Raise the Minimum Wage? A Socratic Dialogue by Lawrence W. Reed

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The ancient sage Socrates, a giant in the foundation of Western philosophy, was known for a teaching style by which he aggressively questioned his students. He employed his Socratic method as a way to stimulate logical, analytical thought in place of emotive or superficial pronouncement. Rather than lecture or pontificate, he would essentially interrogate. The result was to force his Greek pupils to see the full implications of their conclusions or to realize that what they had accepted as solid was nothing more than the intellectual equivalent of crumbled feta.

In his January 28 State of the Union speech, President Obama called upon the U.S. Congress to enact a hike in the hourly minimum wage from $7.25 to $10.10. (The dime may have been added because a nice round number without a decimal would sound unscientific.) Economists have long argued that raising thecost of labor, especially for small and start-up businesses, reduces the demand for labor (as with anything else). But Congress may do it anyway—with the usual, oversized measure of self-righteous breast-beating about helping workers. Maybe what members of Congress need is not another lecture on the minimum wage from an economist, but rather an old-fashioned Socratic inquisition. If the old man himself were with us, here’s how I imagine one such dialogue might go:

Socrates: So you want to raise the minimum wage. Why?

Congressman: Because as President Obama says, minimum wage workers haven’t had a raise in five years.

Socrates: Can you name one single worker who was making $7.25 five years ago who is still making $7.25 today? And if you can’t, then please tell me what caused their wage to rise if Congress didn’t do it. Come on, can you name just one?

Congressman: I don’t happen to have a name on me, but they must be out there somewhere.

Socrates: Well, we’ve just been through a deep recession because successive administrations from both parties, plus you lawmakers and your friends at the Fed, created a massive bubble and jawboned banks to extend easy credit. The bust forced many businesses to cut back or close. Now we have the weakest recovery in decades as ever-higher taxes, regulations, and Obamacare stifle growth. No wonder people are hurting! Do you take any responsibility for that, or do you just issue decrees that salve your guilty conscience?

Congressman: That’s water over the dam. I’m looking to the future.

Socrates: But how can you see even six months into a murky future when you refuse to look into the much clearer and more recent past? You guys think the world starts when a problem arises, as if you’re incapable of analyzing the problem’s origin. Maybe that’s why you rarely solve a problem; you just set everybody up to repeat it. If you really look to the future, then why didn’t you see this situation coming?

Congressman: Look, in any event, $7.25 just isn’t enough for anybody to live on. Workers must have more to meet their basic needs.

Socrates: An employer doesn’t have anything to pay an employee except what he first gets from paying customers. I wonder, whose “needs” do you consider when you decide to buy or not to buy: the workers’ or your own? Have you ever offered to pay more than the asking price just to help out the guy who made the product? And if customers like you won’t do that, where do you expect the employer to get the money?

Congressman: That’s not a fair question. My intent here is purely to help.

Socrates: Sounds to me like the answer is “no,” but let’s move on. Why do you assume your intentions mean more to a worker than those of his employer? It’s the employer who’s taking the risk to offer him a job, not you. You’re only making speeches about it. Don’t you see a little hypocrisy here—you, who are personally offering no one a job, self-righteously criticizing others who are actually creating jobs and paying wages even if they’re not all at a wage you like?

Congressman: Employers are interested only in profits.

Socrates: Are you saying employees are not? Are they more interested in working for companies that lose money, and if so, then why don’t they all line up for government jobs?

Congressman: Well, we lose money here in government every year and there are plenty of people who are happy to work for us.

Socrates: You have a printing press. You also have a legal monopoly on force. When you borrow in the capital markets, you shove yourself to the head of the line at everybody else’s expense. Are you saying these are good things and that we’d be better off if the private sector could do these things too? Try to keep up with me here.

Congressman: I repeat, employers are interested only in profits. People before profits, I say! I even have a bumper sticker on my car that says that.

Socrates: So are you saying that employers would be better people if, instead of seeking profits, they tried to break even or run at a loss? How does that add value to the economy or encourage risk-takers to start a business in the first place?

Congressman: You’re trying to belittle me but I went to a state university. All of my sociology, political science and gender studies professors told us that raising the minimum wage is good.

Socrates: Were any of those tenured, insulated, and government-funded pontificators actual job-creating, payroll tax-paying entrepreneurs themselves, ever?

Congressman: That’s beside the point.

Socrates: (Sigh.) Figures.

Congressman: Look, $10.10 isn’t much. I think you must be mean-spirited and greedy if you don’t want people to be paid at least $10.10.

Socrates: Yeah, like you guys in government check your personal ambitions at the door when you take office. I’d like to know how you arrived at that number. Was it some sophisticated equation, divine revelation or toss of the dice? Why didn’t you choose $20.00, which is not only a nice round number but also a lot more generous?

Congressman: Well, $20.00 would be too high, for sure. Too much of a jump at once.

Socrates: It sounds like you think the cost of labor might indeed affect the demand for it. Good! That’s progress. You’re not as oblivious about market forces as I thought. What I want to know is why you apparently don’t think higher labor costs matter when you raise the minimum wage from $7.25 to $10.10. Do you think everyone, regardless of skill level or experience, is automatically worth what Congress decrees? Do you believe in magic, too? How about tooth fairies?

Congressman: Now hold on a minute. I’m for the worker here.

Socrates: Then why on earth would you favor a law that says if a worker can’t find a job that pays at least $10.10 per hour, he’s not allowed to work?

Congressman: I’m not saying he can’t work! I’m saying he can’t be paid less than $10.10!

Socrates: I thought we were making progress, but perhaps not. Can you tell me, if your scheme becomes law, what happens to a worker whose labor is worth only, say, $8.10 because of his low skills, lack of education, scant experience, or a low demand for the work itself? Will employers happily employ him anyway and take a $2.00 loss for every hour he’s on the job?

Congressman: Businesses need workers and $2.00 isn’t much, so common sense and decency would suggest that of course they would.

Socrates: So employers who employ people are too greedy to pay $10.10 unless they’re ordered to, but then when Congress acts, they suddenly become generous enough to hire people at a loss. Who was your logic instructor?

Congressman: Can we hurry this up? I’ve got other plans for other people I have to think about.

Socrates: I give up. You congressmen are incorrigible. You’re the only people on whom my teaching method has no discernible impact.

Congressman: You ask too many questions.

At this point, in utter frustration, Socrates drinks the hemlock. The congressman votes to price many of the nation’s most vulnerable employees out of work and gets reelected.

Whoever warned us to beware of Greeks bearing gifts apparently never met a congressman.

larry reed new thumbABOUT LAWRENCE W. REED

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Prior to becoming FEE’s president, he served for 20 years as president of the Mackinac Center for Public Policy in Midland, Michigan. He also taught economics full-time from 1977 to 1984 at Northwood University in Michigan and chaired its department of economics from 1982 to 1984.

