Category Archives: Dumbasses

Minimum RAAAAAAAAAAAGE!

So, according to the Keynesians at the CBO, raising the minimum wage to $10.10 cents an hour would cost 500 thousand jobs. That’s not some right wing talking point, that’s what they actually claim:

Effects of the $10.10 Option on Employment and Income.
Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects. As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers (see Table 1).
Now, for the record, the report itself is actually quite nuanced. You can decide for yourself, for example, if it is worthwhile to increase the income of “many more” families, and the expense of those whose incomes you reduce to zero-I personally doubt they know either of those numbers with the precision necessary to say one is actually a larger number than the other. They’re still Keynesians.
But for what it is worth, it doesn’t seem like the left wing position should be that we should redistribute wealth from the very poor, to the slightly less poor.
But that is the left wing position. At least if we keep in mind that the left is not entitled to their own facts.
Predictably, the Keynesians at the CBO came under attack for their apostasy. But they are standing by their findings. Well, good on them, someone really ought to push back hard on the Administrations asinine lie that economists don’t believe that the minimum wage reduces employment for low to unskilled labor. The real truth is that since the 1990’s, a handful of econometricians-not economists but statisticians who study economic data-have published a handful of studies suggesting little such effect occurs empirically. The actual case for what happened “empirically” is not clear. But one would not be justified in throwing out textbook economics on the basis of a few studies claiming that the laws of supply and demand are magically suspended in low to unskilled labor markets. The reaction of economists should be not unlike the reaction scientists would have to someone claiming to have created a perpetual motion device: “No, you’ve obviously done something wrong.”
Let’s review, though, lest you think me some heartless ideologue, let’s review what the very laws of economics tell us the consequences of a minimum wage and raising it are.
First, what is a minimum wage? A minimum wage is a price floor. It outlaws any employment contract-with certain exceptions, which we will discuss-where the hourly wage rate is below a certain nominal value. If this floor is above the wage that would clear a labor market, then that labor market won’t clear, at least legally. The last bit is kind of an important point, which some commentators miss. It is already illegal, for example, to hire an illegal alien. However, it is not like you are doing something that will get you in significantly more trouble as an employer if you also pay illegal aliens below the minimum wage. There are no jobs Americans won’t do-there are jobs Americans aren’t allowed to do. Or more specifically, there are employment contracts Americans aren’t allowed to agree to. But I am digressing a bit. What does it mean to say that a market “won’t clear?” Well, those on the short side of market can deny trade to those on the long side, or attach conditions to trade. Or, in English, employers can refuse to employ people at the non market clearing wage. Because demand curves slope downwards and supply curves slope upward (mathematically, the derivative of quantity demanded as a function of price is less than zero, the derivative of quantity supplied as a function of price is greater than zero) there will be a large gap between the people willing to accept work at the new wage, and the actual amount of work available at the new wage. This is called “unemployment”-or at least it is, as long as the surplus labor doesn’t get the message that they might as well give up on getting a job altogether, in which case we just pretend it isn’t a problem because we suddenly no longer call it “unemployment.” It’s worth noting that certain groups will be over represent amongst those whose labor is still demanded, and those whose labor is not. Those who will be better represented in the former group: secondary/part time workers from multi-income families, entry level workers with clear potential for advancement, and young workers from working class households will probably still, mostly, see their labor still demanded. The latter group will have would be workers from the lowest income families, victims of discrimination, and single parents with young children overrepresented. In other words, the minimum wage hurts most those it is intended-or at least, claimed to be intended-to help. It cuts off the bottom rungs of the economic ladder, needed more than anyone else by the most disadvantaged. The total income earned by all such workers may initially increase-it depends on the elasticity of labor demand-but it will be a redistribution of income within those in that labor market. But over time firms will substitute skilled labor and capital for unskilled labor-labor demand will become more elastic-and as a result, ultimately the total income earned by unskilled workers will go down. Now, this effect is the effect on the unskilled and some low skill labor markets, at least those which are subject to the minimum wage price floor. But actually, not every labor market for unskilled or low skilled labor is subject to the price floor. Tellingly, there is a legal exception for farm labor. This has the effect of driving those driven out of other unskilled or low skilled labor markets, into the market for farm labor-the supply curve for farm labor shifts rightward, which means that the market clearing wage for farm labor is now lower. This means that not only does the minimum wage drive many out of the unskilled and low skilled labor markets, it has the particularly perverse consequence of driving down farm wages. But this is the only way to avoid the politically unpalatable level surplus of labor that would be created if an exemption for farm labor did not exist. But the effects on other labor markets are equally telling. Unions generally support raising the minimum wage-even though union workers typically earn well above the minimum wage already. This might seem strange, since there should be no direct effect on their wages. However, union labor is typically skilled labor, and skilled and unskilled labor (or more skilled and low skilled) can be substitute inputs, which means that the imposition of or raising of a minimum wage, should increase demand for skilled labor-the demand curve for skilled labor shifts rightward. Both employment of skilled workers and their total income increases as their wages rise. In other words, higher earning skilled labor, including most union labor, gains at the expense of low earning unskilled labor. In a parallel story, because of regional cost of living differences, and because a Federal minimum wage does not factor these in, areas where prices-including wages-tend to be higher, for example, more Northern states versus Southern ones, those regions with lower wages will have the direct effect of a high minimum wage impose increased labor costs on them, but those regions with higher prices and wages will not. As such, Northern labor acts as a substitute for Southern labor, demand for the labor of higher cost of living areas increases, the total income, and the wage rate in those areas rises. But migration also shifts, as the Southern or low cost of living area workers can move more to the North or high cost of living areas (or more likely, fewer people move away from higher cost of living areas). This shifts the supply curve for high cost of living area labor rightward, somewhat offsetting both the increase unemployment in the low cost of living areas, and the income gains in the higher cost of living areas. But in net, higher cost of living regions are expected to gain at the expense of lower cost of living areas. This lines up rather well, generally, with elections maps-it’s a redistribution of income from Red States to Blue States.
Now, maybe you really think all of the above effects sound great. I certainly don’t. I find them perverse, and immoral. But then, that’s why I vehemently oppose the minimum wage.
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Filed under Common Sense, Dumbasses, Economics, Liberals

