Topic: General

Spending Limits Are Not the Answer

David Primo and Jeff Milyo have just published an op-ed in Roll Call. Advocates have long argued that restrictions on campaign spending, which can be direct spending or contributions, enhance electoral competition. In Vermont they convinced the state legislature to pass spending limits, the constitutionality of which are now before the U.S. Supreme Court. Primo and Milyo correctly note “the most current and best scientific evidence flies in the face of the promises” made by these advocates. Indeed, “the court jurisprudence upholding campaign finance laws is built on a shaky empirical foundation.” They continue: “In fact, we are aware of no scholarly studies that yield consistent evidence of large and statistically significant effects of campaign finance regulations on electoral competitiveness.”

I go into the shaky philosophical and empirical foundations of campaign finance law in my upcoming book, The Fallacy of Campaign Finance Reform.

Supreme Court Gets it Wrong in Hudson

The Supreme Court just ruled 5-4 that police who conduct an illegal “no-knock” raid on a citizen’s home can use evidence seized from that raid against the suspect at trial.

Taken with the high degree of immunity from lawsuits courts and lawmakers have given to police officers in these cases, there is now no real penalty for police who ignore the legal requirement to knock and announce themselves before forcibly entering a private home.

We can expect the already disturbing trend of military-style police raids on American citizens to get substantially worse.

Last April, I wrote a synopsis of what’s at stake in the Hudson case for Slate.

Time to Boycott AMA Members?

A quick look at the press releases coming from the AMA during their annual meeting this week revealed numerous protectionist or otherwise paternalistic positions taken by the physician lobby. The august AMA House of Delegates approved resolutions that called for:

  • greater efforts by health insurers to make price information available to patients (physician, heal thyself)
  • a prohibition on direct-to-consumer advertising of every new drug until physicians feel they’ve had enough time to learn about the drug (pity the poor MD who doesn’t know the answers to his patients’ questions – and First Amendment be damned!)
  • regulation of nurse practitioner-run clinics, which offer affordable access to basic care (and pose a threat to physician incomes; blogged previously here)
  • ending alcohol ads on college sports telecasts, smoking bans, warning labels on video games,” etc., etc.
  • urging the Food and Drug Administration (FDA) to revoke the ‘generally recognized as safe’ (GRAS) status of salt and to develop regulatory measures to limit sodium in processed and restaurant foods,” etc., etc.
  • requiring Americans to purchase health insurance (which increases the appetite for physician services; blogged previously here)

Paging Dr. Bastiat …

But not all was venal and meddlesome in Chicago this week. On a (barely) positive note, the AMA gave a “cautious green light” to the practice of “solicitation of organs from potential donors who have no preexisting relationship with the recipient.” So for all of you who are reading this while your blood is flowing through a dialysis machine, and who don’t want to be one of the thousands who will die on the kidney transplant waiting list this year, if you go out and try to find someone who will give you a kidney so that you can live, the AMA has decided that would be “ethically acceptable.” There. Feel better? 

Minimum Wage: From the Horse’s Mouth

Via the admittedly pro-business Employment Policies Institute, a funny anecdote regarding this whole minimum wage debate:

The generally accepted leading advocacy group for so-called “living wage” laws around the country is the Association of Community Organizations for Reform Now, or ACORN. In its Resource Guide for activists, written by David Reynolds of the Wayne State University Labor Studies Center, ACORN casts aside concerns about minimum wage laws resulting in fewer jobs for low-wage workers, scolding

That’s low road thinking, the kind of philosophy that seeks short-term increases in the bottom-line by directly lowering costs and casts high wages, benefits, and other worker protections as obstacles to competition.

But in 1995, ACORN actually went to court in California in an attempt to exempt ACORN from that state’s minimum wage and overtime laws. Why? Well, according to ACORN’s brief in an appeal of the ruling against them…

…the more that ACORN must pay each individual outreach worker–either because of minimum wage or overtime requirements–the fewer outreach workers it will be able to hire.

The U.S. Chamber of Commerce couldn’t have said it any better.

Topics:

Minimum Wage Wizardry

Ezra Klein over at TAPPED, the American Prospect blog, takes William Niskanen to task for his opposition to the minimum wage below. “[W]hile reasonable people can disagree on the impact of minimum wage laws,” Klein writes, “it’s time they stopped.”

