Filed under: Bureaucracy, Capitalism, Economics, Economy, Energy, Free Markets, Freedom, Taxes, Unemployment | Tags: Economist Mark Perry, President Barack Obama, Wal-Mart Stores
—The correct minimum wage is $0.00. If you want to hire your neighbor’s 11 year old kid to mow your lawn or pull weeds, you should be able to offer him something under the current minimum wage.
The goofy Democrat line is “But you can’t raise a family on the minimum wage.” Well, no you can’t, but by the time you have a family, you should have some skills that are more useful than those of a pure beginner. We forget that employment, like everything else in the economy, depends on supply and demand. The supply of people who can do a simple minimum wage job successfully is very, very large. The supply of those who can run a giant corporation with 20 divisions, 20,000 employees and country-wide or international reach is significantly much, much smaller. The average tenure for a CEO as head of a corporation is only six years.
—Wal-Mart, America’s largest employer just announced that they will close more than 150 US stores — which will mean that 10,000 employees will lose their jobs. Shutting down underperforming stores will help to move the company back to health, when it can create more permanent jobs. Wal-Mart voluntarily raised its base wage to $9 an hour last April, but this resulted in a 10% drop in earnings. A Union backed group that has heckled the retailer to raise it’s entry level wage, was astonished. But the job losses are the direct result of the changes made at Wal-Mart.
—Here’s Economist Mark Perry at AEI with a list of ten reasons why economists object to the minimum wage.
Obama and Hillary are still pretending that women are paid less than men because America’s employers discriminate against female workers. The Left needs women to be victims, and Hillary is running on her qualifications as a woman. “Today, women account for almost half of the workforce,” Obama huffed. “But the typical woman who works full time still earns 79 cents for every dollar that the typical man does.” Bogus statistic, and Obama knows it, for it simply depends on comparing all women to all men. It has been against the law to pay women and men who do the same job differently since 1963.
Unless women stop getting married and having children, and start abandoning careers in childhood education for naval architecture, this huge gap in wages will almost certainly persist. Democrats thus can keep bringing it up every two years.
—Income inequality, the basis of the entire Democrat campaign, is a factor of demographics. Kids starting out have little income and may have big student loans, or renting an apartment or buying a used car are big expenses. There are more middle-age and old people now than there used to be, and older people tend to have more money than their younger counterparts simply because they have been earning money much longer.
A 70 year old man has been saving most of his life. He owns his home. his children are grown, he gets Social Security on retirement, and has benefited from a life-long buildup of career skills and connections and is apt to have far more money than a 30 year old. There is a clear relationship between age and the median net worth of people in every quintile. There are more old people as the baby boomers reach retirement age, and the birth rate has dropped so there are fewer young people. Do not let the Democrats fool you with their whining about Income Inequality. Sheer Demographics.
—In his remarks to the Press on Friday, when he bragged about the wonderfulness of his economy, Obama mentioned the drop in the cost of gasoline as one of his beneficial outcomes. That happened in spite of Obama, not because of Obama, as a result of the glut of oil based on Fracking. Obama’s instinctive response is to try to slap a $10 a barrel tax on oil so he can raise the cost of gasoline at the pump — while having more taxes to invest in “clean energy” which is pure waste. Obama’s wind and solar investment, in spite of the huge subsidies and grants, provide a resounding 0.3 percent of America’s energy.
(additional sentence added about equal pay for women)
Filed under: Bureaucracy, Capitalism, Democrat Corruption, Economy, Free Markets, Politics, Taxes, Unemployment | Tags: January Jobs Report, President Barack Obama, Zero Hedge
President Obama: press briefing, Friday, February 5, 2016, on the just released jobs report:
TGIF, everybody. I wanted to stop by, because as you’re aware by now, America’s businesses created another 158,000 jobs last month. After reaching 10 percent in 2009, the unemployment rate has now fallen to 4.9 percent — even as more Americans joined the job market last month. So this is the first time that the unemployment rate has dipped below 5 percent in almost eight years. Americans are working.
All told, over the past six years, our businesses have added 14 million new jobs. Seventy-one straight months of private-sector job growth extends the longest streak on record. Over the past two years, 2014 and 2015, our businesses added more jobs than any time since the 1990s. …
So, as I said at my State of the Union address, the United States of America, right now, has the strongest, most durable economy in the world. I know that’s still inconvenient for Republican stump speeches as their doom and despair tour plays in New Hampshire. I guess you cannot please everybody.
