Topic: Government and Politics

Five Facts about the Minimum Wage

1. A dozen California metropolitan areas – including big cities like Fresno, Stockton, Bakersfield and Modesto – already have unemployment rates from 8.0% to 18.6%. Yet California’s statewide minimum wage is now scheduled to rise every year through 2022.

2.  News reports imagine that raising the minimum wage will push up other wages, so average wages would supposedly rise more quickly. On the contrary, three of the four most recent increases in the federal minimum wage were quickly followed by prolonged stagnation in average wages.  change in avg and min wage

3. In 2015, twice as many earned less than the $7.25 federal minimum wage (1,691,000) as the number paid that minimum wage (870,000).

4. Every time the federal minimum wage has been increased the number earning less than that minimum always increased dramatically.  This was not just true of teenagers but (as the graph below shows) also for those over 25.  When the minimum wage is pushed up faster than the market would have moved it, the effect is to greatly increase the proportion of jobs paying less than the minimum (including working for cash in the informal economy).  Employers offering less than the minimum, legally or otherwise, then enjoy a flood of unskilled applicants unable to compete for scarcer opportunities among larger businesses subject to minimum wage laws. Such intensified rivalry for sub-minimum-wage jobs then pushes the lowest wages even lower.more were paid less than min when min wage went up

 5. Regardless of federal, state or city laws, the actual minimum wage is always zero.

Lesson from Cyprus: Spending Restraint Is the Pro-Growth Way to Solve a Fiscal Crisis

Much of my work on fiscal policy is focused on educating audiences about the long-run benefits of small government and modest taxation.

But what about the short-run issue of how to deal with a fiscal crisis? I have periodically weighed in on this topic, citing research from places like the European Central Bank and International Monetary Fund to show that spending restraint is the right approach.

And I’ve also highlighted the success of the Baltic nations, all of which responded to the recent crisis with genuine spending cuts (and I very much enjoyed exposing Paul Krugman’s erroneous attack on Estonia).

Today, let’s look at Cyprus. That Mediterranean nation got in trouble because of an unsustainable long-run increase in the burden of government spending. Combined with the fallout caused by an insolvent banking system, Cyprus suffered a deep crisis earlier this decade.

Unlike many other European nations, however, Cyprus decided to deal with its over-spending problem by tightening belts in the public sector rather than the private sector.

This approach has been very successful according to a report from the Associated Press.

…emerging from a three-year, multi-billion euro rescue program, Cyprus boasts one of the highest economic growth rates among the 19 Eurozone countries — an annual rate of 2.7 percent in the first quarter. Finance Minister Harris Georgiades says Cyprus turned its economy around by aggressively slashing costs but also by avoiding piling on new taxes that would weigh ordinary folks down and put a serious damper on growth. “We didn’t raise taxes that would burden an already strained economy,” he told The Associated Press in an interview. “We found spending cuts that weren’t detrimental to economic activity.”

Cato Fiscal Grades: Gary Johnson and William Weld

For November, voters turned off by Trump and Clinton may be interested in the likely Libertarian Party ticket of Gary Johnson and William Weld. Johnson is a former governor of New Mexico (1995-2003), and Weld is a former governor of Massachusetts (1991-1997).

David Boaz gives an overview of their records, noting that both governors scored well on Cato’s fiscal report cards. Since 1992, the report cards have examined the tax and spending records of the nation’s governors every two years.  

Cato report cards are here. The best governors get an “A” and the worst get an “F.” The reports covering Johnson and Weld were written by Steve Moore and various coauthors.

Burt’s Bees and Bureaucracies

The Washington Post discusses an effort by a Maine philanthropist to donate 88,000 acres of land to the National Park Service (NPS). Showing good sense, Mainers are pushing back against the idea:

“How many times do we have to say, ‘No, it’s not what we want for the area?’ ” Millinocket resident Lorri Haskell said, noting that residents in towns near the proposed park voted against its creation, that the governor and legislature are opposed and that Maine’s congressional delegation refuses to introduce the measure necessary to create a national park.