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

Equal Work? Government Has No Idea What That is

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“Equal pay for equal work!” the mantra goes. “Women get only 73 cents on a man’s dollar!” These are oft-heard slogans, and we may well hear them again during the fall campaign with the War on Women afoot. Now, going beyond the rhetoric, it’s not widely known but nonetheless true that the intersex pay gap is attributable to different career choices men and women make: women tend to choose less lucrative fields (e.g., soft sciences instead of hard ones), work shorter hours even when “full time,” are more likely to value personal fulfillment and job flexibility over money, are more inclined to take time off, generally have less job tenure and more often decline promotions. But while I’ve examined these factors at length in the past, the topic today is something more fundamental. This is that there would be a problem with even a well-intended equal-pay-for-equal-work scheme:

Hardly anyone knows what equal work is.

And the government hasn’t the foggiest idea.

Recently I mentioned how women tennis players now receive the same prize money as the men at Grand Slam events (Wimbledon; and the US, French and Australian opens) and how this is hailed as a victory for “equality.” Yet since the women still only play best of three sets but the men best of five, this actually means the men must work longer for the same pay. Even this, however, doesn’t truly illuminate the issue: what actually constitutes “equal work” in professional tennis?

I’ll introduce the point with another example. The top 10 female fashion models earned 10 times as much as their male counterparts in 2013. Is this unequal pay for equal work? Not really.

While I don’t know if women models’ job is more labor intensive, I know they don’t get paid because they’re capable of posing, wearing clothing, standing under hot lights or parading down runways. It’s because their “work” helps to satisfy a market — and it satisfies a bigger market than the men’s work does.

Note here that while people today frown upon discrimination based on innate qualities, integral to doing the women models’ work is being female. If the male models were women, they might be able to do the same “work” and satisfy the market equally.

Likewise, does the “work” in tennis directly have to do with number of sets played? As an aspiring 12-year-old tennis nut, I’d sometimes play 10 sets a day under the sweltering summer sun, but no one thought of compensating me and I never felt oppressed. Professional tennis players earn money because they satisfy a market, and the men’s “work” does this more effectively than the women’s. And how would we characterize this more valued work?

It is success on the men’s tour — people want to see the grandest stage in the game.

Thus, the only way a woman in tennis could do work equal to that of Roger Federer or Rafael Nadal is to compete on, and succeed equally on, the ATP Tour. Of course, a woman who could would not only enjoy the same prize money (it’s greater in men’s tennis overall), but would become a sporting sensation and might very well receive endorsements dwarfing the men’s. So her “work” then could actually be greater.

There are endless more mundane examples. A woman gynecologist I know will only hire female assistants because she believes it makes her patients more comfortable. Not only is this an example of why sex discrimination is often justifiable, but what if she was forced to hire a man? If the patients were indeed less comfortable — and, therefore, perhaps less likely to visit her practice — would that man truly be doing “equal work”?

Now consider female police officers. Forget for a moment that standards on forces were long ago lowered to accommodate women based on “disparate impact” theory and that Eric Holder is currently suing the Pennsylvania State Police for treating women equally. Imagine a study found that people in general, and the criminally inclined in particular, found male officers more imposing and therefore were more likely to mind their p’s and q’s around them. Would, then, even a highly competent female officer be able to perform “equal work”? And if not, and reflecting the phenomenon with fashion models, wouldn’t being male (or at least appearing so, to head the “transgender” argument off at the pass) be integral to the “work” of policing?

What of a female reporter in male athletes’ locker rooms? Not only wouldn’t it be allowed if the sexes were reversed, but if those men were less comfortable and less likely to be forthcoming in their comments — or even if they just had to modify their behavior — could her “work” really be equal to that of a male reporter’s?

Next, my local hardware store provides knowledgeable workers, all men, who render valuable advice on products and how to perform various home repairs. If it was determined that people found a female in that role less credible and were then not quite as likely to buy from the establishment, would even a highly competent woman be able to do “equal work” in that capacity?

What about the little West Indian restaurant, with all-black workers, I loved when I spent a few weeks in Tampa? If hiring a white person made the eatery seem less authentic and negatively affected its appeal, would that individual be able to do “equal work”? The same, of course, could be asked about a black person working in a German restaurant. In these cases race would be integral to the “work.”

And what of a homosexual Boy Scout troop leader? If his presence made parents less likely to enroll their boys in the organization, could he be capable of “equal work”?

Of course, one knee-jerk reaction here is to say that people “shouldn’t” view female cops or hardware specialists, or homosexuals differently than anyone else. But this is a moral argument of questionable morality, as it applies a bias in selectively objecting to market biases. People take little issue with gynecologists or day-care centers that won’t hire men, with male models being paid less or with ethnic restaurants hiring only non-whites. But try only hiring only male cops or employees; compensating a male hardware specialist more handsomely; or, as with Abercrombie a few years back, valuing employees who don’t wear hijabs over those who do. You may have an experience with the DOJ or EEOC that’ll make a dance with the IRS seem pleasant.

We could also talk about how we “should” value work. If we were deific or at least angelic, we would certainly value a mother-of-four’s labors or Mother Teresa’s loving charity more than Facebook and completely devalue rappers’ vulgarity. And even though I earn less than mainstream-press profferers of pablum, I consider my work infinitely more valuable. But flawed though market determinations may be, they’re still the best guide available.

Even within this worldly context, though, some may say there’s more nuance to the matter of work than my examples express. They may contend, for instance, that female police and hardware specialists might have strengths that counterbalance or even outweigh their weaknesses. And guess what?

I agree.

My examples could possibly be lacking.

And this just buttresses the point: virtually no one — if anyone — can properly assess what constitutes equal work in every situation.

This is yet another reason why the matter of work and pay is none of the government’s business. Are bureaucrats, politicians and judges qualified to determine what equal work might be in the thousands of professions in America? Government isn’t God; it’s not even the market, which can be defined as economic democracy expressed through purchasing decisions. When it intrudes into the economy it’s more like Hitler trumping his generals during WWII and deciding on military strategy: an autocratic agency as incompetent as it is arrogant.

Contact Selwyn Duke, follow him on Twitter or log on to SelwynDuke.com

EDITORS NOTE: The featured image is of students and teachers uniting on the streets to protest for equality. Picture Credit

CLICHÉS OF PROGRESSIVISM #21 – “Capitalism’s Sweatshops and Child Labor Cry Out for Government Intervention” by Paul L. Poirot

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Prevalent in the United States and other industrialized countries is the belief that without govern­mental intervention, such as wage and hour legislation, child labor laws, and rules concerning work­ing conditions for women, the long hours and grueling conditions of the “sweatshop” would run rampant.

