How Democrats Ruined Milwaukee and Set the Stage for the Current Riots

The city of Milwaukee was once a prosperous, thriving metropolis. For years it was the world’s foremost beer-producing city, and home to four of the largest breweries on earth (Schlitz, Blatz, Pabst, and Miller). Almost every major American brewery, in fact, had at least one factory in Milwaukee. These employed thousands of local residents in jobs that formed the foundation of the city’s middle class. Other major corporations in the city during the first half of the twentieth century included the A. F. Gallun & Sons leather tanning company; the machinery manufacturer Allis-Chalmers; the heavy-mining equipment producer Bucyrus Erie Company; the Falk Corporation, producer of industrial power transmission products; the electrical component maker Cutler-Hammer; and the A.O. Smith Corporation, a major manufacturer of automotive frames.

Politically, Milwaukee has not had a Republican mayor since 1908. Every mayor since then has been a Democrat—with the exception of three who were openly Socialist. The first of the Socialists—in fact the first Socialist mayor of any major American city—was Emil Seidel, who held office from 1910-12; he also ran for U.S. Vice President in 1912, on the Socialist Party of America ticket. In 1916 Daniel Webster Hoan became Milwaukee’s second Socialist mayor, and his 24-year tenure in office was the longest continuous Socialist administration in American history. The city’s third Socialist mayor was Frank Paul Zeidler, who served three terms from 1948-60. A vocal supporter of the nascent civil rights movement, Zeidler and his administration oversaw the large-scale construction of public housing as a means of promoting racial and economic justice. Zeidler spoke out forcefully in favor of what he termed “public enterprise,” the notion that government could uplift the condition of the poor via the efficient dispensation of taxpayer-funded public services.

By the end of Zeidler’s mayoralty in 1960, Milwaukee’s black population had nearly quintupled during the preceding 15 years, from 13,000 in 1945 to more than 62,000 in 1960. A major cause of this trend was the massive northward migration of Southern blacks which was set in motion by the outbreak of World War II, and which transformed African Americans from a largely rural to a mostly urban people. Beginning in the early 1940s, millions of black workers from the South boarded buses and trains and headed to Northern cities, like Milwaukee, to fill many of the jobs vacated by the nearly 16 million white men who had gone off to war. Demand for black labor was heightened further by the now-urgent requirements of military-equipment production.

As Milwaukee’s black population grew, the burgeoning civil rights movement began to make its presence felt in the city. One of the more noteworthy local figures in the movement was Father James Groppi, a Catholic priest who in 1965 became especially involved in the crusade against housing discrimination.

But local black radicals, allied ideologically with the black militancy that was sweeping many American cities in the Sixties, were wholly dissatisfied with what they viewed as the inadequate pace of racial reforms. And in the summer of 1967 the race riots that rocked Detroit and Newark sparked a similar—though less devastating—outburst in Milwaukee. All told, the Milwaukee disturbances resulted in 3 deaths, about 100 injuries, and 1,740 arrests.

In response to the rioting, Democrat Henry Maier, who served as mayor of Milwaukee from 1960-88, swiftly unveiled a “39-Point Program” designed to address the inner-city problems of poverty and racism that liberal Democrats widely cited as the causes of the riots. Alternatively dubbed the “Little Marshall Plan,” this program sought to enlist government at all levels—local, state, and federal—to pour money into initiatives like housing construction, youth programs, and “community renewal” as a means of pacifying an angry populace. But in the eyes of local black leftists, it was too little, too late. As Mrs. Vel Phillips, a black member of Milwaukee’s Common Council, said in April 1968, the mayor’s 39-point program had failed to demonstrate any “visible effect on the root causes” of ghetto unrest. “Every day is growing worse,” she continued. “Hope goes a long way toward keeping things cool, but Negroes never get anything concrete to hang their hopes on. I don’t believe in violence, and I hope we don’t have any more. But we’d all better realize that many young Negroes have reached the point where they’re ready and willing to die because they figure they have nothing to lose.”

When the Sixties ended, Milwaukee was still known chiefly for its manufacturing. As of 1970, seven of the city’s top ten companies were engaged in that industry; together they employed nearly 47,000 people. But as the cost of manufacturing in the U.S. skyrocketed in subsequent decades—in large measure because of the unsustainably lavish deals that pro-Democrat unions had repeatedly negotiated on behalf of their dues-paying members—many of these businesses elected to move their operations abroad. Between 1970 and 2011, Milwaukee lost no fewer than 40% of its manufacturing jobs—a trend that dealt a severe economic blow to the entire city. From 1970 to 2007, the percentage of families in the Milwaukee metro area that were middle-class declined from 37% to 24%, while the percentage of households that were poor spiked from 23% to 31%.

milwaukee poverty rates graphicToday, per capita income in Milwaukee is $19,199 (32% below the national average); median household income is $35,823 (33% below the national average); and the poverty rate is 28.3% (nearly double the national average).

While joblessness and poverty plague the lives of so many Milwaukeeans, the ever-present threat of crime may be an even larger affliction for them. Milwaukee today has a violent crime rate that is 2.6 times greater than the national average, including a robbery rate of 4.4 times the national average and a murder rate that is triple the national average. African Americans are involved in these crimes in highly disproportionate numbers. In 2012, for instance, fully 80% of all homicide victims in the city were black, as were three-fourths of the known suspects.

The children of Milwaukee, meanwhile, have their own heavy cross to bear. Though the city’s public school system annually spends some $14,200 (about one-third more than the national average) in taxpayer funds on the education of each K-12 student in its jurisdiction, the the overall high-school graduation rate in the Milwaukee Public Schools (MPS) is a paltry 62.8%—far below Wisconsin’s 87% statewide average. On standardized National Assessment of Educational Progress (NAEP) tests administered in 2013 to measure students’ academic abilities:

  • Only 18% of Milwaukee’s fourth-graders scored as proficient or better in math.
  • Only 11% of Milwaukee’s eighth-graders scored as proficient or better in math.
  • Only 16% of Milwaukee’s fourth-graders scored as proficient or better in reading.
  • Only 13% of Milwaukee’s eighth-graders scored as proficient or better in reading.

Notably, in 1990 the Wisconsin State Legislature passed a bill creating the Milwaukee Parental Choice Program (MPCP), the first publicly funded voucher initiative in the United States. Though lawmakers initially restricted it to just 1,000 low-income public school students within the city, MPCP has since grown to become the largest voucher program in America, serving more than 20,000 students. A 2011 study published by School Choice Wisconsin indicated that students in the MPCP had a graduation rate 18% higher than their counterparts in the Milwaukee Public Schools (MPS). Moreover, like other voucher programs across the county, the MPCP operates much more efficiently, from an economic standpoint, than the public school system. As the Heritage Foundation noted: “At $6,442 per scholarship, the vouchers are less than half the $15,034 spent by MPS.”

Regardless of these facts, however, the teachers unions have fought tooth-and-nail against the MPCP. In 2013, for instance, Bob Peterson, president of the Milwaukee Teachers Education Association, denounced efforts to expand the use of vouchers as “slash and burn” measures designed to “destroy public schools.” The City Journal notes:

“According to the union-led anti-school-choice coalition, the problem with vouchers is that they are likely to cream off the best and brightest kids presently attending inner-city public schools, leaving only the most disadvantaged and academically unprepared children. Yet almost in the same breath, opponents of vouchers contend that those ‘cream of the crop’ children and their parents are too stupid to avoid being victimized by educational charlatans. Dire warnings about ‘witchcraft’ schools, ‘Farrakhan’ schools, and ‘creationist’ schools greedily waiting to get their hands on voucher money have been stock features in the teachers’ union propaganda.”

