Friday, September 02, 2011

Some Good Friday Editorials

1. "A Case Against the Case Against Walmart," by Art Carden in the Washington Examiner.  Critics of Walmart have the burden of proof. 

2. "Mr. Obama, Tear Down Those Union Posters," by Diana Furchtgott-Roth in the Washington Examiner, about the NLRB requirement for employers to put up 11-by-17-inch posters informing workers of their right to unionize.
 
3. "The Great Recession and Government Failure," by Gary Becker in the WSJ. When comparing the performance of markets to government, markets look pretty darn good.

4. Review of "The Fall of the Faculty: The Rise of the All-Administrative University and Why It Matters," in the WSJ.   Professors once ran university affairs largely by themselves. Now they are at the mercy of proliferating 'deanlets.' The enormous investment in administrative bloat has not translated into a better college education.
 
5. 'Green Jobs' vs. Real Energy Jobs, by Steve Moore in the WSJ. For every two cents of tax subsidies for 'Big Oil,' wind and solar get nearly $1. The environmentalists are for any energy source.... except those that actually work.
 
6. "It's Time to Repeal the Minimum Wage," by Gary Wolfram in the Detroit News. It's time that we restored one of our fundamental freedoms - to negotiate wages for unskilled labor without government interference.  

39 Comments:

At 9/02/2011 5:56 PM, Blogger PeakTrader said...

I find it amazing some focus on a low standard, e.g. the minimum wage, while there are way too many other standards, including ridiculously high standards, that are much more costly (in both money and time).

 
At 9/02/2011 7:29 PM, Blogger Benjamin said...

The WSJ also recently op-ed'd against the licensing of lawyers, a very good idea.

This is a more serious structural impediment that guys making a minimum wage that is 25 percent lower than in the 1960s.

I can still remember JFK promising that a "rising tide will lift all boats."

Except if you are working for the minimum wage. Your boat has sunk 25 percent in 50 years.

The right wing does itself a disfavor when it always beats up on the lowest, but never the lawyers, the doctors, the liquor distributors, crooked defense contractors--but I forget! Those people give money to political campaigns.

 
At 9/02/2011 7:54 PM, Blogger PeakTrader said...

So, some people shouldn't attend college, some people shouldn't own a home, and some people who work hard doing jobs other people won't do at minimum wage are overpaid.

 
At 9/02/2011 8:19 PM, Blogger Che is dead said...

Except if you are working for the minimum wage. Your boat has sunk 25 percent in 50 years. -- "Benji"

Do you even know who the people are that are working minimum wage jobs?

In one of the most in-depth studies to date of adults who earn minimum wage, University of Nevada, Reno economist Bradley R. Schiller answers the question that many policymakers have been asking for years: Do a large number of families depend on the income from minimum-wage jobs? The answer, according to Schiller's research, is an emphatic "No."

His findings include:

Approximately three out of four of the adults earning minimum wage earned 30 percent or less of their total household income, illustrating that most were not the main breadwinners in their households.

In households with children where one adult earned minimum wage or less:

- 94 percent of the minimum-wage earners also had a spouse that worked,

- 77 percent of the minimum-wage earners provided less than 20 percent of the household income,

- about half (47 percent) had a spouse earning more than $40,000 a year,

- an additional 16 percent had a spouse earning $30,000 to $40,000 a year, and,

- an additional 12 percent had a spouse earning $20,000 to $30,000 a year.

About 95 percent of the adults who earned minimum wage at some point during the eight-year period also earned considerably more than minimum wage at some point during the same period. Schiller says this debunks the claim that many adults are "stuck" in minimum wage jobs, and is consistent with earlier research that showed the majority of minimum-wage earners earn a raise within one to 12 months.

Phyorg.com

One would think that by now you would have realized that everything that you say is complete bullshit.

 
At 9/02/2011 8:34 PM, Blogger Che is dead said...

