Today's prize for economic literacy goes to:

"Even as markets overflow"

Wow! You mean as supply increases it doesn't increase price too?! Whaaat??

Once again, it's all about the marginals. Can Walmart absorb higher wages? Apparently they think they can. Yippee, great for their employees. Does that carry over throughout the entire economy? Nope. Nope. Nope.

http://www.cato.org/blog/reich-wrong-minimum-wage

Watching Robert Reich’s new video in which he endorses raising the minimum wage by $7.75 per hour – to $15 per hour – is painful.  It hurts to encounter such rapid-fire economic ignorance, even if the barrage lasts for only two minutes.

[...]

By completely ignoring elasticity, Reich assumes his conclusion.  That is, he simply assumes that raising the minimum wage raises the total pay of unskilled workers (and, thereby, raises the total spending of such workers).  Yet whether or not raising the minimum wage has this effect is among the core issues in the debate over the merits of minimum-wage legislation.  Even if (contrary to fact) increased spending by unskilled workers were sufficient to bootstrap up the employment of such workers, raising the minimum wage might well reduce the total amount of money paid to unskilled workers and, thus, lower their spending.

So is employers’ demand for unskilled workers more likely to be elastic or inelastic?  The answer depends on how much the minimum wage is raised.  If it were raised by, say, only five percent, it might be inelastic, causing only a relatively few worker to lose their jobs and, thus, the total take-home pay of unskilled workers as a group to rise.  But Reich calls for an increase in the minimum wage of 107 percent!  It’s impossible to believe that more than doubling the minimum wage would not cause a huge negative response by employers.  Such an assumption – if it described reality – would mean that unskilled workers are today so underpaid (relative to their productivity) that their employers are reaping gigantic windfall profits off of such workers.  But the fact that we see increasing automation of low-skilled tasks, as well as continuing high rates of unemployment of teenagers and other unskilled workers, is solid evidence that the typical low-wage worker is not such a bountiful source of profit for his or her employer.

I usually have pretty good success (at least temporarily) with my liberal friends when I attack their love of things like living wage laws by introducing the idea of the marginal. The marginals are 1) the companies waiting to be born and looking hard at whether the numbers add up. 2) The companies on the cusp of failure and closing who are looking at how to make the numbers add up. 3) The companies looking to expand or hire one more employee and are looking at whether their labor will be worth the cost. And 4) companies looking to contract or lay off one employee and are looking at whether their labor is worth the cost.

It is among these companies that growth and contraction happens. These are often small, single location family businesses that have great hopes and tight budgets.

When I put it that way, sometimes the scales fall away from the eyes of my friends, and they admit that maybe the price of the law is greater than its benefits.

The problem is, as soon as our conversation is over, they tend to revert right back to their old thinking. The knowledge never seems to stick.

An oil company makes a profit and funnels some of that profit into R&D, or building new drilling rigs, or exploring for new productive wells--if successful, their business will grow, more jobs will be provided, and more tax revenue collected. Because it is choosing to invest the money in the business, instead of taking it in profit, that money is tax exempt. Obama calls this private investment "corporate welfare".

The government funnels taxpayer money, in the form of grants and loans, into "green" businesses--which can't convince private lenders to invest their own money, and thus must rely on taxpayers and bureaucrats instead. Many of these businesses, coincidentally, I'm sure, are headed by major Democratic party donors, who take large salaries and kick back more donations. Many of these companies promptly go broke (proving the reluctant private investors correct in their assessments.)

Obama calls this corporate welfare "investment".

Note: Just to be clear...the word "is" appeared several times in the above paragraphs. "Is," a form of the verb "to be". In the first instance above, it is used with the past participle of the transitive verb "to choose" as a passive-voice auxiliary. In the second appearance, it should be taken to mean that the subject of the clause has the qualification or characterization specified in the antecedent.

France is going bankrupt, it's increasingly uncompetitive, the government is too big and spends too much...but they go and do this:

French president cuts retirement age

Workers who entered employment aged 18 will be able to retire at 60 rather than 62, under the decree agreed at a cabinet meeting on Wednesday. 

 60!!

One of my flaming-liberal friends posting this tonight:

Taken in order:

1. • The pre-existing conditions system in the act is so bad, they had to shelve it. Yeah, that'll work.
     

     Health and Human Services Secretary Kathleen Sebelius decided to pull the plug on a long-term care insurance program seen as a budget drain. She also decided that Washington would not dictate a basic health benefits package for the country, allowing each state to set its own, within limits.