Honk If You’re Over-Employed!

We live in an absurd world. You may be aware of a recent report-not, let’s keep in mind, from some right wing think tank, but from the Keynesians at the Congressional Budget Office-that Obamacare will lead to a very large increase in the number of people working part time instead of full time, and the CBO officials even seemed to have opened up introductory texts on actual economics saying the law creates “a disincentive to work.” In English for those of you playing at home: it destroys jobs.

Now, despite the fact that this is a government report, the government isn’t gonna take an insult to itself, from itself, lying down. The Obama administration has given the excuse that this is not due to anyone actually involuntarily losing their job, it’s due to people choosing not to work, because they never really wanted to have a job, they just had to to get health insurance.

Follow that? Millions of people won’t be working anymore, but it’s okay, they didn’t want to be working. They were over-employed because they really only wanted health insurance, not a job. In fact, the assertion amounts to a statement that the American people suffer from a chronic over employment problem.

Huh? That’s self-evidently nonsense. Of the entire population of the US, about 43% of people are employed. Of those between the ages of 15 to 64 a little less than 68% of people are employed. And keep in mind, those are people employed at all-the percentage of people with full time jobs is more like 34% and 54%, respectively. I don’t see how anyone could come to the conclusion, looking at those numbers, that too many people have to work too much.

But the assertion is, at any rate, based on the presumption (perhaps shared by the CBO) that Obamacare actually alleviates anyone’s health insurance woes. And, in alleviating these woes, it allows people to make the choices they would “naturally” chose to make, if only it weren’t for having to worry about health insurance. One might well make the argument that people could “naturally” chose not to work, if only they didn’t have to worry about eating. But there is nothing “natural” about the decisions one can make when one is able to use someone else’s income to purchase one’s health insurance-as is the case with subsidized insurance bought with the help of the government. It’s the “natural” choices the slave master can make with the fruit’s of his slave’s labor, or the “natural” choices a thief may make with his ill begotten loot. Of course, people receiving such things from the criminal gang that is the government are not themselves criminals or slave masters-that is the government. They are no more guilty of the crime itself than the thief or the slave master’s children, whom they feed with their ill gotten gains. But it is absurd and perverse in the extreme to suggest nothing untoward is going on, simply because people are responding to incentives. One might as well conclude nothing untoward is ever going on in the economy-people always respond to incentives. This doesn’t mean that incentives can’t be bad.

