“Restaurant Recession” Hits NYC Following $15 Minimum Wage

This will be a rough year for full-service NYC restaurants as they try to navigate a future with significant economic headwinds and significantly higher labor costs from the city’s $15 an hour minimum wage.

An article in the New York Eater (“Restaurateurs Are Scrambling to Cut Service and Raise Prices After Minimum Wage Hike“) highlights some of the suffering New York City’s full-service restaurants are experiencing following the December 31, 2018 hike in the city’s minimum wage to $15 an hour, which is 15.4% higher than the $13 minimum wage a year earlier and 36.4% higher than the $11 an hour two years ago. For example, Rosa Mexicana operates four restaurants in Manhattan and estimates the $15 mandated wage will increase their labor costs by $600,000 this year. Here’s a slice:

Now, across the city, restaurant owners and operators are reworking their budgets and operations to come up with those extra funds. Some restaurants, like Rosa Mexicano, are changing scheduling. Other restaurateurs are cutting hours and staffers, raising menu prices, and otherwise nixing costs wherever they can.

And though the new regulations are intended to benefit employees, some restaurateurs and staffers say that take home pay ends up being less due to fewer hours — or that employees face more work because there are fewer staffers per shift. “The bottom line is, we have to reduce the number of hours we spend,” says Chris Westcott, Rosa Mexicano’s president and CEO. “And unfortunately that means that, in many cases, employees are earning less even though they’re making more.”

In a survey conducted by New York City Hospitality Alliance late last year, about 75% of the more than 300 respondents operating full-service restaurants reported they’ll reduce employee hours this year because of the new wage increases, while 47% said they’ll eliminate jobs in 2019.

Note also that the survey also reported that “76.50% of respondents report reducing employee hours and 36.30% eliminated jobs in 2018 in response to mandated wage increases.” Those staff reductions are showing up in the NYC full-service restaurant employee series from the BLS, see chart above. December 2018 restaurant jobs were down by almost 3,000 (and by 1.64%) from the previous December, and the 2.5% annual decline in March 2018 was the worst annual decline since the sharp collapse in restaurant jobs following 9/11 in 2001.

As the chart shows, it usually takes an economic recession to cause year-over-year job losses at NYC’s full-service restaurants, so it’s likely that this is a “restaurant recession” tied to the annual series of minimum wage hikes that brought the city’s minimum wage to $15 an hour at the end of last year. And the NYC restaurant recession is happening even as the national economy hums along in the 117th month of the second-longest economic expansion in history and just short of the 120-month record expansion from March 1991 to March 2001.

Here’s more of the article:

“There’s a lot of concern and anxiety happening within the city’s restaurant industry,” says Andrew Rigie, executive director of the restaurant advocacy group. Most restaurant owners want to pay employees more, he says, but are challenged by “the financial realities of running a restaurant in New York City.” Merelyn Bucio, a server at a restaurant in Soho that she declined to name, says her hours were cut and her workload increased when wage rates rose. Server assistants and bussers now work fewer shifts, so she and other servers take on side work like polishing silverware and glasses. “We have large sections, and there are large groups, so it’s more difficult,” she says. “You need your server assistant in order to give guests a better experience.”

At Lalito, a small restaurant in Chinatown, they used to roster two servers on the floor, but post wage increases, there’s only one, who is armed with a handheld POS (point of sale) system, according to co-owner Mateusz Lilpop. Having fewer people working was the only way for him to reduce costs, he says. Since the hike, labor costs at Lalito have risen about 10 percent — from 30 to 35 percent to 40 to 45 percent of sales, he says.

These changes get passed onto the diner, some restaurateurs argue. Service can suffer due to fewer people on the floor, or more and more restaurateurs will explore the fast-casual format over full-service ones. Some restaurants are also raising prices for customers. According to the NYC Hospitality Alliance’s survey, close to 90 percent of respondents expect to raise menu prices this year. Lalito’s menu prices have increased by 10 to 15 percent. Lilpop says, and it’s not just the cost of paying his staff driving prices up — it’s a ripple effect from New York-based food purveyors’ own labor cost increases.

“If you have a farmer that has employees that are picking fruit, he has to increase his labor costs, which means he has to increase his fruit prices,” Lilpop says. “I have to buy that fruit from him at a higher rate, and it goes down the chain.”

A few economic lessons here.

  1. A reduction in restaurant staffing that results in a decline in customer service (e.g., longer wait times, less attentive wait staff, etc.) is equivalent to a price increase for customers.
  2. The increases in the city minimum wage to $15 an hour, in addition to directly increasing labor costs for restaurants, also affects the labor costs of companies that supply food, liquor, restaurant supplies, menus, etc. and causes a ripple effect of indirect higher operational costs throughout the entire restaurant supply chain as described above.
  3. Even for workers who keep their jobs, a higher minimum wage per hour doesn’t necessarily translate into higher weekly earnings, if the reduction in hours is greater than the increase in hourly wages. For example, 40 hours per week at $13 an hour generates higher weekly pre-tax earnings ($520) than 33 hours per week at the higher $15 an hour ($495).

Prediction: This will be a rough year for full-service NYC restaurants as they try to navigate a future with significant economic headwinds and significantly higher labor costs from the city’s $15 an hour minimum wage.

This article was reprinted from the American Enterprise Institute.

COLUMN BY

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.

EDITORS NOTE: This FEE column with images is republished with permission. Image Credit: Wikimedia Commons | CC BY 2.0

Is AOC a Clear & Present Danger to America?

There is little doubt that the Democrat Party is now being run by the likes of Ocasio-Cortez a Socialist along with a large number of the moderates in the Democrat Party. She along with Bernie Sanders have a huge following among young millennials who call themselves Democrat Socialists.

Unfortunately for America Ocasio-Cortez, Sanders and their followers are economic illiterates.

Read the analysis in the opinion piece below that appeared in the Washington Post . By following her advice the loss to New York was estimated by the Governor to be $27 Billion. The actual loss is far far greater.  So far each of the Democrats running for President have embraced the absurd Green New Deal created by this economic illiterate. No one can doubt New York Democrats have already marched off the cliff under the tutelage of Ocasio-Cortez and her followers.

America will be in serious trouble if it follows the advice of Ocasio-Cortez and her entourage. It is not an exaggeration to say this economic illiterate and her followers could destroy America.

Alexandria Ocasio-Cortez is an economic illiterate — and that’s a danger to America

By Marc A. Thiessen

The left complains that conservatives are “obsessing” over Alexandria Ocasio-Cortez. Well, there is a reason for that: Ocasio-Cortez is driving the agenda of today’s Democratic Party — and her economic illiteracy is dangerous.

Case in point: Last week, Ocasio-Cortez celebrated the tanking of a deal negotiated by her fellow Democrats in which Amazon promised to build a new headquarters in Long Island City, New York, right next to her congressional district. Amazon’s departure cost the city between 25,000 and 40,000 new jobs. Forget the tech workers whom Amazon would have employed. Gone are all the unionized construction jobs to build the headquarters, as well as thousands of jobs created by all the small businesses — restaurants, bodegas, dry cleaners and food carts — that were preparing to open or expand to serve Amazon employees. They are devastated by Amazon’s withdrawal. (Amazon’s founder and chief executive, Jeffrey P. Bezos, also owns The Post.)

READ MORE.

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New Jersey Lawmakers Are Trying to Tax the Rain

This gives new life to the saying, “when it rains, it pours.”

Sometimes life mimics fiction. And sometimes life is so much stranger than fiction you have to double check the headlines to ensure they aren’t satire. The latest double take comes from New Jersey, where, under the guise of environmentalism, local legislators have passed a new tax on—wait for it— the rain.

Governments are known for a lack of creativity and an uncanny ability to think only inside the box. However, when it comes to getting creative with inventing new forms of taxation, they never disappoint. Chicago, for example, recently implemented a “PlayStation” tax on its residents as part of the city’s previously existing “amusement tax,” which, just as it sounds, taxes individuals on almost all forms of entertainment.

