Category: nannyism

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folly free trade & free markets general freedom ideological culture moral hazard nannyism national politics & policies property rights responsibility too much government

Minimally Mugged By Reality

minimum wage, business, pay, workers, fallacy, profit, Bernie Sanders

It should shock no one: forcing businesses to pay steep minimum wages ends up pushing some businesses out . . . of business. Yesterday I looked at what minimum wage laws can do to low-skilled workers. Today, consider the employers. When we make it harder to turn a profit, it becomes harder to profit. Businesses that can’t at least break even close their doors.

Many business owners are inclined to promote, politically, politicians who in turn support minimum wage hikes. Do they change their minds when mugged by reality? Alas, the trauma alone won’t convert a person to principled allegiance to free markets.

I was reminded of this fact by a story about business owners in Minneapolis who stress their Sandernista credentials.  

“I’m a bleeding-heart liberal and I’m a big Bernie Sanders supporter,” says businesswoman Jane Elias, an art store owner. “But this whole flat-out, $15, one-size-fits all is just wrong.” Another victim, restaurant owner Heather Bray, says she’s a “proud, proud progressive.” But: “The arithmetic doesn’t work. People will not continue to go to budget-conscious restaurants when they’re no longer budget-conscious.”

So . . . arbitrary minimum-wage demands don’t add up in light of the demands of running their businesses under their particular circumstances. Well, no disagreement here. But take it further, please. Keep doing the math. The bottom line is that everybody, not just you — and always, not just sometimes — has the right to make his own decisions about his own life and property.

And profit by it.

This is Common Sense. I’m Paul Jacob.

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Accountability ideological culture local leaders moral hazard nannyism national politics & policies responsibility too much government

Minimum Wage Laboratory

minimum wage, experiment, Seattle, scientific method, social engineering

Not every popular idea about government policy is good. Or bad. How do we tell the difference?

One way is evidence.

The modern administrative state was promoted heavily by social scientists who thought that piecemeal social engineering should be tested. A few even thought that the older experiment in limited-government federal republicanism gave Americans a near-ideal testing ground: “the laboratory of democracy.”*

Activists and politicians have been pushing big increases in the minimum wage in cities around the country. Seattle, Washington, has been one of those, establishing an $11.00/hour legal minimum in April of 2015, then raising that limit by two dollars in 2016. Now the results are in.

The City of Seattle commissioned a study of “the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance,” and it shows clear results:

  1. The first hike led to “modest reductions in unemployment” but scant change in over-all low-wage employment.
  2. The second hike led to a 9 percent reduction in hours worked at wages below $19/hour;
  3. a reduction of over $100 million per year in total payroll for low-wage jobs; and
  4. total payroll losses average about $125 per job per month.

Jonathan Meer, an economist teaching at Texas A&M University, calls this an “unmitigated disaster.” But he notices that a backlash against it was immediate.

To those who object: do you object to the method or the conclusions?

The only halfway plausible rationale for social engineering of this kind — top-down interventions into markets — has been “social science.” Rejecting evidence is to reject science, which is to reject . . . the minimum wage idea itself.

This is Common Sense. I’m Paul Jacob.

 

* The idea is to test policy tried in one location against its goals. What works should be mimicked, but only after the evidence is in and results accepted as good. And dropped in cases where not.

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crime and punishment folly free trade & free markets general freedom nannyism national politics & policies responsibility too much government

Serving Consumers? Punish!

Amazon, monopoly, trusts, antitrust, trade, free trade, big business, economic myths

New media ballyhooer Douglas Rushkoff made waves this week. Citing an un-named friend who went hysterical about Amazon.com’s purchase of Whole Foods, he asserted that such “unease is widespread, and has raised new calls for breaking up Jeff Bezos’s impending monopoly by force.”*

The company has “surely,” he claimed, “reached too far.”

Apparently, serving customers exceptionally well is bad for business.

Yes, he almost totally ignored the pro-consumer benefits of Amazon. Had to — his case makes no sense when you factor in us consumers. He focused, instead, on Amazon’s success in terms of its recent “online and offline retail sales growth” and its control of 40 percent of cloud storage and streaming services.

He went on to spin a bizarre fantasy about how disruptive bigness is in business. His economically illiterate farrago reminds me of the sad case made against pre-antitrust Standard Oil, a company which, during the whole time of its growth prior to break-up, kept on producing more fuel at ever-decreasing prices.** Broken up because of . . . fears about how businesses change. And of bigness itself.

As long as consumers are being served, this reaction strikes me as paranoid. When businesses get big (and even near-monopolistic) and then cease to serve customers, they fail. While serving customers, there is no call for fretting over businesses that move from one success to another  — which is what Rushkoff has the gall to worry about.

The call for Amazon’s break-up over-sells government and necessarily under-serves consumers.

This is Common Sense. I’m Paul Jacob.

 

* Rushkoff’s piece in Fast Company was the first I heard of such a “call.” Rushkoff is the coiner of the term “media virus” and a sort of populist pusher of market skepticism.

** For the bizarre story of the Standard Oil case, and how it made no economic sense whatsoever, see Dominick T. Armentano, Antitrust: The Case for Repeal (Ludwig von Mises Institute, 1999), p. 41-43, and Antitrust and Monopoly (Independent Institute, 1990), pp. 57-60.