The implication is that legislators, in the days of Abraham Lin­coln, for instance, were cruel and inconsiderate of the poor—no better than the caricatured fac­tory owners of the times who would employ men and women and children at low wages, long hours, and poor working conditions. Otherwise, had they been humani­tarians, legislators of a century ago and earlier would have prohibited child labor, legislated a 40-hour work week, and passed other laws to improve working condi­tions.

But the simple truth is that legislators of a few generations ago in the United States were powerless, as Mao or Nehru or Chavez or Castro has been powerless in more recent times, to wave a wand of restrictionist legislation and thereby raise the level of living and abolish poverty among the people. If such a miracle were pos­sible, every dictator and every democratically chosen legislator would “push the button” without hesitation. (Editor’s note: See the recommended readings below for abundant historical evidence of this point).

The reason why women and children no longer find it neces­sary to work for low wages under poor conditions from dawn to dusk six days or more a week is the same reason why strong healthy men can avoid such onerous labor in a comparatively free industrialized society: surviving and earning a living are made easier through the use of tools and capital accumu­lated by personal saving and in­vestment.

In fiction, the children of na­ture may dwell in an earthly para­dise; but in the real life of all primitive societies, the men and women and all the children strug­gle constantly against the threat of starvation. Such agrarian econ­omies support all the people they can, but with high infant mortal­ity and short life spans for all survivors.

When savings can be accumu­lated, then tools can be made and life’s struggle somewhat eased—industrialization begins. And with the growth of savings and tools and production and trade, the pop­ulation may increase. As incomes rise and medical practices im­prove, children stand a better chance of survival, and men and women may live longer with less effort. Not that savings are ac­cumulated rapidly or that indus­trialization occurs overnight; it is a long, slow process. And in its early stages, the surviving women and children are likely to be found improving their chances as best they can by working in factories and so-called sweatshops. To pass a law prohibiting such effort at that stage of development of the so­ciety would simply be to condemn to death a portion of the expand­ing population. To prohibit child labor in developing countries today would be to condemn millions to starvation.

Once a people have developed habits of industry and thrift, learned to respect life and prop­erty, discovered how to invest their savings in creative and pro­ductive and profitable enterprise, found the mainspring of human progress—then, and only then, after the fact of industrialization and a prosperous expanding econ­omy, is it possible to enact child labor laws without thereby pass­ing a death sentence.

A wise and honest humanitarian will know that poverty (and worse) lurks behind every minimum wage law that sets a wage higher than some individual is capable of earn­ing; behind every compulsory 40-hour week rule that catches a man with a family he can’t support ex­cept through more than 40 hours of effort; behind every legislated condition of employment that forces some marginal employer into bankruptcy, thus destroying the job opportunities he otherwise afforded; behind every legal ac­tion that virtually compels retire­ment at age 65.

Men will take their children and women out of sweatshops as fast as they can afford it—as fast as better job opportunities develop—as fast as the supply of capital available per worker increases. The only laws necessary for that purpose are those that protect life and private property and thus encourage personal saving and in­vestment.

To believe that labor laws are the cause of improved living and working conditions, rather than an afterthought, leads to harmful laws that burden wealth creation, sap the incentive of the energetic, and close the doors of opportunity to those least able to afford it. And the ultimate effect is not a boon to mankind but a major push back toward barbarism.

Paul L. Poirot

Summary

  • Sweatshops and child labor were commonplace in preindustrial, precapitalist days because production and productivity were so low, not because people disliked their wives and children more than they do today.
  • Savings, investment, and economic growth improve working and economic conditions faster and more assuredly than well-intentioned but misguided laws that simply close doors of opportunity.

For further information, see:

“Child Labor and the British Industrial Revolution” by Lawrence W. Reed

“Sweatshop Blues: An Interview with Benjamin Powell”

“Book Review: Child Labor and the Industrial Revolution by Clark Nardinelli” as reviewed by David M. Brown

“Why Economies Grow” by Aaron Schavey

“The Man Behind the Hong Kong Miracle” by Lawrence W. Reed

ABOUT PAUL L. POIROT

Paul L. Poirot was a long-time member of the staff of the Foundation for Economic Education and editor of its journal, The Freeman, from 1956 to 1987.

EDITORS NOTE: Paul L. Poirot was a long-time editor of FEE’s journal, The Freeman. This essay is slightly edited from the original, published there in 1963 under the title “To Abolish Sweatshops.”) The featured image is courtesy of FEE and Shutterstock.

Drought Conditions in the U.S. and Immigration

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As water resources necessary for survival dwindle the U.S. Senate, in all its’ wisdom, passed legislation last year that would have doubled mass immigration levels to 2 million a year, dramatically increase worker visas and grant amnesty. Democrats are interested in poverty level voters and Republicans cheap labor. Fortunately the House refused to take up a bill which had no benefits but many negatives for the citizens that voted them into office.

In addition, contemplate what could happen if the population continues to soar.

Here is a link to an article about India, second most populated country in the world, and water their shortages. Don’t forget we are the third most populated country in the world and have 20% of all the world’s immigrants already living here.

When is enough enough?

Five Lessons K–12 Can Learn from Higher Ed by Jenna Robinson

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Colleges aren’t perfect, but they can be instructive for the public schools.

U.S. colleges and universities don’t get everything right. On the whole, they’re overpriced, operationally hidebound, and ideologically stagnant. Despite those problems, American higher education does some things very well—well enough that students from around the world still choose to come to the United States to get advanced degrees.

Primary and secondary schools could learn a lot by taking a close look at some of the best practices in higher education. The underlying difference is that higher education behaves more like a free market, where individual choices and actions determine the outcome.

Here are five things that universities gets right:

1.  Students learn at their own pace. When a student gets to college or university, she arrives with a cohort of other students. They’re mostly the same age, and they’ll probably all take English 101 within their first year on campus. But that’s where the class structure ends. After English 101, students all go their own ways, taking classes to suit their particular talents and interests. Entrance exams mean that students enroll in the math or foreign language courses commensurate with their skills. And if a student flunks differential equations or organic chemistry, he doesn’t have to be held back a whole year. He moves on with the rest of his courses while he retakes the one problem class. There are even classes like “economics for non-majors” that allow students to explore a subject without taking difficult prerequisites or learning complicated methodology.

In K–12, students advance in lockstep with their peers. Students must learn all subjects at the same speed. Special talent in math or language doesn’t result in early promotion to the next level. Until students reach late middle school or early high school, they are expected to learn at exactly the same rate as their peers. And adherence to social promotion (which is allowed in half of U.S. states) means that all students advance from one grade to the next, regardless of achievement. This practice occurs despite the evidence that retaining students who fail their courses generates better outcomes for those students.