That leaves only the prospect of President Obama using his authority under the Antiquities Act of 1906 to declare the land a national monument — something he has done nearly two dozen times while in office.

“It has nothing to do with us anymore,” Haskell said as she sat at her kitchen table. “It has to do with whether President Obama is going to betray us. Is this how democracy works?”

The land was assembled by Roxanne Quimby, co-founder of Burt’s Bees. She and her son have lobbied for a decade to give it to the NPS. But their effort “has bitterly divided this corner of New England… where distrust of the federal government runs as deep as the rivers and streams.”

Why would Quimby want to give her land to the mismanaged, gridlocked, and polarized federal government? Why not preserve it within a private, nonprofit environmental organization? Why not give it to the state government?

Skeptical Mainers fear that once the Feds have the land, they will curtail access to it and move decisionmaking to faraway Washington. As discussed on DownsizingGovernment.org, centralizing control over assets and activities does not solve problems, it creates them. Whether it is land, water, education, housing, or transportation, federal control creates more bureaucracy, more regulation, less certain funding, and less democracy.

Quimby must have a romantic and unrealistic vision of the NPS, because the actual agency is likely to mismanage her land and run it down over time. The NPS operates more than 400 parks, monuments, and historic sites. The total acreage of NPS holdings has quadrupled from 20 million in 1940 to 85 million today. That is far too large an inventory to manage efficiently, and many NPS sites suffer from deterioration. About 60 percent of 27,000 NPS historic structures need repairs. The NPS and other Department of Interior agencies have accumulated more than $14 billion in deferred maintenance.

America does not need more national parks. The NPS can’t maintain what it already has. Human bureaucracies are not like efficient bee colonies. Mainers would be better off keeping control of their land within Maine.

For more on NPS, see here.

Do Don’t Not Vote

Jim Harper provides an excellent response to the too-smart-by-half libertarians who pride themselves on not voting (and mock those who do). I’ll add another benefit of voting Harper does not mention explicitly.

The usual anti-voting spiel goes like this. Your vote has zero chance of being the deciding vote. So what’s the point? You’re totally wasting your time. Not voting is smart. You should be smart. Like me. Harper responds by noting that the non-deciding vote also has value:

Votes are a dazzling roman candle of information supplied to elected officials, their staffs, political parties, journalists, opinion leaders, and future candidates, to name a few. All these witnesses to elections incorporate vote information—not just outcome, but win/loss margins—into their actions and assessments well beyond election and inauguration day.

Margins of victory matter: to candidates, donors, other officials, etc.

Yet voting has value apart from its direct effect on vote totals for various candidates or referenda. This is principally because many people see voting as an act of caring. If you vote, they think you care about your community/state/country. If you don’t, they think you don’t care and – listen up, libertarians – they will be less open to your ideas. Libertarians who want to influence other people might want to drag themselves to the polls if only so that they can later pass this test.

One might object that it makes no sense to use voting as a signal for caring. Perhaps, but it makes no less sense than using non-voting as a signal for smartness. We don’t get to choose how others interpret voting. Sometimes, if you want to get anywhere with people, you obey the local customs, even if they seem silly. 

I am not recommending that everyone always vote. There may be principled reasons not to vote. Many people who vote maybe shouldn’t. But we should put to rest the “deciding vote” objection.

Your vote matters. Not as much as it would under instant-runoff voting, but it still matters.

Don’t Not Vote

A fair number of libertarians pride themselves on not voting. Among their reasons: One person’s vote is so unlikely to influence the outcome of an election that almost any alternative action is a better use of time. That reasoning has appealing simplicity. For consistency’s sake, our hyper-rational non-voting friends should refrain from applauding at performances or cheering at games. People who want to see liberty advance, and not just bask in the superiority of libertarian ideas, should probably vote—and vote loudly.

News that former Massachusetts governor William Weld desires to join Gary Johnson on the Libertarian Party ticket makes the question of libertarians’ voting practices particularly salient in 2016. The major parties’ candidates are the least popular ever.

Here’s a reason why non-provision of the pivotal vote is not a reason not to vote: Voting does more than elect candidates.

