Tag Archive for: jobs

A Higher Minimum Wage Will Make Us Meaner by Scott Sumner

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In a recent post, I argued that government monopolies often offered worse service to customers than competitive private firms. In this post (which will have something to offend both progressives and conservatives), I’ll look at a different but related problem.

A few days ago there was a big debate about a New York Times expose on working conditions at Amazon.com. (By the way, it would have been useful for the NYT to compare labor practices at the Seattle company to working conditions at firms operating in the Amazon region of Brazil.)

Many liberals were appalled, while conservatives often wondered why, if working conditions were so bad at Amazon, people didn’t simply “get another job.” I have sympathy for both sides, but probably a bit more for the conservative side.

One liberal objection might be that it’s not easy to get another job. (And perhaps that’s because monetary policy since 2008 has been too contractionary. And perhaps that’s because conservatives have complained about the Fed’s QE/low interest rate policies, which has made the Fed reluctant to do more.)

Regardless of how you feel about monetary policy, it’s clear that if employers feel they have a “captive audience” of workers, who are terrified of losing their jobs, it would be easier for the employer to crack the whip and drive the employees to work extremely hard. One advantage of a healthy job market is that workers have more power to negotiate pleasant working conditions.

But progressives also have some major weaknesses in this area. They tend to favor policies such as New York City’s rent controls, and the new $15 minimum wage being gradually phased in in some western cities.

I like to think of these policies as engines of meanness. They are constructed in such a way that they almost guarantee that Americans will become less polite to each other.

In New York City, landlords with rent controlled units know that the rent is being artificially held far below market, and thus that they would have no trouble finding new tenants if the existing tenant is unhappy. So then have no incentive to upgrade the quality of the apartment, or to quickly fix problems. They do have an incentive to discriminate against minorities that, on average, are more likely to become unemployed, and hence unable to pay the rent. Or young people, who might damage the unit with wild parties.

Wage floors present the same sort of problem as rent ceilings, except that now it’s the demanders who become meaner, not the supplier. Firms that demand labor in Los Angeles in the year 2020 will be able to treat their employees very poorly, and still find lots of people willing to work for $15/hour.

Even worse, this regulation will interact with the migrant flow from Latin America, to produce another set of unanticipated side effects. In some developing countries there is a huge army of unemployed who go to the cities, hoping to get one of the few high wage jobs available in the “formal” sector of the economy. With a $15 minimum wage, migrants will come from Mexico until the disutility of waiting for a good job just balances the expected utility of landing one of those good jobs. You’ll have lots more angry, frustrated, young Mexican illegal immigrants with lots of time on their hands. What could go wrong?

One reason that I am what Miles Kimball calls a “supply-side liberal” is that I believe my preferred policy mix (NGDP targeting, plus free markets) is most likely to produce the sort of “nice” society I grew up with (in Madison, Wisconsin).

This post first appeared at Econlog. ©

Scott Sumner
Scott Sumner

Scott B. Sumner is the director of the Program on Monetary Policy at the Mercatus Center and a professor at Bentley University. He blogs at the Money Illusion and Econlog.

Paul Krugman: Three Wrongs Don’t Make a Right by ROBERT P. MURPHY

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One of the running themes throughout Paul Krugman’s public commentary since 2009 is that his Keynesian model — specifically, the old IS-LM framework — has done “spectacularly well” in predicting the major trends in the economy. Krugman actually claimed at one point that he and his allies had been “right about everything.” In contrast, Krugman claims, his opponents have been “wrong about everything.”

As I’ll show, Krugman’s macro predictions have been wrong in three key areas. So, by his own criterion of academic truth, Krugman’s framework has been a failure, and he should consider it a shame that people still seek out his opinion.

Modeling interest rates: the zero lower bound

Krugman’s entire case for fiscal stimulus rests on the premise that central banks can get stuck in a “liquidity trap” when interest rates hit the “zero lower bound” (ZLB). As long as nominal interest rates are positive, Krugman argued, the central bank could always stimulate more spending by loosening monetary policy and cutting rates further. These actions would boost aggregate demand and help restore full employment. In such a situation, there was no case for Keynesian deficit spending as a means to create jobs.

However, Krugman said that this conventional monetary policy lost traction early in the Great Recession once nominal short-term rates hit (basically) 0 percent. At that point, central banks couldn’t stimulate demand through open-market operations, and thus the government had to step in with a large fiscal stimulus in the form of huge budget deficits.