2.  Students and parents have skin in the game. Paying tuition affects parents’ and students’ behavior in two ways. First, they shop around for the best deal—not necessarily the cheapest school, but the school at which they can get the most bang for their buck. Second, paying tuition motivates students to care about their educational success (or lack thereof). No one wants to see their hard-earned dollars go down the drain—and scholars have found that this is true for money spent on higher education, particularly as a student approaches graduation. Loans, savings, and money earned from working are better motivators for students to stay in school than scholarships or grants.

If students fail their elementary school courses, they don’t have any financial stake in that failure—at least, not until very far in the future. And parents can’t easily make comparisons to tell whether they’re getting any bang for their buck. Thus, they don’t have strong incentives to hold schools and teachers accountable. More importantly, parents who send their children to public schools can’t take their education dollars elsewhere. Even if one student leaves, the school district will quickly fill her spot with someone else.

3.  Professors are required to have degrees in their field. Community college and university departments only hire professors and lecturers with degrees in the subjects they teach. Professors teaching Introduction to American Government at State U. can be expected to have a Ph.D. in political science—probably with a concentration in American politics. They also research in that same field, keeping abreast of the latest scholarship on their topic. Professors are experts in their own discipline when they enter a classroom to teach undergraduates.

In K–12 schools, many teachers have degrees in education and have spent more time studying pedagogy than the subject they teach. In many states, teachers are even rewarded with raises for getting advanced degrees—regardless of whether that degree is in their field. But the success of programs like Teach for America makes it clear that an education degree can’t substitute for good subject knowledge.

4.  Students can attend any school for which they’re qualified. College students aren’t “zoned” for particular schools. Even public colleges and universities don’t limit applications to students from certain area codes (although they often cap out-of-state enrollment). This system means that every student who chooses to go to college must weigh the costs and benefits of each option and make a decision about where to apply and attend; they cannot simply rely on a default option. Because students can choose where to attend, colleges compete to offer students what they want: good graduation rates, tuition discounts, face time with professors, and opportunities for extracurricular activities. The importance of U.S. News and World Report’s yearly college rankings is a testament to the power of education consumers’ choices.

In stark contrast, a large majority of students in most public school districts simply attend the school for which they’re zoned, and few students consider charter, private, or home-school options.

5.  Professors are paid as individuals, not as a collective. University professors in demanding fields, with unique or extraordinary talent, or with impressive resumes are paid more. Thus, the mean salary for a professor of engineering is $117,911 annually, while a history professor earns $82,944. Instructors, who do no research, earn less than tenure-track professors, who are expected to publish. Moreover, professors are evaluated on their merits when they are up for tenure. How many journal articles have they published? How good (or bad) are their student evaluations? Have they performed any administrative, advising, or outreach work to the satisfaction of the committee? University teachers receive no credit for simply sticking around for a requisite amount of time.

In K–12 public schools, however, “longevity pay” accrues to all teachers who continue to show up. Schools award tenure, in most cases, simply for teaching for a certain number of years without getting negative reviews. Most tellingly, teacher pay is rarely based on individual merit. Teachers receive raises en masse, sometimes for school performance and sometimes just because it’s a good budget year.

Higher education is by no means perfect. But by allowing some market processes, it has avoided the worst failures of the public school system. Politicians and K–12 educators should take heed.

ABOUT JENNA ROBINSON

Jenna Robinson is director of outreach at the Pope Center for Higher Education Policy.

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

TWO REPORTS: Teachers make up only 50% of all Education Jobs

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Parents, concerned citizens and taxpayers have long been concerned about the growing number of non-teaching jobs in public schools. Taxpayers want their property tax dollars to go primarily to the classroom. Two recent studies show that, overtime, education funding is increasingly going to non-teaching jobs.

Visual Editor at The Daily Signal and digital media associate at The Heritage Foundation, Kelsey Harris reports, “Even though the Obama Administration proposes spending $25 billion specifically to ‘provide support for hundreds of thousands of education jobs’ in order to ‘keep teachers in the classroom,’ research by both Heritage and The Fordham Institute reveal alarming numbers: only half of education jobs belong to teachers.”

The Fordham Institutes Matt Richmond writes, “The number of non-teaching staff in the United States (those employed by school systems but not serving as classroom teachers) has grown by 130 percent since 1970. Non-teachers—more than three million strong—now comprise half of the public school workforce. Their salaries and benefits absorb one-quarter of current education expenditures. ”

To show how teachers are no longer the majority The Fordham Institute and Heritage provide the following four charts and map (NOTE: For a larger view click on the chart/map):

Chart 1 & 2: Only half of education jobs are teachers:

Hidden-Half-Report chart 1

chart2-1 (1)

Chart 3: How education staffing has outpaced student enrollment:

chart1600

Chart 4: The farther a school is from a city, the more non-teaching staff it has:

Hidden half report chart 2

Map showing the number of teachers aides per 1,000 students by state:

Final-National-Map-Web

 

EDITORS NOTE: Click on the chart/map for a larger view.

CLICHES OF PROGRESSIVISM #19 – “Big Government Is a Check on Big Business”

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A myth runs through most of America today, and it goes like this: Big business hates government and yearns for an unregulated market. But the reality is the opposite: Big government can be highly profitable for big business.

Many regulations restrict competition that would otherwise challenge existing firms. At the same time, government institutions—many created during the New Deal—funnel money to the largest corporations.

When government regulates X industry, it imposes high costs that hurt smaller firms and reduce competition. Imagine that the Department of Energy imposes a new rule that dishwashers must be more energy efficient. Coming up with designs, retrofitting factories to produce these energy-efficient models, and navigating the forms and licenses around this rule might cost a dishwasher-producing firm thousands of dollars. An industry giant, with more revenue and sizeable profit margins, can absorb this cost. A small dishwasher factory that’s only a year or two old, with little revenue and less profit, cannot. The latter would have to shut down. That means less competition for the industry giant, enabling it to grow even bigger and seize even more market share.

Barriers to entry, such as expensive licenses, also cripple start-ups and reduce competition. The Progressive New Republic speaks favorably of how Dwolla, an Iowa-based start-up that processes payments and competes with credit card agencies, had to pay $200,000 for a license to operate. Rather than hire employees or build a better product to compete with its entrenched competition, Dwolla was forced to spend its first $200,000 on a permission slip. Dwolla could afford it; but how many less-well-funded competitors were forced from the market? How many were deterred from even starting a payment-processing business by this six-figure barrier to entry?

