Category: national politics & policies

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

A Teachable Wage

The U.S. President wants to up the national minimum wage to $9 per hour.

Republicans tend to lose at such policy debates, sometimes by daring to tell the truth: That minimum wage laws tend to raise unemployment. But that doesn’t impress politicians, who can’t be bothered to look beyond the surface of such issues.

They present the minimum wage hike as a guarantee that higher wages get paid all around, that wages only go up, rather than what actually happens: some wages go up to meet the law, and others evaporate, as people are let go, jobs downsized, and new jobs go uncreated.

So why would congressional Republicans use the same old rhetoric to balk at the president’s plan?

Sometimes irony works. Republicans should take all the Democrats’ premises — we want higher wages, more wealth, etc., etc. — and up the ante:

“Yes, raising wages would be great! But why are you all such tightwads? Raise the minimum to $49 an hour! Or make the lowest rate comparable with congressional pay: $85 per hour!”

Then compromise and say they will only vote for the raise if the rate hike is a serious amount, not the president’s paltry $1.75 increase.

At that point, a more honest conversation will start up.

For the ugly truth is that the harmful effects of the current and rather low minimum wage laws rest mainly on folks who aren’t very likely to vote, or to notice why it is they are unemployed. But raise the rate to $49 per hour, or even $19, and the scam becomes obvious to all but the most dense.

Even Democrats would insist on a lower rate.

And then Republicans should demand that Democrats explain why. And reveal the perverse logic behind minimum wages for all to see.

This is Common Sense. I’m Paul Jacob.

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national politics & policies too much government U.S. Constitution

Authorized, But in the Red

According to the late economist James Buchanan, there exist three basic categories of government functions: protective, productive, and redistributive.

The protective functions are most basic. As inscribed in the Declaration of Independence, we are to be protected by government not in a scattershot way, but by having our rights delineated and defended. Think courts and the military.

The redistributive functions make up the bulk of the federal government, today . . . according to a recent Heritage Foundation chart, “More than 70 Percent of Federal Programs Goes to Dependence Programs.” Most of these, like Social Security and Medicare, were not originally contemplated as tasks for the federal union, and are flagrant violations of the Constitution.

But some “productive” (business-like) functions were placed into the Constitution, the most famous being the authorization to create a postal service.

Though no longer an official wing of the U.S. Government, the Postal Service is still hamstrung by congressional micro-management, as the shrinking mail biz busies itself trying to erase red ink.

The current notion is to drop Saturday delivery of all but packages. The enterprise hopes to save billions on this reform, alone, and was able to initiate the service cut without Congress’s approval by gambling on what some are calling a legal loophole.

Perhaps as politically dangerous is the ongoing attempt to get rid of post offices in smaller communities, replacing them with “Village Post Offices” that private enterprise would run.

It’s worth noting that though the Constitution allows for mail delivery and a few other “productive” services, these aren’t very productive — at least, they tend to operate in the red.  Besides, what is authorized by the Constitution doesn’t mean required by the Constitution.

This is Common Sense. I’m Paul Jacob.

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incumbents national politics & policies

Gravy Train Engineers

A lot of big money in the Republican Party is now actively being marshaled to make sure that Tea Party efforts come to naught.

The latest endeavor bills itself the Conservative Victory Project, and has been written up in the New York Times, which relates the group’s intent: “to counter other organizations that have helped defeat establishment Republican candidates over the last two election cycles.”

You see, campaigns to unseat staid, big-government “conservative” Republican incumbents have not gone unnoticed amongst the Old Guard of the GOP. And these folks are worried about the quality of the gravy their gravy train returns. So they seek to shore up the “winners”:

“There is a broad concern about having blown a significant number of races because the wrong candidates were selected,” said Steven J. Law, the president of American Crossroads, the “super PAC” creating the new project. “We don’t view ourselves as being in the incumbent protection business, but we want to pick the most conservative candidate who can win.”

Law is, of course, thinking of several Tea Party candidates in the last election who blew it, Big Time. You know the ones: the candidates who talked weirdly of rape.

But it’s not just Tea Party Republicans who shoot themselves in the proverbial foot, or place foot in mouth. Mainstream “conservatives” blow it, too, as Grover Norquist pointed out in the Times article. “People are imagining a problem that doesn’t exist,” said Grover.

I worry that “the real problem” Law and his cronies (such as Karl Rove) are fighting is the specter of a successful Tea Party contingent, with Rand Paul at its lead. Real change is awfully frightening to the whip hands on the gravy train.

This is Common Sense. I’m Paul Jacob.

