The Myth of Stagnate Incomes

If you've been listening to politicans a lot you probably believe that Americans' incomes are "stagnating". That, except for the fortunate few, hardly anyone is getting ahead.  If, instead, you listen to economists who research facts, you'd know otherwise. This chart is from data in a recent study released by the Congressional Budget Office.

The Myth of Stimulus Spending

Edmund Phelps. Nobel Laureate in economics, debunks the Keynesian notion that "fiscal stimulus" helps economies recover form recessions. If that were the case, countries that had larger debt (stimulus) would have recovered faster than those that implemented dreaded "austerity" budgets such as Spain, Portugal and France. Big deficits did not speed up recoveries. In fact, the relationship is negative, suggesting fiscal profligacy led to contraction and fiscal responsibility would have been better.

Yet, the next time we have a recession, count on the willfully ignorant in government and the media to call for more "stimulus".

60% of Households Receive More in Government Transfers than they Pay in Taxes

According to a report released this year by the Congressional Budget Office, only the top two income quintiles in the United States pay more in taxes than they receive in government transfers.  Fair share?

Factory Jobs Are NOT Coming Back, Mr. President

Those who think Donald Trump (or anyone else) is going to "bring back factory jobs" to America needs to study this chart for a moment.  I'm pretty sure The Chinese were not responsible for the declines prior to 1980. Nor those after 1980, for that matter.

How Socialism Destroys -- in One Chart

In this one chart from Mark Perry we see the power of capitalism to create economic activity and power of socialism to destroy it.

Income Inequality is Something You Control

Mark Perry at U of Michigan created this summary chart about income distribution for those who think income inequality is something that is externally foist upon us. It pretty clearly demonstrates that:

1. The more people you have working in your household, the higher will be your HH income
2. If you want higher income, get married
3. The highest income households are those with people in peak earning years (35-64). In other words, people just starting out or those who are retired earn less than a 50 year old with a 30 year work history.
4. If you want to earn more money, don't drop out of high school. Earn an advanced degree.

While these points may seem obvious, they don't seem to penetrate the skulls of those in the media who decry "income inequality" as if it is a disease that randomly attacks people.  If you don't like being in the bottom quintiles of income you CAN do something about it -- e.g. get married, get a job, finish high school, GROW UP (literally and figuratively).

Growth, Not Obama Fuels the Labor Force

A reminder. Only one thing affected the decline in labor participation -- economic growth. Economic growth fueled by actions that increase corporate profits and hence the need to hire more people.  For all of President Obama's preening this week, it should be quite clear from these charts what happened during his eight years in office. 

The Diversity Blob Just Keeps Growing

Ever wake up one day to see a sprawling bureaucracy and wonder how it got there? Below are the employees who work in the "Diversity Department" at the University of Michigan. It's almost 11 million dollars in payroll.  How many scholarships could Michigan provide for $11MM? This is just one university in the country. Now you know where all the people with degrees in woman's studies, black studies and queer studies go to "work". If you live in Michigan, your tax dollars go to support this blob. And you can bet there's a similar bureaucracy at every public university.

My favorite is the web designer who "earns" almost $100K. Every hire a web designer? They typically work for less than half that. But they're probably not "diverse" enough. This one is no doubt special.

Yes, Girls Outperform Boys

The NY Times took the data below and decided that it was a big story. And it is. Now you might think the obvious conclusion from this data was: Girls consistently outperform boys in English skills. That is a big story. But the Times decided the story was:

Boys Outperform Girls in Math:
Rich, White and Suburban Districts

Yes. Ignoring the most important aspect of the report, they chose to make this a story about . . . wait for it . . . White Privilege.  White Privilege doesn’t appear to affect English skills, only math skills. The Times doesn’t really explain that, but, damn, those rich white kids sure do get math better. And isn’t that unfair?   

Yes The Middle Class is Shrinking, But Why is That Bad?

Yes, it's true that the percentage of households earning "middle class incomes ($50-100,000) is declining. But it's declining because those earning more than that amount have been increasing so rapidly.  If you listen to politicians and the media they seem to think that's something to be alarmed about. Why?

The Rich Pay Everyone's Taxes

The Rich don't pay their fair share share of taxes. They pay everyone's taxes.