For big businesses, which often sacrifice agility for size, smaller competitors are a major threat. By limiting smaller competition, government helps the industry giants at the expense of everyone else. Barriers to entry can kill the next innovative firm before it can become a threat to its giant competition. When this happens, we don’t even know it: The killed-before-it-can-live company is a classic example of the “unseen” costs of regulation.

While regulations minimize competition, government entities subsidize big business. The Export-Import Bank, established in 1934 as part of the New Deal, exists to subsidize exports by U.S.-based firms. The primary beneficiaries? Large corporations. From 2009 to 2014, for instance, the Ex-Im Bank financed over one-quarter of Boeing’s planes. Farm bills, a key element of the New Deal that still exists today, subsidize huge farms at the expense of smaller ones. The program uses a variety of methods, from crop insurance to direct payments, to subsidize farmers. The program is ostensibly designed to protect small farmers. But 75 percent of total subsidies—$126 billion from 2004 to 2013—go to the biggest 10 percent of farming companies. The program taxes consumers to funnel money to large farms.

Nor are these programs unique. National Journalism Center graduate Tim Carney argues, “The history of big business is one of cooperation with big government.” In the time of Teddy Roosevelt, big meat packers lobbied for federal meat inspection, knowing that the costs around compliance would crush their smaller competitors. New Deal legislation was only passed with help from the national Chamber of Commerce and the American Bankers Association. The Marshall Plan, which subsidized the sale of billions of dollars of goods to Europe, was implemented by a committee of businessmen. President Johnson created the Transportation Department in 1966, overcoming resistance from shipping interests by agreeing to exempt them from the new rules. Costly regulations for thee, but not for me.

If Progressives want to see what free enterprise looks like, they need only look at the Internet. For the past 20 years, it’s been largely unregulated. The result? Start-ups erupt and die every year. New competitors like Facebook bring down existing giants like MySpace and are in turn challenged by a wealth of social media competitors. Yahoo was the Internet search king until two college kids founded Google. Google has been recently accused of monopoly status, but competitors like DuckDuckGo spring up every day.

Let’s imagine if the Internet—a playground of creative destruction—had been as subject to big government as brick and mortar businesses have been. Yahoo would have been subsidized. Facebook would have had to pay six figures to get a licensing fee, crushing college-kid Zuckerberg before he got started and preserving MySpace’s market dominance. Businesses that learned to play the lobbying game would have been allowed to write regulations to crush their competitors.

For those who doubt, the proof of business’s collusion with big government is in the pudding. In 2014, a surprising number of libertarian-leaning men and women are in Congress. How has big business responded? K Street has spent millions of dollars working to replace laissez-faire advocates with those who are establishment-friendly. Sadly, cronyist businesses are fighting to keep free market advocates out of power.

A final note: I have criticized Progressives here, but the institution of big government, which enables businesses to hire lobbyists to write regulations or give themselves a subsidy, is the primary problem. The bigger government grows, the more powerful a tool it becomes for businesses prone to use it for private advantage. That’s not capitalism; it’s what one economist properly labeled “crapitalism.”

Julian Adorney
Economic Historian, Entrepreneur, Fiction Writer

Summary

  • Big Government and Big Business often play well together, at the expense of start-ups, little guys, and consumers.
  • Artificial, politically instigated barriers to entry make markets less competitive and dynamic, and make established firms more monopolistic.
  • A free market (true capitalism, not its adulterated “crapitalism” version) maximizes competition and, therefore, service to the consumer.

For further information, see:

“Of Meat and Myth” by Lawrence W. Reed
“Atlas Shrugged and the Corporate State” by Sheldon Richman
“Ending Corporate Welfare As We Know It” by Lawrence W. Reed
“The Rise of Big Business and the Growth of Government” by Robert Higgs
“Theodore Roosevelt: Big Government Man” by Jim Powell

ABOUT JULIAN ADORNEY

Julian Adorney is an economic historian, entrepreneur, and fiction writer. He writes for the Ludwig von Mises Institute and other websites. You can find his collected work at adorney.liberty.me.

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

INFOGRAPHIC: How Unions Are Chewing Through Taxpayer Dollars

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Nicole Rusenko and Kelsey Harris write and graphically display on The Daily Signal:

Did you know your tax dollars are financing unions?

Thanks to what the federal government calls “official time,” government workers spent 2.4 million hours on union work in 2010. In fact, the Internal Revenue Service alone has 286 full-time employees who work exclusively for the National Treasury Employees Union.

Check out the infographic below for more details on whose special interests (and pockets) your money is going.

WARNING: This infographic may upset your stomach and shrink your wallet.

OfficialTime_Infographic_Rusenko-011

COMMENTARY BY

Portrait of Nicole Rusenko Nicole Rusenko@ncrusen20

Nicole Rusenko is a senior designer at The Heritage Foundation.

 

Portrait of Kelsey Harris

Kelsey Harris
Kelsey Harris is the visual editor at The Daily Signal and digital media associate at The Heritage Foundation.

Did you know all of the Sarasota County School Board/Union salary and benefit negotiations are open to the public?

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I didn’t think so.

If you go to the Sarasota County School District website in the lower right is a section titled “Upcoming Events”. If you click on the small print “Click for Monthly Calendars” you will learn that the School Board has since June 11th, 2014 been negotiating salaries and benefits with the Sarasota County Classified/Teachers Association (SC/TA). These negotiations are normally scheduled each Wednesday from 3:00 – 5:00 p.m. The next scheduled School Board and SC/TA meeting will be on Wednesday, July 30, 2014. All negotiations are held at the SC/TA offices located at 4675 South Tamiami Trail, Sarasota, FL.

What you can’t find on the website is that all of these negotiations are open to the public. 

According to Scott Ferguson, Communications Specialist Sarasota County Schools, “The meeting location and dates/times are posted to our website for public notification; members of the public may attend if they wish.”

You would think the Sarasota County School Board members would want the public to know about these negotiations since salaries and benefits make up such a large portion of the district budget. According to the 2013-2014 Final Budget General Fund Executive Summary salaries and benefits make up approximately 78% of the total budget.

Why should taxpayers care about the Sarasota County School Board Budget? Because 76% of the money comes directly from local property taxes. About 23% comes from the state and less than 5% comes from the federal government.

Another reason these negotiation are important is because President Obama’s Race to the Top for Student Success, codified in Florida Senate Bill 736, requires all teachers be evaluated and paid based on performance measures.

According to the White House website on Race To The Top (RTTT):

Race to the Top marks a historic moment in American education. This initiative offers bold incentives to states willing to spur systemic reform to improve teaching and learning in America’s schools. Race to the Top has ushered in significant change in our education system, particularly in raising standards and aligning policies and structures to the goal of college and career readiness. Race to the Top has helped drive states nationwide to pursue higher standards, improve teacher effectiveness, use data effectively in the classroom, and adopt new strategies to help struggling schools.