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folly free trade & free markets general freedom moral hazard nannyism responsibility too much government

Signature Nonsense

nanny state, too much government, books, authentication, California, busybody, Brian Doherty’s Radicals for Capitalism, Jerry Brown

Did anyone really need this?

Last year, California’s Governor Jerry Brown signed into law Assembly Bill No. 1570, which concerns collectibles, particularly signed-by-author or artist books. But it doesn’t mention books, and is confusingly written. What a mess.

Who asked for it?

It certainly wasn’t the struggling booksellers who have come to depend on signed authors’ copies. In the Age of Amazon.com, book vendors need to add value to stay afloat.* Author-signed copies help.

The law says that for signed-by-creator collectibles sold for more than $5 — yes, a mere five smackers — sellers must provide customers a Certificate of Authentication. The law specifies nine “helpful” directions for said certificates. So imagine an edition of Brian Doherty’s Radicals for Capitalism, signed by the author at, say, a non-profit dinner, or at a bookstore signing, or even a late-night bar —discounted to not much over five bucks.** The bookseller must not only provide a certificate, but list the book’s provenance. Talk about an added cost of doing business.

I mention Mr. Doherty not merely because of his excellent book, but because he has not unreasonably confessed that “my own interests could be harmed by any attempt to actually enforce the letter of this law.”

This week on EconTalk, economist Mike Munger mentioned the market’s built-in regulatory features — reputation being the most obvious — for helping consumers avoid getting ripped off buying books . . . and paintings . . . and anything else improved by creator signature.

But, really, can’t we make do with a little caveat emptor as well as caveat lector? Better than regulations this dense.

This is Common Sense. I’m Paul Jacob.

 

* The number of independent bookstores plummeted (down a thousand) around the country between 2000 and 2007. But there seems to be an increase since then, despite (or because of?) Abebooks and Alibris and other dot coms.

** I found a signed copy of Doherty’s history at Abebooks for $10.

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First Amendment rights folly general freedom moral hazard nannyism responsibility too much government

Legal Not to Lie About Your Milk

milk, Institute for Justice, regulations, Ocheesee Creamery, Department of Agriculture, too much government

Mary Lou Wesselhoeft doesn’t have to lie about the milk she’s selling. The Florida Department of Agriculture has lost in court. Mary Lou has won.

Ocheesee Creamery sells pasteurized milk without any additives. One of her products is skim milk. Ocheesee sells skim milk without vitamin additives, which is perfectly legal to do. But the Florida government claims that only skim milk with the additives counts as real “skim milk,” the kind you can call skim milk in speech to customers. (Kafka, did you write this horror story? Fess up!)

Give credit to the judge who asked: “Can the state, consistent with the First Amendment, take two words out of the English language and compel its citizens to use those words only as the government says?” The reply of the government’s lawyer? “Yes.”

Creepy.

Mary Lou’s victory is also a victory for all Americans who want to exercise their right to tell the truth about what they’re selling. And it’s a victory for the Institute for Justice, which took up the case on her behalf. At its website, IJ points out how easy it would be to annihilate freedom of speech by letting the government redefine words at will. We’re not free if our freedoms can be arbitrarily defined away by the people in power.

The Institute specializes in defending our rights against senseless government intrusions. Until such laws and regulations are repealed, it seems that the Institute will always have much to do — unfortunately. But, fortunately, it keeps on doing it.

This is Common Sense. I’m Paul Jacob.

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folly free trade & free markets local leaders moral hazard nannyism property rights responsibility too much government

Housing Horror

Oregon, housing, rent control, urban, planning, low income, land, property rights

Housing in Oregon’s north-central urban region is becoming more and more like San Francisco’s — out of the budgetary reach of huge swaths of average workers.

“The median rental household can’t comfortably afford a two-bedroom apartment in 28 of Oregon’s 36 counties,” Elliot Njus writes for The Oregonian. But it is worst in Portland and the three counties in the region: Multnomah, Washington, Clackamas. 

The findings come from a group called the National Low Income Housing Coalition. Njus quotes Alison McIntosh, of another group, the Neighborhood Partnerships, who not unreasonably concludes that “folks are really struggling to make ends meet.”

Well, yeah. This was predicted, long ago.

The state of Oregon began a comprehensive land-use planning system, decades ago, to prevent urban sprawl. At about the same time the Portland-region’s three major counties began a concentrated effort to . . . concentrate populations within the area. Confine them. Regulate them. Economists and other critics* from the very beginning predicted rising housing costs. And other problems.

Now, of course, the usual groups react in precisely the wrong ways: rent control. The State House in Salem recently passed legislation to uncork rent control. Thankfully for renters, the Senate nixed the idea. 

But we can be sure this proven housing killer (a disaster where tried) will resurface. Common sense (as well as reams of economic research) tells folks how bad an idea this would be, exacerbating the problem it aims to solve.

Alas, some folks look at government more as magic than as just another flawed, human institution.

This is Common Sense. I’m Paul Jacob.

 

* One set of critics can be found at the Cascade Policy Institute, which describes Oregon’s land-use regulatory system as “the nation’s most restrictive” — adding that “every square inch of Oregon has been zoned by government planners, with the result that development of any type is prohibited on most private land.”

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