Chart courtesy of Mark Perry

The Short Term effects of Minimum Wage Increases

This will not come as a shock to anyone who has successfully completed Economics 101, but two professors from University of California San Diego felt it necessary to publish a paper that shows that labor has a demand curve as well. From their abstract:

As of 2015, We estimate that relatively large minimum wage increases(defined as those exceeding $1) reduced employment among low-skilled population groups by just over 1 percentage point.

What Do Universities Plan to Do About This Gender Disparity?

Progressives claim there are no inherent differences between genders. Ergo any male-female disparities must be explained by discrimination of some sort, which requires remediation. So my questions are this:

1. In light of the disparity in college degrees, what is it that colleges and universities are doing that discriminate in favor women over men?
2. Universities have been particularly active in doing things to narrow gender disparities. What do they plan to do about this one? Safe spaces for men? Extra points on exams for men? More tuition assistance for men and less for women? Inquiring minds want to know.

The Myth of Tax Cuts for the Rich

If you listen to Democrats in Congress and most of the media you'd probably think the recent tax legislation were "tax cuts of the rich". If you used facts instead of rhetoric, you'd know that isn't true.
The tax cuts will result in the highest earning Americans actually shouldering more of the income tax burden than in 2017. If your household earns  $150,000 (which doesn't exactly make you "rich" in most major urban centers), you get the privilege of helping to pay 87% of the country's income taxes. Middle income households in contrast will pay 4%.

More Evidence of the Perverse Effects of the Minimum Wage

A new study from Grace Lordan, London School of Economics and David Neumark, University of California at Irvine shows the  following:

1. Increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers. 

2. An increase of the minimum wage by $1 (based on 2015 dollars) decreases the share of low-skilled automatable jobs by 0.43 percentage point. 

The Balance of Payments Must Always Balance

Apparently Donald Trump didn't study Balance of Payments at Wharton because he is always wailing about a "trade deficit".  A trade deficit is always balanced by a surplus of foreign investment.
So, for example, if US businesses and consumers import more than they export, there is a corresponding increase in the capital investment from abroad -- e.g. buying the stocks and bonds of US companies, investing in US treasury debt. Why this would be bad is beyond me.

More on Cost-Benefit in Education

Here's another example where the education establishment ignores cost-benefit analysis.

A new study from CATO and the University of Arkansas examines student performance at charter schools and traditional schools in eight major U.S. cities, Washington D.C., Indianapolis, Boston, Denver, San Antonio, New York City, Atlanta, and Houston. These researchers also conducted a return-on-investment (ROI) analysis, comparing projected lifetime earnings of charter school students with those of traditional school students, relative to the cost to taxpayers. Their conclusion? They show public charter schools are delivering better results for students at significantly lower costs to taxpayers.

Yet the education establishment routinely opposes charter schools. Not surprising if your objective has more to do with employing people than educating students. 

Education is Exempted From Cost-Benefit Analysis

Most people grasp the idea of cost-benefit analysis. for instance, you wouldn't spend $100,000 on improvements to your home if it added only $10,000 to the selling price. And you wouldn't spend a million dollars on advertising your business if it only increased sales by $100,000.

However, when it comes to education, people seem to be living in a different universe. They are spending huge amounts of money and getting no benefit from it. If your local supermarket doubled your grocery bill so they could hire more people, but gave you the same amount of food at the same service level, would you continue to do business with them? Of course not. What if government forced you to pay that store even if you went elsewhere to shop? They would have no incentive to stop spending money for no benefit, would they?

International Trade=Lower Prices

Questions for today.
1. Do you think it's a coincidence that the categories with the lowest price changes are the ones that are traded internationally?
2. Do you think it's a coincidence that the categories with the highest rate of price change are the ones with the most regulation and government subsidy?
3. What do you think will happen if we adopt more protectionist policies?

Inflation Fears?

Some perspective on the media's sudden concern about inflation. 

Watching the Stock Market Work

Over the last 14 months, we have had a compressed demonstration of how the stock market works. At any given point in time, the intrinsic value of equity investments roughly reflects two factors.