Improve teacher effectiveness means performance pay for teachers. Specifically Florida’s RTTT for Student Success: Reforms teacher evaluations; Ends Professional Service Contracts for new teachers hired after July 1, 2011; Creates 2 pay schedules after July 1, 2014: “Performance” and “Grandfathered” Pay Schedules; Eliminates pay supplements for advanced degrees out of certification area; and Ends “last-in-first-out” for reduction in force decisions.

The Florida Education Association describes President Obama’s Race to the Top for Student Success (SB 736) thusly:

Despite all the talk about local control and less government, this bill reduces a school district’s flexibility and authority over teacher evaluations, pay schedules and working conditions. This bill gives new power and authority to the Department of Education and the Florida Legislature.

RTTT for Student Success is a component of Common Core State Standards, renamed Florida Standards.

According to the June 11, 2014 Bargaining Negotiation Notes, “Some conversation ref. highly effective teachers, summer school and performance pay – parties tabled the discussion for later.” To see a sample of the new PRIDE Teacher Evaluation Form click here or the PRIDE Document Checklist click here. Ferguson states, “Topics/proposals to be discussed at future meetings have not yet been determined.”

Taxpayers and interested citizens may want to sit in on these negotiations that will define “effective teachers” and lay out teacher “performance pay” and evaluation standards. Don’t you think?

Question from our readers: Why doesn’t the Sarasota County School Board hold all of these negotiations in the District chambers and televise them?

AGENDA: Grinding America Down

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All American citizens who hold their FREEDOM dear, and support family values should watch the below listed video entitled “AGENDA: Grinding America Down.”   We’ve received thousands of E-mails each week for 5 years; “AGENDA: Grinding America Down” is one of the most significant presentations we’ve viewed over these past 5 years.

Before you watch “AGENDA: Grinding America Down”, please watch this 19 second video:

The video is about the values you want to ensure your children & your extended family members benefit from, it supports the different religious faiths that provide the foundation upon which human values are based, it’s about supporting the members of the US Armed Forces—many of whom gave their last full measure of devotion in order to defend the Republic—it is mainly about the FREEDOMS accorded to all American citizens in the US Constitution by the Founding Fathers.

AGENDA: Grinding America Down

Using Obama’s own words, when he said that he fully intends to “fundamentally transform” our 238 year old Republic; we now have witnessed his true goal to create a Socialist State by any means necessary.  By repealing President Clinton’s requirement that welfare recipients must work for financial aid from the government, over the past 6 years, Obama has managed to enroll a record number of Americans and illegal immigrants in government welfare program with 40 million on food stamps, and millions of new recipients on the disability rolls.

Obama has been framing traditional US work ethics as the foolish belief that President Ronald Reagan once supported, with President Reagan’s thesis that anyone can lift themselves up by their bootstraps being the promise that always has been America and the success that comes about from hard work.  In order to “fundamentally transform America”,  Obama in his speeches and his bloated bureaucracy has been working to replace President Reagan’s well held belief  in American’s work ethic, that contributed to the most successful economy in the history of mankind with something that has never worked in any country in history.  Obama wants to replace American work ethic with the Marxist principal that government must distribute the wealth created by hard working Americans to those who have little interest in working.  Obama wants to more heavily tax the top 10% of successful American earners who already pay 68% of all the taxes in the nation each year (the bottom 50% of earners in America pay 3% of all the taxes).

Obama’s unrelenting attack on the Second Amendment and the right of American citizen’s to bear arms, and the protections accorded all American citizens by provisions of  the Second Amendment that is under relentless assault by the Obama administration.  Obama’s use of the IRS to suppress the rights of conservative Americans who were trying to exercise their right to participate in a national presidential elections should have a special Prosecutor assigned, but Holder refuses to appoint one.   Obama is also using Holder’s Justice Department to prevent states from issuing voter IDs to endure American citizens only vote once, in the last presidential election 7 million voters voted in two states; voter fraud was not controlled; the fear of rampant voter fraud looms large in the November election.

AGENDA Grinding America Down graph

For a larger view click on the chart

The Obama administration will eventually meet with serious and widespread “unorganized” opposition from American citizens because of his violation of Federal Laws, Immigration Laws, and provisions of the US Constitution.   The  Obama administration has been preparing for possible citizen’s unrest, by creating heavily arming federal police force swat teams in the Capital Police Force, Park Police, DHS, the Wildlife Service, the Marshal Service, in the IRS, the Postal Police, the Department of Defense Police, the Federal Protective Service, the Secret Service, and Obama ‘s National Police Force authorized & funded by the Obamacare Law, while providing DHS with armored vehicles, and purchasing excessive amounts of ammunition (more than the US Army and the US Marine Corps uses each year in training their personnel).

The most important Congressional election in 238 years will be held in about 3 months, we encourage you to support the endorsed Combat Veterans For Congress listed in the attachment.  They have the courage to stand up to bureaucratic excesses, will work to rein in the out of control spending by irresponsible members of Congress & the Obama administration, and will protect and defend the US Constitution.

Florida Sheriff would refuse any request from Dept. of Homeland Security to house illegals in his jail

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Sherry Smart, a resident of Sarasota County, FL, sent an email to all of her County Commissioners. Smart wrote, “As all of you are aware we have a crisis at our borders and now it is spreading it’s tentacles across the US. Murietta, California learned about their invasion at the last moment with the assistance of their Mayor who was outraged with this Federal overreach. Next came the people of Virginia who learned about the Fed’s plan for an abandoned building and those people prevailed.  Today I read an article where Pasco County is taking in illegals and requesting more beds. I’d like to know if there are any plans in place for North Port and Sarasota County.” See the map below on the three know relocation areas for illegals in Florida.

Christine Robinson, Sarasota County Commissioner responded stating, “Excuse me for the delay in my response, I was traveling this weekend.  Thank you for writing. I am copying our Sheriff who is a separately elected constitutional officer who is solely in charge of law enforcement responsibilities with your concern.” Robinson did not say if the County would agree to house illegals.

However, Sarasota County Sheriff Thomas M. Knight (pictured above) did respond to Smart stating, “My office has a working relationship with the Department of Homeland Security/Immigration and Customs Enforcement.  I have not received any information from that group of intentions to request assistance from the Sheriff’s Office to house illegals in the Sarasota County Jail.  In fact, I would refuse the request if that should come.  I think it would be also important for you to know that since I took office in 2009, the Sheriff’s Office has recognized over 435 criminal illegal aliens who have been booked at the Sarasota County Jail – having them removed and sent to Miami – Dade County for deportation proceedings. Thank you for staying engaged.” [Emphasis mine]

numbers usa map of illegal relocations

Map of relocation areas (in red) by state. Map courtesy of Numbers USA. For a larger view click on the map.