As is par for the course, Krugman didn’t express his views in a tone of civility or with humility. No, Krugman wrote things like this in response to Gary Becker:

Urp. Gack. Glug. If even Nobel laureates misunderstand the issue this badly, what hope is there for the general public? It’s not about the size of the multiplier; it’s about the zero lower bound….

And the reason we’re all turning to fiscal policy is that the standard rule, which is that monetary policy plus automatic stabilizers should do the work of smoothing the business cycle, can’t be applied when we’re hard up against the zero lower bound.

I really don’t know why this is so hard to understand. (emphasis added)

But then, in 2015, things changed: various bonds in Europe began exhibiting negative nominal yields. Here’s how liberal writer Matt Yglesias — no right-wing ideologue — described this development in late February:

Indeed, the interest rate situation in Europe is so strange that until quite recently, it was thought to be entirely impossible. There was a lot of economic theory built around the problem of the Zero Lower Bound — the impossibility of sustained negative interest rates…. Paul Krugman wrote a lot of columns about it. One of them said “the zero lower bound isn’t a theory, it’s a fact, and it’s a fact that we’ve been facing for five years now.”

And yet it seems the impossible has happened. (emphasis added)

Now this is quite astonishing, the macroeconomic analog of physicists accelerating particles beyond the speed of light. If it turns out that the central banks of the world had more “ammunition” in terms of conventional monetary policy, then even on its own terms, the case for Keynesian fiscal stimulus becomes weaker.

So what happened with this revelation? Once he realized he had been wrong to declare so confidently that 0 percent was a lower bound on rates, did Krugman come out and profusely apologize for putting so much of his efforts into pushing fiscal stimulus rather than further rate cuts, since the former were a harder sell politically?

Of course not. This is how Krugman first dealt with the subject in early March when it became apparent that the “ZLB” was a misnomer:

We now know that interest rates can, in fact, go negative; those of us who dismissed the possibility by saying that people could simply hold currency were clearly too casual about it. But how low?

Then, after running through other people’s estimates, Krugman wrapped up his post by saying, “And I am pinching myself at the realization that this seemingly whimsical and arcane discussion is turning out to have real policy significance.”

Isn’t that cute? The foundation for the Keynesian case for fiscal stimulus rests on an assumption that interest rates can’t go negative. Then they do go negative, and Krugman is pinching himself that he gets to live in such exciting times. I wonder, is that the reaction Krugman wanted from conservative economists when interest rates failed to spike despite massive deficits — namely, that they would just pinch themselves to see that their wrong statements about interest rates were actually relevant to policy?

I realize some readers may think I’m nitpicking here, because (thus far) it seems that maybe central banks can push interest rates only 50 basis points or so beneath the zero bound. Yet, in practice, that result would still be quite significant, if we are operating in the Keynesian framework. It’s hard to come up with a precise estimate, but using the Taylor Principle in reverse, and then invoking Okun’s Law, a typical Keynesian might agree that the Fed pushing rates down to –0.5 percent, rather than stopping at 0 percent, would have reduced unemployment during the height of the recession by 0.5 percentage points.

That might not sound like a lot, but it corresponds to about 780,000 workers. For some perspective, in February 2013, Krugman estimated that the budget sequester would cost about 700,000 jobs, and classified it as a “fiscal doomsday machine” and “one of the worst policy ideas in our nation’s history.” So if my estimate is in the right ballpark, then on his own terms, Krugman should admit that his blunder — in thinking the Fed couldn’t push nominal interest rates below 0 percent — is one of the worst mistakes by an economist in US history. If he believes his own model and rhetoric, Krugman should be doing a lot more than pinching himself.

Modeling growth: fiscal stimulus and budget austerity

Talk of the so-called “sequester” leads into the next sorry episode in Krugman’s track record: he totally botched his forecasts of US economic growth (and employment) after the turn to (relative) US fiscal restraint. Specifically, in April 2013, Krugman threw down the gauntlet, arguing that we were being treated to a test between the Keynesian emphasis on fiscal policy and the market monetarist emphasis on monetary policy. Guys like Mercatus Center monetary economist Scott Sumner had been arguing that the Fed could offset Congress’s spending cuts, while Krugman — since he was still locked into the “zero lower bound” and “liquidity trap” mentality — said that this was wishful thinking. That’s why Krugman had labeled the sequester a “fiscal doomsday machine,” after all.

As it turned out, the rest of 2013 delivered much better economic news than Krugman had been expecting. Naturally, the market monetarists were running victory laps by the end of the year. Then, in a move that would embarrass anybody else, in January 2014 Krugman had the audacity to wag his finger at Sumner for thinking that the previous year’s economy was somehow a test of Keynesian fiscal stimulus versus market monetarist monetary stimulus. Yes, you read that right: back in April 2013 when the economy was doing poorly, Krugman said 2013 would be a good test of the two viewpoints. Then, when he failed the test he himself had set up, Krugman complained that it obviously wasn’t a fair test, because all sorts of other things can occur to offset the theoretical impacts. (I found the episode so inspiring that I wrote a play about it.)