1. A discounted present value of expected future earnings.

2. The expected returns from competing investments.

When Donald Trump was elected President the expectations of future earnings rose dramatically because he promised, then delivered on, reduced taxes and government regulation. Both of these actions greatly increased expectations of future corporate earnings versus what they had been under the Obama administration and what could be expected from another Clinton administration. Hence the significant market run-up immediately following his election.

The second factor we've seen play out in the last week. The Federal Reserve has made it pretty clear that we can expect higher interest rates in the future. This affects expectations for bonds, the primary alternative to equity investments.

Traders trying to guess which of these two factors will be dominant create a lot of day-to-day volatility, but over the longer run, it is the battle between these two expectations that counts. If corporate earnings continue to grow faster than expected, Factor #1 will prevail. Otherwise, you can expect a major correction in 2018. 

The MIddle Class IS Shrinking

Thanks to Mark Perry for updating this important chart.

So the next time you hear someone say, "the middle class is disappearing", you can respond, "Good!".

Government Involvement=Higher Prices. Imports=Lower prices

Gee, it almost looks as if the more government involvement in an industry, the faster prices rise. Who would have predicted that?
And (dare I say it?), prices also seem inversely related to the level of imports in the industry.

The Ignorance of E.J. Dionne

I understand opinion writers are supposed to write opinions, but wouldn't you want to consult someone who knew something about the subject before displaying your ignorance in public?

EJ Dionne writing in the Washington Post makes the claim that "government works" citing as an example the bailout of auto companies by the federal government.

"In the end, taxpayers invested some $80 billion in the effort and recouped all but approximately $10 billion of that."

Let's think about this, Mr. Dionne (regrettably, after rather than before you wrote this).

1. If your investment advisor came to you and said he should be lauded for losing 12.5% of your money, would you do so?

2. To what other uses could that $80 billion have been put? If the government had not confiscated $80B from the private sector and directed it to the auto industry, isn't it likely it would have been invested in something that had a return higher than -$10 Billion?

I'm not sure whether to damn Mr. Dionne by pointing out his ignorance of opportunity cost or to assume he is knowingly trying to mislead his readers in order to make lame excuses for government economic malfeasance.

Fair and Balanced?

Well, at least the most fair and balanced according to a new Gallup poll.

More Guns Do Not Cause More Homicides

While economists understand that correlation does not mean causation, the chart below certainly doesn't support the progressive's position that the solution to gun violence is to reduce the number of guns available.

Update: Minnesota just reported that gun ownership in the state reached an all-time high, while violent crime reached 50 year low.  At some point even the HYSTERICALS have to acknowledge that the data does not support gun ownership being positively correlated to gun violence.

High Earners Will Shoulder Even MORE of the Tax Burden

According to the Joint Committee on taxation they expect tax filers with incomes of $100,000 and over to pay 79.1% of all Federal Taxes. As opposed to 78.7% now.

1. The media claim that this is a "tax cut for the rich" is a crock as usual.
2. People earning at least $100,000 will continue to pay a hugely disproportionate share of federal taxes because . . .
3. Lower income earners will be getting a larger percentage tax reduction.

It's Not Easy Being Green in the Northeast

The Regional Greenhouse Gas Initiative (RGGI) is a cooperative effort formed in 2012 among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions via the much-touted "cap and trade" mechanism. While to date nobody has claimed that this initiative has done anything to reduce global temperatures, it has clearly reduced the number of manufacturing jobs in those states. Since 2012, the number of manufacturing jobs is the United States increased 5.4% while the number of manufacturing jobs in the RGGI states fell by 3.8%. I guess that's okay with the people who created this cooperative. They don't work in manufacturing. 

Migration Follows what Economic Theory Predicts

North American Moving Services just released its annual US Migration Report for 2017 based on household moves from one US state to another last year.

It's pretty obvious what's going on here. People are moving away from Democrat-controlled, high tax, anti-business states to states that are Right-to-Work, Republican-controlled, high growth, business friendly, low tax.

Gosh, if only there some sort of theory that would predict these things.