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Filed under Common Sense, Dumbasses, Economics, Freedom, Healthcare

A Teeming Horde Of Socialists

-Or, the Capitalist Suicide Pact.

Is it the case that the restraint of free movement of people across international boundaries is, in essence, of the nature of the error of the protectionist? Is, it not the case that imposition on such free movement represents violation of the natural right of man by the State?

Resolved that these propositions are, so the citizen of the Capitalist World, fear hypocrisy, deigns it that the artificial construction of a border ought not restrain migration, and he welcomes with open arms as a brother the worker, the talent, the human resource, (for he does not make the error of the population alarmist, that more people is bad) into the nation he calls home, but which, thinking on it, he holds in no special regard, except in so far as it may be an exemplar of his capitalist ideal-and that it is not, so much the more reason to hold it in contempt.

And, being that he may occasionally dislike the results of elections, but thinking the results of human events must inevitably favor liberty in the end, he excepts democracy, perhaps hesitantly. He thinks not for a moment that, in the regions from which his new brothers come, in choosing their own governments freely they have chosen despotism, tyranny, socialism. He is, after all, not racist, to think that ideology could be genetic. He thinks, such is the product of their institutions, but our institutions favor the market-One supposes he forgets that this is not so often, his patriotism is oddly restored from his-deserved-early contempt. And more importantly, he reasons, these are Christians, and we all know how Christians vote. Oh sure, he thinks, my wife or lover may not be able to get an abortion the next time she gets pregnant, but trade will be reasonably unrestrained. He is, unaware? Perhaps, of the evidence the prevailing opinions of these folks, on the contrary, are much the opposite of the typical evangelical Christian. He attributes, instead, all the evidence of every passing election, of evidence of purposeful thought by a block of voters seeking to righteously punish the truculent. And, he says, surely if we do away with the truculent, these people will, so long as we may make the issue ours, vote more in line with their religious beliefs. Religion, not biology, determines ideology, all human history not withstanding.

And lo, political victory! He achieves his goal, and across the nullified national boundary comes the teeming horde. Wonder, glory, at the production from this labor! Huzzah, a victory for mankind, for the future! And thus, on the surface, it seems.

But things are not as they appear. Look upon those things our Capitalist Citizen holds, rightly, in contempt: government largesse swells, and strains to be supported by a tax structure that burdens exclusively the upper income earners; for now, the state of Social Security and Medicare improve, at the expense of Medicaid and welfare programs.

Never fear! The election is here! Finally in good conscience, Capitalist Citizen can support Republicanism again, having defeated the bigots and reclaimed it’s name for the Truly Righteous. And, he expects-contrary to recent evidence-that the people are generally intelligent enough to realize that socialism isn’t working. He is enthusiastic. And so election day arrives.

Disaster! Calamity! Well, on the bright side, your wife can get that abortion. It is the first electoral college unanimous election since George Washington.

Republican Crass Crusty is defeated by Democrat Hugo Vladimir Gonzalez in a landslide. The election is attributed by pundits to the Hispanic vote.

Well, an election is just an election, there will be another one. So he waits, and in the mean time the Democrats further transform the country into something he does not recognize as remotely Capitalist. They win the next election, too, and the next one.

After an entire generation of ruin, Citizen Capitalist is in despair. In his squalid, rent controlled apartment, Citizen Capitalist commits suicide, not able to face the world anymore, it’s future so dim.

Of course, in reality, he committed political suicide a generation ago.