California, on the other hand, recently tried to get away with unprecedented levels of extortion when it tried to tax residents for their drinking water and text messages. The water tax is still on the table, but luckily, the Golden State did not succumb to the new ridiculous texting tax. New Jersey, though, might not be so lucky.

To be perfectly clear, while the new tax is being referred to as the “rain tax,” it doesn’t actually tax the rain itself, but that doesn’t make the context of the legislation any less absurd.

Bill S-1073 seeks to penalize businesses and homeowners whose property contains paved surfaces, like a driveway or a parking lot. When it rains, the rain acts as a medium, transporting any pollutants it picks up from paved surfaces, like brine and rock salt, and then depositing it into sewers and drains. And since the pollutants are thought to have originated from paved surfaces, the state has determined that property owners are responsible for any negative environmental impacts that result therein and should be penalized accordingly.

The legislation itself does not actually allow the state to collect any taxes, however. Instead, it allows each of its 565 different municipalities to create their own stormwater utility systems to minimize the runoff problem. Each locality will then charge each homeowner and business based on what the bill calls “a fair and equitable approximation” of how much runoff is generated from their property.

The legislation states:

Under the bill, a county, municipality, or authority (local unit) that establishes a stormwater utility is authorized to charge and collect reasonable fees and other charges to recover the stormwater utility’s costs for stormwater management.

As is the trend these days, supporters are praising the bill as a heroic move to protect the environment, though there is no real evidence that any significant harm is being done. Yet, legislators would have you believe there is a crisis at hand.

Senate President Steve Sweeney tried to convey the seriousness of the problem, saying, “With all the salt we’ve had on roads recently, that’s all running into the sewer systems, so you don’t ignore the problems because they don’t go away.” However, this winter has actually been mild for the state, with fewer snow falls than usual, meaning there has not been any sudden influx of rock salt pouring into the sewer systems this season.

A local writer, E.W. Boyle, highlighted the true idiocy of this proposed tax, writing:

Now, since our roads have been treated during winter storm events for over 80 years, with no apparent environmental impact, one wonders what took them so long to notice that there is salt runoff into creeks, streams and estuary rivers during subsequent rain events. No, rather what they noticed was the potential for yet another tax levy.

Boyle hits the nail on the head, and he is not alone in his opposition to the new tax. Republican state senator Tom Kean Jr. also criticized this proposal for the burden it places on New Jersey residents. Since each municipality is in charge of setting its own rules regarding the collection of this tax with very little oversight from any other governing entity, it is ripe for potential abuse. Keane said, “We all want to protect our environment. We all want to preserve it for future generations, but this is a weighted tax.” He continued, “The citizens of New Jersey…really [have] no way to defend themselves against tax increases at local levels.”

Since the bill gives local governments carte blanche to set the rates and collect the revenue, it makes it harder for residents to voice their concern if they believe they are being asked to pay too much. Keane later added:

…you shouldn’t create unfair authorities with uneven taxing practices…You’re creating a new layer of government that will not be regulated. The concern is uneven enforcement.

While uneven enforcement is certainly a concern, it is not the only problem the new rain tax inflicts on New Jersey residents. The legislation also comes with a hefty price tag that property owners will be responsible for footing.

New Jersey is currently one of the most heavily taxed states in the country. And yet, it is going to burden its residents even further with the passing of this bill. According to the EPA, it will cost the state of New Jersey $15.6 billion to upgrade its storm drain system. However, the cost to Garden State taxpayers could end up being significantly higher.

New Jersey’s Office of Legislative Services, which usually determines the fiscal impact of state policies, could not shed any light on what this might actually cost residents. Since each local municipality is in charge of setting its own rates for each property owner, there is really no way of estimating the projected costs at this time. And given the nature of government, it is highly probable that taxpayers will end up paying more than their “fair” share of the burden.

Chris Sturm, a supporter of the bill and a water policy “expert” at the nonprofit organization New Jersey Future, attempted to downplay the impact this will have on homeowners. Sturm commented, “This will be negligible for the vast majority of homeowners. This is for properties that have large impervious surfaces.” While no one, including state officials, is sure of the fiscal impact this will have on residents, there is something else quite disturbing about his statement.

These properties with “large impervious surfaces” are places of business. They are the very institutions responsible for creating jobs, wealth, and prosperity within the state. And yet, rather than celebrating these titans of industry for their contributions, state lawmakers are attempting to impose onerous taxes on them. This is yet another example of governments using their taxing powers to turn private businesses into their personal coffers.

To make matters worse, any individual or business who does not pay their “rain tax” will be charged interest and have a tax lien imposed on them by the state, the very same type of action taken against those who fail to pay their property taxes.

New Jersey is, unfortunately, not the first state to attempt to inflict this type of tax on its residents. In 2012, Maryland instituted its own version of the rain tax, but it was not received well by the taxpayers. In 2014, Republican Governor Larry Hogan altered the law and allowed nine counties and the city of Baltimore to opt out of the state’s rain tax, so long as each municipality promised to address the Chesapeake Bay runoff issue on their own.

Hogan commented, “Passing a state law that forces counties to raise taxes on their citizens against their will is not the best way to address the issue.”

New Jersey does not feel the same way.

New Jersey legislators have done their constituents a great disservice by passing this bill. And now, the legislation is currently sitting on the desk of Governor Phil Murphy. It is expected that it will be signed any day now. This gives new life to the saying, “when it rains, it pours.”

COLUMN BY

Brittany Hunter

Brittany Hunter

Brittany is a senior writer for the Foundation for Economic Education. Additionally, she is a co-host of Beltway Banthas, a podcast that combines Star Wars and politics. Brittany believes that the most effective way to promote individual liberty and free-market economics is by telling timely stories that highlight timeless principles.

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EDITORS NOTE: This FEE column with images is republished with permission. The feature image by Pexels on Pixabay.

In America Today, We Plunder and Call It Good

Frederic Bastiat, a French economist and member of the French National Assembly, lived from 1801 to 1850. He had great admiration for our country, except for our two faults—slavery and tariffs.

He said: “Look at the United States. There is no country in the world where the law is kept more within its proper domain: the protection of every person’s liberty and property.”

If Bastiat were alive today, he would not have that same level of admiration. The U.S. has become what he fought against for most of his short life.

Bastiat observed that “when plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.”

You might ask, “What did Bastiat mean by ‘plunder’?”

Plunder is when someone forcibly takes the property of another. That’s private plunder. What he truly railed against was legalized plunder, and he told us how to identify it.

He said: “See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.”

That could describe today’s American laws. We enthusiastically demand that the Congress forcibly use one American to serve the purposes of another American.

You say: “Williams, that’s insulting. It’s no less than saying that we Americans support a form of slavery!”

What then should we call it when two-thirds to three-quarters of a $4 trillion-plus federal budget can be described as Congress taking the property of one American and giving it to another to whom it does not belong?

Where do you think Congress gets the billions upon billions of dollars for business and farmer handouts?

What about the billions handed out for Medicare, Medicaid, food stamps, housing allowances, and thousands of other handouts?

There’s no Santa Claus or tooth fairy giving Congress the money, and members of Congress are not spending their own money. The only way Congress can give one American $1 is to first take it from another American.

What if I privately took the property of one American to give to another American to help him out? I’m guessing and hoping you’d call it theft and seek to jail me. When Congress does the same thing, it’s still theft. The only difference is that it’s legalized theft.

However, legality alone does not establish morality. Slavery was legal; was it moral? Nazi, Stalinist, and Maoist purges were legal, but were they moral?

Some argue that Congress gets its authority to bypass its enumerated powers from the general welfare clause. There are a host of proofs that the Framers had no such intention.

James Madison, the “Father of the Constitution,” wrote, “If Congress can do whatever in their discretion can be done by money, and will promote the general welfare, the government is no longer a limited one possessing enumerated powers, but an indefinite one.”

Thomas Jefferson wrote, “Our tenet ever was … that Congress had not unlimited powers to provide for the general welfare, but were restrained to those specifically enumerated.”

Rep. William Drayton of South Carolina asked in 1828, “If Congress can determine what constitutes the general welfare and can appropriate money for its advancement, where is the limitation to carrying into execution whatever can be effected by money?”

What about our nation’s future?