Things became even more comical by the end of 2014, when it was clear that the US economy — at least according to conventional metrics like the official unemployment rate and GDP growth — was doing much better than Krugman’s doomsday rhetoric would have anticipated. At this point, rather than acknowledging how wrong his warnings about US “austerity” had been, Krugman inconceivably tried to claim victory — by arguing that all of the conservative Republican warnings about Obamacare had been wrong.

This rhetorical move was so shameless that not just anti-Keynesians like Sumner but even progressives had to cry foul. Specifically, Jeffrey Sachs wrote a scathing article showcasing Krugman’s revisionism:

For several years…Paul Krugman has delivered one main message to his loyal readers: deficit-cutting “austerians” (as he calls advocates of fiscal austerity) are deluded. Fiscal retrenchment amid weak private demand would lead to chronically high unemployment. Indeed, deficit cuts would court a reprise of 1937, when Franklin D. Roosevelt prematurely reduced the New Deal stimulus and thereby threw the United States back into recession.

Well, Congress and the White House did indeed play the austerian card from mid-2011 onward. The federal budget deficit has declined from 8.4% of GDP in 2011 to a predicted 2.9% of GDP for all of 2014.…

Krugman has vigorously protested that deficit reduction has prolonged and even intensified what he repeatedly calls a “depression” (or sometimes a “low-grade depression”). Only fools like the United Kingdom’s leaders (who reminded him of the Three Stooges) could believe otherwise.

Yet, rather than a new recession, or an ongoing depression, the US unemployment rate has fallen from 8.6% in November 2011 to 5.8% in November 2014. Real economic growth in 2011 stood at 1.6%, and theIMF expects it to be 2.2% for 2014 as a whole. GDP in the third quarter of 2014 grew at a vigorous 5% annual rate, suggesting that aggregate growth for all of 2015 will be above 3%.

So much for Krugman’s predictions. Not one of his New York Timescommentaries in the first half of 2013, when “austerian” deficit cutting was taking effect, forecast a major reduction in unemployment or that economic growth would recover to brisk rates. On the contrary, “the disastrous turn toward austerity has destroyed millions of jobs and ruined many lives,”he argued, with the US Congress exposing Americans to “the imminent threat of severe economic damage from short-term spending cuts.” As a result, “Full recovery still looks a very long way off,” he warned. “And I’m beginning to worry that it may never happen.”

I raise all of this because Krugman took a victory lap in his end-of-2014 column on “The Obama Recovery.” The recovery, according to Krugman, has come not despite the austerity he railed against for years, but because we “seem to have stopped tightening the screws….”

That is an incredible claim. The budget deficit has been brought down sharply, and unemployment has declined. Yet Krugman now says that everything has turned out just as he predicted. (emphasis added)

In the face of such withering and irrefutable criticism, Krugman retreated to the position that his wonderful model had been vindicated by the bulk of the sample, with scatterplots of European countries and their respective fiscal stance and growth rates. He went so far as to say that Sachs “really should know better” than to have expected Krugman’s predictions about austerity to actually hold for any given country (such as the United States).

Besides the audacity of downplaying the confidence with which he had warned of the “fiscal doomsday machine” that would strike the United States, Krugman’s response to Sachs also drips with hypocrisy. Krugman has been merciless in pointing to specific economists (including yours truly) who were wrong in their predictions about consumer price inflation in the United States. When we botched a specific call about the US economy for a specific time period, that was enough in Krugman’s book for us to quit our day jobs and start delivering pizza. There was no question that getting things wrong about one specific country was enough to discredit our model of the economy. The fact that guys like me clung to our policy views after being wrong about our predictions on the United States showed that not only were we bad economists, but we were evil (and possibly racist), too.

Modeling consumer price inflation

I’ve saved the best for last. The casual reader of Krugman’s columns would think that the one area where he surely wiped the deck with his foes was on predictions of consumer price inflation. After all, plenty of anti-Keynesians like me predicted that the consumer price index (among other prices) would rise rapidly, and we were wrong. So Krugman’s model did great on this criterion, right?