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Filed under Common Sense, Dumbasses, Economics, elections, Freedom, General, humor, Republicans

To Whom Success Is Due

Recent statements by Obama have gotten a lot of (well deserved) attention already. As usual when Obama tells us what he really thinks, we Conservatives are just too stoopeed to comprehend the point, or we are taking the remarks out of context. Right. Well, what does Obama mean when he says “You didn’t build that”? Apparently his point was simply that people cannot take all the credit for their own success. But such a statement is totally vacuous if it is not meant to make a political point. So what is the political point? The political point is that successful people owe their success to the fact that the government made their success possible, and, therefore, they have a special obligation to pay the government for the services it provided them. This point is still vacuous, however, because it is basically an argument for a progressive income tax which, in case you haven’t noticed, is the existing government policy. In terms of what Obama would like to do with that policy, he has said that the wealthiest should pay more: in other words, according to Obama, the wealthiest are not currently paying income taxes in proportion to the extent to which they benefit from the services that government provides. But that is false: those with the highest incomes pay a greater portion of the overall revenue from income taxes than their share of the national income. The other possible political point is that the government needs to provide certain services. Again, vacuous: the government can provide necessary services, it also might “provide” many unnecessary ones. What services that only the government can provide does Obama want? Which ones are the “bad guys” trying to do away with? The answer to both questions is none. There are a great many unnecessary services that the government “provides” and many such services that Obama wants to create or expand (or has).

But, let’s deal, in a philosophical manner, with these points in a bit more detail. Obama says people owe their success (at least some of it) to great teachers or roads and bridges. These are government services, it is surely true that people may benefit from these services. But do the successful disproportionately benefit from these services? Put another way, why is life unfair? I have t0 admit I am a bit amused to learn that Leftists do not believe that some people succeed and others fail because of a cruel and angry God in whom they do not believe. It turns out it’s teachers. Yes, teachers choose to make some people successful and others not; in fact we may make a general statement that government services discriminate systematically to make certain people successful and others not. One has to wonder, if government services are so profoundly biased and unfair, why we would want the government to be the provider of services at all. Well, either that or one cannot attribute a few people’s success to services provided to people who failed, too. But on a less facetious level, it is worth noting that, in a capitalist economy, one would not have obligations to those who have provided services or goods for one’s use. One pays the price the offerer asks for their services-or one demonstrates how little one actually desires the service by not bothering. It is by forcing some services to be done through the government that you create a situation where someone “owes” another party for their services, but does not pay. Who are the greatest beneficiaries, and to whom is the most owed? The answers are, the government’s friends, and the governments enemies. Are there services which only the government can provide? The first that springs to mind is national defense. But every person benefits equally from that crucial service, and yet about half of the people pay nothing for this service (crucial point here: for this service. While Social Security and other things that payroll taxes pay for are arguably not necessary services, such taxes are in-arguably not supposed to pay for national defense). I would certainly agree that people should pay for services they receive. If such services cannot be provided by private entities (cannot does not mean the same thing as “currently not” as Leftists inevitably interpret this) the solution to this problem is called user fees, or in the case of services which a person may not choose to forgo a head tax-not a progressive income tax. In point of fact, however, Leftists do not agree with the principle that people should pay if they receive a service-they strongly reject this proposition as unfair when it applies to making those people who they like pay for things Leftists think should be given to them for free. But a more fundamental problem is that, even if they were being serious in proposing such a principle, the Left believes a great many things must be done by the government, that frankly don’t need to be. We might be able to maintain true fairness (those who benefit, pay), if we adopted the aforementioned principle and then had the government provide most services, but never as well as the private sector could. In fact in many cases it would only remain “those who benefit, pay” in the sense that many would not benefit at all and therefore have no obligation. But more importantly, people would not decide for themselves if they were in the group of those who benefit, and pay, as in the capitalist economy; the people who would benefit, and pay, would be arbitrarily determined by the government-the only difference from the current situation being that the government cannot make those who benefit and those who pay two different groups of people. The real alternative is capitalism.

Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all. We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.