... but I forget! Those people give money to political campaigns. -- "Benji"


"[Solyndra] ... is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world. " -- Barack Obama - NBC

Solyndra, recipient of a $535 million Department of Energy loan guarantee, last month cancelled a $300 million initial public offering because auditor PricewaterhouseCoooper said its operating losses and negative cash flow raise doubts about its ability to continue as a going concern ... More Embarassing Solyndra was the first recipient of a loan guarantee under the dual auspices of the Recovery Act and Title XVII of the Energy Policy Act of 2005 ... Taxpayers are on the hook for $390.5 million—73% of the loans ... Some observers questioned the wisdom of the government's deal from the start, saying the company was an inefficient, high-cost producer ... One of Solyndra's biggest stakeholders is Argonaut Ventures I. Its majority owner is Oklahoma oil billionaire George Kaiser, who was a "bundler"of campaign funds for the Obama-Biden campaign. This means he collected contributions and sent them en masse to the candidates. - Barrons

A solar energy company that intends to file for bankruptcy received $535 million in backing from the federal government and has a cozy history with Democrats and the Obama administration, campaign finance records show ... Shareholders and executives of Solyndra, a green energy company producing solar panels, fundraised for and donated to the Obama administration to the tune of hundreds of thousands of dollars. - DailyCaller

How do you like your crow?

 
At 9/02/2011 8:44 PM, Blogger Che is dead said...

Two British guys on vacation in the U.S. visit Wal-mart and love it - "The place is amazing. I don't know why any other shops exist"

 
At 9/03/2011 1:41 PM, Blogger Benjamin said...

Che-

You seem labor under the misunderstanding that I am a liberal, or support government subsidies.

I prefer classic economics, of the type espoused by Milton Friedman.

A true rendering on Friedman finds as many conflicts with the GOP as the Dems.

The GOP is a confederacy of feckless poltroons, deeply wedded to agency spending and subsidies, or protection for favored industries. Add in the nonsense about creationism, homophobia, gun nuts, militarism, and liquor/cig industry ties, and you have a very unappealing party.

This does not mean I am a Dem. In fact, I voted for Reagan, and was relatively pleased with my vote. Since then, the GOP has not come up with much. Neither have the Dems.

All that said, if we want to alter structural impediments, I can think a a lot more important places than people earning minimum wage. It is sad that the corrupted GOP can do nothing better but pick on little guys over and over again.

 
At 9/03/2011 3:20 PM, Blogger juandos said...

Yet again che doesn't fall down on the job...

Good link there amigo...

There's a bit more in this
iWatch posting you might find interesting...

 
At 9/03/2011 3:49 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 9/03/2011 3:52 PM, Blogger Ron H. said...

"All that said, if we want to alter structural impediments, I can think a a lot more important places than people earning minimum wage. It is sad that the corrupted GOP can do nothing better but pick on little guys over and over again."

You cannot be in favor of both a minimum wage and the economics of Milton Friedman. It's just not possible.

So, which will it be, bunny?

Actually, it appears the GOP is trying to provide opportunities for little guys, unlike the leftists like you who want to deny them jobs by means of a minimum wage.

 
At 9/04/2011 2:40 AM, Blogger juandos said...

"I find it amazing some focus on a low standard, e.g. the minimum wage......

Well PT do you also find it amazing that kids can't get jobs?

That there are skill sets almost vacant now in this country because the young folks are to expensive to hire and teach while on the job?

Did you notice how the idea of the 'apprenticeship program' almost seems to have disappeared?

 
At 9/04/2011 9:43 AM, Blogger PeakTrader said...

Juandos, raising the minimum wage to $10 an hour would have a small effect on employment.

For example, the job losses from increasing the minimum wage would be offset by the job gains from increased consumption (from workers with the highest marginal propensities to consume) and unemployment benefits.

And

Two-Thirds Of Americans Support Raising Minimum Wage: Poll
12-6-10

Two-thirds of Americans support raising the minimum wage to at least $10 an hour.

The survey, conducted by the Public Religion Research Institute to plumb American attitudes on religion, values, and politics, found that 67 percent of respondents favor hiking the minimum wage to $10 an hour. Even a majority of Republicans -- 51 percent.

