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Experience Denied

Monday, January 26th, 2015

Jan Ellison is grateful for the low-wage jobs she had as a kid.

“The difference from the way my own children are being raised is that I was acutely aware of the financial burden of these [educational and other] pursuits. . . . I made money of my own from age 11 onward. I had a paper route. I cleaned houses and swimming pools. I took clerical temp jobs. . . . I can’t say that any of this was important work, but the act of doing it mattered.”

She learned to “work for the ticket” that would take her to better things.

That minimum wage laws make it harder to gain such experience is a problem raised not by Ellison but by a Cafe Hayek reader, Mike Wilson, who calls her memoir “as powerful a case against raising the minimum wage as I have encountered.” (Strictly speaking, against establishing or enforcing any wage-rate floor.)

Wilson’s sensible point is that when you’re just starting out in the work force, you must develop the habits and skills needed to do a job well and to then go beyond it. These include punctuality, mastering procedures, accepting corrections with grace, being civil, staying productive and careful when you’re tired, and more.

What you can bring immediately to a job is willingness to learn what’s necessary. But the higher your pay must be before you’ve made yourself worth that pay, the harder for employers to give you the chance to make yourself worth it.

This is Common Sense. I’m Paul Jacob.

Death by Metro

Wednesday, January 21st, 2015

“Metro has a reputation for shoddy service and a history of not learning from its mistakes,” Aaron Wiener admitted in a column for The Washington Post. But this extremist zealot’s basic argument for government-run, taxpayer-subsidized mass transit might best be understood by its headline: “Metro’s a mess. All the more reason to ride it.”

A woman died last week riding the city’s subway system. She was overcome when train cars became stuck in a tunnel filling with smoke. Another 84 riders were hospitalized, two in critical condition.

DC Fire was so woefully slow in response — victims say more than 30 minutes — that afterwards no public official was willing to say precisely how slow. Not the new mayor; not the Chairman of Washington’s Metro board. The latter provided an excuse, claiming he “cannot speak to it” because of the investigation by the National Transportation Safety Administration.

Upon arrival, the rescuers’ radios didn’t work. “[D]espite hundreds of millions of dollars in upgrades and new training and safety protocols at the transit agency,” The Washington Post reported, “a critical piece of infrastructure — emergency communications — remains a significant problem.”

This isn’t Metro’s first accident, either. Six years ago, nine people died when two Metro trains collided.

Without profits, and run “politically” as a public entity, there just isn’t the same incentive to make the necessary investment in infrastructure required to run the subways safely. A private company with Metro’s record of accidents and failure in addressing safety concerns would likely be shut down.

Sadly, Metro faces no such threat.

But the transit agency faces a different one: ridership has fallen to the lowest point in a decade. People are voting with their feet.

This is Common Sense. I’m Paul Jacob.

Subsidy for Everybody!

Friday, January 9th, 2015

According to Vice President Joe Biden, the debate is over. Health care, by which he means medical assistance, is a basic right — to be obtained through government, and made effective by the Affordable Care Act — not a “privilege.”

By “right” he means  “something others are forced to provide,” in this case by taxes, regulations, and the full panoply of U.S. law. Today’s “liberals” like to use the word “privilege” to mean anything obtained without direct government assistance. And therein lies a huge problem.

In his first weekly address of the year, Biden touted how great the ACA, “Obamacare,” is. How affordable it is for families, for everyone! It’s a panacea, though Biden didn’t use the word.

Actually, he didn’t say that we have a right medical care. He said we have a right to health “insurance,” which we’re forced to purchase — and for which many are subsidized, too.

How far does he go with this?

“An awful lot of people who didn’t think they could or would find quality, affordable health insurance are actually able to get assistance from the government to help them pay for their health care plans at a cheaper rate,” he earnestly intoned. “A family of four with an income of around $95,000, they can still get a subsidy to lower their health care premiums.”

You can see where the problem is. If a household making $95,000 per annum can receive subsidies, who’s paying for all this?

Perhaps you.

Can you see why Obamacare’s a prescription for financial disaster?

This is Common Sense. I’m Paul Jacob.

Rent Too High?

Friday, December 19th, 2014

Remember Jimmy McMillan? He’s “the rent is too damn high!” shouting, six-time New York City mayoral candidate with the, er — Rent is Too Damn High Party.

McMillan is at least partly right. It’s no mystery that rents are so high. Government policies are aimed at just that result.

In New York City, rent control discourages new supply as well as maintaining existing supplies — causing shortages leading to higher prices. In many cities, particularly in Blue political metropolises, zoning has pretty much the same effect.

Meanwhile, pumping subsidies into the demand side of the rental housing market doesn’t exactly decrease prices.

Last weekend, the Tyler Morning Telegraph offered up “Housing Choice Voucher program helps families,” reporting on 65-year-old Brinda Meier’s effort to land one of 500 “popular” Housing Choice Vouchers offered with grants of federal tax dollars distributed through Tyler’s Neighborhood Services Department. The voucher goes to help pay the rent.