   • Affordable care act "Makes health care more affordable for small businesses". Hello? Is that why so many of them plan to ditch their company-provided health care and dumping their workers in the state exchanges?
   
   
   • I'm sorry, but 25 year-olds are ADULTS!!! The sooner they take responsibility for themselves, the better. Prolonged adolescence is a cancer on our age, cutting off our most-vibrant talent from actually making a contribution to our world.
2. In other words...he's following that idiot Bushitler's time table. Big deal.
3. "Free preventitive care". Oh, the problem is preventitive care...like mammograms, stool tests, and treadmill tests...Nothing to see here...move along.
   
   Meanwhile, the new puritanism is alive and well. Our way, or no way...we can have the stake and tinder ready in an hour....So, you have a moral issue with paying for birth control...tough patooties. We dictate, you obey. End of discussion, compromise, etc.
   
   How about we treat adults like ADULTS!!! You want to work your way through 1,000 condoms in a year, be my guest...just pay the bill yourself.
4. ...and his position on gay marriage is what, again? Hmmm...anybody? No hands? Really? And the fact that his stated position on it is identical to the hated Bushitler? Nothing to see her, move along.
5. Solyndra....Fisker Karma....Chevy Volt....Yes, thank you O-man for taking money from productive people and pouring it down the rabbit hole.
6. More flexibility, my fat ^&&! He's locking the entire education system in to a sub-standard curriculum which will put even the best US math minds two years behind other developed nations by 8th grade. Wooo Hooo!!! The Common Core is a pathetic and ILLEGAL attempt to dictate to every school district what they should be teaching. My state of California actually had to dumb down their math standards by a full year to adopt the CC. And the Education Department is forbidden by three separate laws from attempting to enforce curriculum standards.
7. Please....tell me what the fair share is...and then tell me the repercussion of that number? Taking money from people who invest nearly all of their money in stocks, bonds, venture capital firms, or real estate development--tell me, is that a good idea, or a bad idea? Their money doesn't grow on trees. Taking it from one place does not make it magically appear somewhere else, as if it's free money. What are the consequences of taking all of that money out of the private sector and handing it over to the government? Already, our high capital gains and business taxes are driving companies off shore. How many more have to leave before "social justice" just looks like shared poverty.
8. Can I just laugh at this one... one of the lowest employment rates in history and the most-prolonged jobs recession...but it's really not his fault!!! Hugs and kisses big-O we love you!!! **swoon**

Some numbers:

$22,050	Poverty line for a family of 4.
$ 5,048	Earned Income Tax Credit for family of 4 making $22,050
$ 3,000	Estimated annual Food Stamps for Family of 4 making $22,050 ($250/month)
$ 1,080	School lunch benefit @ $3/day for 2 kids and 180 school days.
$ 7,951	Average employee contribution to health care for family of 4 (Medicaid benefit)
$39,129	Total effective income of family of 4 with $22,050 in wages.

And that's not counting eligibility for Section 8 housing vouchers. (The program has waiting lists and can be hard to get into.)

So, a family of 4 making $22,050 can have an effective income of 77% more than that amount, or $17,000 more. In fact, the median household income in the US is $31,111, so the "poverty line" denotes families which can make $8,000 more than the median.

Independent bookstores vs. Amazon: Buying books online is better for authors, better for the economy, and better for you. - Slate Magazine

I'd have to agree. I don't see much point in local bookstores...even B&I doesn't get a visit very often anymore. It's just much easier to say "let's see if it's on the Kindle" and start reading it 30 seconds later, than it is to get in the car and go to the B&I at the mall.

We have Amazon Prime as well, which is a great thing. We do all of our Christmas shopping from the comfort of home, then it appears at mom's house half way across the country just 2 days later. Then there are all the Amazon Prime videos, which seems superior to Netflix anyway.

Steve Says: Yes, I agree too. Going to the bookstore might be "something to do" still, i.e. something to get you out of the house. But the bookstore book selection is clearly inferior (especially for science and math), and I often find the reviews of other readers you find on line quite useful. Links to related books are useful too. You can even peek into most books online now. All in all, it's a winning combination.

There were two major summits for Europe last week.

The heads of state of the European Union met last week to try to hammer out an EU and euro-saving agreement. Loaded with mountains of debt and slow growth, the community faces serious threats of a major recession or depression.