Another Milwaukee entity that strongly opposes voucher programs is the Educators’ Network for Social Justice (ENSJ), an alliance of classroom teachers and post-secondary instructors who have allied themselves with the Democratic Party of Milwaukee County and a number of local Democrat politicians. Committed to “promoting pro-justice curricula and policies so that all students in the Milwaukee area are better served,” ENSJ also opposes the use of standardized tests to measure student achievement and aptitude. In 2008, members of ENSJ and the organization Rethinking Schools co-founded a Social Studies Task Force designed to articulate concerns about the content of a social studies textbook series that was up for adoption by the Milwaukee Public Schools. ENSJ’s major objection was that the textbooks devoted insufficient attention to the “racism,” “anti-Semitism,” “stereotypes,” and “discrimination” that, by ENSJ’s telling, had always been a major part of American history. Yet another bone of contention was that the books did not discuss the fact that some early U.S. presidents were slave owners. According to ENSJ, it is impossible to “even minimally understand U.S. history” without exploring “racism,” “the dispossession of Native Americans from their lands,” “slavery and lynchings,” or the “anti-Chinese riots at the turn of the century in which hundreds were killed.” “By omitting the ‘r’ word” from their historical narrative, adds ENSJ, “texts help to obscure racism’s relationship to economic exploitation—whether in the case of slavery, the theft of Indian and Mexican land, the underpayment and mistreatment of Chinese railroad workers in the mid-19th century, or the use of Third World sweatshop workers today.”

As a consequence of the poverty, crime, unemployment, and dysfunctional school system that have become the hallmarks of life in Milwaukee, the city’s population has declined markedly in recent decades, from 741,000 in 1960 to just 599,000 today. An estimated 5,000 houses—mostly in impoverished neighborhoods—are vacant and abandoned throughout the city.

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EDITORS NOTE: This piece was originally posted in May 2014.

Mr. Trump Make America Great Again by ending Obama’s ‘policy of cheating small businesses’

american small business league logoDear Mr. Trump,

I would like to offer some suggestions based on U.S Census Bureau data that will help you “Make America great again” and “Jump start America.”

The Census Bureau data indicates there are over 28 million small businesses in America and that they are responsible for over 90% of the net new jobs. The Small Business Administration released a report that found businesses with fewer than 20 employees account for 90% of all U.S. firms and are responsible for more than 97% of all new jobs.

American small businesses are responsible for over 50% of the private sector work force, over 50% of the GDP and over 90% of all U.S. exporters are small businesses.

I have made a five-minute video of Obama, Bush, Secretary Clinton and your pal, Ted Cruz, talking about the importance of small businesses to job creation.

Clearly, if you want to create more jobs you can’t do it without helping small businesses. The single largest federal economic stimulus program ever passed by Congress, specifically for small businesses, is the Small Business Act. Today that federal law mandates that a minimum of 23% of the total value of all federal prime contracts be awarded to small businesses. Within that goal is a separate 5% goal for woman-owned small businesses, a 5% goal for minority-owned small businesses and a 3% goal for service disabled veteran owned small businesses.

Here’s the problem, a long series of federal investigations have found most of the money that is supposed to go to small businesses is actually going to Fortune 500 firms and their subsidiaries.

NBC, CBS, ABC, CNN, MSNBC, CNBC, Fox News, RTTV and Mother Jones have all reported on the abuses.

So here is my suggestion, why don’t you promise America’s 28 million small businesses and the 50% of the private sector work force they employ, if you are elected President, you will guarantee they will receive the 23% of all federal contracts the law requires.

If you end the Obama Administration policy of cheating small businesses and small businesses owned by women, minorities and service disabled veterans, I’m sure they will be very very appreciative.

Lloyd Chapman
American Small Business League

Infrastructure Unites Voters in Divisive Election Year — Advantage Trump

MILWAUKEE, Wis. /PRNewswire-USNewswire/ — With 90 days left before Election Day, a national poll released Tuesday by the Association of Equipment Manufacturers (AEM) found that half of registered voters say the nation’s infrastructure has gotten worse over the last five years, and a majority of voters said roads and bridges are in “extreme” need of repair.

Donald Trump at the Detroit Economic Club stated:

We will build the next generation of roads, bridges, railways, tunnels, sea ports and airports that our country deserves. American cars will travel the roads, American planes will connect our cities, and American ships will patrol the seas.

AEM notes that the findings were part of a new national poll to gauge voter perceptions and attitudes about the current and future state of U.S. infrastructure amid a high-profile election. The poll found that registered voters, regardless of political affiliation, recognize the declining state of the nation’s infrastructure as an issue that should be addressed and believe that the federal government should do more to improve infrastructure across the board.

“Americans across the political spectrum understand the dire state of U.S. infrastructure and believe that the federal government should do more to improve our infrastructure,” said Dennis Slater, president of AEM. “Voters recognized that increased federal funding for assets such as roads, bridges, and inland waterways will have a positive impact on the economy, and they are looking to the federal government to repair and modernize.”

The national poll identified a number of key findings, including:

  • Nearly half (46 percent) of registered voters believe that the state of the nation’s infrastructure has gotten worse in the last five years.
  • A significant majority (80 – 90 percent) of registered voters say that roads, bridges and energy grids are in some or extreme need of repairs.
  • Half (49 percent) of the surveyed population feel that the federal government is primarily responsible for funding repairs to the nation’s infrastructure.
  • Seven out of every 10 registered voters say increasing federal funding for infrastructure will have a positive impact on the economy.
  • More than eight out of every ten Americans consider water infrastructure (86 percent), solar powered homes (83 percent) and smart infrastructure (82 percent) as the top three important innovations for the future of infrastructure.
  • Voters across the political spectrum think that the federal government should do more to improve the nation’s overall infrastructure, with 68 percent of Republicans, 70 percent of Independents and 76 percent of Democrats sharing this sentiment.

Registered voters also feel that government across the board should be doing more to improve the nation’s overall infrastructure, with 76 percent of individuals surveyed wanting more from state governments, 72 percent looking to the federal government to do more and 70 percent expecting more from local governments.

“Both presidential nominees have voiced their strong support for infrastructure investment,” said Ron De Feo, CEO of Kennametal and chairman of AEM’s Infrastructure Vision 2050 initiative. “The specific ideas and proposals they offer over the next 90 days will be critically important, and voters should consider them carefully on Election Day.”

The national poll was conducted as part of AEM’s ongoing efforts to develop a long-term national vision for U.S. infrastructure. An analysis of the national poll results is available here.

aem logoAbout the Association of Equipment Manufacturers (AEM) – www.aem.org

AEM is the North American-based international trade group providing innovative business development resources to advance the off-road equipment manufacturing industry in the global marketplace. AEM membership comprises more than 850 companies and more than 200 product lines in the agriculture, construction, forestry, mining and utility sectors worldwide. AEM is headquartered in Milwaukee, Wisconsin, with offices in the world capitals of Washington, D.C.; Ottawa, Canada; and Beijing, China.

Can We Chill on Denouncing the Rich? by Doug Thorburn

The mother lode of higher wages and higher standards of living is capital. Consider: what’s a trucker worth without a truck?

Let the question (and your intuitive response to self) sink in for a bit, while we ask similar questions of others. What’s a gaffer worth without the lights? What’s a ballplayer worth without TV? What’s a server worth without a restaurant? What’s a store clerk worth without the store and computer chips and scanner? I’ll even ask it of myself: what am I worth without my computer?

Let’s go back to the trucker. Without a truck, his value to others diminishes to near-zero. Compared with a Chinese Cooley carrying the trucker’s cargo on his back, the Cooley is worth a lot less, isn’t he? The trucker might not be as smart, as educated or as strong; yet, he’s worth thousands of times more than the Cooley. Why? Because of the truck.

Now, ask a simple question: who paid for that truck—a poor guy or a rich guy? You know the answer. Who employed the trucker—and kept him employed—a poor guy or a rich guy? Likely a rich guy. Few remain employed by poor guys, at least for very long.

Likewise, who paid for the factory that built the truck? A rich guy, but ok, maybe lots of rich guys or, in the United States, median-income guys (who are rich when compared with the living standards of those in most other countries). Same with the factory that makes computer chips in enough volume to bring the price down to pennies per gigabyte, which takes billion dollar factories.

Poor people don’t build those; rich guys do. The same is true for the lighting and TV/movie studios where the gaffer executes lighting plans, the TV factories and cables that put the ballplayer (and actors and news anchors) on television; the restaurant and factories that build the supplies every server uses every workday; the store the clerk works at and the registers and scanners he uses.

And, me too. I’m worth a heck of a lot less without a computer, which has made things immeasurably more efficient (even as it allows government to complicate things to a degree unimaginable in the paper and pencil age). I hold no grudges against those with the brains and savings to create and build the computer chips and monitors that make my work far more efficient than it would be without such chips and monitors. In fact, I’d like to make it easier for them—which would make me worth even more to consumers of my services. I’d like to let them keep more of their earnings. In fact, all of it.

Three Ways to Create Wealth

There are only three ways to create real wealth, none of which involve involuntary transfers or, more bluntly, theft. The obvious is via the production of goods or services that are sold to willing buyers, or donated to willing recipients. Except for voluntary donations of wealth, if others don’t willingly purchase goods and services, they don’t ascribe higher values than payments made and, therefore, wealth hasn’t been created; it has been consumed. If they are voluntarily given, to the extent the property or services were of less value to the donor and more value to the donee, wealth has been created, even if there is no unit by which to measure such wealth creation. (Still, there’s nothing wrong or immoral about such charity.) Note that sales or otherwise voluntary transfers imply that such goods and services work, operate or act as advertised (i.e., fraudulent conveyances do not create wealth).

A less obvious way of creating wealth is by investing in plant, equipment, education and training that increases the quality and quantity of the production of goods and services that can be traded. An even less obvious way is via protecting that which has been produced. This creates wealth indirectly: people are more likely to produce whatever they can keep or trade for other kinds of wealth, which means property rights and contract enforcement are fundamental to the creation of wealth.

Most people see that education or training creates wealth, directly or indirectly. Yet, by itself, little or no wealth is created. Of what value is a computer programmer without a computer? How much are newscasters, actors or professional athletes worth without TV and the billions in (private) infrastructure to showcase their talents? How much wealth is created by a skilled welder without welding equipment, or machines or tools to weld? Is any wealth created by training an astronaut when there is no space capsule (built by private contractors)? How about a geologist without a drilling rig or the millions of dollars in equipment required to dig—or a trucker without a truck?

The Trouble with Taxing the Rich

Higher tax rates at every level discourage increased production. When a retiree, with a wealth of knowledge and a lifetime of experience, is subjected to federal income tax rates of 46.25% on a “chunk” of income because of the way Social Security is added to the taxable base, she is much less likely to work—which means she is less likely to produce things that others consume. When she realizes she is slammed with 15.3% Self-Employment tax and a 9% state income tax on top of the 46.25% federal tax, she is likely to walk off the job; after all, even serfs were required to render unto Caesar only 20% of what they produced.

When a young entrepreneur grasps the fact that every dollar he earns, representing the creation of goods or services that others willingly purchase, is subject to 40% tax rates, he is much less likely to work longer or harder. At some point, the trade-off of pleasure is perceived as having greater value than work, which means the provision of value for others reaches an early limit.

Worse, the budding entrepreneur has less capital, which translates to less production and fewer purchases of the tools, equipment and continuing education required to increase productivity—thereby decreasing the supply of goods and services that would otherwise be made available to others.

Investors are often a different breed. They don’t usually stop investing, making them a rich target for exorbitant taxation. However, taxes remove from their coffers the funds with which to create the tools, equipment and machinery required for the use of educated, trained or skilled worker-producers.

Such funds are moved into the hands of government, which usually simply transfers funds and, when it invests (as in infrastructure and education) has proven itself time and again to be a lousy investor (think: Solyndra). Because it lacks a cybernetic feedback mechanism informing it’s doing a great, good or lousy job—specifically, a profit or a loss that threatens to put it out of business or actually does so for not pleasing King Consumer—goods and services are not as efficiently provided.

If instead investors were allowed to keep their funds and invest, we would all be wealthier—including those of us who make their living via the use of trucks and computers.

Beyond a point, wealthy people invest. They often live far below their means and invest the rest. Is it really them, then, that benefit from their capital? No. It’s the billions of people who benefit from the billions invested in microchip factories; it’s the billions benefiting from car production facilities; it’s the millions of people who benefit from rides at Disneyland every year—where most Americans can take multiple million-dollar rides for the price of a day’s work or less.

The benefits of capital—owned by both the super-wealthy and more middle-to-upper income folks largely via retirement accounts, investing more modest amounts—are provided to us, from smartphones and laptops to trips to Disneyland and ocean cruises—for our enjoyment for a tiny fraction of the cost of that capital. Billions for the enjoyment and benefit of billions.

Stop with the Taxes

Hence, low marginal tax rates on high-income earners are desirable not because they need the money—but rather because WE need it, in the form of capital, which comprises investable funds. Only this creates plant and equipment that produce our smart phones and airliners and cruise ships making possible our vacations to faraway places our ancestors only a century ago couldn’t even dream of.

This capital, too, is the mother of income equality: when you consider all the “things” we have today that either didn’t exist 50 years ago or did but for which the real cost has collapsed, capital equalizes earning power among the unskilled, weak and infirm.

Consider: nearly anyone can operate machinery that does the vast majority of the work—the production—and earn a decent income. A person with an IQ of 120 has no advantage over one with an IQ of 80 when operating a big rig; nor does one weighing 240 pounds have an advantage over one weighing 120 pounds. A man has no advantage over a woman programming or operating a computer. The able-bodied have little or no advantage over the disabled in creating computer imagery.

Flat and low tax rates create a motherlode of capital. Middle-to-upper income people who do not consume all their earnings invest their savings and create the capital required for the plant and equipment— the microprocessor factories and the trucks—that create a higher standard of living for everyone, including the poor, infirm and disabled.

Doug Thorburn

Doug Thorburn

Doug Thorburn, EA, CFP, Alcoholism Researcher, Author of “Alcoholism Myths and Realities” and numerous other books and articles. “Protect yourself from financial abuse.”

During his acceptance speech Donald Trump draws 61 lines in the sand

Donald Trump “humbly and gratefully” accepted the Republican Party nomination for the presidency of the United States on July 21st, 2016.

The theme of Mr. Trump’s acceptance speech was to show the differences between him, Hillary Clinton, Barack Obama and the Democratic Party’s platform. Trump summed it up by saying:

My opponent asks her supporters to recite a three-word loyalty pledge. It reads: “I’m with her.” I choose to recite a different pledge. My pledge reads: “I’m with you the American people.”

During his acceptance speech Mr. Trump drew clear domestic and national security policy lines in the sand. Here are the lines in the sand from Mr. Trump’s acceptance speech:

  1. [W]e will lead our country back to safety, prosperity, and peace.
  2. We will be a country of generosity and warmth.
  3. [W]e will also be a country of law and order.
  4. The crime and violence that today afflicts our nation will soon — and I mean very soon come to an end.
  5. We cannot afford to be so politically correct anymore.
  6. The problems we face now — poverty and violence at home, war and destruction abroad — will last only as long as we continue relying on the same politicians who created them. A change in leadership is required to produce a change in outcomes.
  7. [O]ur plan will put America first.Americanism, not globalism, will be our credo.
  8. The American people will come first once again.
  9. My message is that things have to change and they have to change right now.
  10. I have no patience for injustice. No tolerance for government incompetence.
  11. I know that corruption has reached a level like never ever before in our country.
  12. I have joined the political arena so that the powerful can no longer beat up on people that cannot defend themselves.
  13. Nobody knows the system better than me, which is why I alone can fix it. I have seen firsthand how the system is rigged against our citizens, just like it was rigged against Bernie Sanders.
  14. [W]e are going to fix the system so it works fairly and justly for each and every American.
  15. We will bring the same economic success to America that [Governor and Vice President nominee] Mike brought Indiana.Hi
  16. The first task for our new administration will be to liberate our citizens from the crime and terrorism and lawlessness that threatens their — our communities.
  17. When I take the oath of office next year, I will restore law and order to our country.
  18. I am the law and order candidate.
  19. I will work to ensure that all of our kids are treated equally, and protected equally.
  20. We are going to defeat the barbarians of ISIS. And we are going to defeat them bad.
  21. I will do everything in my power to protect our LGBTQ citizens from the violence and oppression of a hateful foreign [Islamic] ideology.
  22. We must have the best, absolutely the best, gathering of intelligence anywhere in the world.
  23. We must abandon the failed policy of nation- building and regime change that Hillary Clinton pushed in Iraq, Libya, in Egypt, and Syria.
  24. we must work with all of our allies who share our goal of destroying ISIS and stamping out Islamic terrorism and doing it now, doing it quickly.
  25. We’re going to win. We’re going to win fast. This includes working with our greatest ally in the region, the state of Israel.
  26. [W]e must immediately suspend immigration from any nation that has been compromised by terrorism until such time as proven vetting mechanisms have been put in place. We don’t want them in our country.
  27. I only want to admit individuals into our country who will support our values and love our people. Anyone who endorses violence, hatred or oppression is not welcome in our country and never ever will be.
  28. We are going to have an immigration system that works, but one that works for the American people.
  29. We are going to build a great border wall to stop illegal immigration, to stop the gangs and the violence, and to stop the drugs from pouring into our communities.
  30. By ending catch-and-release on the border, we will stop the cycle of human smuggling and violence.
  31. Peace will be restored by enforcing the rules for the millions who overstay their visas, our laws will finally receive the respect they deserve.
  32. We are going to be considerate and compassionate to everyone. But my greatest compassion will be for our own struggling citizens.
  33. I have a different vision for our workers. It begins with a new, fair trade policy that protects our jobs and stands up to countries that cheat — of which there are many.
  34. I’m going to make our country rich again. Using the greatest business people of the world, I’m going to turn our bad trade agreements into great trade agreements.
  35. I am going to bring our jobs back our jobs to Ohio and Pennsylvania and New York and Michigan and all of America and I am not going to let companies move to other countries, firing their employees along the way, without consequences.
  36. I pledge to never sign any trade agreement that hurts our workers, or that diminishes our freedom and Independence. We will never ever sign bad trade deals. America first again. American first.
  37. I will make individual deals with individual countries. No longer will we enter into these massive transactions with many countries that are thousands of pages long and which no one from our country even reads or understands.
  38. We are going to enforce all trade violations against any country that cheats. This includes stopping China’s outrageous theft of intellectual property, along with their illegal product dumping, and their devastating currency manipulation.
  39. I have proposed the largest tax reduction of any candidate who has run for president this year, Democrat or Republican. Middle-income Americans will experience profound relief, and taxes will be greatly simplified for everyone. I mean everyone.
  40. Excessive regulation is costing our country as much as $2 trillion a year, and we will end and it very quickly.
  41. We are going to lift the restrictions on the production of American energy.
  42. We will build the roads, highways, bridges, tunnels, airports, and the railways of our tomorrow.
  43. We will rescue kids from failing schools by helping their parents send them to a safe school of their choice.
  44. We will repeal and replace disastrous Obamacare. You will be able to choose your own doctor again.
  45. [W]e will fix TSA at the airports, which is a total disaster.
  46. We are going to work with all of our students who are drowning in debt to take the pressure off these young people just starting out in their adult lives.
  47. We will completely rebuild our depleted military.
  48. [T]he countries that we protecting at a massive cost to us will be asked to pay their fair share.
  49. We will take care of our great veterans like they have never been taken care of before.
  50. We will guarantee those who serve this country will be able to visit the doctor or hospital of their choice without waiting five days in a line and dying.
  51. We are going to ask every department head and government to provide a list of wasteful spending projects that we can eliminate in my first 100 days.
  52. We are also going to appoint justices to the United States Supreme Court who will uphold our laws and our constitution.
  53. My opponent wants to essentially abolish the 2nd Amendment. I, on the other hand, received the early and strong endorsement of the National Rifle Association. And will protect the right of all Americans to keep their families safe.
  54. An amendment, pushed by Lyndon Johnson, many years ago, threatens religious institutions with a loss of their tax-exempt status if they openly advocate their political views. Their voice has been taken away. I will work hard to repeal that language and to protect free speech for all Americans.
  55. [M]y sole and exclusive mission is to go to work for our country, to go to work for you. It is time to deliver a victory for the American people. We don’t win anymore, but we are going to start winning again. But to do that, we must break free from the petty politics of the past.
  56. I will be a champion.Your champion.
  57. I am your voice. So to every parent who dreams for their child, and every child who dreams for their future, I say these words to you tonight: I’m with you, and I will fight for you, and I will win for you
  58. We will make America strong again.
  59. We will make America proud again.
  60. We will make America safe again.
  61. And we will make America great again!

Here is the video of Donald Trump’s acceptance speech:

When Employers Compete, Workers Win — When They Can’t, Workers Lose by Donald J. Boudreaux

David Henderson does a very nice job summarizing why stripping workers of the right to offer X as part of an employment contract makes most workers worse off, even if the intention of the government officials who do the stripping is to help workers — and, indeed, even if a Nobel laureate economist misses this reality.

Here’s another part of the picture.

Workers’ bargaining power ultimately is tied positively to workers’ alternatives: the greater the number, and the better the quality, of a worker’s employment options, the stronger is that worker’s bargaining power. If many different employers are competing for your services — each by offering you good pay, good benefits, and good work conditions — you as a worker have splendid bargaining power.*

It follows that government interventions that reduce the creation of good jobs— that is, interventions that reduce firms’ incentives to create better opportunities for employing human labor — reduce workers’ bargaining power. In turn, it follows that if overtime-pay arrangements of the sort that emerge in the absence of government restrictions on employment contracts are for many firms and workers the most efficient sorts of labor contracts available — as they are likely to be in a competitive economy — then government prohibitions that make those contract terms illegal will reduce firms’ efficiencies and, hence, dampen their willingness to create new jobs that pay as much as jobs would pay in the absence of those prohibitions.

Put differently, government restrictions that shrink the ways that employers can squeeze more efficiency into their operations shrink the number of jobs that are created, or reduce the maximum pay that employers can offer to employers who perform newly created jobs.

Over time, therefore, regulations such as the newly imposed overtime-pay diktats dampen workers’ bargaining power by reducing the number of high-as-possible-quality jobs created by employers. With fewer such jobs, there’s less competition for workers.  And with less competition for workers, workers’ bargaining power shrinks.

Note that empirically documenting this reduced competition for workers, as well as documenting its effects on workers’ pay (lower than otherwise), fringes (lower than otherwise), and work conditions (worse than otherwise) would be practically impossible. Because the consequences of these diktats play out fully only over a long span of time, it is simply too difficult for an empirical investigator to uncover, amidst all the countless other changes that occur in the economy, the details of what pay, fringes, and work conditions would beotherwise — that is, had such diktats not been imposed.

Yet unless you think you can say nothing absent empirical evidence about the effects on workers’ well-being of a reduction in the intensity and quality of competition for labor, then you should worry that these new overtime-pay diktats will, over time, make many workers worse off than they would otherwise be.

* Note that if, in this situation, you as the worker (whose services employers are competing for) agree to reduce the value that you will receive on one margin (say, pay) in order to increase the value you will receive on another margin (say, working conditions), it would be wholly mistaken for an outside observer to notice your agreement to work for lower pay and conclude from that observation that youremployer has undue bargaining power over you. And it would harm you if this outside observer, arrogant in his or her ignorance of the details of your and your employer’s affairs, orders your employer to increase your pay to some level higher than you agreed to accept.

Cross-posted from the indispensable Cafe Hayek.

Donald J. Boudreaux

Donald J. Boudreaux

Donald Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, a professor of economics and former economics-department chair at George Mason University, and a former FEE president.