Wow! Why? What’s the debate stopper?! Klein says, “Just crosscheck this list of state minimum wage laws with this rundown of state unemployment rates.” Turns out that there is an inverse eyeball correlation between high minimum wage and high unemployment rates. QED? Well, no. This factoid might help Klein’s case if it wasn’t totally meaningless in isolation from auxiliary assumptions.

That pattern is perfectly consistent with Niskanen’s claim, which is, after all, just an application of the bedrock Economics 101 principle that if the price of something goes up, consumers will tend to buy less of it. In fact, Klein’s pattern might be evidence in favor of Niskanen’s claim. Here’s some more Economics 101 to explain why high minimum wages and low unemployment rates might be expected to go together.

A high unemployment rate indicates a significant oversupply of labor relative to available jobs. In that case, you expect the price of labor to be low, since it is so abundant. If there is already a minimum wage—a lowest legal price—high unemployment will tend to drive wages toward that floor. Let’s say it’s $4 an hour. Now, if there is already high unemployment, and you raise it to $5 an hour, lots of people will have to get a raise, since lots of workers are probably being paid something close to the lowest legal wage. Employers will not be able to afford to give all those people raises. So unemployment would increase further. Now, the effect is quite different in places that have low unemployment rates. In a tight labor market, wages will be higher. So fewer people’s wages will be near the price floor. And so if you raise the floor, fewer workers will be affected. If the labor market is tight enough, and almost no one is getting a wage even close to the floor, raising the floor a little may have no detectable effect at all—like a law mandating breathing.

Now, suppose legislators more or less understand this (or that key constituencies pressure them to act like they do). You’d then expect that states with high unemployment rates and low wages to be least likely to raise their minimum wage, since it would have a relatively large adverse effect for them. And you’d expect states with low unemployment and high wages to be most likely to raise their minimum wage, since it is least likely to make a difference for the worse. And so you end up with high unemployment states with low minimum wages, and low unemployment states with high minimum wages.

Now, I have no idea whether this reasoning in fact explains the pattern Klein observes. But then, neither does he. He’s just a victim of confirmation bias, seeing what he wants to see in an inkblot of ambiguous data. But the pattern he points to might be evidence in favor of the idea that minimum wages increase unemployment. Hardly a debate stopper, is it? Perhaps Klein will grant reasonable people the privilege to continue disagreeing.

It’s worth nothing that Klein admits “And yes, if you jack the wage up to $16 an hour, jobs will be lost. But up to $7 over a period of years?” So what weird science reveals the “no effect” point between $7 and $16? $16 an hour? Unemployment for sure. But not at $7! So what about $8? How about $12? $15.75?

Of course, a bump up to $7 will push fewer people out of the legal labor market than a bump up to $16. But why Klein thinks that a bump up to $7 will push zero people out, when he has already conceded the general point, is mysterious.

Voluntary Charity vs. Government Charity

Chris Edwards’ post on FEMA brought to mind a 2002 New York Times article, which I recently found on FreeRepublic.com. The article concerned fiscal shenanigans at the United Way, and FreeRepublic.com allowed readers to post comments. The following were representative:

“Why anyone would give money to (through) the United Way so they can skim their take is beyond me. Pick your favorite charity or cause, and give to them.”

“If anyone at work asks you to give through United Way, point them to the Salvation Army. The difference is like night and day.”

Pity we never see comments like:

Why anyone would give money to FEMA is beyond me. Pick your favorite charity or cause, and give to them.

If anyone at work asks you to contribute to Medicaid or Food Stamps, point them to the Salvation Army. The difference is like night and day.

As I told a (hostile) room of graduate social work students this morning, when charity is coerced, charities don’t have to try nearly as hard.

Corey’s Christo-Sized Coat-Tails

Newark Mayor-elect Corey Booker has political coat-tails so long they could be a Christo art installation.

Booker won in a landslide earlier this spring on a platform of clean government and school choice, and now the slate of municipal council members he has endorsed have won a clean sweep in yesterday’s runoff elections.

Booker and his fellow revolutionaries will face stiff opposition from the teachers’ unions and state legislators in their efforts to give Newark residents unfettered school choice, but they unquestionably have the city’s people behind them.