What Homeschooling Tells Us About Government Schools

Don Boudreaux offers this analogy at Hayek

Imagine that the only source of professional haircutting is government-operated hair-care salons that are funded exclusively with tax dollars doled out directly to the bureaucrats in charge of each salon. Imagine also that each citizen can use a salon free of charge, but is assigned exclusively to the salon nearest to his or her home. If this were how professional hair-care specialists were organized and compensated, these specialists’ salaries would be determined not by competition and consumer choice, but by politicians. Hair-stylists’ workloads and incomes would then depend only upon their skills at political lobbying and uttering clever sound bites for the news media. No premium would attach to quality hair-styling skills. Hair stylists inevitably would lose much of their ability to cut and style hair as they focus their energies increasingly on protecting and expanding their special political prerogatives. More and more people would cut and style their own hair at home.

In 1980 only 10,000 children were schooled at home. Today that figure stands at about one million. This means that fully 2 percent of all children are now homeschooled. And this number continues to grow, even though public education is “free.”

It's The Economy (Again), Stupid

Presidents are seldom responsible for the performance of the stock markets, but this one is an exception.  Market prices are always roughly reflect the present value of future income streams, the expectation of which ratcheted upward last November with the election of a President who promised, and appears to be delivering, lower taxes and regulation for businesses.  Economic growth is driven by corporate profits and the reinvestment that devolves from those profits. We have experienced this twice before when President Kennedy and President Reagan cut tax rates. Democrats -- stuck with their Keynesian assumptions -- seem not to have learned this lesson. Or don't want to. It appears that they will come out in unanimous opposition to lower taxes and higher growth. A rather peculiar platform to run on.  Maybe they ought to remember what James Carville said during the Clinton years -- it's the economy, stupid.

The Fed Is Worried About Bitcoin??

Takes quite a lot of Chutzpah for the Federal Reserve to claim it is worried about BitCoin losing it's value.

It's Hard to Cut the Taxes of Those Who Don't Pay Any

Democrats are wailing that the current tax reform proposal doesn't cut taxes enough for The Poor. It's pretty hard to cut taxes on people who don't pay any in the first place.

The Rich Are Not Paying Their Fair Share

Democrats are right. The Rich are not paying their Fair Share of income taxes. They're paying more than everyone else's share.

Millennials Prefer Communism. Really?

According to polling firm YouGov, Americans currently between the ages of 18 and 29 have a more favorable view of Communism/Socialism than they do of Capitalism.

Why? Below is a chart from 1991 showing GDP per capita in geographically matched countries. The ones on the left were, at the time, Communist economies. The ones on the right were capitalist economies.

Millennials would really rather live under a system that robs people of 90% of their economic well-being? Or maybe they just enjoy being surrounded by poor people?

Another possible explanation would be that Millennials are grossly ignorant having been successfully indoctrinated by leftist ideologues who run our schools.

CO2 Reduction Isn't Really a Goal, Is It?

Liberals say they want reduced CO2 emissions. But do they? If they did, they would be applauding the chart below. Why aren't they? Because all of this reduction was accomplished by the free market exploring new sources of inexpensive natural gas that replaced a lot of coal in electric production.
The truth is that CO2 reduction is not really their goal. Their goal is to make conventional energy sources more expensive so that they can more easily justify their Utopian schemes using wind and solar energy. And create a new source of taxation to fund these schemes.

Fair Share of Taxes?

This chart from Professor Mark Perry.
1396 US taxpayers collectively paid far more income tax than 70 million Americans who paid the least tax.
And yet the constant drumbeat, "The Rich don't pay their fair share of taxes".
Darn right, it's not a Fair Share.

Middle Class Tax Cuts

The mantra in Congress today is "tax cuts for the middle class" -- as if that hasn't been going on for over 30 years. But remember, never let facts get in the way of a good emotional argument.

Citizen United Hysteria vs. The Facts

Remember how Democrats screamed that the Supreme Court's Citizens United decision would "unleash a tidal wave of corporate spending that would wash away your voice"?
Below are the Top 20 contributors to Super PACs in the 2015-16 election cycle. Not one corporation. In fact among the Top 40 contributors there is only one corporation (and 8 unions).

Economic Ignorance Encapsulated

I came across the chart below from the Cato Institute's Financial Regulation Survey.

It seems to me the perfect capture of the economic naiveté of the public. Anybody who has even a passing understanding of economics would understand making mortgages to more people with low credit qualifications will result in more defaults.

It wasn't in the study, but I'll bet you would get similar results for these questions:

Do you favor or oppose government raising the Minimum Wage?