Meanwhile, far down south in Durban, South Africa these same heads of state sent bureaucrats down to a climate summit, where they agreed to hamstring their economies and take on more debt, and thus hasten the coming major recession or depression.

Who's to blame for this mess?

Britain and the US and the whole g*& d*&^ Anglo world, of course!!!

Instapundit...

I was just discussing this very thing with the 11-year-old today:

Almost everyone I know started with crappy jobs like hauling shingles up a ladder, but if you’re not willing to do the crap work chances are you won’t make it that far. There are lots of jobs advertised but there are lots more that aren’t.

She mentioned that she and a friend were naming jobs they wouldn't want when they get older; she mentioned working in a fast-food restaurant. I pointed out that they were actually okay jobs; that they were good for an entry level; that often if you work hard at one, you can get promoted relatively quickly; that they often have reasonably good benefits; and that people want to know you can do the awful jobs before you can get a better one.

I also pointed out that it was a good second job when you were just starting out. I told her that you often have to take a job that doesn't pay enough when you begin. It might be in your dream line of work at your dream company, but you are still getting paid bupkis. You take it, hoping that you will get promoted and move towards the job you really want. In that case, you often need to work two jobs. So, don that polyester uniform and pay the rent!

As OWS tries to find what to do with itself now that Zuccotti park has been cleared out, I offer this:

I'm still trying to get my chin off the floor after having read "To Save Our Economy, Ditch Taiwan" in today's NYTimes

He [Obama] should enter into closed-door negotiations with Chinese leaders to write off the $1.14 trillion of American debt currently held by China in exchange for a deal to end American military assistance and arms sales to Taiwan and terminate the current United States-Taiwan defense arrangement by 2015.

I really don't have much to say... I am just shocked that anyone would suggest such a thing, especially in a national newspaper. Shouldn't our foreign policy have the tiniest bit of morality worked into it? Yeesh.

What determines which articles in the NYTimes allow comments and which don't? I would like to see the reaction of others.

Ann says:

NRO's Mark Krikorian picks up the story on the Corner.

As does Ed Morrisey at Hot Air.

In the last year or so, I must have seen and heard a couple hundred variations on this theme:

Yet Europe's problem isn't the euro. If it were, Hungary, Iceland and Latvia—none of which use the euro—would have been spared their painful days of reckoning. The same applies for Britain. Europe is in a debt spiral brought about by spendthrift, overweening and inefficient governments.

Bull!

The problem is not the various governments of the euro-zone, the US, Ohio, California, Detroit, or pretty much every other place on the map, because whenever they are talking about this fundamental problem of debt control, they are talking about democracies. The problem is not the governments that people elect, the problem is with the people who believe lunch should always be free.

When the people's representatives dole out favors, tax breaks, subsidies, social welfare programs, etc. they buy votes. But is it the fault of the politicians who throw around tax money like beads during Mardi Gras, or is it the fault of the electorate that greedily feast on the dole and happily reelect the people who give them free stuff!

Democracies get the governments they deserve. Stop blaming the elected politicians for accurately reflecting the desires of the people they represent.

How bad is the problem? Surveys of Tea Partiers--that part of the electorate most vocal about deficit control--show that even they don't actually want to make the kind of cuts that are increasingly necessary. If even the Tea Party is deluded about our financial condition, and if even they always want it to be Fat Tuesday and never Ash Wednesday, what hope do we have? Do you really expect politicians to make serious cuts when there is almost no segment of the population that will support them?

So, hold on to your hats and invest in gold. Europe's fall is inevitable...and so is ours.

What's with the Republican love of the "Flat Tax" ?

Perry Proposes 20 Percent Flat Tax. Perry would keep popular deductions for mortgage interest and charitable gifts.

Other Republicans/Conservatives have embraced the Flat Tax as well. Why? I think Perry's plan is dunderheaded. Keeping those deductions and making the tax flat is just the opposite of what I would like to see. It makes much more sense to me to eliminate as many deductions and loopholes as possible, thus simplifying our tax system, and reducing economic distortions.

I really don't have much problem with a progressive tax rate structure, and it seems a majority of "rich" people don't either. Should I pay a higher rate than someone who makes half what I do? Yes.

Is it so difficult to look up your total tax in a table? Is it that really complicated? More complicated than multiplying by 20%? No.

As I said, I don't get it.

The Left's argument, in a nutshell:

"Ponzi schemes bad. Social Security good. Therefore, Social Security is
not a Ponzi scheme."

