition out there.”
HT: J-Walk Blog
Source: Carpe Diem Blog

It isn't rocket surgery, as the Ivy League professor said

Selections: Tax Hikes and the 2011 Economic Collapse , By ARTHUR LAFFER in The Wall Street Journal

It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives. . .

it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.

People can also change the timing of when they earn and receive their income in response to government policies.

Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn't rocket surgery, as the Ivy League professor said.


Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.

In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn't take effect until Jan. 1, 1983. Reagan's delayed tax cuts were the mirror image of President Barack Obama's delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.

But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.

Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.

If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet.

Friday, June 4, 2010

The essence of contradictory worldviews

For the classical liberal/modern conservative:

Faith is placed in God upon a humbled acceptance of the limits to man’s reason because of a flawed human nature.

“If it can’t be reasoned, that does not mean it does not exist.”

For the classical conservative/modern liberal:

Faith is placed in reason and the unlimited potential of an infallible ego-centric man.

“If it can’t be reasoned, it does not exist.”

The self proclaimed "enlightened" academics still use a medievil system

Can you say irony?

Selections: The University Guild vs. Glenn Beck, By Amity Shlaes

[O]ur system of higher education is a throwback to medieval economics: a guild. As in the classic guild, members require a lengthy period of training, with formal stages. To be in any way authoritative, a writer must have a Ph.D., a guild seal. Members of this guild have enormous discretion when it comes to the conferring of the seal - also typical. In the humanities and social sciences, Ph.D.s. and, it goes without saying, tenure-track posts -- are usually awarded to those not hostile to the master professors' views. For many decades top universities have been especially rigorous in this practice, with the result that it is difficult to find non-progressives with top credentials in the humanities. The guild demands much from its apprentices, graduate students, including dull work in obscure texts. Indeed it is proud of that obscurity, for it distinguishes academic work from, say, the easy popular histories on bookstore shelves or tv.

In the field of history, the guild also maintains a monopoly on education by generating curricula, syllabi, and, of course, a canon, a set list of texts for each period of the past. Of course the academic guild, generally on the progressive side, has made many concessions to conservatives or classical liberals. Professors have assigned the odd conservative book; they mentioned the opponents' arguments. But such offerings have generally been presented as an afterthought, secondary, less authoritative. Looking back at their education many adults saw through this pretense of fairness. They resented the guild monolith. Something was missing.

Moral relitivity and intelligence

2 four blocks by Tom McMahon that explain morality and knowledge. Brilliant.

Moral RelativismThe 4-Block of Life

Boarders, Language, and Culture

A fun history lesson

Noah Webster and the Bee, By JOHN A. MURRAY

[T]he author of America's first dictionary and the originator of uniform spelling in America would be proud. That's Noah Webster, to whom the [spelling]Bee owes its official dictionary, "Merriam-Webster's Third New International Dictionary."

Webster was a champion of American independence who wanted to do away with the elitism of England's dictionaries, which ignored the speech of common folk. He had a loftier goal as well:

"A national language is a band of national union," he wrote, "…for if we do not respect ourselves…other nations will not respect us."

Webster's blueprint for American education received great support from leaders such as George Washington, James Madison and Benjamin Franklin. In the 1780s, Webster, who had graduated from Yale, wrote a spelling book and a grammar book—both of which became standard classroom texts for over 160 years. (When Webster died in 1843, George and Charles Merriam bought the copyright to Webster's dictionary and became the publishers.)

As one of America's Founding Fathers, Webster accomplished many firsts in U.S. history. Not only was he the new country's first best-selling author, for the "Blue-backed Speller." . . . he also "penned pamphlets against slavery…wrote about politics, agriculture, and disease…created the laws for the country's free public education system…and helped form and pass the U.S. Constitution."

Webster's passion for educating and assimilating immigrants into America is evident as well, both through his school texts and his magnum opus—the American dictionary. "In our American republics, where government is in the hands of the people, knowledge should be universally diffused by means of public schools," he wrote.

What few people realize today, however, is the profound role that faith played in Webster's outlook. It was no secret at the time. Of the man known as "The Schoolmaster of our Republic," editors often wrote above his picture, "He taught millions to read, but not one to sin."

Starting in 1783 with the publishing of the "Blue-backed Speller," Webster packed an educational and scriptural punch—including a "moral catechism" at the book's end. By 1947, Webster's "Speller" had reinforced both the English language and a biblical worldview by selling more than 70 million copies.

Money received that is not earned sickens the culture of hard work and creative entrepreneurial activity through which people can truly find happiness

There’s A New Culture War…And We’re Losing It
Free enterprise is not simply an economic alternative. Free enterprise is about who we are as a people and who we want to be. It embodies our power as individuals and our independence from governmet
In The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future, Arthur Brooks argues that the new culture war in America is not over guns, gay marriage or abortion, but instead between a socialist redistributionist minority (the 30% coalition) and a massive free-enterprise, work-ethic, opportunity-oriented majority (the 70% majority.)

Yet, despite the overwhelming majority of Americans who believe in free enterprise, the Left’s dominance of the intellectual upper class (opinion makers like the news media, academia, and the entertainment industry) has enabled the minority to dominate the majority.

They have been able to dominate because they are professionals at using words. They use the language of morality to achieve their redistributionist ends while those who favor freedom, individual opportunity, the right to pursue happiness, and personal liberty have been maneuvered to a series of banal and ultimately unattractive positions in the public debate.

The Left speaks in the language of right and wrong, of equality and inequality, while the leaders of the free-enterprise majority speak in the dry language of economics. Thus, despite the overwhelming majority in America who support the tenants of free enterprise, the Left is winning both elections and the hearts of America’s young people, who did not live through the Cold War and shockingly view socialism almost as favorably as they view capitalism.

It is the Left that is materialistic, because it assumes that by redistributing money it can redistribute happiness. But all redistribution does is expand misery

Inequality is not what makes people unhappy

Arthur C. Brooks, Happy Now?

What’s at stake in America’s battle over free enterprise.

On May 13, 2009, at Arizona State University, Barack Obama delivered his first commencement address as President of the United States. At one of the most frightening economic moments in America’s history, it was a chance to be a mentor, a teacher, and the nation’s inspirer-in-chief.

Did the president urge the graduates to get out there and create the growth and jobs our country needs? Did he inspire them to be the next generation of great American innovators and entrepreneurs? No; instead, he told the graduates that people who “chase after all the usual brass rings” display “a poverty of ambition.” He averred that this thinking “has been in our culture for far too long.” He told them they could do better than trying “to be on this ‘who’s who’ list or that top 100 list.”

If you’re a free marketeer, you’ve faced this charge a thousand times: You are a materialist. Meanwhile, your progressive interlocutors are interested in the higher-order things in life — such as fairness, compassion, and equality. Your vision for America might be wealthier, but theirs is happier. . .

Income equality is how redistributionists define the path to greater enlightenment and happiness for the rest of us. And that is why they are so willing to offer policies that sacrifice entrepreneurship for higher taxes, self-government for growing bureaucracies, individual achievement for powerful unions, and private businesses for federally managed corporations.

One problem with the redistributionists’ approach is that it’s based on a flawed premise — that greater income equality will bring us greater flourishing and happiness. A careful reading of the data demonstrates a crucially important truth, and one we overlook to our great peril.

A discussion of the Civil Rights Act

Selections: The Right To Discriminate, Walter E. Williams
Fight Bigotry Without Government, John Stossel

Should people have the right to discriminate by race, sex, religion and other attributes? In a free society, I say yes. Let's look at it. When I was selecting a marriage partner, I systematically discriminated against white women, Asian women and women of other ethnicities that I found less preferable. The Nation of Islam discriminates against white members. The Aryan Brotherhood discriminates against having black members. The Ku Klux Klan discriminates against having Catholic and Jewish members. The NFL discriminates against hiring female quarterbacks. The NAACP National Board of Directors, at least according to the photo on their Web page, has no white members.

You say, Williams, that's different. It's not like public transportation, restaurants and hotel service in which Title II of the 1964 Civil Rights Act "prohibits discrimination because of race, color, religion, or national origin in certain places of public accommodation, such as hotels, restaurants, and places of entertainment." While there are many places that serve the public, it doesn't change the fact that they are privately owned, and who is admitted, under what conditions, should be up to the owner.

If places of public accommodation were free to racially discriminate, how much racial discrimination would there be? In answering that question, we should acknowledge that just because a person is free to do something, it doesn't follow that he will find it in his interest to do so. An interesting example is found in an article by Dr. Jennifer Roback titled "The Political Economy of Segregation: The Case of Segregated Streetcars," in Journal of Economic History (1986). During the late 1800s, private streetcar companies in Augusta, Houston, Jacksonville, Mobile, Montgomery and Memphis were not segregated, but by the early 1900s, they were. Why? City ordinances forced them to segregate black and white passengers. Numerous Jim Crow laws ruled the day throughout the South mandating segregation in public accommodations.

When one sees a law on the books, he should suspect that the law is there because not everyone would voluntarily comply with the law's specifications. Extra-legal measures, that included violence, backed up Jim Crow laws. When white solidarity is confronted by the specter of higher profits by serving blacks, it's likely that profits will win. Thus, Title II of the 1964 Civil Rights represented government countering government-backed Jim Crow laws.

One does not have to be a racist to recognize that the federal government has no constitutional authority to prohibit racial or any other kind of discrimination by private parties. Moreover, the true test of one's commitment to freedom of association doesn't come when he permits people to associate in ways he deems appropriate. It comes when he permits people to voluntarily associate in ways he deems offensive.

John Stossel," said "Private businesses ought to get to discriminate. I won't ever go to a place that's racist, and I will tell everybody else not to, and I'll speak against them. But it should be their right to be racist."

Maybe. At the time, racism was so pervasive that such an intrusive law may have been a good thing. But, as a libertarian, I say: Individuals should be surrounded by a sphere of privacy where government does not intrude. Part of the Civil Rights Act violates freedom of association. That's why I told Fox's Megyn Kelly, "It's time now to repeal that part of the law."

America's fundamental political philosophy has deteriorated quite a bit if we can't distinguish between government and private conduct. I enthusiastically support the parts of the civil rights act that struck down Jim Crow laws, which required segregation in government facilities, mass transit, and sometimes in private restaurants and hotels. Jim Crow was evil. It had no place in America.

Racist policies in private restaurants are also evil, but they do not involve force. Government is force, so it should not be used to combat nonviolent racism on private property, even property open to the public.

I just don't trust government to decide what discrimination is acceptable. Its clumsy fist cannot deter private nonviolent racism without stomping on the rights of individuals. Today, because of government antidiscrimination policy, all-women gyms are sued and forced to admit men, a gay softball team is told it may not reject bisexuals and a Christian wedding photographer is fined thousands of dollars for refusing to take photos of a homosexual wedding.

I'll say it again: Racial discrimination is bad. But we have ways besides government to end it. The free market often punishes racists. Today, a business that doesn't hire blacks loses customers and good employees. It will atrophy, while its more inclusive competitors thrive.

In the pre-1964 South, things were different. But even then, private forces worked against bigotry. White owners of railroads and streetcars objected to mandated segregation. Historian Jennifer Roback writes that in 1902 the Mobile Light and Railroad Company "flat out refused to enforce" Mobile, Alabama's segregation law.

In cities throughout the South, beginning in 1960, student-led sit-ins and boycotts peacefully shamed businesses into desegregating whites-only lunch counters. Those voluntary actions were the first steps in changing a rancid culture. If anything, Washington jumped on a bandwagon that was already rolling.

It wasn't free markets in the South that perpetuated racism. It was government colluding with private individuals (some in the KKK) to intimidate those who would have integrated.

It was private action that started challenging the racists, and it was succeeding -- four years before the Civil Rights Act passed.