Do you favor or oppose government raising the Minimum Wage if it meant there would be fewer jobs for low skilled workers?

Or maybe this one

Do you favor or oppose higher tariffs on goods from China?

Do you favor or oppose higher tariffs on goods from China if it resulted in higher prices for most things that you buy?

The illusion of a Free Lunch is still very powerful.

More Mindless Gun Control Hysteria

After the Las Vegas shootings we will once again have to endure the mindless calls for more gun control of some sort. My challenge is a simple one. If murders were related to gun ownership, wouldn't you expect to see a positive correlation between the two? Why would you advocate restricting the right to freely own guns simply to say you did something that has little likelihood of achieving your goal?

If you went to your boss and told him that you could make the company profitable if only he would fund big pay raises for the salesforce, do you think he would ask for empirical evidence to support that relationship? And if you couldn't provide that evidence, what do you think he should do?

The Anticipation Effects of Business Regulation

Don Boudreaux at Café Hayek points out that minimum wage regulation has long term pernicious effects because businesses anticipate that government will constantly raise the wage floor above the market price. This means that the impact of the Seattle minimum wage is not only the difference between $15 and the current market wage, but also the anticipation that an anti-business city council will continue to raise that number in the future.  In response to this, employers will today try to adjust their business models -- mainly though automation -- to accommodate not only today's wage, but the $20 or $30 that will surely come in a few years.

The Anticipation Effect extends well beyond wage floors. Just a couple of weeks ago Amazon made the decision to expand its headquarters outside the city of Seattle. They did this not only because of the anti-business actions the current city council has taken, but because it had become quite clear that they could expect a tsunami of onerous regulation in the future.

Businesses are forward thinking even if government is not.

The Michigan Comeback

The table below is courtesy of the Wall Street Journal.
What do suppose changed in 2011 that didn't change in Illinois?
The date coincides with when Republicans took over the legislature and the governor's office. More directly it coincides with the reduction in both business and individual tax rates and enactment of the Michigan Right To work law.

So the lesson is pretty clear. If you want to keep your slow growth, you can keep on giving control to Democrats. That's what the people of Illinois apparently want. The people of Michigan opted instead to give control of the state to pro-growth Republicans.

Income Growth for Married Couples

Mark Perry created this chart from the newest census data. Over the last 70 years, real median income for households with two working spouses has increased by 3X. Perhaps the answer for those unhappy with their income is to get married and have your spouse get a job.

The Truth About Household Incomes

At the risk of bringing facts to an emotional fight with demagogues and the media, how exactly does one defend the notion (and it is just that) that median incomes in the country are falling?

Settled Science

The ”science is settled”.  In 2015 we are told (97% consensus according to the web site) that global warming is causing the Greenland ice sheet to melt. Two years later we find out that the Greenland ice sheet is increasing.

I don’t know what that actually means, but I’m 97% certain that “settled” isn’t part of it. At the moment I’m going to go with “don’t know jack”.

Why Price Gouging Laws Are a Bad Idea (in one photo)

They say a picture is worth a thousand words.
For those who can't understand verbal explanations of why laws that prohibit "price gouging" are a really bad idea., try this picture.
Apparently the price of Aquafina wasn't high enough to motivate this woman to, say, fill up containers in her home with tap water. If the price could be doubled or tripled, even this lady might rethink that. As a result of laws prohibiting this sort of rational pricing behavior, the people who come into the store after her will be unable to buy bottles of water. But at least they'll be unable to buy them at regular prices. Right?

It's All About the Children, Right?

Percent change since 1950

Students                                 +100%

Teachers                                +240%

Administrative Staff              +695%

Spending per pupil                +368%

Mean SAT score                      -10%

You Don't Learn Logic in Journalism School

This article in the Seattle Times entitled "Seven tips to help you graduate from college in four years" demonstrates that they don't teach logic or statistical inference in journalism school (but ought to).

It may sound counterintuitive, but freshmen college students who take a full load of reasonably demanding courses are more likely to graduate from college on time.
That’s part of the message Western Washington University has been conveying to its students in a campaign called “15 to Finish,” which encourages students to work hard from the outset.

