Category: free trade & free markets

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free trade & free markets national politics & policies too much government

How Not to Help the Poor

Q. When’s the best time to kick out the bottom rungs of a ladder?

A. After everybody’s climbed it.

So, when’s the best time to raise the minimum wage?

After everybody is being paid at a higher rate.

Contrary to innocent expectations, minimum wage laws don’t guarantee that people will be hired to work at or above the minimum. Instead, they prohibit businesses from hiring (or workers from accepting jobs) below the minimum rate. That is, rates are guaranteed, but the jobs are discouraged.

A recent push by House Democrats to raise the national minimum wage to ten bucks per hour was stalled by leadership. Left-leaning representatives cried foul. But a report in The Hill explains the reluctance: “Concerns about the economy have increased since last Friday, when a jobs report showed an anemic May during which only 69,000 jobs were added. A higher minimum wage could discourage employers from creating more jobs and that, in turn, could hurt President Obama in the election.”

It turns out that the more clever Democrats are considering, instead, a plan to slowly, gradually raise the rates.

This would mean fewer unemployed right away. The fewer people hurt, all the less likely that voters would put two and two together and blame them, and their minimum wage rate hike.

This is how politicians hurt Americans, most of the time: In increments small enough not to cause an uproar.

In this case, it’s the poorest who are hurt most, those who haven’t yet climbed the proverbial ladder. Democrats, ideologically blind to the results of their regulations, feel nothing.

Besides, they know that, in America, most poor folks don’t vote.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture media and media people national politics & policies

Learning from Krugman

We often have much to learn from our intellectual opponents. But some opponents we must deal with only because they are there . . . in some inescapable way.

Paul Krugman, for instance, is a Nobel Laureate economist. We deal with him not because his technical work is more relevant than the work of a hundred other economists, or because he wrote a really fine essay on the law of comparative advantage. Or because some Swedes thought enough of him to give him a big award and cut him a huge check.

We deal with him because he has a column and a blog at the New York Times.Paul Krugman, economist of a different color

And for the Times he’ll commit almost any sort of fallacy or public foolishness. Thanks to the New York Post, you can read a grand demolition of Krugman’s modus argumenti. “Krugman is a most unusual economist,” Kyle Smith writes:

Others may measure their words, issue caveats, acknowledge that the research isn’t conclusive, admit that their biases influence their reading of facts. Not Krugman. . . . He changes the subject, ignores inconvenient evidence and plays playground bully to people he sees as ideological enemies (a list longer than Nixon’s). He blasts away at others’ work without even providing the basic courtesy of a link to what he’s talking about. . . .

And Smith goes on, in part to review Krugman’s new book, End This Depression Now! (turnabout being fair play, no link from me). Not surprisingly, Krugman’s advice is a Democratic politician’s delight: spend more. Lots more.

Smith’s destruction is funny, and devastating. My complaint with Krugman has long been his relentless partisanship. But Smith reminds me that we have something to learn from Krugman, too: How not to promote a cause we regard as good.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Dragon by the Tail

The idea of a man-made satellite was conceived first by a science fiction writer. Space travel was often depicted as a private activity in that genre, with sci-fi master Robert Heinlein, especially, imagining private launches of rockets as well as private travel from Earth to Moon, and beyond.

But for fifty years, governments have directed — and still direct — money, technology and manpower to develop outposts in space. The current International Space Station is a multi-government project. The rockets that lift payloads of Earth’s surface and into orbit, allowing the station to continue to operate, have all been state-run efforts.SpaceX Falcon rocket launch for Dragon

Until now.

Last week, a private company launched a rocket into orbit, and this weekend its unmanned cargo ship, named Dragon, was caught by a robotic arm and dragged in to dock with the space station.

“Looks like we got us a Dragon by the tail,” came the words from out there.

Since mothballing the Shuttle program, NASA has been hiring Russian rockets to launch American payloads, thus meeting American “obligations” to the international effort. Now, with this first successful private launch to a space station, NASA will be able to rely on more local technology and expertise.

By contracting with private firms like SpaceX — the enterprise that launched Dragon — NASA hopes to save money. Its current contract with SpaceX amounts about $1.6 billion.

We can argue about the necessity of developing “outer space,” I know. But if contracting out with private enterprise can save money over government-run efforts, and at the same time encourage the old science fiction dream of private business in space, that seems like progress.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture

Competition in Currency

Monopoly control of money is at the root of all kinds of evil.

As the Euro faces collapse, and the dollar’s value becomes increasingly unsteady, central bankers the world over worry about what to do next.

But it doesn’t have to be this way.

Last Thursday I mentioned monetary experimentation, including Ron Paul’s support for F.A. Hayek’s idea of competing currencies. In my Townhall column this weekend, I noted that Rep. Paul has done more than promote the idea “that government policy should allow all currencies to float, favoring none. . . . Last year he introduced the Free Competition in Currency Act, as Hayekian a piece of legislation as you could imagine.”Monopoly Money

Paul’s proposal is not merely a sign of the times, it is a sign of intellectual seriousness — in a politician, no less. In the early 1980s he had introduced a measure to return the United States to the gold standard. But now he is willing to let “the market decide” which monies should circulate.

We may know a lot more about money than we used to, but one of the things we’ve learned is that no one knows for sure how to manage an entire monetary system, the whole kit and kaboodle.