Just 980,000 U.S. workers earn exactly the minimum wage, and 2.6 million earn less, according to the Labor Department. Those groups make up just 4.9 percent of hourly-paid workers.

 
At 9/04/2011 9:45 AM, Blogger PeakTrader said...

Work should be rewarded, even work by low-skilled workers.

 
At 9/04/2011 10:50 AM, Blogger PeakTrader said...

Also, I may add, I don't think it's about inequality.

It's about 90% of workers receiving a little less income and profit to maintain a floor, or a subsistance wage, for the bottom 10% of workers.

I'd also want less welfare and more work or workfare.

However, I can see government working towards equality by raising the floor "too high."

 
At 9/04/2011 2:26 PM, Blogger juandos said...

"Two-Thirds Of Americans Support Raising Minimum Wage"...

Yes PT, its probably that same 2/3 of Americans who's collective grasp of basic economics is somewhat less than nil too...

The cost to any employer is damn site more expensive than the mere wage PT but I'm sure you know this already...

The pro & con argument...

Maybe Walter Williams can show you the light:

Minimum Wage, Maximum Folly

Minimum Wage Cruelty: Update

 
At 9/04/2011 3:38 PM, Blogger Ron H. said...

juandos

"Well PT do you also find it amazing that kids can't get jobs? "

It should be obvious that there aren't enough jobs for teens or anyone else, because Obama and Congress haven't done enough to create them.

QE3, coming right up, should do the trick. Third time's a charm, don't you know.

That and a higher minimum wage, which causes employers to hire more people, will virtually eliminate unemployment in this country.

:)

 
At 9/04/2011 3:56 PM, Blogger Ron H. said...

"For example, the job losses from increasing the minimum wage would be offset by the job gains from increased consumption (from workers with the highest marginal propensities to consume) and unemployment benefits."

Wait a minute. Are you advocating increased amounts in unemployment benefits as an economic growth engine?

Where WILL the money come from to fuel this pipe dream, absent any redistribution from the highly productive to the less productive? Would any prices increase? How would these newly wealthy teenagers be better off if they must spend their new largess on the same amount of goods and services they used to spend less on?

Or, what if these newly flush people change their consumption habits by dining at Outback instead of Wendy's?

Bigger numbers don't equal prosperity.

Just what IS, in your opinion, the optimum min wage?

 
At 9/04/2011 5:03 PM, Blogger PeakTrader said...

Juandos, representing the low-wage labor market with a linear partial equilibrium model is an oversimplification.

Ron, unemployment benefits will be spent. The alternative is less consumption.

Unemployment benefits are normally temporary, until there are jobs, where people can get hired (e.g. in the cyclical nature of the economy).

A subsistance wage allows you to pay for the most basic bills, e.g. housing, food, clothing, transportation, minimal health care, etc. rather than depend on government, family, or charity.

 
At 9/04/2011 6:09 PM, Blogger PeakTrader said...

Of course, a squirrel will bury its nuts when times are good and dig them up when times are bad to avoid starvation.

However, if people bury their nuts in the wrong places when times are good, e.g. the housing or stock market, and times turn bad, there may be little to dig up except shells.

Then where would they be?

 
At 9/04/2011 7:24 PM, Blogger Ron H. said...

"Ron, unemployment benefits will be spent. The alternative is less consumption."

But where does the money come from? Consumption without production isn't growth. Redistribution isn't growth, and doesn't lead to it. It should be obvious by now that stimulus only creates activity until the money runs out, then it's back to recession as usual, except for the additional debt.

There is another alternative: Rather than redistributing my earnings to others, allow me to keep it, and spend it as I see fit. I may cause the creation of some jobs along the way, and eliminate the need for some of the unemployment benefits.

"Unemployment benefits are normally temporary..."

That may have been true in the past, but appears to no longer be the case.

"A subsistance wage allows you to pay for the most basic bills, e.g. housing, food, clothing, transportation, minimal health care, etc. rather than depend on government, family, or charity."

That sounds like a pretty good living to me.

How much, exactly, is this subsistence wage, and is it provided by government mandate?

 
At 9/04/2011 7:29 PM, Blogger Ron H. said...