Why would it be counterintuitive? Because the author is committing the fallacy of Post hoc ergo propter hoc (Since event Y followed event X, event Y must have been caused by event X.) She observes that faster graduation rates follow demanding course loads and concludes that the course loads are what causes that.

Isn't it more likely that students who are innately ambitious and intent to graduate to get on with their lives are also innately more serious about academics -- i.e. interested in actually learning more on the way to their degree?

Ms Long labels herself a "higher education reporter".  Perhaps it's time to go back to school?

The Power of Compound Growth

You've heard this advice: Start saving early for your retirement. Consider this example. Investor B opens an IRA at age 19. For seven consecutive years he puts $2,000 in his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this investor makes NO MORE contributions -- he's finished.

A second investor A makes no contributions until age 26 (this is the age when investor B was finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he's 65 (at the same theoretical 10% rate).

Whos is better off? Check the chart below. 

Climate Changing? Gender Inequality is the Culprit.

If you want to understand the irrational extent of climate change hysterics, read the Intergovernmental Panel on Climate Change report. Among the policy recommendations from this illustrious group of "scientists" are "reduced gender inequality & marginalization in other forms,” “provisioning of adequate housing,” and “cash transfers”.  All scientifically proven ways to reduce the planet's temperature of course

It's Medicaid That's Out of Control

At every juncture in the discussion about reforming healthcare, Democrats and a few Republicans wail that you "can't cut Medicaid".  Does this look like a program that has been subject to any cuts since it's inception? More importantly, how long can you sustain spending on something that is growing many times faster than the economy which must fund it?

Yes, honey, I know the kids deserve all sorts of nice things, but if our Visa bill is doubling every year and our income is going up by 5%, do you not see a problem? Are you expecting the Tooth Fairy to fix this for us?

Fleeing Fiscal Suicide

This is what happens when states pursue reckless financial practices and try to cover them up with onerous taxes on its most productive citizens. They move to states that appreciate them. Democrats have long supported assisted suicide. Now they're applying that to entire states.

Black Privilege

According to data derived from the 2014 federal budget, the average annual per capita "net contribution" (taxes paid minus benefits received) breaks down by race as follows:

White: +$2,795 (on average pays more in taxes than receives in benefits)

Black: -$10,016 (on average receives more in benefits than pays in taxes)

Over the course of an average 79-year lifespan, a white individual would then average a net contribution of $220,805, whereas over the course of an average 75-year lifespan, a black individual receives a net benefit of  $751,200.

One can quibble about the precision of the data, but the magnitude is so lopsided, you can’t really dispute the conclusion:  The government acts in ways that results in transfers of large amounts of wealth from white people to black people.

It would appear that reparations are already in place.

[In fairness, what is really going on is that the government is transferring large amounts of wealth from those who earn it to those who don’t. Blacks simply constitute a disproportionate share of the latter group. However, turnabout being fair play, this methodology (disparate impact) is the same used by those who claim that racism is the cause of all sorts of unequal outcomes.]

The Economic Road to Perdition: Healthcare & Minimum Wage

Perhaps for policy reasons, and certainly for political reasons, it is impossible to unwind reliance on employer-provided insurance. But this fact, combined with the “preexisting conditions” consensus, means that henceforth the health-care debate will be about not whether there will be a thick fabric of government subsidies, mandates and regulations, but about which party will weave the fabric.

 --- George Will

This is the frustrating essence of the current debate about the GOP healthcare bill.  Once you concede that government should be involved in running healthcare, you are then reduced to arguing about which forms of intrusion are the least harmful. Clearly Obamacare has been horribly harmful. Arguably the GOP alternative is less harmful. But either way you are on the road to economic perdition and have abandoned the principle that systems work best when individuals are allowed to make free choices.

The same reasoning applies to the battles over Minimum Wage laws. Once you concede that government should be involved in setting prices for things, you are reduced to arguing about the amount of damage various forms of intrusion incur. In 1971, President Richard Nixon declared a "freeze" on all prices and wages in the United States. This was an attempt by government to control the inflation that it itself had created. Predictably, it ended disastrously. Minimum wage laws have been around in the US since 1938. The economic effect of any price floor is to create a supply surplus. If you set a minimum price for lemons you will have a surplus of unsold lemons. If you set a price floor for wages, you will have a surplus of labor, otherwise known as unemployment. The Law of Demand is not widely debated -- except when it conflicts with Utopian fantasies.

