Many salaried workers in the U.S. may soon be obliged to punch a time clock, thanks to the Labor Department’s proposed regulation raising the income level for workers to qualify for overtime. More overtime pay sounds great. But what Labor fails to mention—and its economists surely understand—is instead of paying more workers overtime, many companies will simply cut back their hours or lower their salaries.
Tuesday, May 31, 2016
Demand doesn't go away just because of restrictive regulations. The events in Austin are instructive (Reason.com):
A majority of the 17 percent of Austin voters who turned out chose to stick it to big business—and to themselves. And Uber and Lyft pulled out of the city.
By all reports, the results have been a mess. About 10,000 drivers lost their gigs, bars are reporting a decline in business, and some honestly unanticipated hiccups have been reported, such as particular inconvenience for disabled residents who need to find new ways to get around.
And, ironically in the wake of a "victory" for pro-regulation forces, there's been a big surge in completely unregulated rides arranged by word of mouth, through closed social media groups, and through peer-to-peer services. On Facebook, Austin Underground Ride (currently around 6,500 members) urges former Uber and Lyft drivers to join. "You can post your availability and info on this page and continue making the money you need to feed your families and pay your bills. Riders can post here their needs for a ride as well. We don't need anyone. We can make our own deals as people and take care of ourselves.
Fantastic story. Apparently, according to this video, there is a whopping 90% of people who have autism who are unemployed. This car wash in Florida was created around helping the autistic find purpose (YouTube):
Friday, May 27, 2016
Because free(er) markets create a positive feedback loop (HumanProgress):
The story of Chile’s success starts in the mid-1970s, when Chile’s military government abandoned socialism and started to implement economic reforms. In 2013, Chile was the world’s 10th freest economy. Venezuela, in the meantime, declined from being the world’s 10th freest economy in 1975 to being the world’s least free economy in 2013 (Human Progress does not have data for the notoriously unfree North Korea).Read the whole thing.
Another Pew poll found that 95 percent of Vietnamese felt that people were better off in a free-market economyAnother irony is that while supporters of a certain politician have been touting "democratic socialism", claiming that this imaginary breed of socialism isn't the 'government ownership of the means of production', in practice, their vision of the world is more accurately described as "democratic fascism" (Thomas Sowell) - "government control of the economy, while leaving ownership in private hands". I'm guessing that doesn't quite have the same marketing ring to it. On a hopeful note though, from the original WP article:
Millennials tend to reject the actual definition of socialism — government ownership of the means of production, or government running businesses. Only 32 percent of millennials favor “an economy managed by the government,” while, similar to older generations, 64 percent prefer a free-market economy.More: Tweet from Garry Kasparov:
When a managed economy begins to fail, the only direction is to manage it more & more. It's how "democratic socialism" leads to repression.— Garry Kasparov (@Kasparov63) May 17, 2016
Thursday, May 26, 2016
Because "ordinary" people are allowed to pursue their dreams to get rich. For some perspective when you read the news (WSJ):
An American earns, on average, $130 a day, which puts the U.S. in the highest rank of the league table. China sits at $20 a day (in real, purchasing-power adjusted income) and India at $10, even after their emergence in recent decades from a crippling socialism of $1 a day. After a few more generations of economic betterment, tested in trade, they will be rich, too.Read the whole thing.
Actually, the “we” of comparative enrichment includes most countries nowadays, with sad exceptions. Two centuries ago, the average world income per human (in present-day prices) was about $3 a day. It had been so since we lived in caves. Now it is $33 a day—which is Brazil’s current level and the level of the U.S. in 1940. Over the past 200 years, the average real income per person—including even such present-day tragedies as Chad and North Korea—has grown by a factor of 10. It is stunning. In countries that adopted trade and economic betterment wholeheartedly, like Japan, Sweden and the U.S., it is more like a factor of 30—even more stunning. And these figures don’t take into account the radical improvement since 1800 in commonly available goods and services.
[...]Once we had the ideas for railroads or air conditioning or the modern research university, getting the wherewithal to do them was comparatively simple, because they were so obviously profitable.
If capital accumulation or the rule of law had been sufficient, the Great Enrichment would have happened in Mesopotamia in 2000 B.C., or Rome in A.D. 100 or Baghdad in 800. Until 1500, and in many ways until 1700, China was the most technologically advanced country. Hundreds of years before the West, the Chinese invented locks on canals to float up and down hills, and the canals themselves were much longer than any in Europe. China’s free-trade area and its rule of law were vastly more extensive than in Europe’s quarrelsome fragments, divided by tariffs and tyrannies. Yet it was not in China but in northwestern Europe that the Industrial Revolution and then the more consequential Great Enrichment first happened.