Hey Clinton, Sanders Supporters: ‘It’s Not Racist To Put Americans’ Jobs First’

LOS ANGELES, California /PRNewswire-USNewswire/ — Californians for Population Stabilization (CAPS) launched a radio ad today in Los Angeles reminding Californians that putting Americans’ jobs first isn’t racist. The commercial features civil rights leader and former Congressional Black Caucus Foundation Executive Director Frank Morris and is running on multiple radio stations in Los Angeles, including the top urban contemporary station.  The ads are scheduled to run for the next week.

“Many of my Democratic brothers and sisters have unknowingly become pawns of Wall Street and the US Chamber of Commerce open border propaganda machine,” commented Frank Morris, civil rights leader and member of Californians for Population Stabilization.  “They’re labeling slower immigration policies racist when less immigration would mean more jobs and better wages for minorities in California.” Morris continued, “People need to realize that Wall Street wants more immigration so there are more of us competing against each other for jobs.  That keeps wages low and corporate profits high.”

As the California primary has approached, protests have proliferated throughout the state with much of demonstrator’s ire directed at Republican presidential candidate Donald Trump and his inflammatory comments many have labeled racist.  Demonstrators have also conflated Trump’s rhetoric with his proposed policy of reducing mass immigration, calling slower immigration policies racist.

Morris commented, “Donald Trump is dead wrong to make sweeping generalizations about specific groups and should be admonished if not repudiated for doing so.  But people need to recognize that the policy of reducing mass immigration has merit.  It’s not racist to put the job interests of American workers first. That’s just common sense.  It would be nice if Hillary and Bernie stepped up and called for less low skilled foreign workers, not more.”

Both Clinton and Sanders support amnesty for eleven million illegal aliens.  Both support President Obama’s executive actions for millions here illegally, giving them legal authorization to compete for American jobs.   And both Clinton and Sanders have promised to double down on President Obama’s executive actions if elected.

“Traditionally, our Democratic leaders have stood up for working class Americans but in this case, Clinton and Sanders policies would hurt African Americans and Hispanic Americans,” commented Morris.

As of April 2016, more than one million Californians were still unemployed with hundreds of thousands more under-employed or having given up looking for work.  And while the state’s overall unemployment rate has been improving, African Americans and Hispanic Americans aren’t faring as well as whites.   In 4Q 2015, the unemployment rate for African Americans was 10.9%, Hispanic Americans 7.2% and whites 4.4%.  Californiacontinues to have one of the highest African American unemployment rates in the country.

“How can our leaders call for more immigration, more foreign workers when millions of Americans still can’t find jobs?” asked Morris.

To learn more, visit CAPSWeb.org.

RELATED VIDEO: Was an Endless Flow of Immigrant Workers who Take Jobs and Suppress Wages Dr. King’s Dream?

Do CEOs Make 335 Times More Than Average Workers? by Mark J. Perry

Manufacturing Ammo for Class Warfare.

The AFL-CIO released its annual report on CEO pay last week (see details here and here), and has calculated a CEO-to-worker-pay ratio of 335-to-1 for 2015, based on the average total compensation package for S&P 500 CEOs of $12.4 million last year, and average annual pay of $36,875 for America’s 99 million rank-and-file workers.

Here are some observations on the AFL-CIO’s questionable methodology that is uses every year to calculate an inflated CEO-to-worker pay ratio (see this related CD post from last May), and an analysis of how a complete confiscation of CEO pay would affect average worker pay.

Dubious Math for Worker Pay

In its 2016 report, the AFL-CIO reports that the average nonsupervisory rank-and-file worker made $36,875 annually in 2015 based on “average nonsupervisory worker pay according to Bureau of Labor Statistics’ 2015 data.”

No other details are provided, but the $36,875 annual average worker pay calculated by the AFL-CIO is apparently based on an hourly wage of $21.04 for the average nonsupervisory worker in 2015 (BLS data here), an average workweek of only 33.7 hours (BLS data here) for the average rank-and-file nonsupervisory worker, and an assumption of 52 weeks of work per year ($21.04 per hour x 33.7 hours per week x 52 weeks ≈ $36,875).

Here’s an important statistical issue: Every year the AFL-CIO does an apples-to-oranges comparison of: a) total CEO compensation for only 500 CEOs working full-time to b) the cash wages only for 99 million rank-and-file workers, who work less than 35 hours per week on average, and are therefore mostly part-time workers.

But you would never know that from the AFL-CIO’s website because the details of average worker pay are never really explained, and I guess nobody has ever bothered to check and find out that the AFL-CIO is using average annual worker pay for mostly part-time employees who only work 33.7 hours per week on average.

Questions: a) How would the AFL-CIO’s CEO-to-worker pay ratio change if we calculate average worker pay for full-time workers, b) how would the ratio change if we compare the average pay for a rank-and-file workers who work the same number of hours that a typical CEO works, e.g. 45, 50 or 60 hours per week, and c) how would the ratio change if we compare total compensation of both CEOs and rank-and-file workers working full-time?

The chart above summarizes how the CEO-to-worker pay ratio would change, here are the details:

a. Assuming a 40-hour workweek for a rank-and-file worker at an hourly wage $21.04 and average annual pay of $43,763, we would get a CEO-to-worker pay ratio of 283-to-1.

b. Assuming a 45-hour workweek for rank-and-file workers at an hourly wage $21.04 (and 5 weekly hours of overtime at $31.56 an hour) and average annual pay of $51,969, the CEO-to-worker pay ratio would be 239-to-1.

c. Assuming a 50-hour workweek for rank-and-file workers at an hourly wage $21.04 (and 10 weekly hours of overtime at $31.56 an hour) and average annual pay of $60,174, we would get aCEO-to-worker pay ratio of 206-to-1.

d. Assuming a 60-hour workweek for rank-and-file workers at an hourly wage $21.04 (and 20 weekly hours of overtime at $31.56 an hour) and average annual pay of $76,585, the CEO-to-worker pay ratio would be 162-to-1 (or less than half of the AFL-CIO’s reported ratio of 335-to-1).

e. Assuming a 40-hour workweek for full-time rank-and-file workers at $21.04 an hour, and adding the monetary value of employer-provided benefits of $9.59 per hour (based on the 45.6% average that benefits represent as a share of hourly earnings according to the BLS), and total compensation of $63,719, we would get a CEO-to-worker compensation ratio of 195-to-1.

If we further considered a 50 or 60 hour workweek and fringe benefits for rank-and-file workers for an even more accurate apples-to-apples comparison, the CEO-to-worker pay ratio starts approaching 100-to-1, which is a far cry from the AFL-CIO’s 335-to-1 ratio that will be generating sensationalized media coverage in the coming weeks.

Confiscation and Redistribution of CEO Pay

And what’s the whole point of the AFL-CIO’s annual reports on CEO-to-worker pay ratio? The sub-title of the AFL-CIO’s 2015 Executive Paywatch websitepretty much sums it up: “High paid CEOs and the low wage economy.” The AFL-CIO’s message seems to be that if CEOs weren’t being so generously over-compensated then the rank-and-file workers would be doing much better and making higher wages. For example, according to the AFL-CIO in 2014:

America is supposed to be the land of opportunity, a country where hard work and playing by the rules would provide working families a middle-class standard of living. But in recent decades, corporate CEOs have been taking a greater share of the economic pie while workers’ wages have stagnated.

The AFL-CIO has fallen here for the zero-sum, fixed pie fallacy, one of the most common economic mistakes that falsely assumes that one party can gain only at the expense of another. But let’s assume that there is a “fixed pie of wages” and do some confiscation and redistribution of CEO compensation to see how that would affect average rank-and-file worker pay.

Question: If the CEOs of the S&P 500 companies received $12.4 million on average last year, then as a group, those 500 CEOs received about $6.20 billion in total compensation in 2015. If the AFL-CIO could wave a magic wand and confiscate that entire amount and redistribute $6.20 billion to the current 99 million rank-and-file workers, what would each one get?

Answer: An annual increase in pay of about $63 for each rank-and-file worker before taxes, or about $1.20 more per week, or 3.5 cents per hour. In other words, complete confiscation and redistribution of S&P 500 CEO compensation would make almost no difference for the average rank-and-file worker.