Votes are a dazzling roman candle of information supplied to elected officials, their staffs, political parties, journalists, opinion leaders, and future candidates, to name a few. All these witnesses to elections incorporate vote information—not just outcome, but win/loss margins—into their actions and assessments well beyond election and inauguration day.

Here’s one use of vote information that I’m familiar with as a former Hill staffer: Folks in Congress assess each other’s strength and weakness according to electoral margin of victory. When a one- or two-term member of Congress is re-elected by a wide margin, it’s a signal that he or she is there to stay. That member is going to have a vote for a long time and will acquire more power with increasing seniority. The stock of that person and his or her staff rises, and they immediately have more capacity to move their agenda.

The process is the same in reverse. When a longer-serving member suffers a narrow win, that signals blood in the water. That member is likely to draw a more serious, better funded challenger in the next election, and defeat becomes much more likely. The stock of that politician drops, and the ability of that person’s office to advance an agenda falls with it.

Liar, Liar?

Hillary Clinton in Bosnia

Earlier this week Ruth Marcus of the Washington Post published a column titled (in the print edition) “Stonewaller, shape-shifter, liar.” I won’t keep you in suspense: it was about Donald Trump. But apparently I wasn’t the only reader to have the reaction, Wouldn’t that title apply to more than one candidate this year? And some of the readers made their view known to Marcus. So today she tries valiantly to explain why Hillary Clinton isn’t – really, quite, so much – guilty of the same offenses.

Sure, she stonewalls and keeps secrets. But in many cases, she eventually comes clean. Like, you know, with her private-server emails and her Benghazi correspondence.

And yes, she’s flipped 100 percent from her previously firm positions on same-sex marriage (against, then for) and the Pacific region free-trade agreement (for, then against). Yet, Marcus writes, “voters, agree or disagree, can have reasonable confidence about Clinton’s basic worldview and where she stands on issues.” Really? Just where does she stand on trade? For TPP or against it? For a trade agreement with Europe or against it? Unless Marcus is psychic, she’d surely have to admit that Clinton stands firmly with her finger to the wind. (Admittedly, that might be better than Trump’s adamant support for protectionism.)

And then there’s, well, the lying. Marcus cites two fact-checkers who conclude that there isn’t sufficient evidence to prove that Clinton lied about the Benghazi attack. Not beyond a reasonable doubt, anyway. Marcus even praises Clinton’s wildly inaccurate and repeated statements about coming under sniper fire:

Clinton’s handling of another “lie” is instructive. At several points during the 2008 campaign, Clinton described “landing under sniper fire” in Bosnia in 1996; video debunked that account. But confronted with conflicting evidence, Clinton acknowledged that she “misspoke.” Has Trump ever backed down from his bevy of demonstrably false statements?

Sorry, counselor, this is not “misspeaking.” It would be misspeaking if she said she came under fire in 1998, when it was really 1996. We might even credit her with misspeaking if she said it happened in Bosnia when it really happened in Kabul; she’s traveled a lot. But in this case, she made a claim about her own experience, and repeated it many times over several years with great detail (as a video with 7 million views illustrates), that was completely at odds with the facts. It’s not a stumble. It’s more like the false claim of Joe Biden that he came from a long line of coal miners, or the false claim of Sen. Richard Blumenthal throughout his political career that he served in Vietnam, or indeed the false claim of historian Joseph Ellis that he too served in Vietnam. In every case these claims served to make the teller seem more experienced and even heroic than he or she actually was – helpful in building a political persona, but absolutely false.

And that doesn’t even get us to statements at odds with known facts on such points as whether she was “dead broke” upon leaving the White House, why she was named Hillary, whether her grandparents were immigrants, and whether she tried to enroll in the Marines or how and why she voted for the war in Iraq.

My low regard for Donald Trump is pretty well known. But I don’t see how any honest assessment can dismiss the low levels of honesty that Hillary (and Bill) Clinton have displayed for 25 years now. Which might explain why exactly 64 percent of voters consider both Clinton and Trump not to be “honest and trustworthy.” And given the high levels of unpopularity of both major-party nominees, you have to wonder if voters are going to be looking around for plausible alternative candidates.