Posted tagged ‘Minimum Wage Laws’

Must Reads For The Week 5/3/14

May 3, 2014


The pen is mightier than the sword...

 The pen is mightier than the sword… (Photo credit: mbshane)

What $1.4 Trillion In QE Buys The US Economy, at  GDP is a measure of dollars spent on consumption. Consumption is the destruction of what has been produced. If the Fed electronically prints counterfeit dollars, it is really printing a portion of the GDP number. This counterfeit money misallocates scarce resources into areas of production that can’t be sustained when the counterfeiting is decreased of stopped. The Feds electronically printed counterfeit money can only prop up the GDP number for so long before economic reality eventually catches up. The laws of economics are always at work trying to correct what results from the counterfeiting of money. Free money isn’t free. It comes with consequences that are born by people {you and me} down the line from the people {banks, wall street brokerage firms, and our Government} who receive it first.

Texas Oil Output Hits 34 Year High, by Mark J. Perry, at Where would the GDP number be with out the shale oil revolution on private land.

Seattle Announces $15 Minimum Wage Highest In Nation, by Alan Pyke, at, I saw this at Here is an excerpt from the article, “There are 102,000 workers in Seattle currently earning less than $15 an hour. Raising those people’s wages will put about half a billion extra dollars of spending money into Seattle workers’ pockets. As SEIU 775 president and coalition co-chair David Rolf said in a statement Thursday, the deal “will pump nearly $500 million into Washington’s economy, proving that a higher minimum wage fuels business and job growth.” Can you see the flaw in their impeccable logic? The money that is used to pay the extra wage is coming from somewhere. It’s either coming from the consumer through higher prices, or the production process through automation which means fewer workers. You’re not creating $500 million of new goods or services, you are just changing who spends the $500. This is like taking water from the deep end of the pool and dumping it into the shallow end of the pool. No new water is being produced, you are just redistributing the same amount of water.

Will Dunbar Rise Again, by Thomas Sowell, at Anything Thomas Sowell writes is outstanding. Next to economics his writings on education and race are truly in his wheel house.

One Million People Dropped Out Of Labor Force In April: Labor Participation Rate Plummets To Lowest Since 1978, at The labor participation rate is the important stat to look at in determining if our economy is producing wealth or consuming wealth. The principle is simple to understand. When fewer people work, less is being produced, and when greater numbers of  people work more is being produced. All this government intervention has not helped the economy at all, in fact it has made it worse than if we had let the market work its cleansing magic on previous government interventions.

The USPS Used Its Coercive Monopoly Power To Squash The Digital Mail Start Up Outbox, by Mark J. Perry, at aei-ideas. This is like the cab companies trying to get cities to regulate Uber and Lyft.

The Great Lakes Are Still Almost Half Frozen, And It Could Affect The Environment For Years, by Joseph Erbantraut, at In the middle of “global warming'” the planet decides to show us how arrogant we are. The planet does what it wants when it wants.

John Kerry Blasts “Propaganda Bull Horn” RT, at I guess it’s only cool when our Government has a propaganda bull horn, aka, the mainstream media.

Stressing The Grid: From Interventionism To Blackouts, by Steve Gorham, at EPA regulations are going to cause coal fired power plants to close. Where will the electricity come from to replace this lost capacity? Not from wind and solar. Expect higher prices and potential rolling blackouts.




Must Reads For The Week 2/15/14

February 15, 2014
The pen is mightier than the sword...

The pen is mightier than the sword… (Photo credit: mbshane)

Suicide Bomb Instructor Accidentally Blows Up His Class, at I wonder if Iraq’s version of OSHA will fine the terrorist training camp for unsafe working conditions?

More Evidence Of Employers Fighting Back Against The Possibility Of Higher Minimum Wages, at Do central planners ever consider the possibility that employers will react differently to these interventions than the planners thought they would?

WaPo Columnist: The Austrians Are Winning, by I’ll bet the WaPo columnist, E.J. Dionne, has never read anything  by Hayek, Mises, or Rothbard. Mr. Dionne I have a suggestion, start with Economics in One Lesson by Henry Hazlitt. Baby steps, baby steps.