Steve_Southerland,_Official_Portrait,_112th_Congress

Congressman Steve Southerland, II, FL District 2.

Voicing similar concerns, Neil Rice from Perry, Florida sent an email to Congressman Steve Southerland, II, FL District 2. Rice stated, “House republicans stand your ground or lose your seat. No money for illegal immigrants, with out money they can not stay. Close the borders first and completely. Send back All the illegals. DHS IS A UNCONSTITUTIONAL AGENCY AND NEEDS TO BE ABOLISHED. They are corrupt beyond words, doing what ever they wish. and committing EXTORTION against the American taxpayer.”

“This is an election year, and we are forming groups to campaign against any representative that does not abide by the U.S. Constitution, protects our country and it’s people, (no matter who gets it). We have nothing to lose anymore,” notes Rice.

Melissa Thompson, Deputy District Director for Rep. Steve Southerland, II replied, “Steve and the Republican Conference have no plans to give the President more money for the illegals.”

According to Numbers USA Florida has been targeted by the federal government to take illegals. George Fuller, from Sarasota notes, “Kansas Southern owns subsidiary FERROSUR which has two trains that leave southern Mexico every 8 to 10 days headed for the U.S. Border. This has been the most used form of transportation by illegal aliens to get through Mexico. The trains are known as La Beastia.”

There is a growing backlash across Florida and the United States against this illegal alien invasion. Many argue that America’s sovereignty is being violated as well as standing laws ignored. Is lawlessness coming to Florida?

RELATED VIDEO: Zack Interview-Security on the border between USA and Mexico. NAFBPO’s mission is “to contribute to the security and stability of the United States.”

[youtube]http://youtu.be/ZnkSXosZhic[/youtube]

 

RELATED ARTICLES: 

Brooks County, Texas: Ranchers Round Up Illegals Who Skirt Checkpoint
First Five Steps to Solving Southern Border Crisis
On the Border, Activist’s Arrest Rattles the ‘Dreamers’
SESSIONS WARNS ALL OF CONGRESS: OBAMA’S NEW IMMIGRATION STRATEGY ‘THREATENS FOUNDATION OF OUR CONSTITUTIONAL REPUBLIC’

Food Deserts or Just Deserts? by Stewart Dompe, Adam C. Smith

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The regulatory consequences of the farm bill and other interventions.

According to the United States Department of Agriculture, 23 million Americans live in so-called food deserts. A food desert is defined as an urban neighborhood or rural town without access to fresh, healthy, and affordable food. The argument goes that lack of access leads to poor dietary choices and a higher incidence of obesity, diabetes, and heart disease.

The proposed solution is a series of government grants (i.e., subsidies) that will be given to anyone, including residents, businesses, non-profits, colleges and universities, and community development corporations. There are at least 19 programs from three departments (Treasury, Health and Human Services, and Agriculture) that offer grants and other resources to combat food deserts. To the rescue!

The reality, however, is that this new policy is an attempt to redress the unintended consequences of existing policy. The stated problem of a food desert is that fresh fruits and vegetables are unavailable at affordable prices in low-income areas. The issue here is not low prices but relative prices. Low-income consumers have a choice of how to spend their food budget and obviously want the most caloric bang for their buck. Even if fruits and vegetables were available at lower prices, they must compete against heavily subsidized processed foods containing carbohydrates and corn syrup.

Where do these subsidies come from? Meet America’s favorite barrel of pork, the farm bill. Whenever someone bemoans partisan gridlock, gently remind them that the farm bill always passes with bipartisan support and, in its 2014 iteration, has a price tag of nearly $1 trillion. For years the farm bill has heavily subsidized the production of wheat, corn, and soybeans with the intended consequence of lowering the prices of products containing those goods.

So it’s no surprise—at least for anyone who recalls from their principles of economics class that demand curves slope downward—that Americans’ consumption of carbohydrates has increased substantially over time. Indeed, we eat 25% more carbohydrates today as part of our daily diet than we did 30 years ago. All sweet treats and candy are cheaper because of corn subsidies, as are breads, cereals, crackers, and everything else containing wheat. A USDA program of farmers markets and community gardens will do little to offset the literal billions spent on corn and wheat subsidies.

Another important issue affecting food availability in rural areas is population density. Those living in far-flung rural communities have to drive many miles to reach a supermarket. Supermarkets compete by offering a wide selection of goods at low prices. Without the population to generate a high turnover, they cannot justify their business model. Supermarkets, however, are not the only source of food services. In several prominent studies, stores with fewer than 20 employees were not counted. This methodology was employed because smaller stores, typically bodegas operating in ethnic neighborhoods, are less likely to have the space for fresh produce or refrigeration. This is a strong bias against smaller, family-owned businesses that operate in areas not traditionally covered by so-called big-box retailers.

Lack of population might explain the problem in rural areas, but regulation is the blight of the urban poor. Cities like New York and Washington, D.C., have made it very hard for companies like Walmart to operate in their cities. They have even passed discriminatory legislation with the express purpose of making it harder for Walmart to do business in those communities. The standard claim against Walmart is that its prices are so low that other businesses can’t compete. But if we’re trying to offer affordable produce to large numbers of people, isn’t that sort of the point? Cities that make it hard for big-box stores to operate hurt their poorest residents. Affluent suburbanites can afford to drive to (and purchase from) Whole Foods and other high-end grocers. For everyone else, zoning laws hurt those that lack the mobility to travel outside the zone or otherwise fail to meet the sticker price of these privileged establishments.

Finally, there is already an existing technological solution to the problem of availability: frozen and canned fruits and vegetables. These goods are high in nutritional content, and their packaging means that stores don’t have to worry about spoilage the way they do for their fresh produce. Fresh food has desirable qualities when it comes to taste and presentation, but it comes at a cost. Consumer demand decides whether a store carries fresh produce or not. Intervening in the market on aesthetic grounds is unlikely to create a good result for those who must actually live with the results.

Food deserts are a result of market forces being channeled through bad regulation. If the government wishes to change how people eat, it would be better off ending farm subsidies and inviting supermarkets into the cities. More generally, we as food consumers should recognize that what’s on the shelf is not just a product of poor consumer choices, but of poor government policies as well.

ABOUT STEWART DOMPE

Stewart Dompe is an instructor of economics at Johnson & Wales University. He has published articles in Econ Journal Watch and is a contributor to the forthcoming Homer Economicus: Using The Simpsons to Teach Economics.