Alexis de Tocqueville is said to have predicted, “The American republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”

We long ago began ignoring Bastiat’s warning when the federal government was just a tiny fraction of gross domestic product—3 percent, as opposed to today’s 20 percent: “If you don’t take care, what begins by being an exception tends to become general, to multiply itself, and to develop into a veritable system.”

Moral Americans are increasingly confronted with Bastiat’s dilemma: “When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law.”

COPYRIGHT 2019 CREATORS.COM

COMMENTARY BY

Portrait of Walter E. Williams

Walter E. Williams

Walter E. Williams is a columnist for The Daily Signal and a professor of economics at George Mason University. Twitter: @WE_Williams.

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EDITORS NOTE: This Daily Caller column with images is republished with permission. The featured image is by Pixabay.

The Green New Deal Mirrors Mao’s Great Leap Forward

The Mises Institute’s William L. Anderson published an article titled “AOC and the Green Great Leap Forward.” Anderson wrote:

When Baby Boomers were in college a half-century ago, many saw Mao as their political hero, a man with great vision who had the political will to do what was necessary to advance the fortunes of his own people. That he was a murderous tyrant who presided over mass death that exceeded even the killings of World War II was irrelevant or even ignored.

Today, we are told by her adoring press that Alexandria Occasio-Cortez is the New Visionary, a person who is far-seeing and knows what we have to do in order to survive the coming consequences of climate change. That her grand vision is little more than a mass-depopulation scheme is ignored, and we ignore it at our peril.

I believe that Alexandria Ocasio-Cortez is a clear and present danger to our Constitutional Republican form of government.

The Great Leap Forward

It is important to understand history in order to realize how dangerous the Green New Deal is. Let’s look at the last time this type of massive government reorganization of society happened. It was tried in China under Mao Zedong. According to the Encyclopedia Britannica:

Overall, the radicalization of policy that led to the Great Leap Forward can be traced back to the anti-rightist campaign of 1957 and a major meeting of China’s leaders at the resort city of Qingdao in October of that year. 

In the Encyclopedia Britannica’s study of the Great Leap Forward found:

[I]n Chinese history, the campaign undertaken by the Chinese communists between 1958 and early 1960 to organize its vast population, especially in large-scale rural communes, to meet China’s industrial and agricultural problems. The Chinese hoped to develop labour-intensive methods of industrialization, which would emphasize manpower rather than machines and capital expenditure. Thereby, it was hoped, the country could bypass the slow, more typical process of industrialization through gradual accumulation of capital and purchase of heavy machinery. The Great Leap Forward approach was epitomized by the development of small backyard steel furnaces in every village and urban neighbourhood, which were intended to accelerate the industrialization process.

[ … ]

After intense debate, it was decided that agriculture and industry could be developed at the same time by changing people’s working habits and relying on labour rather than machine-centred industrial processes. An experimental commune was established in the north-central province of Henan early in 1958, and the system soon spread throughout the country.

Under the commune system, agricultural and political decisions were decentralized, and ideological purity rather than expertise was emphasized. 

What were the outcomes of the Great Leap Forward?

Encyclopedia Britannica’s study of the Great Leap Forward found:

The program was implemented with such haste by overzealous cadres that implements were often melted to make steel in the backyard furnaces, and many farm animals were slaughtered by discontented peasants. These errors in implementation were made worse by a series of natural disasters and the withdrawal of Soviet support. The inefficiency of the communes and the large-scale diversion of farm labour into small-scale industry disrupted China’s agriculture seriously, and three consecutive years of natural calamities added to what quickly turned into a national disaster; in all, about 20 million people were estimated to have died of starvation between 1959 and 1962.

This breakdown of the Chinese economy caused the government to begin to repeal the Great Leap Forward program by early 1960. 

In an article titled “AOC’s Green New Deal Is a U.S. Version of Mao’s Disastrous Great Leap Forward” the Foundation for Economic Education’s Dr. William Anderson, a Professor of Economics at Frostburg State University, wrote:

In what its supporters have claimed is “visionary,” congressional media darling Alexandria Occasio-Cortez (AOC) has released her short-awaited Green New Deal, and she has called for nothing short of the destruction of life as we have known it:

Rep. Alexandria Ocasio-Cortez said she has no qualms about acknowledging a so-called “Green New Deal” will mean unprecedented governmental intrusion into the private sector. Appearing on NPR, she was asked if she’s prepared to tell Americans outright that her plans involve “massive government intervention.”

We cannot predict what would be the outcome if the Green New Deal Resolution was fully implemented. What we can say is it would require a massive government takeover of all means of production with the stated goal of “saving the planet.”

As George Santayana wrote, ” “Those who cannot remember the past are condemned to repeat it”

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Panera Bread’s Socialism Experiment in Ends in Failure

The last vestige of Panera Bread’s pay-what-you-want Utopian business model will succumb to reality on February 15th.

In 2010, Panara Cares launched as a “non-profit” experiment that allowed patrons to pay whatever amount they felt for meals. Not surprisingly, all five of the locations were unable to sustain operations as, according to Panera founder Ron Shaich, “people ultimately came to the locations for a handout.”

Shaich once defended the the Panera Cares concept saying, “In many ways, this whole experiment is ultimately a test of humanity.”

However, the “donations” at the original Panera Cares location in Portland, Oregon only covered 60 to 70 percent of the total operating costs. Either “humanity” doesn’t appreciate the costs associated with running a restaurant, or people just happen to view a “free lunch” for exactly what it is.

Indeed, when the St. Louis Panera Cares location closed in 2018, Shaich admitted, “The nature of the economics did not make sense.”

The decision to close the last Panera Cares store in Boston, Massachusetts was made by Panera’s new owner, the JAB Holding Company, which is also the parent company of Peet’s Coffee (3 – Neutral), and Krispy Kreme (3 -Neutral). JAB also holds a majority ownership stake in Keurig Dr. Pepper (3 – Neutral).

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The Future is Now: Bitcoin Acceptance is Growing

Over the last couple of years, many folks have been lured to the cryptocurrency space expecting to hold or trade their way to riches. Despite the 2018 downtrend in markets, those who bought in pre-summer 2017 are likely still looking at some healthy profits.

Bitcoin wasn’t just created for speculation though. The clue is in the name – digital currency. That said, the process of turning some of your gains into usable money can be arduous. You first must bring your funds out of cold storage, get them to a Bitcoin exchange that allows fiat withdrawals, register your bank details, and wait for the withdrawal. It’s all a bit convoluted. Fortunately, you often don’t have to worry about any of that (or the harsh withdrawal and exchange fees that usually accompany it).

Just about any purchase you could possibly make can already be completed entirely using Bitcoin. From web services to outdoor gear, online entertainment to real estate, the future is already here. Hell, you can even buy that famous cup of coffee that many Bitcoin protesters are always banging on about. Let’s look at some of the options in more detail.

Online Purchases

There are loads of ways to spend your Bitcoin in a strictly online capacity. Any firm that supports credit or debit card transactions can technically accept the digital currency. It’s actually a lot simpler than making a legacy systems payment too. Just scan a QR code or copy a string of digits into your wallet and hit send. You don’t have to worry about personal data being stolen by hackers from the site either!

Here are some of the main online retailers accepting Bitcoin as a payment for goods and services:

  • Overstock.com – this online retailer sells mostly homewares, along with toys, sporting goods, jewellery, clothes, and gadgets. Their prices are pretty good too!
  • Shopify stores – merchants operating their own stores on e-commerce platform Shopify can opt to accept Bitcoin if they choose so. You’ll find an eclectic bunch of goods offered for the virtual currency there.
  • Subscription services – some massive names accept Bitcoin to pay for the subscriptions they offer. These include Microsoft, 4Chan, Reddit, Bloomberg, WordPress.com, NameCheap, and Chicago Sun-Times.
  • Travel services – when booking your next flight or hotel, check out some of these options to spend your Bitcoin in getting you from A to B. You can even get somewhere to rest up when you arrive: Expedia, airBaltic, AirTreks, and CheapAir.com. If you really want to splash the cash on the most exotic trip possible, head over to Virgin Galactic and check out their Bitcoin offerings.