Actually, no, it didn’t; his model was totally wrong as well. You see, coming into the Great Recession, Krugman’s framework of “the inflation-adjusted Phillips curve predict[ed] not just deflation, but accelerating deflation in the face of a really prolonged economic slump” (emphasis Krugman’s). And it wasn’t merely the academic model predicting (price) deflation; Krugman himself warned in February 2010 that the United States could experience price deflation in the near future. He ended with, “Japan, here we come” — a reference to that country’s long bout with actual consumer price deflation.

Well, that’s not what happened. About seven months after he warned of continuing price disinflation and the possibility of outright deflation, Krugman’s preferred measures of CPI turned around sharply, more than doubling in a short period, returning almost to pre-recession levels.

Conclusion

Krugman, armed with his Keynesian model, came into the Great Recession thinking that (a) nominal interest rates can’t go below 0 percent, (b) total government spending reductions in the United States amid a weak recovery would lead to a double dip, and (c) persistently high unemployment would go hand in hand with accelerating price deflation. Because of these macroeconomic views, Krugman recommended aggressive federal deficit spending.

As things turned out, Krugman was wrong on each of the above points: we learned (and this surprised me, too) that nominal rates could go persistently negative, that the US budget “austerity” from 2011 onward coincided with a strengthening recovery, and that consumer prices rose modestly even as unemployment remained high. Krugman was wrong on all of these points, and yet his policy recommendations didn’t budge an iota over the years.

Far from changing his policy conclusions in light of his model’s botched predictions, Krugman kept running victory laps, claiming his model had been “right about everything.” He further speculated that the only explanation for his opponents’ unwillingness to concede defeat was that they were evil or stupid.

What a guy. What a scientist.


Robert P. Murphy

Robert P. Murphy is senior economist with the Institute for Energy Research. He is author of Choice: Cooperation, Enterprise, and Human Action (Independent Institute, 2015).

My 2015 Commencement Address

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All manner of people are giving commencement speeches to students graduating from colleges and universities these days. It is doubtful that any will be remembered because the prospects of students depend in large part on the economy into which they are entering, the majors they pursued, their individual ambitions, and capacity for hard work. Then, too, there’s dumb luck which often plays a role.

For those graduating this year, my profound sympathy because the economy could not be much worse short of being declared an official Depression. Out of a total of 330 million Americans, there are currently 93,194,000 Americans who are not in the workforce because they can’t find a job or have given up looking. Even in the field of manufacturing—not something you studied for—the number of jobs have declined by 7,231,000, some 37% since manufacturing peaked in the U.S. in 1979.

U.S. economic growth rate has slowed to 0.2%. In short, it is virtually non-existent. So, with your diploma in hand, unless you majored in the sciences, math or engineering, you are not likely to join the workforce any time soon. Those of you who majored in social work, theatre arts, elementary education, and something called parks and recreation, are going to be at the bottom of the salary scale for the rest of your life.

Of the previous graduates from 2008 to the present who voted for Barack Obama, just 14% have real jobs. You have had the vast misfortune of being born just in time to live through the worst presidency in the history of the nation. If, in fact, you even know the history of the nation.

You are at a further disadvantage because the curriculums of the government schools you attended have been so distorted that you have been led to believe that the Founding Fathers were all slave-owning, white elitists when in fact, many opposed slavery, the labor source of their era, and would have abolished it. However they knew they could not get the Constitution ratified by the southern states if they did. It’s called compromising for a greater goal, the finest and currently the oldest functioning Constitution on Earth.

Depending on your race and sex, you have already been taught to blame anything that goes wrong in your life on whether you are white, black or Hispanic, male or female. If you want to know what’s wrong, look in the mirror and ask yourself what you are doing wrong or not doing right—dressing, manners, behavior, addictions, et cetera.

If you have been raised to believe in God and have spiritual values, you are likely to be mocked, though not necessarily to your face. While still the majority faith in America, Christianity is under attack from many directions, not the least of whom are homosexuals that constitute less than 2% of the population. Their attack on traditional (and biological) male-female marriage that has been part of every civilization going back five thousand years and more will degrade society in many ways.

For many of you, graduation means years of paying off huge loans for the privilege of picking up a degree that, as noted—short of science, math and engineering—will not yield a lot of income. This will impact your lifestyle including possibly having to move back in with your parents. It may mean putting off marriage and a family of your own for a while and your loans will affect being able to secure a mortgage on a home, but everyone is having problems doing that these days.

So, if all this looks and sound bleak, it is because it is. A real commencement speech should tell you the truth but most of them do not. They are generally filled with inspiring talk about the future.

The future you are looking at along with everyone else is fraught with danger. That, however, can be said of every “future” that every American has faced since the nation was established. It took a shooting war with Great Britain just to have a nation and Americans have been engaged in wars large and small ever since.

