Archives For Politics

Raising the Minimum Wage Law

February 13, 2013 — 1 Comment

minimum_wage_custom-8614e5bd8d516fbadd22d4a09fff441a70ba1596-s6-c10Raising the minimum wage law seems like a harmless thing to do. How can it be bad to pay people more?

But this line of thinking shows complete lack of understanding of the basics of economics.

It focuses solely on the receiver, neglecting that there must be someone else on the other end as the giver. Money does not just appear (except in Washington where they print it).

In short although it may seem like it is helping workers, it is hurting employers, which hurts workers. The employers will be forced to pay a rate that they may not be able to keep up with to keep the business flourishing. The effect is that they may have to either lay off workers or hire less.

Another problem with raising the minimum wage is that it adversely effects inflation. If the minimum wage is raised, then everyone demands to get paid more and the previous money they made is worth less.

In effect it punishes those who have saved the “little” they received all their life.

I am not saying that the minimum wage should never be raised, because it does need to keep up with inflation. But the change should be minor and incremental, unlike what the President is proposing.

Milton Friedman explains this well in the video below.

Thomas Sowell also wrote about how the minimum wage hurts young blacks.

Liberals try to show their concern for the poor by raising the minimum wage. Yet they show no interest in hard evidence that minimum-wage laws create disastrous levels of unemployment among young blacks in this country, as such laws created high unemployment rates among young people in general in European countries.

The two most recent books that show this with hard facts are Mismatch by Richard Sander and Stuart Taylor Jr. and Wounds That Will Not Heal by Russell K. Nieli. My own book Affirmative Action around the World shows the same thing with different evidence.

In all these cases, and many others, liberals take positions that make them look good and feel good — and show very little interest in the actual consequences for others, even when liberal policies are leaving havoc in their wake.

In the book Foundations of Economics Shawn Ritenour writes

It boggles the mind that contemporary policy makers and a large set of the intelligentsia still think that raising the minimum wage helps the working poor. In a free market there is a tendency for workers to be paid according to the economic contribution of the marginal laborer. Increasing the minimum wage does not make workers more productive. Therefore, if the government raises a wage floor above the market wage, the quantity of workers hired will decrease and unemployment will occur. This is the last thing we want to do if we are unhappy with our continuing high unemployment rate.

In saying this, I do not mean to be callous to the concerns of the working poor and unemployed. Far from it. Real compassion requires telling the truth.

Michael Saltsman wrote an article with the WSJ on this subject entitled “How to Put a Waitress Out of Work.”

Don’t be fooled by this proposal wearing a compassionate face. Underneath it all there is only more tears.

Rand Paul on Foreign Policy

February 9, 2013 — 1 Comment

Republicans Unveil Legislation To Protect Soldiers And Seniors From Budget CutsSenator Rand Paul visited the Heritage Foundation this past Wednesday to deliver a speech on foreign policy.

There is a quite a bit of buzz about this speech as it seems that Paul may run in 2016.

In the speech he broadly outlined his views, cutting a middle ground between isolationism and interventionism. It is, he says, “a policy that is not rash or reckless. A foreign policy that is reluctant, restrained by constitutional checks and balances, but does not appease.”

He called Reagan’s foreign policy “robust but restrained” and spent a good deal of time talking about Radical Islam and how to respond to such threats.

Radical Islam is no fleeting fad but a relentless force. Though at times stateless, Radical Islam is also supported by radicalized nations such as Iran. Though often militarily weak, Radical Islam makes up for its lack of conventional armies with unlimited zeal.

Like communism, radical Islam is an ideology with worldwide reach. Containing radical Islam requires a worldwide strategy like containment. It requires counterforce at a series of constantly shifting worldwide points. But counterforce does not necessarily mean large-scale land wars with hundreds of thousands of troops nor does it always mean a military action at all.

Containment, though, should be discussed as an option with regard to the more generalized threat from radical Islam. Radical Islam, like communism, is an ideology with far reach and will require a firm and patient opposition.

He also touched on how he would deal with the threat of Iran having nuclear weapons.

No one, myself included, wants to see a nuclear Iran. Iran does need to know that all options are on the table. But we should not pre-emptively announce that diplomacy or containment will never be an option.

Let me be clear. I don’t want Iran to develop nuclear weapons but I also don’t want to decide with certainty that war is the only option.