Europe Considers Wholesale Savings Confiscation, Enforced Redistribution, at This can’t happen here, can it? The EU is talking about using the savings of the people of Europe to fund long-term investments in order to boost the economy. I thought all that electronically printed counterfeit money was supposed to boost the economy.

Retail Sales Slide Across The Board, Post Biggest Miss Since June 2012, at This is a symptom of not having enough people producing. The more our Government tries to use the spending of electronically printed counterfeit money to stimulate the economy the less will be produced. Spending counterfeit money is theft. It is consuming what has been produced, without any corresponding production to back up the counterfeit money. It is the consumption of wealth not the production of wealth.

Initial Jobless Claims Miss; Back Above 8-Month Average, at Government interventions, including the Fed electronically printing counterfeit money and keeping interest rates artificially low, lead to fewer people producing. This is just another symptom of the real problem, which is , say it with me, Government intervention into the free market. If we cure  Government intervention, these symptoms will go away.

Video: John Stossel – In Praise Of Fossil Fuels, at Carbon based fuels are the least expensive way to power the world economy. Subsidizing and mandating “green” energies isn’t the answer to lower cost energy. The market will reveal a lower cost form of energy if or when one exists. The Government has chosen Green energy and the market has rejected it. Think of all the wasted resources, including human capital, that could have been used to make carbon based fuels more abundant and less expensive. When it comes to green energy our Government is literally Don Quixote tilting at wind mills.

The Mafia State Of Mind, by Charles Hugh Smith, at I like reading CHS’s articles because they make me think.

Thomas Sowell Discusses “Fact Free Liberals”

January 23, 2014

Thomas Sowell

I love when Thomas Sowell writes articles taking the educated elite to the cleaners by challenging  the facts they cite to prove their reality. The first article is titled, Fact-Free Liberals, read here. Here are some excerpts from the article.

“Someone summarized Barack Obama in three words — “educated,” “smart” and “ignorant.” Unfortunately, those same three words would describe all too many of the people who come out of our most prestigious colleges and universities today.”

“……The net results are bright people, with impressive degrees, who have been told for years how brilliant they are, but who are often ignorant of facts that might cause them to question what they have been indoctrinated with in schools and colleges.”

“All too often when liberals cite statistics, they forget the statisticians’ warning that correlation is not causation.”

“But who reads history these days? Moreover, those parts of history that would undermine the vision of the left — which prevails in our education system from elementary school to postgraduate study — are not likely to get much attention.”

After wetting your appetite by tackling issues like women getting paid three-quarters of what men make, income mobility, black applicants for mortgage loans being turned down at twice the rate of white applicants, and other issues , he challenges more Progressive sacred cows in his next article titled, “Fact Free Liberals: Part II”, read here. Here are some excerpts from this article.

“Words seem to carry far more weight than facts among liberal….”

“When words trump facts, you can believe anything. And the liberal groupthink taught in our schools and colleges is the path of least resistance.”

He analyzes rent control laws, and minimum wage laws in this article, and then takes on “the war on poverty, sex education, and the murder rate in this article titled, “Fact-Free Liberals: Part III”, read here. Here are some excerpts from the article.

“The actual signing of the “war on poverty” legislation took place in August 1964, so the 50th anniversary is some months away. But there have already been statements in the media and in politics proclaiming that this vast and costly array of anti-poverty programs “worked”.”

Of course everything “works” by sufficiently low standards, and everything “fails” by sufficiently high standards. The real question is: What did the “war on poverty” set out to do — and how well did it do it, if at all?

“Without some idea of what a person or a program is trying to do, there is no way to know whether what actually happened represented a success or a failure. When the hard facts show that a policy has failed, nothing is easier for its defenders than to make up a new set of criteria, by which it can be said to have succeeded.”

“While the fact-free liberals celebrate the “war on poverty” and other bright ideas of the 1960s, we are trying to cope with yet another “reform” that has made matters worse, ObamaCare.”

Reading Thomas Sowells books is like receiving a vaccine, inoculating you from the lies of politicians, journalists, and the educational establishment, who are unapologetic about pushing their ideology through propaganda.