Real-World Purchases

Real-world purchases with Bitcoin are a little trickier than their online counterparts, for now. That’s because when you want to have a quick bite to eat or even to pay for a home in person, you’re limited by your geographical location. Since many retailers haven’t begun to accept Bitcoin yet, finding one might be more trouble than it’s worth!

  • Real-estate – if you did really well from Bitcoin’s meteoric rise over the last five years, you could buy property with the virtual currency. All budgets are catered for too. There was the famous example of the massive Moscow mansion selling for Bitcoin. Meanwhile, at the other end of the spectrum, a man from Grimsby, UK, offered to sell his modest, terrace house for crypto last year. The US has also joined the trend, and if you are looking to buy a lake house in the state of Minnesota, you can pay for it with Bitcoin at some real estate agencies.
  • Bars, restaurants, and coffee shops – this one is a little bit location-dependent. However, if you live or are visiting one of the destinations on the growing list of Bitcoin-friendly cities, you’ll have loads of options to spend your gains. Berlin, Reykjavik, and Ljubljana are amongst the top spots for live Bitcoin purchases. The likes of KFC Canada have even had cryptocurrency promotions in the past. However, these were for a limited period only.
  • Entertainment – if you’re out in Vegas at a loose end, you can even pay for a spot of late-night activities using Bitcoin in the flesh. A strip club in Las Vegas has seen the advantages of a pseudonymous payment system early, and some of their exotic dancers come adorned with QR codes, so you can tip them directly using Bitcoin.
  • Charity – the Twin Cities, which are Minneapolis and Saint Paul, have long embraced cryptocurrencies with Bitcoin ATMs popping up regularly across the area. But, it’s not the only space the community is seeking to disrupt. Recently, Minnesota’s charity organizations have started accepting Bitcoin donations. The relevant authorities believe this will not only contribute to the public good, but also help boost mass adoption of cryptocurrencies. 

Mixing the Virtual and the Physical

Finally, if the store you wanted to shop at doesn’t directly accept Bitcoin, that doesn’t mean you can’t use it. Several gift card services have sprung up in the last couple of years. You pay for the card in Bitcoin (or another supported cryptocurrency) and you receive the voucher to your email. You can then use the code from the card online or print the voucher off and take it down to the store to do your shopping in an old-school style.

The following services are more than happy to sell you a gift card in exchange for some Bitcoin: GiftOff, eGifter, and Gyft. These vendors offer gift cards for some massive companies including but certainly not limited to:

  • Decathlon
  • Tesco
  • Pizza Express
  • Nike
  • Amazon
  • Adidas
  • Domino’s
  • Dunkin’ Donuts
  • Macy’s

It’s even possible to use a peer-to-peer marketplace and sell your Bitcoin to someone directly in exchange for a gift voucher. You’ll be amazed at the price increase you can charge too. We’ve seen a trader offering Bitmain vouchers in exchange for Bitcoin with a 75% markup!

The list of places you can spend your Bitcoin continues to grow each week. With options to suit just about every taste, it can be quite difficult not to abandon your strategy and just blow a hefty chunk on a two-man kayak canoe, those Nike sneakers you’ve been pining after, or even a luxury apartment.

EDITORS NOTE: The featured image is by Pixabay.

Don’t Believe the Fake News. Tax Cuts for Everyday Americans Are Real.

The left-leaning media would have you believe that the 2017 tax cuts were nothing of the sort. Sen. Kamala Harris, D-Calif., recently tweeted that average refunds are down, calling the president’s tax cut a “middle-class tax hike.”

This is simply the latest episode in a long-running campaign to demagogue tax cuts that let the vast majority of Americans keep more of their hard-earned money.

Some of the biggest cuts are actually being enjoyed by the lowest-income Americans. A typical family of four got a $2,917 tax cut this year.

So what’s the complaint about?

In an early sample of tax returns, the IRS has reported that average refunds are down $170 from last year and that they hadn’t changed much from 2017, the year before.

But this is not relevant, for two reasons.

First, the sample of tax returns cited by the IRS is very small, and some analysts expect refunds will actually go up this year.

But second, and more importantly, tax refunds have nothing to do with the size of anyone’s tax cut. A refund is what you get back if you’ve paid too much in taxes throughout the year. Your tax cut is the drop in total taxes you owed to Uncle Sam last year. The two are not connected.

Employers across the country already gave us our tax cuts by withholding less money from our paychecks every pay period. Americans saw a bump to their paychecks in February 2018.

Of course, withholding is never perfectly accurate, so your refund or tax payment at the end of the year is simply a last-minute adjustment. But that refund does not cancel out the overall bump in take-home pay due to the tax cut.

Do you remember when House Speaker Nancy Pelosi called the tax cuts “monumental, brazen theft,” or when former Treasury Secretary Larry Summers predicted the tax cuts would kill 10,000 people every year? This most recent round of hysteria is just more of the same.

Last year, The Heritage Foundation calculated what Americans across the country can expect from the tax cuts. The average household can expect about $26,000 more in take-home pay over the next 10 years thanks to the tax reform.

Americans benefit twice from the tax cuts—first, by paying less in taxes, and a second time from higher wages generated by a faster-growing economy.

At the end of 2018, workers saw some of the largest wage gains in over 10 years, and unemployment rates remain historically low. Over the next 10 years, because of a larger economy, the typical American will benefit from over $26,000 more in take-home pay, or $44,697 for a family of four.

The average American household can expect to pay about $1,400 less in taxes in 2018. But depending on where you live and how many kids you have, the numbers can look different.

In communities that had high tax bills last year, such as Palo Alto, California’s district (CA-18) represented in the House by Anna Eshoo, or one of New York City’s Manhattan districts (NY-12) represented by Carolyn Maloney, the average tax cut could be as much as $3,000.

Lower-income communities, such as areas near Phoenix, Arizona (AZ-7), represented in the House by Ruben Gallego, as well as Philadelphia, Pennsylvania (PA-2), will see much larger cuts in their tax bills. In these communities, tax reform brought an average income tax cut of 18 percent or more.

And the tax cuts are especially good news for parents. A married couple filing jointly with two children will see their tax bills fall by $2,917.

In the coming years, the tax cuts will continue to raise wages, increase investment, and expand economic opportunities. They will also continue through 2025. 

Don’t let the misinformation about refunds throw you off. Middle-class and lower-income Americans are the biggest beneficiaries from the tax cuts.

COMMENTARY BY

Portrait of Adam Michel

Adam Michel

Adam Michel focuses on tax policy and the federal budget as a policy analyst in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. Twitter: @adamnmichel.

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EDITORS NOTE: This Daily Signal column with images is republished with permission. The featured image is by Pixabay.

Breakdown: The World Is Measurably Better Since January 2017

The largely unreported and to some ironic reality of the past two years is that the world overall is a better, safer, more prosperous place since the swearing in of Donald Trump as President of the United States in 2016. Better than it was under Barack Obama and better than it was under George W. Bush.

Despite the nonstop onslaught of negative reporting on Trump — 90 percent according to the Media Research Center (there’s been 10 percent positive?) — and the breathless reporting on the government shutdown, the latest Robert Mueller leak or arrest, the Kavanaugh hearing fiasco, fake news such as BuzzFeed’s flat wrong non-story on Trump telling Michael Cohen to lie, the disgusting anti-Christian bigotry associated with the MAG-hat Covington Catholic High School students and so on ad infinitum — Trump’s approval ratings remain right in the range they were when he took office, and ticking upward.

That suggests that the relentlessly anti-Trump, Democratic partisan media is washed out by what his actual policies have so clearly accomplished.

But it also suggests that a lot of Americans — probably more than are reflected in polls, and at least some who support Trump — simply do not feel safe saying to anyone that they realize how much better off the country and the world are. It wasn’t supposed to happen. But the media not reporting something does not mean it didn’t happen.

So here are some of the major areas where the world is demonstrably better off since January 2016:

→ First, the economy, duh! 304,000 jobs in January, blowing out all of the predictions. Manufacturing has burst back in the U.S. when President Obama said those jobs would never return. (Man, that guy was wrong a lot.) GDP growth 50 percent higher than it had been under Obama, even though the recovery is now long in the tooth. This has led to a growing consensus among non-political economists that what has driven the economic renaissance has been tax cuts, massive deregulation, stronger trade policy, tax breaks to lure back offshore capital, and a dramatic rise in oil and natural gas production.

→ The entire federal court system will be far more conservative and constitutional for a generation as Trump’s judicial nominees have been uniformly originalists and conservative…and young. This means that there should be fewer overtly political rulings in which the law and constitution are bent to judges’ political views like a reed in the wind, and more solid rules for governing and living.

→ The dishonest and duplicitous media has been unmasked for the partisans they are. This was unintended, of course, but Americans are better off knowing this (something I have known for many, many years as a former member of the mainstream media.) The media’s vicious partisanship has been widely self-exposed for Americans to see, although many members of the media themselves seem to remain in denial. The vast majority of Americans do not.

→ China’s systemic cheating on trade agreements and thieving of intellectual properties has been called out and responded to forcefully. Since Trump’s inauguration, an accepted consensus has emerged that China’s actions pose a commercial threat to world trade, to its geographic neighbors and to the security of the United States. Ultimately, we will end up with better, more fair trade that will absolutely benefit American companies and workers, but also will benefit most of the rest of the world, which will be more empowered to demand better, more fair agreements for their companies and workers.

→ Pulling out of the terrorist-enabling Iran nuclear agreement did not result in the end of the world, In fact, the world basically yawned past the regular hyperbolic media coverage. Further, most of the sanctions have been reinstated, including by our European friends, when the media Democrats assured us they could not be. Iran is feeling the pinch. Leashing up the murderous Mullah’s financially makes the world that much safer.

→Similarly, when the U.S. walked away from the essentially worthless, symbolic Paris Climate Accords, the world did not warm and seas did not rise. Actually, the U.S. continues to be a leader in reduction of carbon emissions, largely through the voluntary, innovative private sector.

→ The U.S. showed its promise-keeping resolve for the first time when Trump directed the U.S. embassy in Israel to be moved from Tel Aviv to Jerusalem — just like Obama, Bush and Bill Clinton had promised to do before him, but never did. The hyperventilating over lighting the Middle East tinderbox never materialized. The normal amount of Muslim terrorism and Israeli military response ensued afterwards as before.

→ Black Americans are enjoying an employment resurgence like that not seen since before the disastrous implementing of the Great Society. While overall U.S. unemployment hit a 50-year low in Trump’s second year, joblessness among black Americans has set a modern record as well. Black employment has risen about 1.3 million under Trump to hit a record 19.3 million in October. Now this clearly started before Trump, but that it accelerated this long into a recovery is fairly remarkable.

→ Russian aggression against Ukraine and other small neighbors has been held in check as the U.S. has sent arms and supplies to the Ukraine and stiffened the response to Russian belligerence. The tough talk had already been backed by missile attacks against Russian mercenaries in Syria and Russian-backed Syrian allies. Using the big stick once or twice means carrying it around becomes a deterrent — not a joke as with the previous president. The crossing of any red line is obviously not going to be acceptable and Russia knows that.

→ Trump’s forceful efforts to denuclearize North Korea resulted in a one-one-one summit with President Kim, and second one coming up. It started with tough talk, followed by the movement of U.S. naval and air power off the coast. It’s ended so far with the self-destruction of some of North Korea’s nuclear facilities and no more of the missile tests that had become common under Obama.

→ Most of our European allies in NATO have been weak and sometimes duplicitous on defense, refusing to live up to their promise on minimal military expenditures to help defend themselves from Russia. Trump again talked tough. Considering he had pulled out of the Paris climate accords and the Iran agreement, European leaders worry he could follow through on NATO threats. They have accordingly increased their defense spending by a combined $100 billion now so far — strengthening free countries against tyranny.

→ ISIS decapitated.

There are plenty more. But this hits the highlights. By all the evidence, it is unarguable, even by the Orange Man Bad crowd, that the world is better off now than two years ago.

EDITORS NOTE: This The Revolutionary Act column is republished with permission. The featured image is by Pixabay.

The State of the Black Union

During the month of February in America we celebrate Black History Month. As we celebrate the achievements of Blacks in the making of this great country, I can’t help but think about the state of the Black community in 2019.

The state of our Black union is depressing!

We, as a community, must stop asking others to do for us what we should be doing for ourselves. We have more education than our parents and grandparents; yet have a lower quality of life. We have more opportunities than our parents and grandparents yet have less to show for them.

We have more Blacks in elected political offices than ever before, yet our economic indices in cities run by Blacks are horrible, i.e.: Washington, DC, Baltimore, and Atlanta to name a few.

Hardly a week passes by without a Black person having some deadly encounter with law enforcement.

How did we, in the Black community, get to where it seems to be open season on our people by law enforcement? Yes, racism still exists, but racism is not the cause of the condition of our community.

According to the Centers for Disease control and Prevention, over 70% of Black babies are born to unwed mothers. It is estimated that since the Roe v. Wade Supreme Court decision legalizing abortion in 1973, that over 16 million Black babies have been murdered — 55 million babies in total.

In New York City every year, more Black babies are aborted than are born. Yes, you heard right. According to their Health Department, between 2012 and 2016, 136,426 Black babies were aborted versus 118,127 babies born. Blacks are the only group in America that have more babies aborted than born!

If Black lives matter, does that include their babies?

The solution to this culture of death in the Black community specifically, and America in general, is very simple. We need to reconstitute the family unit; meaning mother, father and children. These perverted variations of the traditional family unit will not restore our traditional values back to our community or our society.

Study after study has shown that if you graduate high school, get married, and then have children, you are almost guaranteed not to live in poverty.

The traditional family unit is the solution to all the ills facing the Black community and America.

But yet, the media appointed Black leaders and their radical liberal groups spend all of their time promoting homosexuality, amnesty for illegals, and Planned Parenthood.

When have you ever heard the Congressional Black Caucus, the NAACP, or the National Urban League talking about the traditional family unit is key to righting the ship in the Black community?

When Bill Cosby gave his famous “Pound Cake” speech, he was eviscerated by the Black liberal elites.

When have you ever heard Al Sharpton, President of the National Action Network, Derrick Johnson, President and CEO of the NAACP, or Marc Morial, President of the National Urban League talk about the family unit; or telling girls to keep their damn legs closed if they cannot financially afford to care for a child?

How did the Black community allow the homosexuals to hijack our fight for Civil Rights? Their issue has absolutely nothing to do with Civil Rights.

How did we allow George Soros, Bill Gates, the U.S. Chamber of Commerce and Mark Zuckerberg to get media-appointed Blacks to put illegals ahead of their own community? Can you imagine willingly training someone who is going to take your job and agreeing with them that they have a right to take your job.

According to Planned Parenthood’s 2017 annual report, they had total revenue of $1.3 billion, $555 million from the federal government. They made a profit of $77 million. Yes, they get paid to kill.

They also have spent over $38 million in political campaigns between 2012-2016. Yes, they buy Black, Democrat politicians!

To paraphrase Jay-Z, “Blacks folks got 99 problems, but homosexuality, amnesty, and Planned Parenthood should not be one.”

We survived slavery, overcame segregation, and fought discrimination and are still standing.

But, in order to restore the Black community, we must turn away from the media-appointed Black leaders. They have sold us out at every chance.

Just imagine if we put the same amount of energy fighting for our own people and causes like we do for other groups.

Just imagine if we took the energy we put into hating President Donald Trump and Republicans [put it] into getting young girls to stop having babies before marriage; getting Black entertainers and athletes to hire Black C.P.A.s, publicists, lawyers, managers, etc.; getting Black churches to stop caving in to the radical homosexual agenda; and creating more Black entrepreneurs.

We don’t need a law to make any of the above reality; but what we do need is leaders who cannot be bought off by those who have no concern for the Black community.

The state of our union can be brighter, but you can’t have union without “u” “n” “i.”

Disclaimer: The views and opinions expressed in this article do not reflect the official policy or position of BlackPressUSA.com or the National Newspaper Publishers Association.

