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Monthly Archives: July 2009

Well, we’ve done it again.  Though this time, to be fair, we knew it was coming.  The minimum wage increased another $0.70 and is now at $7.25.

I have several personal stories from friends of mine explaining how hard it is for their teen child to find a job.  I suspect that it’s only going to get harder.  Employers are already struggling to make ends meet and now they’re forced to make due with a 10% higher labor force.  If this were any other commodity, experts would understand that somewhere the employer would have to cut.  For example, if the price of electricity went up by 10%, the businessman would be forced to make up for that cost somewhere else.  Or, if the price of milk went up by 10%, again, he would make up for it in other places.

I’ve been awfully hard on the minimum wage proponents and have done some thinking.  As one of the core pillars of my argument, raising the minimum wage may actually impact only a very few.  Only a very small percentage of Americans actually make the minimum wage.  Next, the employer may react not be cutting workers, but by reducing hours.  If done perfectly, that is each worker would see a 10% decrease in hours worked, he comes out ahead; he gets the same pay as before, but does so at a 10% discount in his time.  And last, labor may only be a small part of an individual employers expenses.  For those businesses with small labor costs, the increase will be negligible.

Last, before I walk away from this for a bit, is my favorite question for the pro-minimum wage folks.  If raising the wage 70 cents is a good idea, why not raise it to 20 bucks?

The Michigan Democratic Party is considering asking voters to raise the state’s minimum wage from the current $7.40 an hour to a national high of $10 an hour, increase unemployment benefits and require all employers to provide health coverage.

Unbelievable.

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I never thought that we went into Iraq looking for weapons of mass destruction.  I also never felt that we went into Iraq because Mr. Bush needed to finish what daddy started.  I have always felt that it was something else.  Now, that’s where it ended for me.  I only have so much, so much…ahhh, so much — noodles.  If ya know what I mean.  But The Voice of Reason?  Now SHE has it goin’ on.  She has maintained that we moved into Iraq to set up camp next to Iran.

I know why I married her.

But maybe she was wrong.  Maybe it’s because ol’ Dubya was straight talkin’.  Maybe we were just bringin’ some ol’ fashion freedom:

America chose to save us from the most evil party, and the most despicable President in the universe [Saddam].

America gave the lives of 4,000 of its people to Iraq’s land to instill security and democracy,

America came bearing democracy for Iraq

America canceled all of our debts and urged the rest of the world to do so,

America allowed Shias to practice their religion

America opened the world to us

America urged the Gulf States to allow Iraq to return to the Gulf Cooperation Council

America decided to withdraw from Iraq cities and hand these cities over to the Iraq forces on June 30 in preparation for the final withdrawal from Iraq.

After six years of liberation, we now know who our friend is….

Maybe we aren’t so bad after all.

HatTip TJIC

An article from the Washington Examiner makes you wonder what the whole point is:  HatTip SayAnything.

Area drivers looking to outwit police speed traps and traffic cameras are using an iPhone application and other global positioning system devices that pinpoint the location of the cameras.

That has irked D.C. police chief Cathy Lanier, who promised her officers would pick up their game to   counteract the devices, which can also help drivers dodge sobriety checkpoints.

“I think that’s the whole point of this program,” she told The Examiner. “It’s designed to circumvent law enforcement — law enforcement that is designed specifically to save lives.”

As a geek, this is COOL.  But aside from that, what is the whole point of the cameras in specific and “law enforcement” in general?  It’s to make people follow the rules; in this case, the speed limit.

Lanier said the technology is a “cowardly tactic” and “people who overly rely on those and break the law anyway are going to get caught” in one way or another.

The greater D.C. area has 290 red-light and speed cameras — comprising nearly 10 percent of all traffic cameras in the U.S., according to estimates by a camera-tracking database called the POI Factory.

Lanier said the cameras have decreased traffic deaths. Red-light and speed cameras have been a hot topic in Montgomery County since Maryland Gov. Martin O’Malley signed a bill in May allowing local governments to place speed cameras in school and highway construction zones.