~Frédéric Bastiat

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Filed under Common Sense, Conservatism, Dumbasses, Economics, Election 2012, Freedom, Liberals, Thinkers

Right AND Wrong

Much has been made of the alleged “apostasy” of the Romney campaign from the talking points among Republicans, whose campaign strategy to turn the disastrous and wrong Supreme Court decision into a big get out the vote drive was t0 jump on the Court declaring the mandate a tax. What can I say? For once, I agree with Mitt Romney. It shouldn’t have been declared a tax, any proper analysis of the law would have struck it down as an unconstitutional penalty; the fact of the matter is, however, that even when the Supreme Court is wrong, the government is bound to it’s interpretation of the law. So the way I look at it, Obamacare went into the Court an unconstitutional penalty, and left, along with the shredded remains of the Constitution, as a “constitutional” tax, as rewritten by our nation’s latest greatest legislator, John  Roberts.

So why doesn’t any of the media including Fox or WSJ, ask Obama why, if he really believes he didn’t sign a middle class tax hike into law, he doesn’t ask John Roberts to reconsider and declare his law unconstitutional? Why is it that the Obama administration is being allowed to get away with trying to have it both ways and the Republicans are being given a hard time? Even if we go with the media narrative, the we are left to conclude that Romney is an independent thinker who doesn’t just say what other Republicans tell him to, but the Democrats are much smarter because they are all on the same page with different Democrats, but each individual Democrat is not on the same page with him or herself! Baffling!

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Filed under Courts and Law, Dumbasses, Election 2012, Healthcare, Liberals, Republicans

On The Nature Of Campaign Arguments

By now many of you are aware that the Democrat party and the Obama campaign in particular are attacking the private sector experience of the Republican nominee. They are saying that the goal of working in private equity is to make profit, and not to create jobs, moreover, that Bain Capital destroyed jobs in a few cases to make profit for itself. They moreover assert that this is different from the job of a President, which they say is essentially to create jobs for everyone, presumably even if they must do so at a loss. Well, they are right about one thing: there is no similarity whatsoever between the job of the President of the United States and a business man. But it would be one thing if (as their defenses assert is the case, but clearly is not) they merely were asserting that being in private equity does not uniquely qualify a person to be President. In point of fact, the Democrat argument is that being in private equity (in fact, being in the private sector!) uniquely disqualifies a person from ever being President presumably unless they absolve themselves of their sin of profit seeking by attacking it while in the public sector, so surely the Republican nominee has paid his penance! But oh well. The nature of the arguments aside, it is certainly true that the Republicans are missing the most compelling argument for their nominee by incorrectly claiming that private sector experience uniquely qualifies one to be President (if that were true, I should expect to see the Republican party nominate Warren Buffet, but I doubt that he would run against his good friend and ideological ally Obama), indeed the only argument that can be made for the most far-left Republican nominee in over a century: he’s not Obama. That should be more than enough.

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Filed under Dumbasses, Election 2012, Liberals, Republicans

Free to Lose

It is truly a testament to how ridiculous anti-capitalists are that they are now complaining about companies both when they lose money and when they make “too much”. So JP Morgan loses a couple billion dollars, and there are calls for the government to increase regulations because, I don’t know, losing money is bad and therefore shouldn’t be legal. Really.

Okay, a remedial course in basic economics is a general good recommendation for any politician, since most badly need it: I don’t think even a “liberal” economist would dispute that the way Capitalism is supposed to work is that people will tend to act in such a way as to make more money, because loss of money is a disincentive to behavior that causes loses. It is literally logically absurd to suggest that the behavior that leads to loss of money needs to be punished by the government: the loss of money is the punishment for such behavior and results from no government regulation.

What is especially ridiculous about this is that anti-capitalist actions after the 2008 crash prevented the disincentive of failure (the ultimate loss, reserved for the most egregious of errant business practices) from actually taking place. They not only didn’t disapprove of business making mistakes by doing so, they actively encouraged businesses to make mistakes! The only thing consistent aspect of their behavior is that they have continually stood in opposition to whatever they think would happen without them. They either desperately want to be relevant, or just revel in disrupting the natural order of a free economy. Whether they are trying to do so or not, the real point is that distortions of the natural market signals leads to malinvestment, inefficiency, and failure. At which point the anti-capitalists pretend that they haven’t disrupted the economy, and blame the failure on a unregulated, free market, and proceed to intervene even further.

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