"However, if people bury their nuts in the wrong places when times are good, e.g. the housing or stock market, and times turn bad, there may be little to dig up except shells.

Then where would they be?
"

You're right. John Edwards might still be a big time candidate for political office if he hadn't buried his nuts in the wrong place.

I thought we weren't supposed to save nuts, but spend them all to stimulate the economy. And then, if that's not enough, we should borrow more from those who have some buried, and spend those too.

 
At 9/04/2011 8:01 PM, Blogger sethstorm said...

Gary Wolfram should have titled his article "In Defense of Slavery" since that is what you get when you do such a thing. Make it harder to not hire instead.


Art Carden forgets that the proof exists in post-Sam Walton era of that company. With Sam, the company demonstrated a successful coexistence of profit and humanity. After Sam Walton, the company sold its soul and became the most anti-American entity in its industry if not country. Associating with that company is like selling your soul - for the road to perdition is too common of a path for distributors, bought-out city councils, and workers. If Wal-Mart made an open/honest case, it would not attempt to bribe clergy, send in offensive PR teams to marginalize the community, or buy up city councils - it would lean that No Means No.

 
At 9/05/2011 1:08 AM, Blogger PeakTrader said...

Ron, supply didn't dry-up, demand did.

Yes, a subsistence wage is set by government, and it could replace many expensive and inefficient government programs.

It would be higher in some states than others, because of differences in the cost of living.

 
At 9/05/2011 2:53 AM, Blogger Ron H. said...

"Ron, supply didn't dry-up, demand did."

The high level of demand seen by producers was never there. Fed policy provided an excess of easy credit that masked the actual level of demand.


"Yes, a subsistence wage is set by government, and it could replace many expensive and inefficient government programs."

I was referring to a minimum wage, not a handout program. What should that level be? Is it $10, $20? What? You have explained that a higher min wage would incrase employment, but you haven't explained what that level should be.

"It would be higher in some states than others, because of differences in the cost of living."

What would it be in California?

 
At 9/05/2011 3:22 AM, Blogger PeakTrader said...

Ron says: "The high level of demand seen by producers was never there."

I guess, it was an illusion, until demand dried-up.

In California, a subsistence wage is likely over $12 an hour, because the state has driven-up the cost of living through excessive regulations, taxes, fees, etc..

 
At 9/05/2011 9:49 AM, Blogger juandos said...

"Are you advocating increased amounts in unemployment benefits as an economic growth engine?"...

Yeah Ron H, that one had me stumped coming from the normally very astute PT...

It was a almost echos of Nancy Pelosi...

 
At 9/05/2011 2:17 PM, Blogger Ron H. said...

"It was a almost echos of Nancy Pelosi..."

Yikes! That was unpleasant. I'm so glad I don't as often see images of that witch any more. That could be one of the most important benefits of a Republican House majority.

 
At 9/05/2011 2:40 PM, Blogger Ron H. said...

"In California, a subsistence wage is likely over $12 an hour, because the state has driven-up the cost of living through excessive regulations, taxes, fees, etc."

( - one of them being a minimum wage.)

OK, so assuming that's a minimum wage, and not a negative income tax, just where will that money come from?

From the prospective of an employer, say a fast food restaurant, when the cost of an input goes up, will they:

a. Raise prices or reduce portions, thereby risking losing customers to competitors.

b. Reduce the amount of that input they use.

c. Reduce profit margin, meaning owners income.

d. Something else.


I vote for b.

c. is unlikely, and at some income level the incentive to operate a fast food restaurant will be gone, and it will close.

a. would essentially raise the cost of most basic goods that involve low wage workers, so their gains in pay would be offset by higher prices for almost everything they buy.

Where is the gain, and who gets it?

 
At 9/05/2011 5:48 PM, Blogger PeakTrader said...

Ron, also, some of it can come from more productive workers attracted to the higher wage.

Moreover, demand can increase from the higher wage and unemployment benefits.

Furthermore, some of it may come from "excessive" profits or "excessive" wages, not used for consumption.