Not for nothing, but what I think is cowardly is hiding cameras, taking pictures of speeding cars and then mailing out a ticket.  THAT’S cowardly.  But other than that I am stunned by Ms. Lanier’s comments.  It’s as if she is more interested in capturing people who break laws than in motivating them to not break laws.  I mean, all she has to do is ask herself how those cameras decreased traffic deaths?  Is it because cameras allow drivers to view video on poor driving and make better decisions?  Is it because drivers are able to see video of traffic accidents and get scared [think drivers ed]?  Or is it, because when people know that a camera is there they SLOW DOWN!

So, does Ms. Lanier wanna catch bad guys or have people slow down.

You know, back in college I was all ready kinda on to this.  So, we did a lot of driving back and forth between home and school.  Sometimes to my place, other times to my buddy’s.  And we had a “fuzz buster”.  You know that little device that detects police radar and beeps or screams at you.  Well, every time, EVERY SINGLE time that we heard our little gadget even chirp we promptly brought our speed right to the speed limit.  And we smiled.  We thought we were out thinking the law.  But one night it occurred to me that we were doing exactly what they wanted us to do; slow down.  THEN it occurred to me why they even ran squad cars at all?  Why not just prop up a radar and turn it on.  Drive away and plant another one?  Us silly stupid college kids would slow down for each one.

Anyway, these cameras act exactly like a radar detector, except they are announced.  Why this police chief should get upset that people are advertising where to slow down, then slow down, is beyond me.

I’ve admitted before that I am no economist.  Fact is, I haven’t even ever taken a class in economics.  However, I did major in mathematics and work significantly with statistics at my current job.  As I tell my boss, “I’m nifty with numbers”.

So, as I wax poetic on all of these economic issues I do so with a bit of trepidation.  See, really, from an “expert’s” point of view, I don’t know what I’m talking about.

Which makes seeing two of my most often repeated mantras in text at one time very exciting.  This article from Mises.org just made my morning:

Mandating benefits for employees imposes costs on employment. The would-be worker bears the cost. It makes the worker more expensive to hire. The employer has to pay not only a salary but also a benefit. If you make it more expensive to hire people, fewer people will be hired.

It is no different from eggs at the supermarket. If they are $2 each, you will purchase fewer of them — you will economize. This is nothing but the law of demand: consumers will demand less of a good at a higher price than of a good at a lower price. A salary plus benefits amounts to a price that the employer must pay to purchase the work of a laborer. At a higher price, less work will be purchased by the employer.

You should read the whole article; it’s fantastically simple.  And for once, I see in print, what I seem to intuit.  And furthermore, it is verbalized with economic expertize that I simply can’t claim:

There is no real reason to prove these assertions empirically since they flow from the logic of economics.

The article is entitled  “The Jobs Program” and deals with health care:

Sadly, there is no way that free health care can be granted to all living things with the stroke of a pen. Broadening availability will require that the entire sector be turned over to the private sector, so that it can be controlled through the price system like everything else.

But while Mr. Rockwell is speaking about the current health care bill, his article could easily be speaking about the new minimum wage increase slated this month.

Raise the cost of labor.

See, labor, like copper or plastic, oil or stamps, is a commodity.  Businesses need commodities to operate.  Businesses see how much a thing costs, calculates value analysis and then buys some.  How much depends on that analysis.  For example, if copper becomes too expensive, business will try to find a way to use less of it.  Perhaps substituting for something else; a batter value.  Stamps too high?  Go to bulk mailing, or e-mail services.  So it goes with labor.

Why people don’t see this is beyond me.  For example, if we are interested in reducing unemployment, why don’t we mandate that all McDonalds have twice the current number of workers on each shift?  If one McDdude is good, certainly two McDudes is better?  Yes?

No.

See, at some point, more labor doesn’t mean more revenue or profits.  Now, at some point it does.  If I have to wait 20 McMinutes for my McBurger, I am going to walk out the McDoor.  Here, more labor would be worth it to the store.  However, once McDonalds has reached the point that it is servicing the clientele adding more labor doesn’t add up.  The cost doesn’t justify the return.  The simple truth is that the amount of labor someone buys is limited to the business model.  Raising the unit cost of labor reduces the units.  Or, increases the price of the widget.?

So, does raising the minimum wage increase or decrease employment?  In an article from the Wall Street Journal, it seems that studies show jobs will be lost:

There’s been a long and spirited debate among economists about who gets hurt and who benefits when the minimum wage rises. But in a 2006 National Bureau of Economic Research paper, economists David Neumark of the University of California, Irvine, and William Wascher of the Federal Reserve Bank reviewed the voluminous literature over the past 30 years and came to two almost universally acknowledged conclusions.