The threat of Communism faced Americans after World War Two and generations previous to yours waited out and opposed the Soviet Union for nearly fifty years before it collapsed. Communism is still around however in China, nearby Cuba, Venezuela and other nations who suppress their people in the name of the utopian society they claim to have.

The more recent threat is the rise of Islamism, radical Islam as practiced and supported by a significant percentage of the world’s one billion-plus Muslims. It is a cult about Mohammed based on the total domination of the world. Divided between two sects, Sunnis and Shiites, when they are not killing each other, they are killing “infidels”, anyone who is not a Muslim.

It will fall to you and your fellow graduates to fix the nation’s problems and right now its biggest one is that the federal government is too large and we are collectively facing an $18 trillion debt that must be resolved because just paying interest on it makes doing anything else difficult at best.

All of the states are in debt as well as they struggle to pay the health benefits and pensions of civil service workers, active and retired. That often doesn’t leave much money for fixing potholes and other infrastructure needs.

Whatever problems you will encounter, keep in mind previous generations often encountered much worse, such as those in the 1930s during the Great Depression and in the 1940s who fought World War II, and those from the 1950s and 1970s who were called on to fight the Korean War and the war in Vietnam; more recently those who fought the war in Afghanistan and Iraq. Respect their sacrifices and their courage.

If you want to see the government grow even larger along with the debt, vote for Hillary Clinton. She’s still mentally and ideologically stuck in the 1990s, plus she has engaged in behavior that would get anyone else put in jail. You have a large choice among Republican candidates and eventually it will narrow to someone capable of tackling the future.

The best I can do is to wish you good luck. You’re going to need it.

© Alan Caruba, 2015

The EPA’s Ozone Nightmare

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Putting aside its insane attack on carbon dioxide, declaring the most essential gas on Earth, other than oxygen, a “pollutant”, the Environmental Protection Agency (EPA) is currently engaged in trying to further regulate ozone for no apparent reason other than its incessant attack on the economy.

In late January on behalf of the Committee for a Constructive Tomorrow (CFACT), Dr. Bonner R. Cohen, Ph.D, filed his testimony on the proposed national ambient air quality standard for ozone. The EPA wants to lower the current ozone standard of 75 parts per billion (ppb) to a range of 70 to 65 ppb, and even as low as 60 ppb.

“After promulgation of the current ozone standards in 2008,” Dr. Cohen noted, “EPA two years later called a temporary halt to the nationwide implementation of the standard in response to the severe recession prevailing at the time.”

In other words, it was deemed bad for the economy. “Now, EPA is proposing a new, more stringent standard even before the current standard has been fully implemented and even though, according to the EPA’s own data, ozone concentrations have declined by 33 percent since 1980.”

AA - Ozone molecule

Ozone molecule.

According to Wikipedia: “Ozone is a powerful oxidant (far more so than dioxygen) and has many industrial and consumer applications related to oxidation. This same high oxidizing potential, however, causes ozone to damage mucous and respiratory tissues in animals, and also tissues in plants, above concentrations of about 100 ppb. This makes ozone a potent respiratory hazard and pollutant near ground level. However, the so-called ozone layer (a portion of the stratosphere with a higher concentration of ozone, from two to eight ppm) is beneficial, preventing damaging ultraviolet light from reaching the Earth’s surface, to the benefit of both plants and animals.”

So, yes, reducing ozone in the ground level atmosphere does have health benefits, but the EPA doesn’t just enforce the Clean Air Act, it also seeks to reinterpret and use it in every way possible to harm the economy.

As Dr. Cohen pointed out, “the Clean Air Act requires EPA’s Clean Air Scientific Advisory Committee to produce an evaluation of the adverse effects, including economic impact, of obtaining and maintaining a tighter standard. Despite repeated requests from Congress, (the Committee) has not produced the legally required evaluation. By ignoring this statutory mandate, and moving ahead with its ozone rulemaking, EPA is showing contempt for the rule of law and for the taxpayers who provide the agency’s funding.”

Since President Obama took office in 2009 he has used the EPA as one of his primary tools to harm the U.S. economy. In a Feb 2 Daily Caller article, Michael Bastasch reported that “Tens of thousands of coal mine and power plant workers have lost their jobs under President Obama, and more layoffs could be on the way as the administration continues to pile on tens of billions of dollars in regulatory costs.”

The American Coal Council’s CEO Betsy Monseu also testified regarding the proposed ozone standards, noting that the increased reductions would affect power plants, industrial plants, auto, agriculture, commercial and residential buildings, and more.