EDITORS NOTE: This Black Press USA column is republished with permission. The featured photo is by Victor Grabarczyk on Unsplash.

The Best and Worst Cities in the United States

There are several options if you want to measure economic freedom and competitiveness among nations (rankings from the Fraser InstituteHeritage Foundation, and World Economic Forum).

You also have many choices if you want to measure economic freedom and competitiveness among states (rankings from the Tax FoundationMercatus Center, and Fraser Institute).

But there’s never been a good source if you want to know which local jurisdiction is best.

Dean Stansel of Southern Methodist University is helping to fill this gap with a report looking at the relative quality of government policy in various metropolitan statistical areas (MSAs encompass not just a city but also economically relevant suburbs):

…the level of economic freedom can vary across subnational jurisdictions within the same country (e.g., Texas and Florida have less-burdensome economic policies and therefore much greater economic freedom than New York and California). However, levels of economic freedom can also vary within those subnational jurisdictions. For example, the San Jose metro area has substantially higher economic freedom than Los Angeles. The same is true for Nashville compared to Memphis. In some places, metropolitan areas straddle state borders, skewing state-level economic data. This report quantifies those intra-state disparities by providing a local-level version of the EFNA, ranking 382 metropolitan areas by their economic freedom levels.

So who wins this contest?

Here are the five most-free MSAs. It’s worth noting that all of them are in states with no income tax, which shows that good state policy helps:

What if we limit ourselves to large cities?

Here are the five most-free MSAs with populations over one million. As you can see, Houston is in first place, and zero-income-tax Texas and Florida are well represented:

Now let’s shift to the localities on the bottom of the rankings.

Which MSA is the worst place for economic freedom in America?

Congratulations to El Centro in California for winning this booby prize. As you can see, jurisdictions in New York and California dominate:

What if we look at larger jurisdictions, those with over one million people?

In this case, Riverside-San Bernardino-Ontario is the worst place to live.

Though if you want to focus on big cities, the NYC metro area deserves special mention:

Now let’s consider why economic freedom matters.

I’ve shared charts showing how more economic freedom leads to more prosperity in nations.

The same thing is true for states.

So you shouldn’t be surprised to discover that it also is true for metro areas:

Last but not least, here’s a map showing freedom in all MSAs:

I’m not surprised to see so much red in California and New York, but I didn’t realize that Ohio (thanks for nothing, Kasich), Oregon, and West Virginia were so bad.

And the good results for Texas and Florida are predictable, but I didn’t think Virginia would look so good.

This article was reprinted with permission from International Liberty.

COLUMN BY

Daniel J. Mitchell

Daniel J. Mitchell

Daniel J. Mitchell is a Washington-based economist who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review. 

RELATED ARTICLE: These are the worst cities to live in America. Is yours one of them?

EDITORS NOTE: The featured image is by Pixabay.

Minimum Wage Memes: What They Miss and How They Mislead

Sifting through the internet’s conjecture and extracting the economic truth.

f you have spent much time on Facebook the last few days, you may have seen this meme being passed around from a user named Thomas Corbett:

It has already been shared over 109,000 times, and it is just one of a number of similar viral claims regarding minimum wage and housing from people engaged in the #FightFor15 (or I suppose #FightFor33 if you’re the New York Times).

Others include this one from @pookleblinkie on Twitter with over 60,200 retweets:

Or perhaps you’ve seen this infographic created by the National Low Income Housing Coalition:

They each make the case that housing is unaffordable for people working minimum wage jobs, largely in service of the overall case to raise the federally mandated wage floor.

So what’s wrong with these memes?

As it turns out… quite a bit.

One major red flag that should be immediately apparent is that the numbers for all three viral images are completely different. The first claims that the average rent is $1,418, the second claims $1,234, and the third is presented more circuitously but implicitly claims $1,018.

So who’s right? According to the US Census, nobody.

The NLIHC graphic comes close, but the latest numbers show that as of 2017, the real median rent in the United States was $1,012 per month. This makes Thomas Corbett’s rental price claim 40 percent higher than reality and it makes the one from “pookleblinkie” about 22 percent higher, so we can dismiss both of those as factually off-base from the start.

NLIHC’s website states that their source for housing prices is HUD’s “Fair Market Rents” database, so for the sake of argument, I’m happy to overlook any minor discrepancies there. To their credit, they also show a state-by-state comparison, which is important because the average cost of living varies significantly depending on what part of the country you’re in.

That said, even state-by-state data is probably insufficient as the significant cost of living differences are found between urban, suburban, and rural areas. Not merely based on what state you happen to live in.

Still, the idea that low-income earners have absolutely no way to afford housing is a popular belief, and even if the median rent for the United States is $1,012 a month, that would still be well out of range for someone earning the federal minimum wage of $7.25/hour. In fact, even if 100 percent of the minimum wage earner’s income went into housing—which is clearly impossible—they still would not be able to afford a home at all.

But here’s where we see another serious flaw in the argument.

We’re not comparing apples to apples.

It makes no sense to compare median rental prices to the lowest possible wages. It would only make sense to compare the bottom of the wage distribution to the bottom of the rent distribution. Making a more accurate comparison reveals a completely different picture. For instance, when we compare median rental prices to the median household income in the United States for 2017, we find that the annual cost of renting would be $12,144 on a salary of $60,336/year.

That means that the median rental price is only 20 percent of the median household income.

Unfortunately, I don’t believe there’s any way to break down rental home price data by quintile, but anyone familiar with the concept of a “median” knows that it is the number that falls in the middle of the data distribution.

This means that just as there are an immense number of rental homes that cost significantly higher than $1,012/mo. throughout America, there are an equal number of rental homes that cost less than $1,012/mo. There are also a number of housing options that make a lot more sense than trying to rent a place by yourself as someone working a single minimum wage job.

As someone who has spent his entire adult life post-bachelor’s degree living in expensive major cities (New York, Los Angeles, Washington, DC, Atlanta), I had roommates in every apartment I lived in long after my wages exceeded minimum wage. This is perfectly normal, and sharing costs is hardly something to see as a hardship or a social justice issue. As an added bonus, some of my former roommates are still close friends.

Another way to reduce living expenses is to rent a single room in an existing house—something I have also done at various points in my life. That can bring rental expenses down to the low hundreds of dollars per month even in city centers.

And speaking of city centers, the closer you live to the hub of urban activity, the more expensive rental prices are going to be, so expanding your apartment search to homes that are farther away and commuting in can also save hundreds of dollars a month on rent.

Like many adults, I’ve used each of these approaches to pay less than the median rental price in multiple cities, and I don’t think anyone should regard any of these experiences as humiliating or cruel. To the contrary, they are all frugal ways to make the most of your income.

This is also to say nothing of policy changes that would make new home construction more affordable and less time-consuming by streamlining the permitting processes, reducing zoning restrictions, reducing the number of aspects of the process that require city approval, and just generally lowering the barriers to building. Those kinds of policies would pave the way (pun intended) for an increase in the supply of new homes, which would reduce the cost of existing properties.

Tragically, the inaccurate cost claims are not the only major errors embedded in these images. They’re also more subtly deceptive regarding the demographics of minimum wage earners themselves.

Each of these memes suggests or implies that minimum wage workers are primarily adults with families who have only one income-earner. They also imply that a significant number of people are stuck in minimum wage jobs for their entire lives. And from the way our society frequently talks about minimum wage earners, you’d think that they were a massive group of people.

None of these implications are accurate.

In fact, just 2.6 percent of all wage and salary workers in the United States are working at minimum wage occupations. The overwhelming majority of our workforce earns more than minimum wage. What’s more, 50.4 percent of people working minimum wage jobs are under 25 years old, and 24 percent are still teenagers (16-19). According to the Bureau of Labor Statistics:

Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the Federal minimum wage or less.

Furthermore, people who work minimum wage jobs are far more likely to be unmarried/never-married, to lack a high school diploma (hardly a surprise when a large portion are still in high school), and most—64 percent—are working part-time. If when you picture minimum wage workers, you think of the high school or college-aged kid working at a grocery store or a quick-service food restaurant, your picture is pretty accurate.