Other Thomas Sowell Posts You Might Like.

Thomas Sowell’s Vision of the Anointed, at Short video.

Thomas Sowell Used To Be A Marxist? at Short video.

Thomas Sowells Take On The Federal Reserve, at Short video.

Thomas Sowell- “Economic Problems Don’t Have Political Solutions”, at video.

Income Inequality Part II: Increase The Minimum Wage

January 15, 2014

Economic theory suggests an excessive minimum ...

The two recent, but not new, political solutions for income inequality (aka income redistribution), are extending unemployment benefits, and raising the minimum wage. In this post we will look at the consequences of the political solution, “raising the minimum wage”, but first lets start with an understanding of the nature of exchanges.


The free market is nothing more than individuals making voluntary exchanges. What is produced and consumed in the free market is the result of these individual decisions. All actions by individuals are exchanges, whether it’s an isolated exchange or an exchange involving other people.

An example of an isolated exchange would be you deciding to run on your treadmill. You are exchanging the time on the treadmill for other activities that could have been done with that time and at that time. This exchange reveals your value preference no matter what you might have said about that preference before your choice. Value is revealed in action and not one second before the action takes place.

Examples of exchanges between individuals, or interpersonal exchanges, would be you exchanging your labor for money, you exchanging that money for a treadmill, a steak dinner, a ticket to a baseball game, or having your roof repaired. These voluntary interpersonal exchanges increase the value for both parties involved, or they wouldn’t have taken place. Put another way, each person values what they are receiving in the exchange more than what they are giving up.

Are there involuntary interpersonal exchanges, or exchanges an individual wouldn’t choose unless he was forced or defrauded? Yes: examples of these involuntary interpersonal exchanges would be a robber taking your wallet at gun point or under the threat of physical harm, a slave owner taking the labor of the slave under the threat of violence, or a counterfeiter stealing what you’ve produced in a fraudulent exchange of something for nothing. So, in review there are two types of exchanges, isolated and interpersonal, and there are two types of interpersonal exchanges, voluntary and involuntary. Now lets look at raising the minimum wage and extending unemployment benefits through this lens.


When Government officials make a law raising the minimum wage, it voids the wage contract voluntarily agreed on by the employer and the employee. Each person in this exchange decided that the terms of employment were beneficial, or their wouldn’t have been an exchange of the labor for money. The Government is a third-party to the exchange between the employer and the employee. It forces an agreement on both parties that one, or both, would have never decided to make under a voluntary situation. It forces an involuntary exchange to be made.When Government officials mandate a higher wage, the employee would obviously like this exchange of his labor for more money, but the employer wouldn’t voluntarily make this exchange. What if Government officials mandated all wages be lowered? The employers would like these new terms, but the employees wouldn’t voluntarily make this exchange. Labor is ruled by the same economic laws as every other good or service supplied in the market, in spite of the Marxist brainwashing about the specialness of labor, that has taken place over the last seventy plus years.

We know from the law of supply and demand that more is demanded at a lower price than a higher price, and more is supplied at a higher price than a lower price. We have this concept of supply and demand bass ackwards when it comes to labor because we think the supplier is the employer and the demander is the employee. In reality the demander of labor is the employer and the supplier of labor is the employee. The employee is demanding money, not a job, and the employer is supplying money, not a job. When a wage is high, workers will supply more labor at this higher price than they would supply if the wage is lower. When the wage is high the employer will demand less labor than he would demand if the wage was lower. This applies to labor in general, but labor is more complex than this.

Labor is not homogeneous it is specific. Labor can be broken down into specific general categories like construction, healthcare, food services etc; and each general category can be broken down into specific jobs with specific skills like welder, plumber, doctor, nurse, cook, server etc. Each specific skills value is determined by the demand for that skill, balanced by the supply of that skill. If there is a high demand for a skill that’s rare, the price for that skill will be high. If there is a low demand for a common skill the wage will be low. The combinations of how much demand there is for a skill, and how rare or common it is, determines how much money that skill can demand, and how much money the employer will supply.

The demand for NFL quarterbacks is limited to the number of teams in the NFL, 32, and there is no real demand for this skill outside of the NFL. There are roughly 64 quarterbacks in the NFL, counting starters and backups, and these 64 are demanded differently. The demand for the skill level of  Tom Brady or Payton Manning is greater than the demand for the skill level of Ryan Mallet or Josh Johnson, and this difference in skill level determines how much money each can demand.

Millions of people have the ability to dig with a shovel, making it a common skill, and if you add to it the fact that we use machines to dig, we get a situation where there is a large supply of potential labor for the low demand job of digging with a shovel. The result is a low wage for that particular skill. The varying  combinations of the supply for specific labor, and the demand for that specific labor is why wages differ. If you factor in the reality that these combinations are constantly changing, because technology and innovation are constantly changing the supply and demand for labor, you have a situation where no one politician or bureaucrat, or group of politicians or bureaucrats, could possibly have enough knowledge to arbitrarily set wages. Although they certainly have enough arrogance and ignorance to try.


There is one factor these moral crusaders fail to think about when they make these third-party mandates. Individuals may not comply. In an involuntary interpersonal exchange, like robbery at gun point or forced slave labor, the person being robbed or enslaved can simply not comply and accept being beaten or killed, or he may fight back if he thinks he has a chance of prevailing over his aggressors. In the case of the minimum wage being artificially raised above what labor produces, the employer has options besides complying with the law. The employer can 1)use capital in place of labor,  2) get rid of, or not hire low skilled labor and spread the work among his higher skilled employees, or 3) a combination of the two.


The reality is, when the price of labor is artificially set above the cost of labor, there will be less labor. Raising the minimum wage increases unemployment. Politicians really don’t care about the reality that their minimum wage mandate will hurt the people they say they are trying to help. Politicians are only interested in how morally righteous they look in the fight against income inequality. Low skilled workers are being sacrificed on the altar of politics, because political reality is the only reality that interests politicians.

Related ArticleMinimum Wage Laws Create Unemployment, by

Related  ArticlePolitics And Minimum Wage, by Walter E. Williams, at

Central Planners Don’t See The Consequences Of Their Actions. Or Do They?

September 16, 2013
Cover of "Truth or Consequences"

Cover of Truth or Consequences


When central planners intervene in the economy, they either think their interventions, A) will help, B) know they won’t help but want to look like they’re “doing something”, or C) know what the result of the interventions actually will be and lie about these results to the public. This means they are either, A)  ignorant, B) politically self-interested, C) evil, or D) all of above. Here are some recent examples of intervention that have or will lead to consequences that are either known or unknown by the implementors of these plans. You decide if they are born out of ignorance, political self-interest, or evil. The central planning devil or angel should not be judged by their intentions, they should be judged by the consequences of their actions. The difficulty comes in sifting through all the propaganda, or spin, as they like to call it, and find the actual results of their actions. Understanding economic principles helps pull out the nugget of truth. (more…)

Must Reads For The Week 6/8/13

June 8, 2013
The pen is mightier than the sword...

The pen is mightier than the sword… (Photo credit: mbshane)

Finally Some Economic Sense In Spain, at Minimum wage laws create unemployment, as Spain is finding out.

Bombshell: Small Business Employees Won’t Get To Choose Health Care Insurance Plans In 2014, at Making it up as they go.

Nixbama?, at Politicians never change. Great video comparing a former President’s strategies with the current President’s strategies.

Must View: Map Of Rhamaland Shootings And Homicides, at Gun control is making Chicago a safer place. Compared to what?

The Entire Housing Market In One Chart, at This is what happens when planners intervene and don’t allow the market to coordinate supply and demand.

Understanding Libs And Progressives, by Walter E. Williams, at Why are these peoples ideas so readily accepted as gospel?

NSA Also Collecting Data From AT&T Sprint Nextel And Credit Card Companies, at This is Patriot Act  mission creep.

Is Obama Lying About Big Brother? at The President said these are only “modest encroachments” on our liberty. In other words, “These aren’t the droids you’re looking for.”