Bottom Line

The AFL-CIO can only get a distorted and inflated CEO-to-worker pay ratio of 335-to-1 with an apples-to-oranges analysis that compares the total annual compensation of a small, select group of CEOs heading America’s largest multi-national corporations, who probably typically work 50-60 hours per week or more, to the average annual cash wages of part-time rank-and-file employees who work less 34 hours per week on average.

Once we make a more statistically valid apples-to-apples comparison, the CEO-to-worker pay ratio falls in half from the AFL-CIO’s 335-to-1 ratio to only 162-to-1 if we assume a 60-hour work week for the average worker (to be comparable to the workweek of an average CEO), and the ratio falls to less than 200-to-1 once we consider total compensation for both CEOs and full-time rank-and-file workers. Further, even if we could confiscate 100% of the compensation of all S&P 500 CEOs, the typical rank-and-file worker would probably get less than $1 per week in after-tax earnings. Big deal.

Just like last year, the CEO-to-worker pay ratio reported by the AFL-CIO gets my annual “Biggest Blindly Accepted Statistical Fairy Tale of the Year Award.” Well no, it’s actually a tie with the gender wage gap myth and the incessantly repeated “77 cents on the dollar” statistical falsehood. What’s disappointing is that much of the mainstream media seem to blindly accept both of these statistical falsehoods without ever challenging the “statistical legerdemain” that are used to produce and perpetuate these statistical myths.

One exception was this excellent article last year by IBD’s John Merline (“Do CEOs Make 300 Times What Workers Get? Not Even Close“) who concluded:

What’s not understandable is why the mainstream press keeps repeating the massively inflated 300-to-1 number without noting the statistical legerdemain that produced it.

This article is reprinted with the permission of the American Enterprise Institute.

Mark J. Perry

Mark J. Perry

Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

Telsa Motors Misuses B-1 Visas to Import Cheap Labor

NumbersUSA reports:

2016.05.17_TeslaMotorsA new investigative report showed that Tesla Motors’ contract company, Eisenmann, paid a smaller Slovenian company, Vuzem, to hire foreign workers through the B-1 visa program. The companies misrepresented the foreign workers in order to obtain the visas so they could import cheaper, foreign labor instead of hiring American workers.

The B-1 visa allows foreign workers to enter the U.S. for temporary and limited work purposes, such as to join a conference or to supervise or train U.S. workers in a specialized skill. The visa does not permit the worker to perform hands-on jobs that U.S. workers can do and under this visa a worker cannot receive payment from a U.S. company. The visa can last up to six months and there is no set cap for the number of visas allowed each year, 6.2 million B-1/B-2 visas were issued in 2014.

The B visa, along with the L-1 visa, could displace thousands of American workers and depress wages if the United States ratifies the Trans-Pacific Partnership free trade agreement.

Gregor Lasnik, a Slovenian worker hired by Vuzem, has a pending lawsuit against Tesla Motors, Eisenmann, and Vuzem after being injured while helping to build Tesla’s new Fremont plant.

According to court documents Lesnik’s visa application included a letter written by Robert Keller, Eisenmann’s Chicago area-based U.S. purchasing manager, to the U.S. consulate stating that Lesnik would be working for a European subcontractor and had “specialized knowledge” to help build a new paint shop for BMW in South Carolina. The letter also assured that that Lesnik’s employment would “in no way adversely affect the employment of citizens of the United States.”

The visa application also included a hotel reservation in a South Carolina and titled Lesnik as a, “supervisor of electrical and mechanical installation”, even though he had been an unemployed electrician in his country and spoke only a little English. After being approved for the B-1 visa Lesnik was told he would actually be going to California and helping to build Tesla’s new plant.

This misrepresentation on B-1 visa applications has become a common problem, Infosys, an IT firm, was fined $34 million in 2014 for circumventing B-1 regulations among other offenses.

Overseas contractors use the B-1 visa to import foreign workers that will work long hours for low wages, even though it violates visa and labor laws. Lesnik says he was making the equivalent of $5 an hour while working on the Tesla plant. An American company had lost the Tesla contract bid due in part to higher labor costs.

“We have concluded that there is widespread abuse of the B-1 visa in the Bay Area,” said Michael Eastwood, assistant district director of the San Jose area office of the U.S. Department of Labor.

“It’s the wonderful world of unregulated visas,” said Daniel Costa, an immigration law and policy researcher at the Economic Policy Institute.

All three companies refused to comment on the pending legal case. Tesla and Eisenmann deny responsibility since Lesnik was directly hired by Vuzem.

Read more on this story at The Mercury News.

One Company Proudly Bringing Back the ‘Made in America’ Label

“The American manufacturing industry has been an icon for over a century – accounting for nearly 35% of the American economy and nearly $6 trillion dollars of GDP. Recently, we put together a video over at Liberty Tabletop that highlights many of the environmental and economic statistics American manufacturing has to offer,” states Phoebe Parlade, content manager for Liberty Tabletop.

Is it again time for consumers to buy only Made in America products?

Here is the video Parlade refers to which tells a chilling story that Made in America is not what it used to be:

Liberty Tabletop website notes:

Cheap products, imported from overseas, which so many Americans have bought in recent decades have not only cost jobs, and seen millions of overseas workers slave away in horrific conditions on unlivable wages, but are a big factor in the the shipping industry contributing to almost 5% of the whole world’s pollution.

Every time an American citizen buys an imported product, our trade deficit widens. Forbes calls it the ‘destroyer of jobs’. Every year, because we import more than we export, 3% of our economy and wealth is lost overseas. That doesn’t sound like much, but it soon adds up. Over the last 39 years we’ve lost 8 TRILLION dollars. All of that translates into lower wages, lower profits, weaker markets and more unemployment at home when we don’t support American made products.

There’s more than just the money we’ve lost forever, though. The health and safety of foreign workers is much less of a consideration in many developing manufacturing economies. Not only the health and safety of the workers though, your health and safety is put at risk too. We’ve seen radioactive steel and poisonous drywall as well as poisonous flooring imported to the US in recent decades. Our home-grown manufacturers share your values, and obey our laws, and are subject to some of the strictest, and most rigorous rules in the developed world. I know which spoon I’d rather feed my baby with!

Read more.

RELATED ARTICLE: Resource Guide: Buy American, Buy Union-Made

California’s Statewide $15 Minimum Wage Will Horribly Backfire for Poorer Cities by Mark J. Perry

I wrote earlier this month about one of the potentially fatal flaws of California’s recently enacted $15 an hour statewide minimum wage: a one-size-fits-all uniform $15 minimum wage for the entire state of California is really a “one-size-fits-none” minimum wage, given the huge variations in the cost of living around the country’s most populous state.

While a high-wage, high cost-of-living city like San Francisco might be able to absorb a $15 minimum wage without experiencing significant negative employment effects, that same $15 wage could inflict serious economic damages and result in job losses for many of the state’s 500 cities that are in low-wage, low cost-of-living areas.

To help understand how the “one-size-fits-all” approach of a $15 an hour state minimum wage will have a disproportionately adverse impact on low-cost communities in California, the table below displays the “living hourly wages” for California’s 26 metropolitan statistical areas (MSAs), based on data from MIT’s Living Wage Calculator for the year 2014 (most recent year available).

According to the MIT website, the cost-of-living adjusted living wages are the “hourly rates that individuals must earn [in a given MSA] to support their family [and cover basic family expenses], if they are the sole provider and are working full-time (2,080 hours per year).” Living wages for adult workers with 1 to 3 children are also displayed in the table.

The living wage data shown above reveal huge differences in the cost-of-living between low-cost California MSAs like Yuba City, El Centro, Chico, and Merced (living wages are below $10 an hour) and high-cost cities like San Francisco and San Jose, where the cost-of-living adjusted living wage is 38% higher.