Zero Hedge: 02/05/2016, 10;14 a.m.
Headline : “70% Of Jobs Added in January Were Minimum Wage Waiters and Retail Workers”
For those curious where the big jump in earnings came from, the answer appears rather simple: the reason, according to the BLS’ breakdown of jobs added in January (per the Establishment survey), of the 151,000 jobs added in the past month, retail trade added 58,000 jobs in January, while employment in food services and drinking places, aka waiters and bartenders, rose by 47,000 in January.
Simple: state regulations demanding higher wages for minimum wage workers starting January 1, which as discussed previously will promptly lead to employers passing on wage hikes costs to consumers in the form of 10% higher food prices starting in NYC and soon everywhere else.
This is the full breakdown of January job gains:
- Retail Trade: +58K
- Leisure and Hospitality, which includes food workers: +44K
- Professional and business service workers, excluding temp workers: +34K
- Manufacturing workers posted a curious rebound, rising by +29K. We are confident this number will be revised promptly lower.
- Construction +18K
- Wholesale Trade: +9K
- Education and Health saw a big and unexplained drop from 54K to 6K
- Information services added just 1K workers
- As for sectors losing workers included Temp Help workers, Transportation and Warehousing (courtesy of the truck and train recession), Mining and Logging, and Government workers.
Filed under: Bureaucracy, Capitalism, Economics, Economy, Free Markets, History, Law, Politics, Regulation, Taxes, The United States | Tags: Preidential Election 1972, Senator George McGovern, The Wall Street Journal
A little history: George McGovern was a Senator from South Dakota. After college, he became a bomber pilot in the Air Force in World War II, then got a PhD in History and became a professor. In 1957 he became a U.S. Congressman, and then a Senator in 1967. He ran a grassroots campaign for the presidency in 1972, and lost in the biggest landslide in history, winning only Massachusetts and the District of Columbia. He retired from the Senate in 1981 after a long and distinguished career.
He spent several years on public lectures around the world, for he was an expert in world food problems, and in 1988, invested most of the earnings from the lecture circuit acquiring the leasehold on Connecticut’s Stratford Inn. He had always been fascinated with Inns, hotels and restaurants, and it was “the realization of a lifelong dream to own an Inn with a restaurant and public conference facility, complete with an experienced manager and staff.”
He promptly went bankrupt, and in 1992 he wrote an article for the Wall Street Journal, headed with a quotation from Justice Felix Frankfurter:
Wisdom too often never comes, and so one ought
not to reject it merely because it comes late.
In retrospect, I wish I had known more about the hazards and difficulties of such a business, especially during a recession of the kind that hit New England just as I was acquiring the inn’s 43-year leasehold. I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.
Today we are much closer to a general acknowledgment that government must encourage business to expand and grow. Bill Clinton, Paul Tsongas, Bob Kerrey and others have, I believe, changed the debate of our party. We intuitively know that to create job opportunities we need entrepreneurs who will risk their capital against an expected payoff. Too often, however, public policy does not consider whether we are choking off those opportunities.
My own business perspective has been limited to that small hotel and restaurant in Stratford, Conn., with an especially difficult lease and a severe recession. But my business associates and I also lived with federal, state and local rules that were all passed with the objective of helping employees, protecting the environment, raising tax dollars for schools, protecting our customers from fire hazards, etc. While I never have doubted the worthiness of any of these goals, the concept that most often eludes legislators is: “Can we make consumers pay the higher prices for the increased operating costs that accompany public regulation and government reporting requirements with reams of red tape.” It is a simple concern that is nonetheless often ignored by legislators.
The article was truly notable, for it was a pretty big admission from a devout liberal that legislators didn’t have a clue about business. “One-size-fits-all” rules ignore the reality of the marketplace, and the thresholds they set for ‘regulatory guidelines’ don’t fit the reality of how business works.
Congressional Democrats may have had a few moments of reconsideration, but they quickly went right back to their comfortable, traditional way of despising business and businessmen and trying to extract more taxes from the affluent in order to make everything more equal and more “fair.”
Senator McGovern died in 2012 at the age of 90.
Filed under: Capitalism, Domestic Policy, Economics, Education, Foreign Policy, Free Markets, History, National Security, Taxes, Unemployment | Tags: Marco Rubio, Ted Cruz, The Iowa Caucuses
Soon the returns from the Iowa Caucuses will be coming in. As someone online remarked today —”the results of the Iowa Caucuses don’t determine the result of the election — just ask President Santorum.”
It’s a strange year. I forget that there are reporters from all over the world following the candidates and the campaign, not just our own journalists. I was really excited about the campaign at the beginning with such an outstanding bench of Republicans — Scott Walker, Rick Perry, and Bobby Jindal who had all been such successful governors. Uh huh. Apparently the media didn’t like successful governors.
I’m increasingly convinced that the media plays far too large a role in our primary campaigns as do probably meaningless polls when most Americans are just beginning to find out who the candidates are. I’m a political junkie, always have been, but I recognize that most people don’t pay much attention until it’s time for an election. I understand that. You come home tired from work, and want nothing so much as to just relax with something good on TV.
In the Saturday Essay at The Wall Street Journal, John O’Sullivan pointed out “two long-term shocks to the American political system, both gradually coming to a boil in recent decades, and in one short-term shock, which has turned up the gas on them to produce today’s bubbling over.”
The first was the end of the Cold War. But didn’t that happen in 1989? Yes, it did, and it began to loosen the discipline that had kept political parties world-wide either anti-Soviet or “peace-minded,” as their primary orientation. Since the fall of the Berlin Wall, they have been released to follow their other instincts.
Mr. O’Sullivan suggests that “behind the two-party curtain, America’s social classes have been changing places in politics. Highly educated and very rich people used to lean Republican, they now increasingly vote for Democrats. Working class Americans no longer feel well represented by the Democrats…and have shifted sharply to the GOP.”
I certainly had not thought in those terms, but it seems possible. We have a big chunk of mega rich here — Microsoft, Amazon, Starbucks, and Costco, and they are certainly reliable Democrats. I would suggest that the mega rich have done quite well under the Obama regime, but the working class clearly have suffered. Everybody I know complains about having lost some of their favorite small businesses, and everyone knows someone who has been laid off.
You have probably seen the results: High turnout. Ted Cruz won significantly with 28 percent. Trump, second at 24 percent with Marco Rubio, a very close 23 percent. Martin O’Malley on the Democrat side and Mike Huckabee have suspended their campaigns. Hillary and Bernie Sanders are essentially tied, in a dead heat. A setback for Hillary, who is not qualified to run. Technically there are 30 Republican delegates and 44 Democratic delegates. (I don’t know!) Ben Carson placed 4th and Rand Paul 5th.
Also pertinent is an article from the Washington Examiner: “Confronting the hard truths of America’s civic illiteracy“
Recently, the American Council of Trustees and Alumni (ACTA) released a major report: “The Crisis in Civic Education.” ACTA’s curricular survey of over 1,100 colleges and universities shows that only 18 percent of them require students to take a course in U.S. history or government. In secondary education, the results are equally dismal. In 2014, the National Assessment of Educational Progress (NAEP) revealed through their civics test that one in four high-school seniors did not have “proficient” civic knowledge. Moreover, over one-third of 12th-grade students did not have “basic” knowledge of American civics. The NAEP governing board has since shot the messenger that brings such bad news by eliminating the high school civics test.
To spell it out, fewer “than 20 percent of American college graduates knew what the effects of the Emancipation Proclamation were; nearly half could not identify the correct term lengths of Congress; and almost 10 percent thought…”Judge Judy” served on the Supreme Court.” Apparently the Millennials are very enthusiastic about Bernie Sanders, but have no clue what socialism is. Perhaps it’s the offer of tuition -free college (not going to happen). Bernie is even more unfamiliar with economics than the Millennials. Do read the whole thing.