Citing a study undertaken for the National Association of Manufacturers, “a 60 ppb ozone standard would result in a GDP reduction of $270 billion per year, a loss of up to 2.9 million jobs equivalents annually, and a reduction of $1,570 in average annual household consumption. Electricity costs could increase up to 23% and natural gas cost by up to 52% over the period to 2040.”

In a rational society, imposing such job losses and increased costs when the problem is already being solved would make no sense, but we all live in Obama’s society these days and that means increasing ozone standards only make sense if you want to harm the economy in every way possible.

© Alan Caruba, 2015

The Pursuit of Profit Is Pro-Social by Matthew McCaffrey

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A value-creating business is “social” whether it pursues an explicit social agenda or not.

You can’t throw a rock these days without hitting someone who’s talking about entrepreneurship and why we need to encourage more of it. In the public and private sectors — especially in higher education — innovation, enterprise, and entrepreneurship are buzzwords like never before.

A big beneficiary of this trend is the field of social enterprise. Unlike ordinary businesses, the conventional explanation goes, social enterprises use their commercial activities to promote a broader aim of human well-being rather than simple profit maximization. An example is Jamie Oliver using the restaurant business to provide culinary training to disadvantaged youth or sell food that encourages healthier living, even if doing so hurts the bottom line. Because of these kinds of expansive goals, social enterprises tend to be looked on favorably by business students, governments, and the media.

But while social enterprises certainly do create value, emphasizing “social” goals over profits can be misleading because it implies that traditional profit-seeking entrepreneurship fails to produce wide-ranging benefits for large numbers of people. Thinking of social enterprise as distinct from conventional business helps obscure the vital truth that profit seeking is not only compatible with increases in human welfare, it is probably the most powerful force for producing them ever devised.

In fact, that’s the beauty of free-market enterprise: it’s social whether it pursues an explicit social agenda or not. Critics of government intervention often point out that good intentions don’t equate to good policies. Likewise, the absence of good intentions doesn’t equate to bad policy, and lacking a specific social goal doesn’t make entrepreneurs antisocial. Think of Adam Smith’s observation about the butcher, brewer, and baker, which reveals that commerce is social because it’s mutually beneficial, not because entrepreneurs necessarily have a larger agenda.

When a company like Uber charges a price for its services, it’s being social in the sense that it’s creating value for consumers, not just for itself. And the market is simply an elaborate network of voluntary exchanges in which buyers and sellers constantly make each other better off — which is why they do business to start with.

Free enterprise is therefore social enterprise, but the reverse is true as well: enterprise is social if and to the extent that it’s free. We are truly social when we choose our relationships and refrain from choosing our neighbors’. In a free market, the term “social enterprise” is redundant because it’s in the marketplace that human beings express some of their most fundamental social instincts. Buying and selling teach us about peaceful interaction for mutual gain — and reveal to us just how profoundly our well-being depends on our commitment to benefiting others.

However, if we choose coercion over peaceful cooperation, we abandon hope of a working social order. Any social enterprise worthy of the name is therefore hostile to economic intervention, because every intervention is a step away from social cohesion and toward conflict.

Unsurprisingly, the corporate state is the primary cause of antisocial tendencies in real-world enterprises. Take, for example, intellectual-property law. What could be more antisocial than prohibiting people from sharing ideas and using them to improve the welfare of others? Yet many who promote enterprise take it for granted that “protecting” ideas is an essential part of entrepreneurship.

This attitude hints at a broader institutional problem: the sort of enterprise supported by public rhetoric is rarely the kind of healthy economic activity that would be produced in a free economy. Instead, public support for enterprise tends to mean support for a few privileged ventures at the expense of others. Sadly, it’s common for governments the world over to emphasize the need for more entrepreneurship while simultaneously promoting policies that distort, penalize, or even outlaw it. That’s why it’s more important than ever to be wary of the different meanings attached to words like “social” and “enterprise” and how these useful terms come to be associated with harmful economic ideas.

If economics tells us anything, it’s that we can’t effectively promote enterprise without first abandoning the networks of privilege and regulation that undermine entrepreneurship and divert human talent into destructive practices. A vital step toward that goal is seriously considering the rhetoric we use to describe the market. Language radically alters perceptions of commerce and can make the difference between thinking of enterprise as zero-sum profit seeking or as the key to the countless benefits of peaceful exchange.

ABOUT MATTHEW MCCAFFREY

Matthew McCaffrey is assistant professor of enterprise at the University of Manchester and editor of Libertarian Papers.