If $15 an hour is an appropriate minimum wage for San Francisco, it should be less than $11 an hour in MSAs like Yuba City and El Centro, where the cost-of-living is significantly lower. It’s also important to note that all four of those low-cost MSAs had jobless rates above the state average in February, and three of them (all except Chico) had double-digit unemployment rates in February, with El Centro having the distinction of once again being the MSA with the highest jobless rate in the entire country at 18.6%.

Therefore, many MSAs in California (like Yuba City, El Centro, Chico and Merced) not only have costs-of-living way below the state average, but they also have jobless rates that are way above the state average, and it’s those MSAs that will be adversely impacted by the imposition of a uniform state minimum wage of $15 an hour.

Bottom Line: As I concluded before, even supporters of a $15 an hour minimum wage in California would have to concede that a one-size-fits-all, uniform $15 an hour state minimum wage, without any adjustments for the significant differences in the cost-of-living across the Golden State, will disproportionately affect unskilled and limited-experience workers in low-cost MSAs like Yuba City and El Centro, and also in hundreds of other low-cost, low-wage cities (that are not part of an MSA) throughout the state.

In other words, a one-size-fits-all minimum wage for all 500 cities in California is really a “one-size-fits-none” minimum wage, and will inflict very serious and long-lasting economic damage in most parts of the state outside of the large metro areas on the coast (LA, San Francisco, and San Diego).

The clumsy, top-down, ham-handed approach of government imposed wage controls like a $15 an hour statewide minimum wage in California, without allowing for any adjustments to accommodate the significant differences in cost-of-living and labor market conditions, is one of the main reasons the Golden State’s risky experiment with a $15 wage will likely backfire and be “not-so-golden” in practice.

In contrast, one of the significant advantages of market-determined wages is that they can naturally and automatically adjust to the market conditions of local areas. For example, we might expect that the starting wages for national chains like McDonald’s (1,165 stores in California) and Starbucks (2,000 locations) would vary around the state of California based on local labor market conditions and the local cost-of-living, and would be higher in San Francisco than in cities like El Centro.

But a government mandated price control like the $15 an hour uniform minimum wage in California that outlaws adjustments to fit the customized needs of the 500 individual city-level labor markets in the state is a public policy destined to fail — especially in the state’s low-wage, low cost-of-living cities with high jobless rates that are the most vulnerable to the “one-size-fits-none” awkwardness and clumsiness that is the $15 statewide minimum wage in California.

Related: See my article with AEI colleague Andrew Biggs titled “A National Minimum Wage Is a Bad Fit for Low-Cost Communities.

Bonus Question: I included the living wages above that MIT calculated would be necessary to support an adult-headed household with either one, two or three children so that I could feature the question posed below by Georgetown University professor Jason Brennan at the Bleeding Heart Libertarians blog in his post titled “Some Questions for Living Wage Advocates” (h/t Don Boudreaux):

If you believe employers owe employees a living wage, do you think that an employer has a moral duty to pay an employee more just because [he or] she has more children?

Reprinted with the permission of the American Enterprise Institute.

Mark J. PerryMark J. Perry

Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

“Creating Jobs” Will Hurt the Economy by T. Norman Van Cott

How many jobs would the Keystone Pipeline project create? Political reporter Tom Murse points out that the answer is a matter of dispute. “Supporters argue that the Keystone XL pipeline would create tens of thousands, if not hundreds of thousands, of new jobs.” But critics “claim those numbers are wildly inflated,” Murse writes.

Both sides assume a higher number would make the project better for the economy. Both sides have it backwards.

Home Economics

The value of work is easy to grasp at the most domestic level: your own home.

Being a homeowner isn’t easy. Among other things, you always seem to have more chores to do than time to do them. The chores are not ends in themselves. Rather, they are means to an end — in this case, making a home and yard more livable or aesthetically pleasing.

Opting to do a chore yourself — “insourcing” in current parlance — isn’t costless. You lose the opportunity to enjoy the fruits of your other labors. For example, you could tackle different chores, spend more time with your family, or work extra hours in the marketplace, increasing your income. Hiring someone else to do the chore — that is, “outsourcing” — isn’t costless, either. It means you can’t buy other things. Costs represent sacrificed alternatives.

The rule when it comes to home ownership isn’t rocket science. Tackle those chores whose ends you value more than their cost. If your water softener breaks, and you value having softened water more than what it would cost either you or the plumber to repair it, then hire the plumber if his cost is less than what it costs you to fix it yourself. (Don’t forget to count the work time you’ll be giving up to act as your own plumber.)

By outsourcing the repair work, you will have “lost a job,” but your standard of living will be higher. By how much? The difference between your cost and the plumber’s cost.

Added household chores — that is, “gaining jobs” — are anything but a blessing. Chores represent hurdles between you and that more livable, aesthetically pleasing home and yard. Each job represents something you’re going to have to give up before your house is the way you want it. “Gaining jobs” to achieve a given objective is synonymous with worsening your situation, not improving it.

The Rule Writ Large — The Case of the Keystone Pipeline

What is rocket science for many is the ability to recognize that the rule for individual households extends to the national household, as we can see in the case of the Keystone Pipeline controversy. The project, which has been a political football for several years, would transfer oil from Canada to the Texas Gulf Coast. The project’s desirability is associated with the number of jobs required for the pipeline’s construction and maintenance. The more jobs created, the more desirable the pipeline, it would seem.

All involved in the discussion fail to apply lessons for individual households to the national household. Pipeline jobs are part of the cost of getting oil from Canada to the Texas Gulf Coast. They are not part of the benefits. The fewer jobs created, the better. Indeed, in the best of all worlds, there would bezero jobs required to transfer oil from Canada to the Texas Gulf Coast. That way, we could get the oil transferred without having to give up anything!

Pipeline proponents who note a large number of required jobs are unwittingly arguing against the project, just as opponents who cite a small number of jobs are unwittingly arguing in its favor.

Beyond the Pipeline

This failure to apply the simple rules for individual households is not restricted to the Keystone Pipeline issue. It pervades economic, business, and political discussions. Government programs come packaged with estimates of the number of new jobs the programs will supposedly create. The more jobs, the merrier. That’s the political refrain. Likewise, state and local economic development bureaucrats tout the number of jobs associated with business relocations or expansions.

One has to wonder whether those who peddle this more-jobs nonsense apply it to their own households. I bet not. Fewer chores, not more, make their homes more enjoyable. National households are no different. Or as Adam Smith put it in his classic, The Wealth of Nations, that which “is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.”

T. Norman Van CottT. Norman Van Cott

T. Norman Van Cott, professor of economics, received his Ph.D. from the University of Washington in 1969. Before joining Ball State in 1977, he taught at University of New Mexico (1968-1972) and West Georgia College (1972-1977). He was the department chairperson from 1985 to 1999. His fields of interest include microeconomic theory, public finance, and international economics. Van Cott’s current research is the economics of constitutions.

We Pay Millions to ‘Ghost Teachers’ Who Don’t Teach by Jason Bedrick

The Philadelphia school district is in a near-constant state of financial crisis. There are many factors contributing to this sorry state — particularly its governance structure — but it is compounded by fiscal mismanagement. One particularly egregious example is paying six-figure salaries to the tune of $1.5 million a year to “ghost teachers” that do not teach. Pennsylvania Watchdog explains:

As part of the contract with the School District of Philadelphia, the local teachers union is permitted to take up to 63 teachers out of the classroom to work full-time for the Philadelphia Federation of Teachers. The practice, known as “release time” or “official time,” allows public school teachers to leave the classroom and continue to earn a public salary, benefits, pension and seniority.

These so-called ghost teachers perform a variety of jobs for the PFT, serving as either information officers for other teachers or carrying out the union’s political agenda.

“Teachers should be paid to teach,” attorney Kara Sweigart, who is arguing ghost teacher lawsuits for the Fairness Center, a free legal service for employees who feel they’ve been wronged by their unions, told Watchdog.

“At a time when school districts are hurting financially, districts should be devoting every tax dollar to support students,” she said, “not to pay the salaries of employees of a private political organization.”