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national politics & policies responsibility

Bankruptcy, Not Bailouts

America’s bailout economy started many administrations ago, but really went Big Time under President George W. Bush . . . and then went Enormity Time with President Barack Obama.

The Washington Post provides the latest in bailout news by noting an inter-departmental squabble:

The Special Inspector General for the Troubled Asset Relief Program said Treasury approved all 18 requests it received last year to raise pay for executives at American International Group Inc., General Motors Corp. and Ally Financial Inc. Of those requests, 14 were for $100,000 or more; the largest raise was $1 million.

Though this is all quite scandalous, don’t expect policies to change or heads to roll — barring a joint Tea Party/Occupy uprising. The nature of the modern “regulatory” state is clear: government bureaus are quickly captured by the industries they aim to regulate. It’s an old story. The revolving door between business and bureaucracy is as well-established as between journalism and politics.

So why do we have bailouts?

  1. They show that politicians are “doing something”;
  2. They mimic the welfare state logic of “helping the poor” (if, with caustic irony, by stuffing the wallets of the rich);
  3. They aggrandize the showy machinations of the legislative and executive branches at the expense of the branch of government designed to handle massive business failure, the courts.

Perhaps Americans shouldn’t have voted in either an MBA grad (Bush) or a constitutional lawyer (Obama). Maybe what the country needs is a bankruptcy lawyer in the White House.

This is Common Sense. I’m Paul Jacob.

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national politics & policies U.S. Constitution

Power-Grabbing In Recess?

A recent court decision has slowed—dare we hope, stopped?—the erosion of an important check on executive power. This is the constitutional provision that the president’s appointment of certain high officials be subject to Senate approval.

Trevor Burrus of the Cato Institute reminds us that presidents have sought to circumvent the advise and consent requirement since the days of Warren Harding.

The Constitution enables the president to make appointments when the Senate is in recess, i.e., between sessions. (In the days of the Founders, that hiatus lasted many months.) Starting with Harding, though, presidents began making appointments during so-called intra-session “recesses,” or breaks within a regular session. These “recesses” were as brief as ten days by the time we got to Clinton and Bush II.

In 2007, the Senate began conducting brief pro forma sessions within these “recesses” to prevent appointments from being made without its consent. Last year, President Obama counter-moved by declaring that he had authority to determine what constitutes a session. On this basis he made several appointments sans the Senate’s consent.

The DC Court of Appeals has now ruled the maneuver unconstitutional. “The power of a written constitution lies in its words,” writes Chief Judge David Sentelle. “When those words speak clearly, it is not up to us to depart from their meaning in favor of our own concept of efficiency, convenience, or facilitation of the functions of government.”

Do presidents sometimes find the Constitution inconvenient? Too bad.

This is Common Sense. I’m Paul Jacob.

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national politics & policies too much government

Laboring for Unemployment

When you make it harder to hire people—as Obamacare does by imposing penalties on companies that fail to provide specified health insurance—you make it more unlikely that persons will be hired.

Consider the case of Automation Systems Inc., reported at National Review Online. After the economy went into a nose dive a few years back, the only way owner Carl Schanstra could keep the company alive was by slashing staff.

Automation Systems has managed to bounce back, and business is improving. Currently, Schanstra employs 37 people. He would like to hire lots more. But as soon his company employs more than 50, he’ll be socked with $40,000 in penalties and $2,000 for each additional employee. Even firms that already provide health care to employees will have to pay such penalties if they have 50+ workers and their insurance plans don’t offer as much coverage as Obamacare deems necessary.

When you must shell out $40,000 to the government—$40,000 more than all hitherto expected payout of salary and benefits—to hire your very next employee, you have a strong incentive to keep your company smaller than you might have liked. And workarounds like contracting consultants, as discussed last week, are not options for every company.

This reality may seem obvious to anyone with even modest knowledge of what it takes to create wealth and make a living. But somehow the obvious escapes the central planners in Washington.

Or maybe they just don’t care about the hardships their policies impose upon us.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies tax policy

In the Name of Loving

The aptly named decision Loving v. IRS—it’s so true, you know—provides a modest victory in the war of tax-takers versus everybody else.

The ruling, brought to our attention by the Institute for Justice, a party to the lawsuit, concerns IRS regulation of tax preparers. The IRS wants to force non-attorney, non-CPA tax preparers to take an exam, pay annual fees, and take hours of courses every year. District Judge James Boasberg has ruled the regs unlawful.

The regulations govern people hired by others. It would be really crazy if every non-credentialed taxpayer had to pass an exam, pay fees, and take courses every year just for the pleasure of filling out the forms we must complete in order to give IRS our money.

