Corey Iacono for FEE.org:
In late 2014, the city of Seattle did something some economists would describe as daring when it passed a law requiring the minimum wage to be raised to $15 an hour, in stages, by 2017. Risky or not, the law has excited economic and political analysts by creating a unique experiment that researchers can exploit to better understand how large increases in the minimum wage affect a large city.
Liberal politicians and economists praised this as “good economics“. Conservative politicians and economists decried the change, assuming it would cause higher rates of unemployment.
Their results aren’t as rosy as some minimum wage proponents might have hoped, and they largely paint a picture of the minimum wage as an ineffective tool at increasing the earnings of workers. They found that the minimum wage had increased wages, as expected, but also that their “best estimates find that the Seattle Minimum Wage Ordinance appears to have lowered employment rates of low-wage workers.”
There’s only so much money a consumer is willing to pay for an inexpensive good. Raising the minimum wage increases the cost of low-margin goods, and companies have the choice between eating the profit or hiring fewer employees.
Their final verdict was that: “The major conclusion one should draw from this analysis is that the Seattle Minimum Wage Ordinance worked as intended by raising the hourly wage rate of low-wage workers, yet the unintended, negative side effects on hours and employment muted the impact on labor earnings.”
The authors additionally note that the “negative unintended consequences…[are] concerning and need to be followed closely in future years because the long-run effects are likely to be greater as businesses and workers have more time to adapt to the ordinance.”
Ouch. If you make more money per nominal hour — say, $15 per hour — but work fewer hours, your net income does not change. Or, if your net income does change, the net income of someone who now cannot get a “living wage” job goes down. This is bad news for the poor.
“In the U.S. and many other places, an excess of subsidies in these areas ends up leading to a conversion into foods like refined grains and high calorie juices, soft drinks with corn sweeteners and high fat meats,” says Dr. Ed Gregg, chief of the CDC’s epidemiology and statistics branch in the diabetes division.
More than half of Americans’ calories came from subsidized foods, the study authors found.
Compared to people who ate the least amount of subsidized food, the people who ate the most had a 37% higher risk of being obese, a 41% greater risk of having belly fat, a 34% higher risk for having signs of elevated inflammation and a 14% higher risk of having abnormal cholesterol.
Categorize this under: Government causes obesity. It’s no surprise that companies have taken the incentives from government in the form of subsidies to create food that’s unhealthy for your body. Without these subsidies, unhealthy food would be much more expensive, incentivizing Americans to choose healthier food over the unhealthy.
[U.K. voters know] that their living standards have fallen, their cost of living has risen, and that their job prospects have deteriorated. They see a loss in confidence and economic stagnation when they are being assured the opposite.
British voters may not know what they will get with an independent Britain, but they knew that something was rotten, not just in Denmark, but all over the European Union. The same holds true in the United States. Until our leaders can paint more realistic pictures of where we are and where we are going, we should expect more “surprises” like the one we got yesterday.
Candidates with anti-establishment platforms have received a lot of support. Trump and Sanders are two, for example, even if they are not true anti-establishment candidates. Folks are tired of the political elite running their lives, telling them harmful policies are actually good. U.K. voters felt the same, and the results of the Brexit make sense knowing anti-establishment fever has jumped over the pond.
Trump may be all about “The Art of the Deal,” but if he is elected, the deals he makes will be every bit as wasteful and tyrannical as those of his predecessors (or worse). “The quality of being an entrepreneur is not inherent in the personality of the entrepreneur; it is inherent in the position which he occupies in the framework of market society,” Mises emphasized.
A President Trump may be able to make small changes here or there, “[b]ut the setting of the bureau’s activities is determined by rules and regulations which are beyond his reach.”
The problem of government won’t be solved by Donald Trump, Hillary Clinton, Bernie Sanders, or even Ron Paul. The President has a lot of power; his or her voice alone can kill a bill. The President can even stop the growth of government, but he or she cannot deal with the fundamental underlying problem of the government as a monopoly of force on the people.
Furthermore, a President’s hands are tied as Congress has handed its rule-making and regulatory authority to agencies. The EPA, OSHA, HHS, NLRB, and other three, four, and five letter acronym’d agencies make rules, issue fines, and control the government with nary a vote from the people.
No President is going to fix this problem.
“Google, Apple and Amazon have created disruptive technologies that changed the world, and … they deserve to be highly profitable and successful,” Warren said. “But the opportunity to compete must remain open for new entrants and smaller competitors that want their chance to change the world again.”
As far as we’re aware, the only entity with the power to close the market to new entrants and smaller competitors is the government, Warren’s greatest love.
“Apple has long used its control of iOS to squash competition in music, driving up the prices of its competitors, inappropriately forbidding us from telling our customers about lower prices, and giving itself unfair advantages across its platform through everything from the lock screen to Siri. You know there’s something wrong when Apple makes more off a Spotify subscription than it does off an Apple Music subscription and doesn’t share any of that with the music industry. They want to have their cake and eat everyone else’s too.”
Spotify doesn’t have to use iOS to publish its platform. It chooses to do so knowing the requirements of Apple’s App Store, which includes a 30% cut of all sales from the store. The government should not be involved in picking winners and losers. The market can do that in a far more efficient manner.
Michael Bennet from June 22: (via Twitter)
Joined members on House floor today calling for votes to block terrorists from buying guns & strengthen background checks
This is best summed up by Congressman Justin Amash from Michigan: (via Twitter)
Democrats are staging a sit-in on the House floor. They refuse to leave until our Constitution replaces due process with secret lists.
In the short run, uncertainty about Britain’s future relationship with the EU, its largest trading partner, could push the UK into a recession. Friday saw huge market volatility. The British pound lost 10 percent of its value in the hours after the polls closed on Thursday, and Britain’s FTSE 100 index lost 9 percent of its value in early Friday trading, before regaining much of the lost ground.
Short term, yes, it seems like this vote could affect the economy and value of the British £. On the other hand, the fundamental underlying value of the currency hasn’t changed, so we should probably see a rebound in the nominal value of the currency.
“If you are Nissan or some other car producer with major production in the UK, today, the same safety standards and environmental standards allow you to sell everywhere in the European market.”
It sounds like regulations are one of the big concerns. Maybe governments should rethink instituting draconian regulations.
The report predicts that by 2026, millionaires in the Asia-Pacific will hold more wealth than Europe, Latin America, the Middle East, and Africa combined.
The new 1% won’t be in the United States for much longer.
In the real world, of course, the complexity of trade defies comprehension, as countless millions of goods and services are produced, exported, and imported seemingly in defiance of any clear pattern. Yet, an underlying pattern is there, and it remains basically the same one described in its essence by Ricardo two hundred years ago.
There are many models of international trade, but the theory-du-jour is Ricardo’s comparative advantage. If Country 1 is more efficient at producing Good A compared to Good B than Country 2 is efficient, Country 1 should focus on producing Good A and Country 2 Good B. I, Peach gives an excellent overview.
Nothing about the proposed regulation helps consumers. It is proving the rule, however. Companies like Airbnb and Uber are demonstrating in real time what we already know about regulation. First, regulations don’t work to achieve their stated aims, because they are written by and for incumbent businesses with the actual goal of killing the competition. Second, industry-disrupting, consumer-benefitting innovation requires they be circumnavigated.
With news that Denver might try to stymie the growth of AirBNB, this is a reminder of how “protecting the little guy” is a bit more about protecting corporate interests.