Until recently Minimum Wage laws have not been especial controversial, but only because the price floors have been set not too far above the market price for low skilled labor. Hence the unemployment surplus has not been terribly noticeable. Now comes along the Seattle City Clowncil to declare that the wage floor rise should increase by 60%. Suddenly the unemployment surplus becomes quite noticeable, making headlines all over the country.

It would be nice if we could recognize that a) government cannot control the price of anything whether it be wages or medical care and b) in trying to do so it will wreak economic damage, the amount of which will vary according to just how far from economic reality it has strayed. But we won't. The (rather spineless) GOP has given up on having that discussion. They are now engaged in the determination of just how much economic damage they are willing to impose on the country. Obamacare was too much. Their plan is just the right amount of damage  -- they contend. Seattle's Minimum Wage law was clearly too aggressive. Let's scale it back and have a smaller number of low-skilled workers be priced out of a job.

Are we left to arguing that the only thing problematic about heroin is if you inject a little too much of it?

Fantasy Baseball League

I've decided that baseball would be better off operating more like our public schools. Here are some of the changes I'd make:

1. Players could no longer be cut or sent to the minors for poor performance. As long as they show up for every game and practice they would be paid.
2. Player salaries would be determined by how many years they had played for the team, not based on any performance statistics.
3. Players who exhibited performance-oriented behaviors (like trying to steal a base or diving for a fly ball) would be ostracized by the other players on the team.
4. Every call by the umpires would be reviewed by The Commissioner the next day. Scores would be revised based on his ruling.
5. There would be lots of promotional nights and giveaways. Examples: Indigenous People's Night. Gay Pride Night. Free tofu hot dog night. Fan Appreciation Night where everybody in attendance gets a trophy for showing up.
6. Fans would not be allowed to boo or disparage the players or managers. Violators will be ejected and sent to reeducation classes.  

Now, just in case too few people would voluntarily pay to watch games, we would require everyone who lived in the market area to buy a season ticket -- whether they attended games or not. If you wanted to buy tickets to watch an out-of-town team, you could, but you would still have to pay for your season ticket. And in order to increase the salaries of the players and managers we would be raising ticket prices each year. Any sportswriter who questioned the team's record would be told it could be improved by raising ticket prices and expanding the roster. 

In the spirit of community cooperation, I ask all of you to support me in this effort. If you don't, I will have a couple representatives of the players union pay a visit to your home to explain.  

Black Privilege

Apparently there's Black Privilege, too. And think about this the next time you see a black doctor.

San Diego Restaurant Jobs and the Law of Demand

Does anyone (yes, even you Democrats) think this is just a coincidence? It's too bad that there isn't something that would have predicted this. Something, oh, like the Law of Demand.

The Law of Demand states that, all else being equal, as the price of something increases, quantity demanded falls. Could it get any simpler for the simple-minded?

Bee-pocalypse and Other Media-Made Disasters

Remember the media hysteria about bees? In 2006, beekeepers began reporting mysteriously large losses to their honeybee hives over the winter. The media swiftly declared a disaster. Time called it a “bee-pocalypse”. Government must DO SOMETHING to stop this or bees will become extinct! The only thing missing was an international meeting in Paris to establish a Bee-cord. If you guessed that the media attributed the imagined bee-pocalypse to global warming, you'd be correct. Right up there with the myth about polar bear populations dwindling).

 Data thanks to Mark Perry at AEI

The Cost of Federal Regulations

The Competitive Enterprise's annual report on Federal regulations puts the annual cost at just shy of $2 Trillion. That's 10% of the entire US gross domestic product. It also averages almost $15,000 per household. In calendar 2016 Congress enacted 214 laws and Federal agencies issued 3853 rules. That's 18 rules for every law enacted.

And you wonder why economic growth has slowed? And you wonder why people feel they're struggling to support a $15,000 hidden tax on them every year?

The Science is Settled?

The next time you hear the phrase "The Science is Settled" you might want to review this piece of previously "settled" science.