So, demand may rise, although it may remain below supply.

 
At 9/05/2011 6:13 PM, Blogger PeakTrader said...

You don't want to raise the minimum wage when the economy is overproducing.

Henry Ford
Labor philosophy
The five-dollar workday

Ford was a pioneer of "welfare capitalism", designed to improve the lot of his workers and especially to reduce the heavy turnover...Efficiency meant hiring and keeping the best workers.

Ford astonished the world in 1914 by offering a $5 per day wage ($110 today), which more than doubled the rate of most of his workers.

A Cleveland, Ohio newspaper editorialized that the announcement "shot like a blinding rocket through the dark clouds of the present industrial depression."

The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs.

Competitors were forced to raise wages or lose their best workers.

Ford's policy proved that paying people more would enable Ford workers to afford the cars they were producing and be good for the economy.

 
At 9/05/2011 7:04 PM, Blogger Ron H. said...

"Ron, also, some of it can come from more productive workers attracted to the higher wage."

Exactly. That's my point about less productive workers losing their jobs. More productive workers means fewer workers, not more. Some of that productivity may come from capital replacing labor, which puts low skilled workers even further from employment.

"Moreover, demand can increase from the higher wage and unemployment benefits."

Indeed! Allowing higher prices businesses will charge to cover the higher wages they must pay.

"Furthermore, some of it may come from "excessive" profits or "excessive" wages, not used for consumption."

I've never yet heard a reasonable definition of "excessive profits", and "excessive wages" is a new one on me. Who can possibly decide when profits are "excessive"? I thought the market determined profits or losses. This must involve some sort of redistribution scheme.

"So, demand may rise, although it may remain below supply."

Not for long, unless you envision a large inventory buildup. I'm not sure what you're referring to here.

 
At 9/05/2011 7:45 PM, Blogger Ron H. said...

"Henry Ford
Labor philosophy
The five-dollar workday
"

Ford paid what was necessary to attract the type of worker he needed. Businesses do the same thing today.

In 1914 auto assembly was backbreaking and exhausting work requiring some amount of mechanical skill. To attract and keep good workers required more pay than the industry rate had previously been. This is simple supply and demand, nothing more.

With the advent of automation and assembly lines, the 8 hour work day became another benefit to businesses, as it allowed 3 shifts to keep production going nonstop.

"Ford astonished the world in 1914 by offering a $5 per day wage ($110 today), which more than doubled the rate of most of his workers."

A sad comment on the destruction of the dollar by the Fed to less than 5 cents today.

Auto workers have certainly seen their pay improve since then. I doubt many would consider $110/day a good wage today.

"The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs."

Here we have the bottom line reason for the wage increase.

"Competitors were forced to raise wages or lose their best workers."

Ain't capitalism great? You can bet that the bar for hiring raised also, so fewer low skilled workers got jobs.

"Ford's policy proved that paying people more would enable Ford workers to afford the cars they were producing and be good for the economy."

This is a senseless comment. I've heard this before, that workers should be able to buy the product they are making, but how many products actually fit that description? Workers at a pencil factory can afford many of the products they are making, but how many at Boeing can say the same?

 
At 9/05/2011 8:42 PM, Blogger sethstorm said...


Ain't capitalism great? You can bet that the bar for hiring raised also, so fewer low skilled workers got jobs.

The phrase of "Low-skilled workers" seems like a thought-terminating cliche - where these people are meant to have perdition visit them.

How about just raising the pay without raising the skill level - as the market would do absent distortions like offshoring and temporary labor.

 
At 9/05/2011 11:05 PM, Blogger sethstorm said...


I've heard this before, that workers should be able to buy the product they are making, but how many products actually fit that description? Workers at a pencil factory can afford many of the products they are making, but how many at Boeing can say the same?

It demonstrates a willingness to get the product in the hands of people who know it best - while making it a voluntary measure. Not only does it show a confidence in the workers, it also shows a confidence in the product.

While it is admittedly difficult to do with large scale things such as planes, it can be done in other ways.

 
At 9/06/2011 12:01 AM, Blogger Ron H. said...