But the regulations are really crazy anyway. They violate the freedom of professional tax preparers. Also, by making it more expensive to be a tax preparer, they reduce the taxpayers’ tax-preparation choices and/or increase the costs of preparation services.

If judges regularly consulted such desiderata as our freedoms and rights when assessing assaults on them, many more regulations would be voided—say, 99.9 to 100 percent or thereabouts. Boasberg’s ruling hinges more narrowly on the important fact that Congress never gave IRS authority to regulate tax preparers.

The IRS has moved that the ruling be suspended pending its appeal. Let them lose the motion and lose the appeal, and I’ll be loving it.

This is Common Sense. I’m Paul Jacob.

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

Attacking Wage Employment

I don’t know what the optimum ratio of employees to independent contractors would be. No one does. But we can be pretty certain that the current skewing of the economy towards less wage employment and more independent contracting by Obamacare is not a good thing.

You see, “one consequence” of the health reform package, writes economist David Henderson on EconLog, “is an increase in contracting out to avoid the 50-person threshold.”

Now, if there were a general shift towards part-time employment and professional contracting as a result of businesspeople and workers appraising their advantages on the open market, we’d just note this with interest or a shrug and say, “whatever the market decides.”

After all, people might substitute wage contracts for performance contracts (or vice versa) for reasons given by Nobel Laureate R.H. Coase, who figured out why firms exist at all: contracting out isn’t costless. It takes time to negotiate each deal, each task, etc. My friend Dr. Henderson will correct me, I hope, if I’m wrong, but employing labor full-time — by bundling numerous tasks together — is usually easier and cheaper than seeking out specialists and consultants for each task you want done.

In recent years we’ve seen a rise in consulting professionals, in part because the Internet has reduced the costs associated with working from a distance. But today’s switch to independent contractors (as well as to part-time employment) is a result of Obamacare raising the cost of keeping full-time employees. Of course businesses will seek to . . . economize.

And we know such substitution is suboptimal because people are doing it under duress, the threat of force behind Obamacare.

This is Common Sense. I’m Paul Jacob.

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ideological culture national politics & policies

A New Leaf

There’s apparently more than one way to mess up money.

Canada’s new plastic banknotes don’t work in all vending machines, I hear . . . and there’s a less practical problem with the new C$20 note: It has the “wrong” maple leaf on it.

Some botanists are complaining that the stylized leaf logo is not Canada’s native species, but one hailing from Norway.

I’ve not seen one of these bills up close (donations would be appreciated, though), but from the photo, the thing I’d be worrying about is that the Queen, on the basis of her appearances on bank notes, looks more like Dwight D. Eisenhower every year.

Here in America, our Washington insiders mess up money both symbolically and substantively.

In the old days, before president-worship had become something of the country’s official religion, Liberty was represented by female representatives or Indians. (The fact that the U.S. government killed off and hounded remaining populations of native Americans in that time put the latter practice into some cognitive dissonance.) Now, both coins and notes feature dead presidents. Frankly, I think we should junk the presidents and go back to stylized, classical representations of Liberty.

The biggest symbolic problem is having Andrew Jackson, America’s most successful and vehement anti-central banking president, placed on our central bank’s $20 note.

That’s an insult, not an honor.

Another way to mess up money is to devaluate it by over-printing.

Or creating too much credit. Or good old-fashioned seignorage. With the Quantitative Easing and “trillion dollar coin,” we’ve got these last two covered. Alas.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies

Making the Rounds

The “trillion-dollar” coin proposal hit big in the last few months, even garnering a smile, a wink, and a nod from Paul Krugman. The idea was for the government to mint a high face-value platinum hunk of token money and sell it to the Federal Reserve — to weasel around congressional approval for raising the debt limit.

Something very much like it was floated by Populist and inflationist Bo Gritz back in the early ’90s, when he was running for the presidency.

Though the current president has dismissed the notion, people like it so much — perhaps because of its “just so goofy it might work” aspect — that the whole meme is still making the rounds.

As a technical matter, a one trillion dollar coin would probably be too unwieldy. If actually given the go-ahead, the Treasury and the U.S. Mint would likely opt for smaller amounts, cranking out a batch of them — a big batch, to cover the federal government’s rising debt.

My modest proposal? Mint coins at the legal tender amount of $666 million each.

The effigy of Liberty could sport a 666 tattoo on her forehead, and a neat UPC symbol on her wrist, which she could hold up instead of a torch.

That would indicate, by commonly understood symbology, just how dangerous America’s debt really is, and how anti-American the whole idea of the high face-value coinage debt ceiling workaround would be.

Another way to go would be to carve each coin out of coprolite. Another fitting symbol for the last days of our fiat currency.

This is Common Sense. I’m Paul Jacob.