That’s nice, of course, and no doubt why the program is popular. But the landlord actually cashes the voucher check. Moreover, to the extent these rent subsidies allow folks to afford higher rents, they in turn keep those rents higher — including for folks whose voucher numbers won’t come up in the “please Uncle Sam help pay my rent” lottery.

We discover that Meier, who lives on Social Security and food stamps, is preparing to move across town. She’s found a new place to rent, $200 cheaper than her current place — and in a better neighborhood. She tells the reporter that she’ll move without regard to whether she wins the rent subsidy.

So taxpayers may subsidize someone who doesn’t need it, serving only to keep rents too darn high.

This is Common Sense. I’m Paul Jacob.

Rewarding Gruber

Monday, November 24th, 2014

Revealing to all the world the contempt for the American people that Washington insiders possess might garner for Prof. Gruber a future Medal of Freedom.

Perhaps by a president elected by the Irony Party.

What Gruber is unlikely to get, however, is a Nobel Prize for Economics.

Benjamin Zycher, writing at The Hill, questions Gruber’s astuteness as an economist. The MIT professor surely has the wit to sucker those representing American taxpayers out of six million bucks for his consulting, but, otherwise, reveals some blind spots about where incentives should be figured in.

“Economists may disagree about many things,” writes Zycher, “but absent among them is the central role of incentives as determinants of behavior,” a principle that “applies fully to government.”

To reward one constituency at the expense of others, health care bureaucrats will quickly come to regard limits to spending as a kind of “savings.”

From this type of rationing, Zycher suggests, there will be “a reduction in the flow of research and development investments in new and improved medical technologies, yielding fewer new medicines, devices and equipment.”

This means that the most negative effects will be seen down the road. While the easier-to-publicize positive effects of more people covered by insurance can be pointed to right now, as a “benefit.”

However, even that upfront goody isn’t what we might pretend it is. “Gruber seems actually to believe that an expansion of insurance ‘coverage’ is the same as an expansion of actual healthcare,” Zycher notes, with apt incredulity.

By ignoring negative effects of his convoluted program, and concentrating on a few dubious upfront benefits, Gruber proves himself more con artist than economist.

This is Common Sense. I’m Paul Jacob.

We Need iPads

Thursday, October 30th, 2014

Every once in a while somebody explains that “we” don’t need this or that product, however great it may be and however great the demand for it. For example, a tech reviewer dubs Apple’s latest iPad models “largely unnecessary,” given last-year models almost as capable.

The charge of unnecessariness is surely false when we’re talking about customers who do want the most cutting-edge technology and can put it to good use. But it’s false in a broader perspective too — unless we suppose that all advances in human civilization beyond the level of the hut and the bearskin are “largely unnecessary” to human survival and well-being.

If technological progress is necessary, so are key aspects of how that progress happens, including the fact that it so often happens by “largely unnecessary” increments. Any given marginal advance in computer or PC tech may have been dispensable. But the same can’t be said of the process of cumulative improvement as a whole. Consider, for example, that some ninety percent of what we now do on our PCs would have been impossible to do with the 1980 PC. Our 2014 laptops could not have been crafted without myriad intermediate advances.

As striving human beings, our needs evolve as our means improve and enable us to pursue ends that we could not have pursued with less powerful means. Ergo, I welcome every little improvement we can get. And I can hardly wait for my 2025 iPad.

This is Common Sense. I’m Paul Jacob.

This Ain’t Laissez-Faire

Thursday, October 23rd, 2014

Things are what they are, not their opposite. Can we accept that as a starting point?

Not if we’re scoring ideological points regardless of the cost to clarity.

Newsweek calls drug-war violence in Long Island “a harrowing example of free-market, laissez-faire capitalism.” To this, Cato Institute’s David Boaz objects that “the competition between the local Crips and Bloods [is described] in terms not usually seen in articles about, say, Apple and Microsoft or Ford and Toyota.”

Under a truly free market, the rights of buyers and sellers to peaceably trade are legally protected from theft and violence, and their contracts defended from fraud. Black markets, on the other hand, are made up of illegal exchanges, actively prohibited trade.

Sure, black-market trade has something in common with legal trade. As with legal exchanges, persons willingly participate in black-market trades and expect to benefit.

But economic activity that can easily get you jailed is fundamentally different in just this respect from that conducted in a relatively laissez-faire context.

The difference has consequences.

You can’t go to court if you have a grievance with a black-market trading partner or competitor. And persons less scrupulous, more violent, more criminal than the norm tend to be disproportionately represented among sellers of illegal goods that have especially big markups precisely because they’re illegal.

So Boaz is right.

The legal capitalism at K-Mart, J. C. Penny, or a post-Prohibition-Era liquor store isn’t fertile ground for the gang warfare invited by the War on Drugs. We can’t tell the difference, though, if we ignore the difference.

This is Common Sense. I’m Paul Jacob.