First, “a sizable majority of the studies give a relatively consistent (though not always statistically significant) indication of negative employment effects.” Second, “studies that focus on the least-skilled groups [i.e., teens, and welfare moms] provide relatively overwhelming evidence of stronger disemployment effects.”

Now, let’s continue to pretend that we don’t know, for sure, that raising the minimum wage will result in job loss.  Let’s instead use the Global Warming argument.  What if it’s just possible that it does?  Why raise it?  What is the upside?  And there, gentle reader, is the rub.  As far as I can see, there is no upside.  Very very few people actually make the minimum wage or less.  Almost none of them will be making the minimum wage in a year.  Most of them are from families with annual family incomes well well above poverty.  The fact is, there just aren’t that many people making the minimum wage.  And for those that do, they would rather make that amount than make the true minimum wage: $0.00.

Some time ago I wrote about the impact of the new consumer protection measures.  In fact, I was keyed onto this by a post from Dave Ribar on the subject.

Dave’s main point was that credit card companies won’t raise the annual fees they are charging their best companies; so far he is right.   But those credit card companies ARE doing other things.  According to an article in the Wall Street Journal, we are seeing:

Credit-card issuers increasingly are moving consumers into variable-rate cards rather than fixed-rate ones, due in part to the new credit-card law slated to go into effect in phases starting in August.

What this means is that credit card companies are simply determining that government regulation is correctly seen as “damage” and they are routing around it.  See, by definition, the variable rate cards are not subject to the new law passed by Congress.

The new law limits creditors’ ability to raise interest rates, but it can’t control changes in the prime rate – the index that’s the basis for most variable-rate cards. So even after the new law starts to limit rate increases, variable-rate cards will still change if and when the index they’re based on changes.

Again, this law is another example of the government stepping in to rescue people who are simply demonstrating irresponsible behavior.  If I have money to borrow, and I determine that Pete is less trust worthy than Sally, there is only on way in which I borrow to Pete; charge him more.  If Pete would like to enjoy better terms, he could accomplish that by proving that he is more trustworthy.

Again, if a certain group of people feel tha high risk borrowers should be afforded credit, they are free to do this with their own money.  Forcing others to do it by rule of law is ignoring basic laws of economics as well as going against human decency.

Look, it’s simple.  We all do it.  There are times in every good household when something unexpected comes up.  Or, in times of over spending, perhaps it shouldn’t be unexpected, but, you get the point.  You look in the checkbook and look at the bills and confirm that it isn’t going to add up.  You are going to have to reduce spending or get another job.  It happens to all of us.  Happens to me.  Will happen to me again.  And this is healthy; it forces us to keep what is important to us and shed what isn’t.

For example, as I monitor my “play money” fund and see that it’s going to be bankrupt in 3 months I am forced to review what I am paying for in terms of “play”.  I see that I have 3 magazine subscriptions and 5 on line subscriptions.  Further, I am spending 90 bucks a month on aikido and so on and so on.  Given that I have to shave off $50 a month, I go through what everybody goes through.  I itemize my “play money” expenditures, rank them in order of value and cut the ones that are of LEAST VALUE!  Notice I say value, not dollar expenditure.  See, I really appreciate my aikido and am willing to keep that program intact even though it has a higher dollar value than say, Forbes.  Sadly, Forbes is a redundant source and it gets wacked.

What I don’t do is this:

Democrats generally agree that tax increases are needed to avoid what they say would be devastating cuts to education and social services for children and the state’s poor.

See, to me, that’s disingenuous.  Who DOESN’T want to avoid cutting these programs?  There’s not a person in the world that wants to cut education and social services.  First.  It has to be at the top, or close to it, of every single politicians value list.  Or should be.  And that’s what makes me mad about Liberals.  They want and take the easy way out every time.

  • When forced to cut, they won’t.
  • When asked to prioritize, they won’t.
  • When required to do what all adults do-they balk.

Now, this doesn’t mean that Education won’t have to cut back some.  It doesn’t mean that schools have a green light to spend spend spend.  But what it does say is that there HAVE to be places where we can cut before we have to implement “devastating cuts to education and social services”.

Sheesh.