Flawless logic, given the premise.

I also often read about how Social Security is not a Ponzi scheme because it is currently solvent. Bernie Madoff's scheme was solvent too... until it wasn't.

Ann says: I'd love to see the feds move towards the same type of accounting practices as businesses are required by federal law to use. In that case, the massive unfunded liabilities would scream off the ledger books, and it would make it hard to deny the massive crater we're in.

A quick point:

Tea Party Understands Economics Better Than Obama Or Bill Maher - Forbes

Since the Nobel Prize in economics was established [in 1968], seven Nobel Prizes have been awarded to economists who cast serious doubt on Keynesian economics. Not one Nobel Prize has been awarded to an economist who advanced the Keynesian agenda. New York Times liberal columnist, Paul Krugman, won his Nobel Prize for trade theory, not for macroeconomics.

And Sweden isn't exactly the bastion of supply-side economics, you know.

The PJ Tatler » Ever wonder why California is so broke?

One of the problems with government at all levels is that they will see a problem, get worked up over finding a new solution, and create a new bureaucracy to deal with it. Never does it cross the politicians little mind that there is already an agency tasked with the same or similar goals, and that a small tweak to their charter is all that is needed. It's always a call for new and for more.

Liberalism: A Luxury We Can’t Afford -- John Hinderaker:

"Liberalism is a sort of parasite that feeds on the wealth that free enterprise creates. Liberalism exists for two reasons: 1) to stuff the pocketbooks of those who have learned to live at the taxpayers’ expense, and 2) to feed the moral vanity of those who can’t resist meddling in other peoples’ lives."

Command v. Choice, Part I: by Greg Forster

Definitely worth a read.

The president wants a debt limit increase big enough to last through the 2012 election, while the Republicans only want to give him $1,000,000,000,000 ($1T) worth, which will only last for about 6 months...


...Think about that for a minute....

We will be spending so much money that we will need to borrow one trillion dollars, in addition to tax revenues, just to get us through 6 months.

The amount of debt that we accrued during Bush 43 was $2.14 trillion. That is over 8 years, or 16 six-month periods, for an average of: $133 Billion added debt every six months.

Now comes Obama and Pelosi and Ried, and where are we? The same $1 trillion dollar increase which would have lasted us 7 1/2 times as long before OPR, now will only get us through half a year.

Disgusting.

Trains cost Wisconsin taxpayers millions - JSOnline

There is so much wrong here!

In the beginning I was drawn to the fact that it reads more, much more, like an editorial or an opinion piece than a news article, but in the end it was the barely named presence of Amtrak that got my attention.

I think I got really riled up when the article mentioned that the state of Wisconsin was supposed to pony up the money for...

While some of those figures could change, it appears the state eventually could spend $11.7 million on a temporary maintenance base, up to $60.1 million on a permanent maintenance base, up to $10.2 million on train shed upgrades at the downtown Amtrak-Greyhound station, $6.6 million on signal upgrades at the station and at least $10.4 million on new locomotives - all costs the federal government would have paid.

So, what exactly does Amtrak, you know, the business this is all subsidizing, pay for?

Apparently not for their own maintenance facilities and, shockingly, not their own TRAINS either! Why the &^%$ does the state of Wisconsin have to buy the locomotives for the quasi-independent, quasi-federal business Amtrak? If WI buys them, does the state get to keep them? Can they put a big "Owned by the people of Wisconsin" sign on them? If WI puts up the money, does Amtrak pay leasing fees? Or is this a beneficent gift from the taxpayers of Wisconsin to the behemoth and boondoggle that is Amtrak?

But let's take this a step further. This is happening in Wisconsin; should we assume that it is also happening in the other 50 states? How may other states are buying Amtrak their trains, building their lines, and building their facilities? How much money are states pouring down into the black abyss of Amtrak? What does Amtrak actually do on its own, except run the system others have bought for them--essentially managing the passengers and employees (badly.) Why not outsource their contribution to a management company, and keep the trains and tracks in state hands? It would probably be much more efficiently run and cost a whole lot less.

Amtrak is perennially broke, to the tune of billions of dollars; this despite heavy federal subsidies. What I never have heard before--or noticed before--is that it also apparently relies heavily on state subsidies as well.

And that's not even getting into the whole freight rail versus passenger rail problem. (One is extremely efficient way of moving its load, the other isn't and makes the other less efficient by tying up their rail lines.)