Thursday, May 19, 2016
While most people are excited about travelling in the Hyperloop, it would be logistics and freight that pave the way for people travel that would come later (TechnologyReview):
[T]he upfront installation costs will be outrageously expensive, even compared with rail, and especially compared with Internet infrastructure, despite Hyperloop Tech’s favored analogy. “Laying optic fiber is not really pricey,” says Genevieve Giuliano, a transportation professor at the University of Southern California. “Laying Hyperloop tube is going to be pricey.” But she and the other economists and transportation experts I spoke to perked up when I explained Hyperloop Tech’s interest in freight. “The concept is right,” says Giuliano. Freight rail in the U.S. is already quite profitable and efficient (Warren Buffett invests heavily in it). But a high-speed freight backbone—broadband for goods—linking major population centers could make economic sense, she says.
Saturday, May 14, 2016
The ideas of weekends, 8 hour work days, a "living wage" and 5 day, 40 hour work weeks are ones we have Henry Ford to thank (in order to compete for the best workers at the time) - not unions.
Personally, I've always been a big believer in free association and have no issues with the formation of unions. I question though the monopoly they generally demand and wonder if they are an anachronism today. But maybe they always were (theFederalistPapers):
On this day in 1926, Ford Motor Company becomes one of the first companies in America to adopt a five-day, 40-hour week for workers in its automotive factories. The policy would be extended to Ford’s office workers the following August.Henry Ford’s Detroit-based automobile company had broken ground in its labor policies before.
In early 1914, against a backdrop of widespread unemployment and increasing labor unrest, Ford announced that it would pay its male factory workers a minimum wage of $5 per eight-hour day, upped from a previous rate of $2.34 for nine hours (the policy was adopted for female workers in 1916).
The news shocked many in the industry–at the time, $5 per day was nearly double what the average auto worker made–but turned out to be a stroke of brilliance, immediately boosting productivity along the assembly line and building a sense of company loyalty and pride among Ford’s workers.
The decision to reduce the workweek from six to five days had originally been made in 1922. According to an article published in The New York Times that March, Edsel Ford, Henry’s son and the company’s president, explained that “Every man needs more than one day a week for rest and recreation….The Ford Company always has sought to promote [an] ideal home life for its employees.
Apparently new studies suggest that organic food, doesn't taste better, is a lot more expensive and can actually harm the environment (Delish). Apparently organic produce isn't even safer (2011) - and with the public recent recalls/"issues" with Chipotle and Costco, one wonders if it's used as an excuse to cut corners in food safety/prep? More from Forbes (2015). Personally, organic doesn't generally sway me at the counter - I usually go for cheap.
The models have been run and the numbers crunched: Bernie Sanders’s presidential platform, if enacted, would create 26 million jobs and 5.3% growth. An economist has done the calculating, and there’s no use arguing with mathematics. CNN’s headline reads: “Under Sanders, income and jobs would soar, economist says.”
When I run that line by Russ Roberts, he replies with a joke: “How do you know macroeconomists have a sense of humor? They use decimal points.”
Tuesday, May 03, 2016
Honestly, I wouldn’t be remotely tempted to quit the 2016 me so that I could be a one-billion-dollar-richer me in 1916. This fact means that, by 1916 standards, I am today more than a billionaire. It means, at least given my preferences, I am today materially richer than was John D. Rockefeller in 1916. And if, as I think is true, my preferences here are not unusual, then nearly every middle-class American today is richer than was America’s richest man a mere 100 years ago.
Sunday, May 01, 2016
The problem is that leaders in neither party have done an effective job of educating the public on the truth, since there’s more political mileage to be gained by bashing trade, bashing “big banks,” bashing Wall Street, and bashing “greed” than there is explaining the benefits of a free market.
The free market principles that created the nation’s unprecedented prosperity won’t last long if no one is willing to defend them.
A stubborn myth of the pro-tax left (exemplified by Bernie Sanders) is that the Reagan tax cuts merely benefitted the rich (aka Top 1%), so it would be both harmless and fair to roll back the top tax rates to 70% or 91%.Read the whole thing.
Nothing could be further from the truth. Between the cyclical peaks of 1979 and 2007, average individual income tax rates fell most dramatically for the bottom 80% of taxpayers, with the bottom 40 percent receiving more in refundable tax credits than paid in taxes. By 2008 (with the 2003 tax cuts in place), the OECD found the U.S. had the most progressive tax system among OECD countries while taxes in Sweden and France were among the least progressive.