According to public salary data available through Philadelphia city agencies, the school district is paying 16 ghost teachers $1.5 million this year. All of them are making at least $81,000.

PFT Vice President Arlene Kempin, who has been on release time since 1983, is among the highest paid at $108,062. Union head Jerry Jordan, who has also been on release time for more than 30 years, is earning $81,245, according to district payroll logs. The 16 ghost teachers on the books this year are making an average salary of almost $98,000.

The “ghost teacher” phenomenon is far from unique to Philly or even the education sector. Such “release time” subsidies for ghost teachers, policemen, firefighters, and bureaucrats of all stripes are common features of public-sector union contracts nationwide. Last month, a Yankee Institute report found that Connecticut provided unions with $4.1 million to subsidize 121,000 hours union-related activities, “the equivalent of more than a year’s worth of work for 50 full-time employees.” Meanwhile, the Goldwater Institute in Arizona is in the midst of a lawsuit against the city of Phoenix for unconstitutionally providing millions of dollars in release-time subsidies.

According to the most recent report from the federal Office of Personnel Management, the federal government paid more than $157 million in 2012 for federal employees to work for their unions for a total of 3,439,449 hours. And those are just the direct costs.

In his book, Understanding the Teacher Union Contract: A Citizen’s Handbook, former teacher union negotiator Myron Lieberman explained how difficult it is to account for the full amount of subsidies that taxpayers provide to the unions:

Most school board members are not aware of the magnitude of these subsidies. In school district budgets, the subsidies are never grouped together under the heading “Subsidies to the Union.” Instead, the subsidies are included in school district budgets under a variety of headings that may or may not refer to the union…

School districts pay for these subsidies from a variety of line items in the district budget: payments to substitute teachers, teacher salaries, and pension contributions, among others.

In most situations, the union subsidy is lumped together with other expenses paid for under the same line item; for example, the costs of hiring substitutes for teachers who are on released time for union business may be included in a budget line for substitutes that also covers substitutes for other reasons, such as replacing teachers on sick leave, personal leave, maternity/paternity leave, and so on.

Taxpayer dollars allocated for education should be spent on items and activities that assist student learning, not to promote the interests of private organizations (especially when their interests often collide with the interests of students). Union work should be paid out of funds the unions collect through dues and donations, not funds expropriated from unwilling and unwitting taxpayers.

Cross-posted from Cato.org.

Jason Bedrick

Jason Bedrick

Jason Bedrick is a policy analyst with the Cato Institute’s Center for Educational Freedom.

Building Trades Unions to Sanders: Stop ‘the rhetoric and misguided attacks’

WASHINGTON, D.C. /PRNewswire/ — The following statement was issued today by North America’s Building Trades Unions in response to Sanders surrogate Ben Jealous’ comments to CNN’s Wolf Blitzer on construction workers.

“The rhetoric and misguided attacks from the Sanders campaign and its surrogates continues to sink to new lows. A speech before 3,000 Building Trades union members was characterized by top Sanders campaign surrogate Ben Jealous as a nefarious meeting with “donors.” The fact is, the proud men and women of the Building Trades are voters, and the only thing they have donated or contributed is their love of the country as they ply their craft building and rebuilding communities across this great nation.

“The Building Trades were honored to welcome Secretary Clinton and call on the Sanders campaign to stop the gimmicks and the desperate vitriol and get back to what truly matters to voters. What mattered to the hard hats in the room today was hearing a positive vision and dedication to the hard work to move this country forward by the next President of the United States, Hillary Rodham Clinton.”

ABOUT NORTH AMERICA’S BUILDING TRADES UNIONS

North America’s Building Trades Unions is an alliance of 14 national and international unions in the building and construction industry that collectively represent over 3 million skilled craft professionals in the United States and Canada. Each year, our unions and our signatory contractor partners invest over $1 billion in private sector money to fund and operate over 1,900 apprenticeship training and education facilities across North America that produce the safest, most highly trained and productive skilled craft workers found anywhere in the world.

Visit www.Facebook.com/NorthAmericasBuildingTradesUnions or on Twitter @BldgTrdsUnions.

A Tax on Income Attacks Life Itself by Jeffrey Tucker

The least of the problems with income tax is that it takes your money. The really big problem is that the income tax takes your life. It gives the government direct access to the things you own and sets up the political-bureaucratic sector to be the final arbiter of what you can and cannot consider to be yours.

Illustrating this point is the bitter realization that the IRS considers it completely legal to demand access to your electronic communications whenever it wants. This news came about in 2013 because of a Freedom of Information Act request filed by the American Civil Liberties Union.

The filing unearthed a 2009 memo that stated outright: “The Fourth Amendment does not protect communications held in electronic storage, such as email messages stored on a server, because Internet users do not have a reasonable expectation of privacy in such communications.”

Forget search warrants and legal processes. In the interest of getting its share, the government can have it all on demand. This assertion was made again in 2010 by the IRS’s chief counsel: The “Fourth Amendment does not protect emails stored on a server” and there is “no privacy expectation” on email.

A Century of Intrusions

This assertion openly contradicts a 2010 legal decision from the Sixth US Circuit Court of Appeals. United States v. Warshak said that the government must obtain a probable cause warrant before forcing people and providers to cough up email archives. Granted, even that’s not much protection. Government always has its “probable cause.”

Good for the ACLU for making an issue of this. But at some level, it’s all beside the point. The problem isn’t the legal process that allows the government to do what it wants; the problem is that government has a hook into personal income that allows powerful people to have their way with the whole of your life.

As we look back at the history, we can see that the income tax enabled a century of intrusions into our lives. It’s been 100 years of a form of imposition that no American in most of the 19th century could have ever imagined or tolerated.

The income tax is what enabled Prohibition, for example. Without the ability to monitor and adjudicate how people made money, the power of enforcement would not have been there at all. (Remember that Al Capone was not convicted for bootlegging, but for tax evasion.)

It is what made possible the central planning of the New Deal. The government’s presumption that it owns the first fruits of labor gave rise to wage controls and mandatory participation in the Social Security system. It allowed the central planners to push aside young workers and tell them that they aren’t allowed to be part of the workforce. It allowed the introduction of the minimum wage that continues to shut out whole sectors of society.

And look what happened during World War II. The price controls on wages and salaries – made possible only because the income tax gave government a fiduciary interest – inspired companies to start offering health-care benefits as part of the compensation package.

That practice was intensified over the decades until it became mandatory. That practice is a major source of the health care problems we have today. So there we have it: There is a direct link from Obamacare today back to the income tax of 100 years ago.

The Root of All Evil

Frank Chodorov, author of the enduring masterpiece, was right to call the income tax the “root of all evil.” We look back to history and are in awe that anyone ever had the full right to earn whatever money he or she wanted to and to never have to tell the government about it. But that was the way it was for the dominant part of American history.

That’s the system once called freedom.

It’s striking when you realize just how completely unnecessary the income tax is for the funding of government. What if we cut back government spending by exactly the amount the income tax collects? That would take us back in time to 2006. Was the government really too small back then? Would society really collapse if we went back to a government we had just ten years ago?

Yes, the government likes our money and always wants more of it. But more crucially, the government uses the income tax as a primary means of controlling not just our money, but the whole of our lives. That’s the real purpose of the income tax and why the government will fight for its preservation to the end.

Right now, many Americans are sweating it out to get their taxes done in time for the filing deadline. It would be immeasurably hard without the brilliant companies that have put together software programs – updated constantly! – that make what would otherwise seem impossible rather easy. This is the type of thing that free enterprise and the private sector do. They help us to have better lives.

But government? What does it do? It takes. It snoops. It controls. It destroys.

Jeffrey A. TuckerJeffrey A. Tucker

Jeffrey Tucker is Director of Digital Development at FEE and CLO of the startup Liberty.me. Author of five books, and many thousands of articles, he speaks at FEE summer seminars and other events. His latest book is Bit by Bit: How P2P Is Freeing the World.  Follow on Twitter and Like on Facebook. Email.