So, just as we don’t need a grocery czar or an “industrial policy” to micromanage either technological production or R&D, centrally managed money is just too hard for any one set of persons . . . to manage.

Competition in money and banking (sans today’s progressivist doctrine of “too big to fail”) would not only work, it would keep politicians from the extremity of irresponsibility.

For yes, today’s politicians rely upon the Federal Reserve. They need to keep the “printing presses” running to supply that special, hidden tax that funds their deficits: inflation.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets links

Townhall: The Next Thing in Money

More about Ziggy?

This weekend’s Townhall column takes off on a subject broached here at This Is Common Sense last week. But there’s a lot more to it, so check it out. And come back here if you want a complete, easy-to-access full list of the column’s links:

For further reading, please consider:

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free trade & free markets video

Video: Crony Capitalism

Not all capitalisms are created equal:

I prefer the term “free market” to the word “capitalism” because it emphasizes a system that is “free” rather than one feature of it, capital. Capital is a critical aspect of every economic system. But freedom is something we can add to our current mess to bring not only more wealth, but a more feasible order. And sense of justice.

Kudos to Annette Meeks at the Freedom Foundation of Minnesota for highlighting crony capitalism.

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free trade & free markets too much government

Ziggy Stardust Bucks

Josiah Warren Time Store note for Three Hours Labor

When times get tough, the tough . . . switch currencies.

A fascinating report in The Atlantic tells of the upswing in “local currencies.” In the United Kingdom, the Brixton Pound is being floated, engraved on its paper notes the likes of “David Bowie in his Ziggy Stardust era.” Pegged to the British pound, it serves mainly as a scheme to promote local business and trade, though maybe it’s a tad more than mere boosterism.

Bavarians are also “enthusiastically using the local currency as a protest” — the local currency being the Chiemgauer. And “similar currencies have popped up around the world,” including in Canada and the United States.

The Atlantic story also mentions the idea of a “time bank,” a one-step-up-from-barter method based on labor hours and (in some cases) accounting for a variety of skill levels. Such “systems are in use all over the world . . . though the organizers are careful to make sure that the time is never given a specific value in a hard currency, which would open the door to taxation from governments.”

That caveat shows how barter and labor time exchanges might seem the more “revolutionary,” from, say, an establishment point of view. It’s worth noting that the idea’s greatest early proponent was Josiah Warren, America’s genius utopian experimenter and theoretician of “individual sovereignty.”

Less of a radical, Rep. Ron Paul echoes eminent monetary economist and Nobel Laureate F.A. Hayek by promoting the “denationalization of money,” arguing that government policy should allow all currencies to float, getting rid of all taxation on trade amongst currencies as well as repealing all legal tender laws.

For my part, I would greatly enjoy spending a Ziggy Stardust banknote.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets local leaders

A Very American Bridge

Severe flooding forced Polihale State Park on Kaui, Hawaii’s fourth most famous island, to close in December. The needed repairs to a bridge were estimated to run $4 million, and yet state government lumbered along, spitting out no funds for the project. So local businesses got together and did the job themselves.

One of the organizers of the private-enterprise repair job, a local surfer, noted that the two years the state could take to do the job meant a summer or two without the attraction that local businesses depended upon, and that, “with the way they are cutting funds, we felt like they’d never get the money to do it.”

A businessman named Ivan Slack (no slacker, he) said his kayak business utterly depended upon the park — “tourism is our lifeblood; it’s what pays all our bills” — so he was more than willing to get the job going sans taxpayer dollars. His business’s survival depended upon it. He couldn’t just “wait around for a stimulus check.” So his company donated resources — as did others. The community provided its own stimulus.

And the job was completed in eight days.Alexis de Tocqueville

This is what used to be the norm in America. When Alexis de Tocqueville toured the country, he noted the amazingly prolific community organizations and associations that abounded in what was then a “new country.” If the people saw a problem, the people fixed it.

If there’s a bright side to the current economic depression, surely it’s stories like this.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Businesses Rate Governments

What do small businesses worry about the most? I mean, besides serving their customers?

Regulation — licensing in particular.

At least when rating government, owners of small businesses surveyed by Thumbtack.com indicated that “licensing requirements were nearly twice as important as tax rates in determining their state or city government’s overall business-friendliness.”Thumbtack.com's state ratings in terms of small business concerns.

Yes, taxes are a burden. But regulations and licensing can be amazingly arcane and costly in many communities. Their burdens often kick in before you’ve made a dime, and, despite that, they can sneak up on you, with the heavy weight of bureaucracy descending like the proverbial brick ton.

Thumbtack’s page allows you to see how your state rates. Idaho and Texas come out on top, and my state, Virginia, is surprisingly good. “Blue states” (horrible term: sorry) tend to come out much worse. California gets a big fat F, scoring abysmally low in most categories.

No surprise: The most politically unrepresentative state in the union over-regulates!

Distrust the survey? Just talk to the owner of a small business — you’ll likely get corroboration. Tim Sutinen, a businessman from southwest Washington State, noted in his campaign for state office a few years ago that there were only a handful of licensed occupations in the Evergreen State during the economic downturn in the early ’80s. Now, a few decades later, there’s over a thousand occupations you need a license to work in.

No wonder the recovery stalls.

That’s not progress.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture video

Video: How to Fail, America

This is stylish, provocative, and … worth thinking about: