"[Robert] Reich writes that “A $15/hour minimum is unlikely to result in higher prices because most businesses directly affected by it are in intense competition for consumers, and will take the raise out of profits rather than raise their prices.”
Reich is correct that businesses are in intense competition for consumers. What he misses, however, is the fact that, precisely because of this intense competition, businesses have none of the excess profits that Reich presumes will be tapped into to pay the higher mandated wages.
This error exposes Reich’s inability to grasp even the most elementary economic concepts. Intense competition eliminates excess profits; with no excess profits firms cannot, contra Reich, simply pay workers higher wages. Firms instead must respond to a higher minimum wage by some combination of hiring fewer low-skilled workers, working their remaining low-skilled workers harder and reducing these workers’ non-wage pay, and charging higher prices for their outputs. The fact that Reich misses this reality - the fact that he does not understand that intense competition ensures that firms cannot possibly react to a higher minimum wage by tapping into their profits - tells any thinking person all that he or she needs to know about Reich’s analytical skills."
— Don Boudreaux, “How NOT to Do Economiics” (via laliberty)
"If women were paid 77 cents on the dollar [relative to men for the same work], a profit-oriented firm could dramatically cut labor costs by replacing male employees with females. Progressives assume that businesses nickel-and-dime suppliers, customers, consultants, anyone with whom they come into contact—yet ignore a great opportunity to reduce wages costs by 23%.
They don’t ignore the opportunity because it doesn’t exist."
The ‘77 Cents on the Dollar’ Myth About Women’s Pay (via laliberty)
Read the whole thing, I highly recommend it. Very good use of both empirical research and economic theory to dispel the wage gap myth.
"Well, that’s my privilege [to retract previous apocalyptic predictions about climate change]. You see, I’m an independent scientist. I’m not funded by some government department or commercial body or anything like that. If I make a mistake, then I can go public with it. And you have to, because it is only by making mistakes that you can move ahead. …
Take this climate matter everybody is thinking about. They all talk, they pass laws, they do things, as if they knew what was happening. I don’t think anybody really knows what’s happening. They just guess. And a whole group of them meet together and encourage each other’s guesses."
Renowned climate scientist James Lovelock, one of Time magazines 13 leaders and visionaries in their 2007 “Heroes of the Environment.”
The 94 year-old scientist, famous for his Gaia hypothesis that Earth is a self-regulating, single organism, asserts that environmentalism has “become a religion” and does not pay enough attention to facts; he also said that he had been too certain about the rate of global warming in his past book.
“The problem is we don’t know what the climate is doing. We thought we knew 20 years ago. That led to some alarmist books – mine included – because it looked clear-cut, but it hasn’t happened.”
"The members of Congress are underpaid; and I understand that it’s widely felt that they underperform, but the fact is that this is the board of directors for the largest economic entity in the world, and a lot of members can’t even afford to live decently when they’re at their job, in Washington."
Rep. Jim Moran (D-VA), explaining why he thinks an annual salary of $174,000 plus plenty of other perks and conveniences is just too small.
Granted, DC is an expensive city, but our representatives aren’t exactly hurting for cash. Their median net worth is more than $1 million, and if we look at the Senate alone, that median tops $2 million.
But even leaving all that aside, if you can’t get by on $174,000 a year plus ample benefits (including free travel), there is something horribly wrong with your money management skills. Actually, this explains a lot…
"A free man must be able to endure it when his fellow men act and live otherwise than he considers proper. He must free himself from the habit, just as soon as something does not please him, of calling for the police."
— Ludwig von Mises (via iates)
"One thing that gets a lot of attention in happiness research is that once you’ve got enough money to eat and you’re okay, it doesn’t seem like there’s a large effect of additional income on your happiness… But, what’s more interesting to me is another finding, that unemployment, per se, causes a lot of unhappiness. Unemployment makes people really miserable. And, even if you go and give them the same income they would have had if they were employed, they’re still a lot less happy than they would have been if they had a job and that income. This is a way in which the American system is really much more humanistic, and more concerned about the whole person than the European system. In Europe, you have people who are unemployed for a very long time, with very little prospect of getting a job, but you send them a check and that’s supposed to make it up to them. In the U.S., unemployment is lower, it’s easier to find a job, and so, people here get their money, and at the same time they have the pride of having a job. They don’t feel like a loser because they’re unemployed. So, in this sense the American system of less labor market regulation, which leads to lower unemployment and makes it easier to find a job, is really more concerned with human happiness and a richer understanding of what’s going on in the human psyche, than the European system, which just assumes that if you give someone a check they have nothing to complain about."
— Bryan Caplan (via eltigrechico)