That’s not to say that there aren’t older people with children trying to support themselves on minimum wage jobs. There are, but they are comparatively rare. Only about 15 percent of all minimum wage workers are the primary provider for a family with one or more children. That’s just 0.39 percent of the total workforce, which is around 600,000 people in the entire United States.

And of course, that group certainly qualifies for numerous forms of public assistance, including EBT and housing subsidies—which has not been factored into any of these memes either.

I know this has been a lot of statistics and math, but my goal is to arm the valiant readers who have made it to the end of this article with some better information and some logic so that when you’re browsing Facebook and come across misleading memes, you’re better able to spot the errors.

COLUMN BY

Sean Malone

Sean Malone

Sean Malone is the Director of Media at FEE. His films have been featured in the mainstream media and throughout the free-market educational community.

EDITORS NOTE: This FEE column with images is republished with permission.

Freedom of Choice—Not Competition—Is What Sets Capitalism Apart

Capitalism is not “a system of competition” any more than any other system.

Capitalism has often been described as “a system of competition” by its adversaries, or a system “based on competition.” Naturally, this assertion is usually coupled with a spirited oration on how this “tooth ‘n’ nail” competition psychologically corrupts us—pitting man against man in a “race to the bottom.”

Many of capitalism’s most vocal advocates have themselves imbibed this premise uncritically. They leap to a fervent defense of competition, extolling its virtues—real or perceived. In my view, this is a mistake. To accept without evaluation the presupposition that capitalism is a system of competition—in contrast to other hypothetical systems of cooperation (namely socialism and communism)—is to frame the very debate itself in leftist terms and play the game on an unfairly tilted gameboard.

This is not to say that those who defend competition do not raise some worthy points. For example: If not competition, then what is the alternative? Is there to be one central provider of each good and service available who gets to decide on our behalf how it is best to be produced and then allocated?

Adding to that, if competition is wrong in the market, then why not in the political sphere? Surely democracy is out of the question if competition is a corrupting factor—because what do political candidates do if not compete for office? Think of the competition this generates between political parties, not to mention the ensuing competition between firms and individuals for preferential treatment from politicians and legislators and competition between lobbyists, think-tanks, and voters to receive benefits out of the public purse.

If the free and voluntary section of society is a system of competition, how much more so is government? Surely democracy is a “system of competition.” Politicians are competing for the very machinations of control in our society. For the right to pass and enforce laws that apply to everyone (whether they agree with them or not) and to force them to pay for their enforcement. They are not simply competing for market share where the winner of the competition is the one that satisfies the most demand.

We can sidestep the more mundane economic arguments in favor of competition for the moment, such as the case that it increases efficiency and cheapens goods while driving innovation, as we are all familiar with them already.

This is not to say that competition is necessarily an evil, either. The problem lies in defining capitalism as “a system of competition”—in comparison to other systems that are supposedly “cooperative”—is a rhetorical ploy. Those who profess it may honestly believe it to be so, but it’s not true. Capitalism is not “a system of competition” any more than any other system. Capitalism (at least in its free-market, laissez-faire ideal) is a system of the voluntary exchange of goods and services in the absence of physical coercion, theft, compulsion or fraud, predicated upon the fundamental right to own and accumulate property.

Or, for brevity: Capitalism is a system of voluntary exchange predicated upon the right to own property.

One might even venture, therefore, that it is capitalism that is the system most characterized by cooperation.

Granted, upon seeing this definition, many would still debate us over the morality of accumulating property. Or perhaps whether the “negative” right to ownership when it comes to the rich should take precedence over the “positive” right to healthcare or education at their expense when it comes to the poor. We can even debate whether the relationship between capitalists and their employees is really free of coercion given the power disparity between the two groups. Indeed, these are debates I delight in exploring further. However, none of this is a justification for defining capitalism as a system that is more competition-based than others.

After all, it is not the presence of private property or the free exchange of goods that creates the presence of competition in a capitalist system. Scarcity causes that. In any situation of scarcity of resources, there is bound to be some form of competition over those resources (as well as over how those resources are allocated).

If we have a system that allows voluntary exchange, some competition is bound to arise out of that, but that would happen under any system. Even if you had a completely communistic society that was centrally planned and involved no exchange of money whatsoever, people’s time would still be limited. If you were a filmmaker in this society, you would probably want as many people to see your films as possible, as would every other filmmaker. This would put you at least somewhat in competition with them. Does this mean that communism, too, is a system of competition?

Certainly, you would be competing for the only customer—the sponsorship of the state. Corruption and cronyism would surely be the result. Who gets their film made and who doesn’t? Who allocates the highly desirable job of being a filmmaker over the undesirable job of being a street-sweeper or refuse collector, and how can their favor be courted? The competition will commence, but instead of being decided by the free and voluntary exchange of filmgoers, investors, and filmmakers, it will be decided by someone else, I would argue, in a rather more authoritarian fashion. (For a particularly vivid and chilling illustration of how communism substitutes market competition over customers —which is at least tied to the provision of desirable services—for the completely unmeritocratic competition over gaining favor from the corrupt power structure of the state, I refer the reader to Ayn Rand’s first novel, We The Living.)

Competition is just a feature of living in a world of scarcity, and it would exist in any system. Socialism cannot do away with competition—nor can any other system.

The implications of these facts reach into any circumstances of scarcity beyond the economy. For example, suppose two friends each invite me over to dinner for an evening. I might have to make a choice between their invitations, which will result in one of them losing out on my company. Does this then mean that friendship is a system of competition?

We can’t see all of our friends all of the time, or even all of them at the same time. Even if we do, we are bound to have to split our attention among them. In addition to that, we can only maintain so many close friendships at once, and we definitely can’t be friends with everyone. All of this means that, inevitably, we have to make choices.

We each make decisions on who to make and maintain friendships with based upon our value judgments, conscious or unconscious. Perhaps based on how happy we feel around them, how long we have known one another, how much we have in common, how much we trust someone or how loyal they have shown themselves to be, how much they educate, enrich, or enlighten us, or perhaps based upon what roles they allow us to fulfill in their lives. There can be countless other reasons. The fact is we decide.

People who feel that they will benefit from our company, for whatever reason, will make attempts to spend time with us. We will invariably begin to make choices about who to spend time with based upon our values, schedule, and what other activities we are willing to sacrifice to see them. These are basic facts of life, but they hardly make friendship a system of competition.

Similarly, in the market, our time and resources are limited. We make value-based judgments about choices of products and services to consume based upon what utility we think they will bring to us, sacrificing some options for others. Maybe we will choose a coffee shop based on which has the best-tasting coffee, or maybe based on which provides the nicest atmosphere, or maybe based on which is closest, or where the customer service is best, or which is the cheapest, or which we have gone to the longest and therefore find familiar, or perhaps even based on which we think has the best ethos—for example, because they are a social enterprise that only sells fair trade produce and deliberately seeks to employ and train disadvantaged people. The fact is we decide.

Each service provider believes they will benefit from our custom and will make attempts to attract us, placing an upward pressure on the quality of services and a downward pressure on price, which we may correctly identify as a form of competition. Since human beings are not infallible, sometimes someone might buy a coffee that they don’t end up liking, but over the long-term, the competition is likely to be won by the satisfaction of customers.

The miraculous wonder we miss when we focus our attention upon the competition, which derives from choice, is the ability to choose, itself. For example, suppose two commercial events are being held on the same evening. Each prospective patron will want to choose whichever event appeals to them the most, and for whatever reasons they choose based upon what they value in an event. Now, to simply mention that these events are “in competition” would be to completely miss the crucial point that event-goers (who are in the majority compared to event organizers) have a choice of two events which they may prefer to go to one of rather than one alone.

In fact, there is actually far more cooperationinvolved in providing people with goods and services than there is competition. To accomplish anything in the marketplace, one must cooperate with buyers, sellers, managers, employees, suppliers, customers, advertisers, promoters, marketers, collective buyers, and so on.

Leonard E. Read, founder of the Foundation for Economic Education, illustrated this in his most famous essay, “I, Pencil,” first published in 1958. In it, he notes that not a single person on the face of this earth knows how to make a pencil. He goes onto explain that the cedarwood is sourced from Oregon and the logs milled in California. The graphite is mined in Ceylon, mixed with clay from Mississippi, and then treated with a hot mixture that includes candelilla wax from Mexico to increase its strength and smoothness. The six coats of lacquer come separately from the growers of castor beans and the refiners of castor oil. In fact, when you include those who manufacture and transport the equipment involved in these processes, you cannot help but marvel at the fact that millions of people have a hand in its creation. They are working in concert, in cooperation, and as a result, you can get a pencil for pennies.

Because people make choices with scarce resources and limited time, competition will be an inherent part of any economic system so long as there is scarcity. The primary feature of free-market capitalism is not competition, but choice. Rather than moderate the amount of competition in an economy, state intervention will replace competition to serve customers and convince them to voluntarily spend their money on a wide array of ever-expanding goods and services. We can contrast this with other systems in which competition rages over who can gain the favor of those who control the levers of government. That is where the real “tooth and nail” begins.

This article was reprinted from the Mises Institute.

COLUMN BY

Antony Sammeroff

Antony Sammeroff co-hosts the Scottish Liberty Podcast and has featured prominently on other libertarian-themed shows, including The Tom Woods Show, Lions of Liberty, the School Sucks Podcast, and many more.

EDITORS NOTE: This FEE column with images is republished with permission. Image credit: MaxPixel.

Economic Impact Of Super Bowl Dwarfs That Of Government Shutdown

It does sometimes feel as though many Americans actually think the success of the American economy is due to the behemoth in Washington, D.C., rather than in spite of it.

When Friday’s job’s numbers came out, they gobsmacked the media and economic experts, who were expecting 170,000 at the top end and were greeted with 304,000. But those figures were considerably less surprising to those of us who view the government as a hindrance to private enterprise and economic well-being — not an indispensable necessity.

Now an additional data point comes courtesy of Americans’ spending on last night’s Super Bowl — unarguably one of the most boring in history.

“American adults say they will spend an average $81.30 for a total of $14.8 billion as they watch the New England Patriots and the Los Angeles Rams meet up in the Super Bowl,” according to the annual survey by the National Retail Federation and Prosper Insights & Analytics conducted before Sunday’s game.

Meanwhile, the partial government shutdown cost the economy $11 billion, according to a new analysis from the Congressional Budget Office. The CBO says that is due to lost output from federal workers, delayed government spending and reduced demand resulting from those first two. But the CBO goes on to say it is really nowhere near that high.

“Although most of the damage to the economy will be reversed as federal workers return to their jobs, the CBO estimated $3 billion in economic activity is permanently lost after a quarter of the government was closed for nearly 35 days,” CNBC reported, desperately trying to make it seem as though there was economic significance to the shutdown. Media use the big number in the headlines and leads, but it is irrelevant. Only the net number is what counts: $3 billion.

Even the CBO report’s narrative made clear that, despite hyperbolic media attention, the government shutdown was a big snoozer when it came to economic impact.

“Among those who experienced the largest and most direct negative effects are federal workers who faced delayed compensation and private-sector entities that lost business,” the report said. “Some of those private-sector entities will never recoup that lost income.”

So to get this straight. Four hours of football and an entertainment halftime show created nearly five timesas much economic activity as was lost due to the month-long partial government shutdown.

It’s almost as if hundreds of thousands of bureaucrats not showing up in big drab government buildings to push papers, regulate small businesses and grind things slowly for a month didn’t hurt the economy. In fact, based on the job numbers Friday, the bureaucrats’ absence may actually have boosted things.

One downside to note: About 17 million people are expected to call in sick today, the day after the Super Bowl, with the pigskin pox. I’m going to suggest a lot of that is hangover related. That, along with all of the conversations about the game during work hours, could hurt economic output by $4 billion.

The 17 million calling in sick sounds pretty solid. But the $4 billion in economic impact seems a bit squishy considering they are trying to quantify the economic impact of five minutes here and there on the game — when there is no AB comparison given that people engage in water cooler talk year-round.

EDITORS NOTE: This Revolutionary Act column is republished with permission. The featured image is by Pixabay.

California’s New Governor Calls for a Tax on Drinking Water

Communities throughout the state struggle with dangerous pollutants in their supply, but opponents of the suggested tax say there is no need to tax residents in order to solve the problem.

California’s new governor has wasted little time continuing the state’s seemingly limitless expansion of government. Governor Gavin Newsom’s first budget proposal, published last week, suggests instituting a tax on drinking water in the name of cleaning up California’s water systems.

The “Environmental Protection” section of the 2019-2020 budget seeks to

establish a new special fund, with a dedicated funding source from new water, fertilizer, and dairy fees, to enable the State Water Resources Control Board to assist communities, particularly disadvantaged communities, in paying for the short-term and long-term costs of obtaining access to safe and affordable drinking water.

California’s drinking water quality is indeed poor. Communities throughout the state struggle with dangerous pollutants in their supply, but opponents of the suggested tax say there is no need to tax residents in order to solve the problem.

Jon Coupal of the Howard Jarvis Taxpayer Association has argued that the proposal is an example “of California’s knee-jerk reaction to default to a new tax whenever there’s a new problem,” the Sacramento Bee reported. (In another example, last year bureaucrats proposed a new tax on text messages that was ultimately shot down.) Coupal says there shouldn’t be new taxes for water system improvements when the state is sitting on a $14.2 billion surplus.

Similarly, the California Association of Water Agencies, a coalition of public water agencies throughout the state, has expressed opposition to the proposed tax, arguing that in light of the current surplus, a trust should be established to fund water clean-up efforts.  “The state should not tax something that is essential to life, such as water and food,” they said in a press release, adding that the costs of living in California are already too high and that another tax would make water less affordable.

Further, significant funding has already been allocated to help clean up water in disadvantaged communities, which experience disproportionate levels of polluted drinking water. For example, Assembly Bill 1471, passed in 2014, authorized$260 million “for grants and loans for public water system infrastructure improvements and related actions to meet safe drinking water standards, ensure affordable drinking water, or both.”

In 2015, as part of the emergency drought funding, then-Governor Jerry Brown approved an additional $19 million in funding was allocated “to meet interim emergency drinking water needs for disadvantaged communities with a contaminated water supply or suffering from drought-related water outages or threatened emergencies,” according to the state water board.

In June of last year, voters approved Proposition 68, which authorized $250 million for clean drinking water projects, as well as drought preparedness measures.

Further, in December, the EPA awarded California $187 billion in federal funds “for drinking water and wastewater infrastructure improvements.”

California already has one of the largest tax burdens in the country. Its top tier income rate is the highest at 13.3 percent, as is its sales tax rate of 7.25 percent. In 2017, the state collected $82 billion in tax revenue—nearly $4 billion more than expected.

Nevertheless, Newsom is modeling his new tax proposal on a funding bill state lawmakers rejected last year. According to his budget, “This proposal is consistent with the policy framework of SB 623, introduced in the 2017-18 legislative session.”

That bill sought to tax both homes and businesses to raise money for water cleanup and would have been capped at 95 cents per month, but it died in the Senate. (A similar attempt to tax drinking water in the state of New Jersey also languished in that state’s legislature last year.)

It appears voters could be growing apprehensive toward new fees for drinking water considering they defeated Proposition 3 in last year’s election, which would have allocated $500 million in bond funding to help the state’s water suppliers meet safe drinking water standards.

Newsom’s push has received praise from environmental groups, but the Sacramento Bee reports that while the budget has an increased chance of passing since Democrats regained their supermajority in the legislature, some Democrats are hesitant to approve new taxes on drinking water.

Considering the hundreds of millions of dollars that have already been allocated to fix the water problem, it seems the bigger issue isn’t a lack of funding but an excess of bureaucracy and intervention.

COLUMN BY

Carey Wedler

Carey Wedler

Carey Wedler is a video blogger and Senior Editor for Anti-Media.

EDITORS NOTE: This FEE column with images is republished with permission. The featured image is by Pixabay.