Archive for March, 2013

Earlier this month I wrote about the minimum wage law (here). Adding to this, Bryan Caplan, Professor of Economics at George Mason University, argues that there is yet another logical fallacy with the minimum wage:

The Myopic Empiricism of the Minimum Wage

Explain why market-driven downward nominal wage rigidity leads to unemployment without implying that a government-imposed minimum wage leads to unemployment.  The challenge is tough because the whole point of the minimum wage is to intensify what Keynesians correctly see as the fundamental cause of unemployment: The failure of nominal wages to fall until the market clears.

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Often statistics is used in the media with the intention to emphasize some disparity. And whenever the topic is wages, the distinction between disparity and inequality becomes blurred. Economist Thomas Sowell describes the absurdity of this perspective:

Nowhere in the world do you find this evenness that people use as a norm. And I find it fascinating that they will hold up as a norm something that has never been seen on this planet and regard as an anomaly something that is seen in country after country.

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expropriation

The most recent EU summit on Cyprus brought to light a new instrument to tackle the debt crisis: expropriation.

While German newspapers call it a fourth stage of the Euro rescue, Business Insider finds more drastic words:

This Crazy Cyprus Deal Could Screw Up A Lot More Than Cyprus…

What do you think those other depositors in Spain, Italy, Greece, etc., are going to feel like doing when they realize that, if their banks ever need a bailout, they might have their deposits seized?

In addition, I would raise two general questions:

  1. What guarantee is there that this was a one-time intervention?
  2. What happens if this ‘strategy’ is imposed in France or Germany?

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Discussions about minimum wages are often tedious. On his blog, Greg Mankiw uses a very simple argument to counter recent claims for higher minimum wages:

Why $9?

Presumably, the president’s economic team must believe that the adverse employment effects become sufficiently large at some point that further increases are undesirable.

The fact of the matter is that a higher minimum wage ultimately surpasses the productivity of some workers. At this point the least productive people will lose their jobs. So unless we know everyone’s productivity, any claim for a higher minimum wage

  • either assumes that all workers create enough value per hour (to make it profitable to hire them at the minimum wage)
  • or neglects that the weakest members of the society will no longer find a job.

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About a century ago, the Socialist Party of America called for the first national Women’s Day. Over the years movements started and today, March 8 has become the International Women’s Day (IWD) and events take now place in almost all of the world’s countries.

To buck the trend, Thomas Sowell and Peter Robinson dissect the argument that employer discrimination lies at the core of male-female economic differences:

If we become fixed on eliminating male-female income differences, is it the case that the only choice for doing that is to involve the government in redesigning the very nature of the family?

One of the commentators on youtube sets up the following hypothesis:

Liberals need the populace to feel victimized because if they weren’t, then they’d have to take responsibility for their own actions. But why take control of your own life and it’s outcome when you can just blame your shortcomings on your skin color, sexuality, or gender?

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Great summary by former U.S. President Ronald Reagan:

Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

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Adding to my recent blog posts on democracy and federalism, I’d like to share an article by Charles C.W. Cooke, published in the National Review:

Repeal the 17th Amendment

It is liberty, not democracy, that is America’s highest ideal.

The Senate was not intended to be the people’s representative body, but that of the states.

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Every now and then politics goes beyond the normal stupidity. Yesterday, for instance, the European Union decided to ‘abolish’ youth unemployment:

EU ministers agree Youth Guarantee

A six billion euro pot in the EU budget has already been set aside to tackle youth employment in regions with jobless rates of around 25%.

Mr Barroso said it was a sad fact that there are both high levels of unemployment and skill shortages across Europe.

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