Filed under: Bureaucracy, Crime, Domestic Policy, Economy, Health Care, Junk Science, Law, National Security, Regulation, Taxes, The Constitution, The United States, Unemployment | Tags: Barack Obama, Dennis McDonough, James Madison
Dennis McD0nough, President Obama’s Chief of Staff, confirmed the intent of the Administration to pursue “audacious” executive actions. He stated that the Obama administration’s desire was that its actions “not be subject to undoing through [Congress] or otherwise.” Many presidents have used “executive orders” to move an issue forward when Congress was stalling, but McDonough’s comment was something quite different. The end goal here is policy decisions that cannot be undone by Congress “or otherwise” which would seem to be the courts. Obama wants what he wants and he doesn’t want any ignorant interference.
This is the man who regularly claims to have been a ‘Professor of Constitutional Law,’ when he apparently was only a lecturer in civil rights law at the University of Chicago, so his casual treatment of the law is not surprising.
The Founders created a governing system with three branches that was meant to act slowly, with deliberation. The Federalist explained the idea of what James Madison called “checks and balances” in The Federalist No. 51:
If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.
The Progressives in our country have somehow come to believe that whatever it is, is better done by government. Philanthropy should not be granted by rich men, but done by government. What to eat? The government will tell you what you should eat. Health care? The government will decide what medical care you may have and from what physicians or hospitals, and what they will pay for. You taxes will support useless wind turbines and solar arrays, and put the nation’s corn crop in your gas tank. You cannot buy raw milk from a dairy, and you must buy organic food. You are required to use less water when you take a shower, and the government will tell you what kind of light bulbs to use in your house. I could go on and on, but you will find the exercise more informative if you do it yourself.
Over the centuries since the founding, the shallow inclinations of politicians have been limited by respect for the restraint on their authority as a part of the guarantee of American freedom, so essential to who we are and what we believe. Many have commented on the anger of the American people in this campaign season. That is the root of the fury—an administration that ignores the rules and customs and traditions of our history—because this President, like a spoiled child, wants his own way.
He does not like Congress, because they disagree. He does not want to deal with them, and he ‘s not going to argue or try to convince them. He has a pen and a phone, and just try to stop him. And believe it or not, Hillary wants to appoint him to the Supreme Court, when his term is finally over.
Donald Trump said he would use a lot of executive actions as well, but he’d do good ones. And who decides that?
Filed under: Capitalism, Economics, Economy, Free Markets, Taxes | Tags: American Business, Profit Margins, What Makes an Economy Grow?
A random sample of American adults were asked the question: “Just as a rough guess, what percent profit on each dollar of sales do you think the average company makes after taxes?” For the Reason-Rupe poll in May 2013 — the average response was 36%. That response was very close to historical results for a poll from ORC for a similar but slightly different question.
How do the public’s estimates of business profit margins compare to reality? According to a Yahoo!Finance database for 212 different industries the average profit margin for the most recent quarter was 7.5% and the median profit margin was 6.3%. There was not a single industry out of 212 that had a profit margin as high as 36%.
That bit of misinformation drives a lot of bad legislation, for example, the effort to make $15 the minimum wage. If Walmart made $36 profit on every $100 of earnings, then they should certainly be able to pay their workers a little more. But Walmart’s profit margin in the most recent quarter was 3.1% — and a completely different story. For every $100 in sales for Walmart, the state and local governments get an average of $6.88 in sales taxes ( and as much as $9.44 in Tennessee, $9.16 in Arizona). Did you notice that Walmart is closing a lot of stores?
But what about Big Oil? Major integrated Oil and Gas make big profits don’t they? Nope. A below average profit margin of 5.1%. If people realized that their estimates of profit margins were five times too high — would it help to understand why their wages weren’t higher for beginning workers? Would it help to understand how government regulation that imposes big costs on a business puts a damper on business growth and expansion? Or why our economy is not growing as it should?
Government does not make money. It just spends other people’s money, and not often wisely. A growing economy comes from encouraging business to grow and prosper. It’s pretty easy for a business to move from a 6% profit margin down to barely breaking even if sales drop. And that 6% profit margin depends on a lot of correct decisions and correct executions of the decisions.
When the big new thing that you thought would be a huge success just isn’t — there you go. For small business the difficulties are even greater, and the reason so many small businesses have closed up shop. And the failure of the administration to understand these basics is why the business startup rate is in the tank. Who needs to take an enormous risk when tomorrows regulation may destroy the whole thing?
(source: Carpe Diem blog by Mark Perry at AEI)