Probably the best paragraph to summarize Paul’s views in this speech is the following.

What the United States needs now is a policy that finds a middle path. A policy that is not rash or reckless. A foreign policy that is reluctant, restrained by Constitutional checks and balances but does not appease. A foreign policy that recognizes the danger of radical Islam but also the inherent weaknesses of radical Islam. A foreign policy that recognizes the danger of bombing countries on what they might someday do. A foreign policy that requires, as Kennan put it, “a long term, patient but firm and vigilant containment of . . . expansive tendencies.” A policy that understands the “distinction between vital and peripheral interests.”

Although I do not claim to know much about foreign policy, I resonate with what Paul is saying.

I have always thought his father was a little extreme on this issue, but Rand Paul seems to have come to a reasonable yet non-conventional view.

Let’s hope as he says that it is not the case that, “anyone who questions the bipartisan consensus is immediately castigated, rebuked and their patriotism challenged.”

 

Mark Steyn writes about the joke that just happened in the House and the Senate. According to him $2 billion is what the United States borrows every 10 hours and 38 minutes. I did not check his stats but if this is anywhere close to being true, then celebrities should start making videos about math.

The political class has just spent two months on a down-to-the-wire nail-biting white-knuckle thrill-ride negotiation the result of which is more business as usual. At the end, as always, Dr. Obama and Dr. Boehner emerge in white coats, surgical masks around their necks, bloody scalpels in hand, and announce that it was touch-and-go for awhile but the operation was a complete success – and all they’ve done is applied another temporary Band-Aid that’s peeling off even as they speak. They’re already prepping the OR for the next life-or-death surgery on the debt ceiling, tentatively scheduled for next Tuesday or a week on Thursday or the third Sunday after Epiphany.

No epiphanies in Washington: The Congressional Budget Office estimates that the latest triumphant deal includes $2 billion of cuts for fiscal year 2013. Wow! That’s what the Government of the United States borrows every 10 hours and 38 minutes. Spending two months negotiating 10 hours of savings is like driving to a supermarket three states away to save a nickel on your grocery bill.

A space alien on Planet Zongo whose cable package includes “Meet The Press” could watch 10 minutes of these pseudo-cliffhangers and figure out how they always end, every time: Spending goes up, and the revenue gap widens.

gerard-depardieu-08172011-09-675x900Gérard Depardieu, one of France’s most famous actors, has found himself in the middle of a stormy political fight.

The fuel comes from the fact that he bought a house over the border in Belgium.

Depardieu says he is moving to escape the 75 percent tax on the super-wealthy.

The prime minister, Jean-Marc Ayrault, described the move as “shabby” and “pathetic” saying “”paying taxes is an act of patriotism and we’re asking the rich to make a special effort here for the country.”

Depardieu shot back with an open letter published in a major Sunday Newspaper. “I am leaving because you consider success, creativity and talent grounds for sanction,” the actor wrote.

Depardieu said he has paid more than $190 million in taxes over the last four decades. He offered to surrender his passport if he was, indeed, so pathetic.

NPR reports that “the heated debate has spilled over France’s borders. Not only did Belgium’s finance minister welcome any other French citizens who want to join Depardieu, but President Vladimir Putin offered him Russian citizenship.”

 

 

Although a few years dated (2009), the book Creating An Opportunity Society looks like a great resource. Here is a description:

Americans believe economic opportunity is as fundamental a right as life, liberty, and the pursuit of happiness. More concerned about a level playing field for all, they worry less about the growing income and wealth disparity in our country. Creating an Opportunity Society examines economic opportunity in the United States and explores how to create more of it, particularly for those on the bottom rungs of the economic ladder.

Ron Haskins and Isabel Sawhill propose a concrete agenda for increasing opportunity that is cost effective, consistent with American values, and focuses on improving the lives of the young and the disadvantaged.

It also has a helpful PowerPoint presentation about the book.

One of the most interesting slides in slide 15 which shows what accounts for success.

What Accounts for Success

The three factors that cause 74% of people to be “successful” are the following:

  • Graduate from High School
  • Work Full Time
  • Wait until age 21 and marry before kids

Take away one of these factors and your chance at success goes way down.

Conclusion

So what should be done? The authors conclude:

  • Improve Education
  • Expand Work
  • Strengthen Families

I do not know if they rate these according to importance, but it seems to me that if you focus on the last one, the other two will most likely follow.

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