"How about just raising the pay without raising the skill level - as the market would do absent distortions like offshoring and temporary labor."

Let me try to explain this:

If you are Henry Ford, and you have 100 assembly jobs to fill at $2.50/day, and you have 200 applicants, you may just hire the first 100 people who come in the door. You know the pay is low, and most won't stay long. You are hiring on a continual basis due to high turnover. Some have skills and some don't, but it doesn't much matter.

Now you decide that you want to stop the high turnover and hire only good, skilled workers at $5/day.

Now those applicants who come to the door will be screened for talent. You aren't going to pay $5/day for people that can barely dress themselves, so those with low skills, won't get jobs. Get it?

The very same thing occurs when you raise the minimum wage. Those that get hired will be the top applicants out of however many there are. Those with lower skills won't get the jobs. The bar will be higher.

"How about just raising the pay without raising the skill level - as the market would do absent distortions like offshoring and temporary labor."

Do you mean pretend there's a labor shortage?

How about just taking a job at the pay of a tempo or an offshore employee? That would serve the same purpose. Fill a job opening, and get you a job.

Is that what you do? If you hire someone to mow your lawn do you decide to pay them more than they ask for, as if you were lucky to find someone to do the job?

When you go to a restaurant do you decide to pay more than your bill?

Do you try to pay more than the price tag for a shirt because you know the workers who made it aren't paid very much?

I didn't think so. Sometimes you say such stupid things.

Employers shop for the best price they can get on labor, just as you do on things you pay for.

 
At 9/06/2011 12:06 AM, Blogger Ron H. said...

"It demonstrates a willingness to get the product in the hands of people who know it best -"

That's nonsense. An auto assembler doesn't know any more about the finished car than anyone else, except for the part they happen to assemble.

 
At 9/06/2011 6:15 PM, Blogger sethstorm said...


How about just taking a job at the pay of a temp or an offshore employee? That would serve the same purpose. Fill a job opening, and get you a job.

Try explaining how they don't distort the market. With temporary work, you have two people distrusting you in a time where trust is needed the most - work.

As for offshore work, I don't do slave labor. This isn't the Gilded Age, stop trying to bring it back or advocate sending work to countries still in it.



Is that what you do? If you hire someone to mow your lawn do you decide to pay them more than they ask for, as if you were lucky to find someone to do the job?

I've done that in-house for the exercise.


When you go to a restaurant do you decide to pay more than your bill?

That's called gratuity.


Do you try to pay more than the price tag for a shirt because you know the workers who made it aren't paid very much?

Someone that buys that shirt is so far down the chain, that one person's purchase would be imperceptible.


Employers shop for the best price they can get on labor, just as you do on things you pay for.

11
Yet they are allowed to dodge being stung when things go wrong, while it is the opposite for the people they hire.

 
At 9/07/2011 3:19 AM, Blogger sethstorm said...



Now those applicants who come to the door will be screened for talent. You aren't going to pay $5/day for people that can barely dress themselves, so those with low skills, won't get jobs. Get it?

The very same thing occurs when you raise the minimum wage. Those that get hired will be the top applicants out of however many there are. Those with lower skills won't get the jobs. The bar will be higher.


Yet you still have the problem of having the thought-terminating cliche of "low skilled" - where it's OK to consign them to a fate without regard to the circumstances.

 
At 9/08/2011 7:03 AM, Blogger Ron H. said...

"Yet you still have the problem of having the thought-terminating cliche of "low skilled" - where it's OK to consign them to a fate without regard to the circumstances."

"Low skilled" has a widely used and well understood meaning as applies to workers. It means exactly what it sounds like. Low skilled = low skilled.

I'm not consigning them to anything. I just won't likely hire them at a wage above the market rate for their skill level.

I haven't made them low skilled, they have done it themselves.

If they want better jobs, they need to get better skills. They might get them if I could hire them at a lower wage, but sethstorm insists on a minimum wage that prices them out of the market.

How about you, seth, are you still getting those handouts from me? are you still holding out for that job you used to have? You know, the one that doesn't exist anymore?

 

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