 

Hillary: ‘Don’t Let Anybody Tell You’ that ‘Businesses Create Jobs’ [+video]

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There is only one thing that creates a job – profit. If a business, sole proprietor or large corporation, does not make a profit they will not add to their payrolls. The only thing that creates a government job is taxes, paid by businesses and those who work for businesses.

It appears Hillary Clinton does not understand that. Restoring Liberty’s Joe Miller reports:

Appearing at a Boston rally for Democrat gubernatorial candidate Martha Coakley on Friday, Hillary Clinton told the crowd gathered at the Park Plaza Hotel not to listen to anybody who says that “businesses create jobs.”

“Don’t let anybody tell you it’s corporations and businesses create jobs,” Clinton said.

Hillary has not had a private sector job since the days just after she left college. She may be confusing the work she has done for the government as a job but perhaps misunderstands who paid her salary? Perhaps she should have run her remarks by those businesses that contribute to her campaign? Perhaps this is just a new way of saying “You didn’t build that” refurbished for the 2016 presidential race?

American Airlines Lays Off Over 1,000 in Florida

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Gov. Rick Scott issued the following statement after American Airlines’ announcement that it expects to reduce their Florida workforce by more than 1,000 workers before the end of the year:

“American Airlines’ announcement today is certainly bad news for their company and a setback for hundreds of Florida families. We are focused on growing our economy so every Floridian has access to a great job because we know that having the opportunity to work hard and provide for your children is the heart of the American dream.

“I asked the Department of Economic Opportunity Director Hunting Deutsch to work with the Southwest Florida Workforce Investment Board, the Beacon Council, the Miami Chamber of Commerce and the associated labor unions to immediately develop a plan to transition these highly skilled aviation workers into other jobs. We know that Florida workers want to work, and assisting them in identifying other opportunities in our state is a top priority.”

The Mass Layoff Statistics (MLS)* from the US Department of Labor report that during the period February to July 2012 there have been 470 “Layoff Events” in Florida. 

According to the US Department of Labor, Bureau of Labor Statistics Florida has seen a decline in the labor force. In February 2012 there were 9,297,200 in the labor force. In July that number dropped to 9,269,500. Since February 27,700 left the workforce in Florida. During the same period 26,700 jobs were added and the unemployment rate dropped from 9.4 to 8.8 percent. The decline in the workforce may be reflected in the decline in unemployment and skew the number.

On January 1, 2013 Florida is expected to lose over 79,400 defense and defense related jobs due to mandated cut backs in defense spending, known as sequestration. Other jobs are expected to be lost as mandated cuts of $1.2 trillion are implemented. Defense contractors are required by law to send out layoff notifications beginning this month.

*The Mass Layoff Statistics (MLS) program collects reports on mass layoff actions that result in workers being separated from their jobs. Monthly mass layoff numbers are from establishments which have at least 50 initial claims for unemployment insurance (UI) filed against them during a 5-week period. Extended mass layoff numbers (issued quarterly) are from a subset of such establishments—where private sector nonfarm employers indicate that 50 or more workers were separated from their jobs for at least 31 days.

Hasner Campaign: Both Parties Created This Jobs Crisis

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This week the Adam Hasner for US House Campaign launches the “It’s About Math” informational series. Between now and Election Day, Adam will be focusing on the real numbers and real issues of great importance to the residents of Florida’s District 22.

“So many people I speak with, regardless of political party, are sick and tired of the name calling and scare tactics,” Adam Hasner said. “What they really want to know is whether or not you have a plan to get America’s fiscal house in order and get our economy moving again. Every day I am talking about just that. I’m hopeful this debate can be about the real differences I have with my opponent on getting spending under control, creating jobs and improving the lives of people in our community. Solving our nation’s problems isn’t about Republicans or Democrats or any political philosophy. It’s about math.”

A key number from the August jobs report released last week was 368,000. That is the number of Americans who stopped looking for work and are no longer counted in the US labor force by the United States Labor Department. (Wall Street Journal, Five Key Takeaways from Jobs Report, 9/7/12).

“This number itself is telling, but it also says more about the individual stories of the college student who can’t find a job, a dad who got laid off, a mom who’s working less hours than she wants to or needs to, a senior who’s had to go back to work to make ends meet because they lost their retirement savings,” said Hasner.

“Behind this number are the stories of the people who are losing hope and beginning to believe that our country’s best days are behind us. It’s distressing that people are giving up. We can do better and they deserve better.

“While the official unemployment rate hovers above 8% for the 43rd consecutive month – perpetuating the slowest economic recovery in decades – Lois Frankel continues to distract attention from spending and the economy and remains silent about what should we do to create jobs.