The history of human evolution has been rewritten after scientists discovered that Europe was the birthplace of mankind, not Africa.
Currently, most experts believe that our human lineage split from apes around seven million years ago in central Africa, where hominids remained for the next five million years before venturing further afield.

But two fossils of an ape-like creature which had human-like teeth have been found in Bulgaria and Greece, dating to 7.2 million years ago.

The discovery of the creature, named Graecopithecus freybergi, and nicknameded ‘El Graeco' by scientists, proves our ancestors were already starting to evolve in Europe 200,000 years before the earliest African hominid.
An international team of researchers say the findings entirely change the beginning of human history and place the last common ancestor of both chimpanzees and humans - the so-called Missing Link - in the Mediterranean region.
At that time climate change had turned Eastern Europe into an open savannah which forced apes to find new food sources, sparking a shift towards bipedalism, the researchers believe.
“This study changes the ideas related to the knowledge about the time and the place of the first steps of the humankind,” said Professor Nikolai Spassov from the Bulgarian Academy of Sciences.
“Graecopithecus is not an ape. He is a member of the tribe of hominins and the direct ancestor of homo.
“The food of the Graecopithecus was related to the rather dry and hard savannah vegetation, unlike that of the recent great apes which are living in forests.  Therefore, like humans, he has wide molars and thick enamel.

The Economic Costs of Restrictive Housing Practices

It is not unusual for cities to engage in restrictive housing practices that are designed to benefit existing property owners at the expense of new entrants. Restricting competition to benefit incumbents is pretty much what government does.  However, a new study by
Chang-TaiHsieh of the University of Chicago seeks to quantify the cost of these anti-competitive practices -- and they appear to be huge.

We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by more than 50% from 1964 to 2009.

So while politicians gnash their teeth around strategies to get growth up a percent or two, they are simultaneously working against that growth by employing restrictive housing policies to benefit incumbent property owners. These people who seek protection might actually be better off with higher overall levels of economic growth. But the politicians might not be and, after all, aren't they why government exists?

You can read the entire study here. https://eml.berkeley.edu//~moretti/growth.pdf

Cuomo's Low IQ (Insurance Quotient)

The State of New York wants to ban the use of occupation or education in rating auto insurance premiums.

“This new protection cracks down on this unfair practice that soaks drivers for not having a college degree or a high-paying job,” Gov. Andrew Cuomo said in a news release. 

As if we needed more evidence of the Governor's ignorance, let's examine this. Insurance data clearly shows that professionals such as military officers, teachers, engineers, accountants and dentists have lower claims costs than other professions.  Why would you NOT want to use that information to price policies? If you ignored the information or followed the Governor's illogic, you would be overpricing policies to, say, teachers, and under-pricing policies to, say, professional athletes. You would sell more policies to higher risk people and fewer policies to lower risk people. This violates the cardinal rule of insurance as surely as Obamacare did. 

Too bad the people of New York can't buy demagogue insurance. 

A Thought Experiment for Equalitarians

Here's a thought experiment regarding the benefits of greater equality.

Imagine you are participating in a company 401k plan. Your plan has two choices for investment. (A) An investment fund run by Dick that has consistently produced an annual rate of return of 5-7%. (B) An investment fund run by Jane that has consistently produced a 2-3% annual return.

What percent of plan participants do you think will choose Dick's fund? Suppose, not illogically, that 80% of plan participants choose Dick's fun. Is this fair to Sue? Sure, Dick appears to be a more capable investor than Sue, but should Dick really get four times Sue's income for doing the same thing? Especially since it turns out that women who run investment funds attract fewer investments than those run by men?

Now suppose your company (being progressive thinkers) ordered some of the plan's participants to take money from Dick's fund and give it to Sue. Would the plan participants as a whole be better off by doing this? Would the rate of return for the plan be better or worse? Do you think anyone here (other than Sue) would think this was a good idea? How much of your retirement investment are you willing to give up so that Sue is treated with greater equality?

Why, then, is it a good idea in general to re-allocate resources from the members of society who produce high returns to those who produce lower returns. The latter, like Sue, may be nice people and work hard, but what they produce just isn't quite as valuable. Are the members of society better off in total by doing this? Would the total rate of economic growth be better by doing this? How much economic growth are you willing to give up so that the lower producers receive resources more nearly equal to high producers?