ABOUT ADAM C. SMITH

Adam C. Smith is an assistant professor of economics and director of the Center for Free Market Studies at Johnson & Wales University. He is also a visiting scholar with the Regulatory Studies Center at George Washington University and coauthor of the forthcoming Bootleggers and Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics.

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

An Increased Minimum Wage Equals Greater Unemployment

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It’s June, a month famed for marriages, but it is likely to be remembered for the high rate of teen unemployment which has been soaring for a long time. By February, the national unemployment rate for youth, age 16 to 19, had reached 20.7%. By November 2013 it was three times higher than the national average of 6.6% according to the Bureau of Labor Statistics.

Teens are rivaled by the number of American men in their prime working years, a record 1-in-8,who are not in the labor force. These men, age 25-54, represent 61.1 million who are either not working or no longer looking for work. The Weekly Standard reported that “This is an all-time high dating back to when records were first kept in 1955.”

The non-partisan Congressional Budget Office released a report in February that said the wage hike to $10.10 could result in a net loss of about a half a million workers at the same time in increased wages for 16.5 million others.

So, naturally, President Obama in his State of the Union speech, called on Congress to raise the national minimum wage from $7.25 to $10.10 an hour. Soon after, he signed an Executive Order to raise the minimum wage for individuals working on new federal service contracts. That means that taxpayers will pay more for those services as the cost gets passed along. Does he have the power to impose the increase? Probably not.

Meanwhile in California where countless businesses are fleeing thanks to the insanity of its liberal legislature and Governor, as May ended its senate approved a measure that would lift the state pay floor to $13.00 an hour by 2017. If it becomes law, Californians will be interacting with machines for everything from banking to filling their gas tank to having a fast-food meal. Even more insane, Seattle has become home to the highest minimum wage in the nation, $15.00 an hour!

Minimum wage laws have been around a long time. Their original goal was to raise the income of the working poor, but the fact that there is still talk of raising them suggests they don’t work as intended. Letting the job market determine wages holds a greater promise of increased wages because businesses have to remain competitive and that means paying a wage that attracts skilled and even unskilled workers.

As Thomas E. Hall, the author of “Aftermath: The Unintended Consequences of Public Policies” (Cato Institute, $24.95, due in August) notes, “The living wage concept moved to the forefront during the Industrial Revolution, along with calls to end practices such as child labor and conditions poor working women faced. Massachusetts passed the nation’s first minimum wage law in 1912.

One of the outcomes of the Great Depression, 1929 to 1941, was the inclusion of a minimum wage as part of the New Deal’s National Industrial Recovery Act. Suffice to say, the NIRA, which actually encouraged businesses to collude together to set prices, failed to promote economic recovery. It was very unpopular and in 1935 the Supreme Court declared it unconstitutional.

Because liberals never learn anything from experience, the NIRA was resurrected later in the 1938 Fair Labor Standards Act that raised the minimum wage to 40 cents in 1945. “The United States has had a federal minimum wage ever since.”

Politicians and even some demented economists like the minimum wage. Every time it is raised, it appears to the general public that working people benefit. The problem is that the wage increases also include increases in unemployment as businesses try to contain costs in order to remain competitive and make a profit.

As Hall, a professor of economics at Miami University in Oxford, Ohio, notes, “The minimum wage’s first significant impact on national labor market conditions occurred in 1956, when the hourly rate was raised from 75 cents to $1.00.” The increase had its “greatest impact on teenagers because they possess the fewest marketable skills among the working-age population. Also, teens often do, or have in the past, worked at jobs easily replaceable with machinery or by conducting business in a different manner.”

The minimum wage rate, nonetheless, has continued to increase since the 1950s and, “By the early 1990s, these changes had caused to minimum wage to apply to over 90 percent of the U.S. workforce.”

Here’s the fundamental lesson about the minimum wage that continues to be ignored. “President Ronald Reagan, who occupied the White House from 1981 to 1989, did not support further increases because he believed that raising the minimum wage would discourage employment growth…during that decade, the U.S. economy created 18 million new jobs.”

As Hall succinctly points out “Remember that the minimum wage is just a government-imposed price-fixing scheme that creates winners and losers.”

Teens that stayed in school and will either be facing a summer vacation or graduating are particularly disadvantaged by a minimum wage law.

“The effects of high unemployment among this demographic group,” says Hall, “should not be discounted. One reason is that the lack of employment opportunities for young people deprives them of valuable work experience in the form of learning the responsibility of showing up for a job on time, learning to follow directions and complete tasks, learning to work with others…these skills can prove to be beneficial later in life.”

It is likely that the minimum wage is also a factor in why many men in the 25-54 age cohort are not working either. This is hardly the time to be increasing the rate unless you want to see the rate of unemployment increase for all ages and both sexes.

By contrast, in addition to the energy sector, the sector that builds machines to replace human workers is likely to do very well over the coming years.

© Alan Caruba, 2014

RELATED ARTICLE: Consumers Hit With Surcharge to Cover City’s $15 Minimum Wage

Grover Norquist — Trust me! I’m a Lobbyist!

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If Grover says that crops are rotting in the fields, then damn it, crops are rotting in the fields and its time to let illegal aliens into America to harvest those crops so that we can end world hunger.

Hey America, how in the world can this guy get away with these comical policy statements and actually get Members of Congress to support his nonsense?

As we move through this micro-series you will see how Norquist’s nefarious work impacts YOU on a daily basis on the four “I”s of: Immigration, Islam, Israel and Iran.

Watch this short video and see if you can figure it out.

[youtube]http://www.youtube.com/watch?v=4r3SreAxQy0[/youtube]

Grover Norquist: Veni Vedi Visa (I came, I saw, I took your Job)

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In this episode we break Grover’s immigration H1-B, VISA scam.

[youtube]http://youtu.be/6jGe9npilCw[/youtube]

Actually, it’s a brilliant scam where Wizard Norquist and his minions construct a false premise, then conceptually sell this bogus idea as the next best conservative idea to hit Washington. He then secures his target clients, collects eye-popping retainers and does the “K” Street shuffle on the heads of spineless politicians, who mechanically sign the law that the Wizard puts in their power-loving hands.

What a mess this guy has made out of the formerly honorable Conservative movement in America. Norquist has made a bit of a name for himself as a Beltway stand-up “comedian.” But none of his jokes have ever reached the level of side-splitting yuck, yucks, as when he says, with a straight face no less… “Immigration is the number one economic asset for America!”

Now, that IS funny…and destructive for serious Constitutional Conservatives… of which, the Wizard of “K” Street is not one.

As we move through this micro-series you will see how Norquist’s nefarious work impacts YOU on a daily basis in the areas of: Immigration, Islam, Israel and Iran (the Four Is).