Government is a blunt instrument of violence that one day might do something you like but the next day will do something you abhor. Better to leave things to us -- people -- acting together privately.

Thursday, June 3, 2010

Which is preferable for the worker -- being employed at $3.25 an hour or being unemployed at $5.25?

Minimum Wage Cruelty: Update, Walter E. Williams

"Minimum Wage Cruelty" (4/14/10) was my column about the unemployment effects of Congress' 2007 minimum wage increase on the canning industry in American Samoa, a U.S. territory in the far Pacific Ocean. The 2007 legislation mandated 50 cents annual increases in Samoan minimum wages until it reached the U.S. mainland's hourly minimum of $7.25. In response, Chicken of the Sea International moved its operation from Samoa to a highly automated cannery plant in Lyons, Ga. That resulted in roughly 2,000 jobs lost in Samoa and a gain of 200 jobs in Georgia. Prior to minimum wage increases, Samoan wages were about $3.25 an hour. . .

StarKist, the island's remaining cannery, announced that between 600 and 800 people will be laid off over the next six months, reducing the company's Samoan workforce from a high of more than 3,000 in 2008 to less than 1,200 workers. StarKist CEO Don Binotto said it's difficult to compete when Samoan workers' wages are nearly 10 times those of its competitors in Thailand and other countries. . .

Congress can easily mandate higher wages, but they cannot mandate higher worker productivity or that employers hire a particular worker in the first place. . . . It's breathtakingly stupid to think of minimum wages as an anti-poverty tool. If it were, poverty in places such as Haiti, Ethiopia and Bangladesh could be instantly eliminated simply by proposing that these country's legislators mandate a higher minimum wage.

Wednesday, June 2, 2010

Bailout hypocrisy

From Carpe Diem

I'll send somebody a shinny new nickel if they can explain to me that when BP screws up we make sure they pay every dime in damages, but if a bank screws up we bail them out with taxpayer money.

Where is the outrage over mother nature?

source Carpe Diem

Is the average federal worker much more productive or deserving than the average person in the private sector?

Jonah Goldberg,In a Welfare State, How Much Is ‘Enough’?

Governments do not generate wealth; they can merely distribute it. The challenge for both liberals and conservatives is simply to define how much distribution is “enough.” What would an acceptable safety net look like? Who should be taken care of by taxpayers and for how long? Paul Ryan offered an answer to that question, and liberals scoffed because they reject the question. There’s no such thing as enough, as far as they’re concerned. That’s what the Greeks thought.

According to USA Today, “paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year,” while government benefits rose to a record high. In fact, government employment is becoming a method of redistributing wealth. In 2009, the federal payroll grew and the number of federal jobs paying over $100,000 a year doubled.

The average federal worker earns over 70 percent more than the average private-sector worker, writes Arthur Brooks in his new book, The Battle: “To find this acceptable, you must agree that the average federal worker is much more productive or deserving than the average person in the private sector.” . . .

Intellectual consistency and the oil spill

Laissez-Faire Meets the Oil Spill,By THOMAS FRANK

Back in April, for example, Rep. Ron Paul (R., Texas) greeted the president's drilling policy with the suggestion that the Environmental Protection Agency be abolished and "the energy market" freed from bureaucrats so that it might answer to "the demands of the people and the decisions of private investors."

But what say the tea partiers today? Who will step forward now and demand that the "energy market" be rescued from regulatory bondage?

Tuesday, June 1, 2010

Behavioral economics

In his just-published book, How Pleasure Works, Yale psychology professor Paul Bloom, described by Harvard psychologist Steven Pinker, as “among the deepest thinkers and clearest writers on the science of mind today,” writes:

Freud claimed "when you meet a human being, the first distinction you make is 'male or female' and you are accustomed to making the distinction with unhesitating certainty." This is true for me at least; I get e-mails from strangers with foreign names and when I can't tell whether the sender is a man or a woman, it is oddly unsettling. It shouldn’t matter — I have no intention of mating with them — but it does. When we see a baby in a diaper, the first question that many of us ask is: Is this a boy or it is a girl?

source: Dennis Prager