“That’s most likely because she knows her record on job creation as Mayor was abysmal. Lois Frankel entered office in West Palm Beach with the city’s unemployment rate at 5.4%. But by the time she left office 8 years later, the unemployment rate in her city had climbed to 10.6%. The numbers prove that she didn’t have solutions for West Palm Beach and she’s failed to offer any ideas on how to get our nation’s economy back on track.

“Mayor Frankel continues to support the same misguided Washington policies that for the last 43 months have been failing small businesses, families and hard-working Americans.

“Both parties got us into this mess, but now isn’t the time to point fingers and place blame. It’s time for a new approach:

  • We must reform the current tax code to make it flatter, fairer, and simpler and eliminate loopholes and exemptions.
  • We must eliminate hurdles to form new businesses and right-size regulations that are currently stifling economic growth with red tape and compliance costs and do it with a balanced approach that protects our natural resources and protects consumers.
  • We must unleash the power of Made in America energy with new technologies for safe development of domestic oil and natural gas. Affordable energy is a key factor in creating jobs and attracting companies to bring manufacturing jobs back home.
  • We must also focus on education and worker training initiatives to get the long term unemployed back to work.
  • “What small businesses need is certainty, knowing what to expect so they can make critical decisions to hire new employees, invest in new equipment, and expand their operations.

“It’s time for common-sense policies that will empower private sector job creation to help Main Street get back on its feet and get America’s economy back on the move.

Obama Turning Americans into “Economic Slaves”

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Florida Congressman Allen West (R-22) stated at a Port Saint Lucie campaign speech President that President Obama wants to turn Americans into “economic slaves.”

At the event Congressman West spoke about the importance of lowering taxes, minimizing regulations on business and bringing jobs back to Florida. Congressman West criticized President Obama on his failure to create private sector jobs.

“Self-esteem comes from doing esteemable things. Sitting at home and getting a check from the government is not going to help your self-esteem. What it will do is make you an economic slave to people living in a far, far, distant place,” West remarked.

Congressman West stated, “He does not want you to have the self-esteem of getting up and earning and having that title of ‘American’. He’d rather you be his slave and be economically dependent upon him.”

Congressman West said during a Conservative Black Forum said that President Obama “doesn’t have a vision for the black community” in America. Congressman West’s website notes:

“In the beginning, in chapter one, it talks about over the past 30 years, billions of dollars have been poured into black communities across the country in hopes of curing well-documented socio-economic problems including failing schools and adequate housing, rampant crime and drug abuse, black on black killings, unemployment and more,” West said. “Despite the courageous efforts of many local institutions, agencies, school leaders, grassroots organizations and community residents, the problems remain.”

“In many instances, these problems have grown worse,” he continued. “I believe it will take new ideas and new voices to find solutions, and that is exactly why we’re here. We’re here today to talk about economic freedom as opposed to economic dependency. We’re here today to talk about four basic conservative principles and how they can apply to economic revitalization for the black community: That’s limited government, being fiscally responsible, individual industrialism that leads to self-sufficiency and the free market that grows business, and lastly and most importantly, it’s about equality of opportunity which comes from a good education.”

West points to the black community’s 14 percent unemployment rate as an indicator that the current economic policies aimed at helping minorities aren’t working, adding that “if you understand actual unemployment, it’s probably closer to 18 or 20 percent.”

On top of that, West pulled out statistics showing how blacks aren’t proportionally represented population-wise in the percentage of new start-up businesses around the country.

“60 percent of new startups are in the white community, 23 percent of new startups [are] in the Hispanic community, 5 percent [of] new startups [are] in the Asian community and, with 13 percent of the population, you’re only seeing nine percent of new startups coming out of the black community,” West said.

Over the more than two-hour-long discussion about issues facing these communities and possible solutions, President Barack Obama hardly came up. After the event, West told The Daily Caller that’s because Obama “doesn’t have a vision for the black community and economic development.”

“He doesn’t have a vision for America,” West told TheDC. “So, I think that’s why we see all of these horrible economic indicators turning in the way that they are. His vision is just to get re-elected and that’s not what I’m here talking about.”

West issued a warning concerning the Supreme Court’s recent decision to uphold the Affordable Care Act. “Now we find ourselves in a situation where the tax code of the United States of America is being used as a weapon against the American people. It is being used for behavior modification. That is exactly what came from the Supreme Court decision last week,” said West.

Congressman West is campaigning for a second term in the U.S. House in Florida’s newly-drawn district 18. He faces County Sheriff Bob Crowder in the GOP primary on August 14 for a chance at the party’s nomination.