(Video) 1948 cartoon: “Make Mine Freedom!”

July 7, 2014

Here’s a neat animated short from almost 70 years ago that does a darned good job showing the differences between a society based on individual liberty and the free market, on the one hand, and those based on statism (Socialism, Communism, and Fascism) on the other. It makes good use of humor to get its point across:

Nowadays, I think we could add another “-ISM” to that patent medicine’s list of ingredients: the religious totalitarianism of Islamism.

Via Dan Mitchell, this was part of good post on how the Left was wrong about unemployment insurance.

(Crossposted at Sister Toldjah)


#RaiseTheWage: Seattle businesses push back against minimum wage increase

July 6, 2014
"But at least we won the election! Obama!!"

“But at least we raised the minimum wage!”

Rick Moran at PJMedia has an article up about an effort on the part of Seattle business owners to get a measure on the ballot that would roll back the city’s recently passed $15 per hour minimum wage to a more “reasonable” $12.50. You can go there to get the details (there are accusations of fraud in the petitions to get the measure on the ballot), but here is a portion in which a Seattle business owner describes the very real impact raising the minimum wage has on his and other businesses:

That favorite coffee shop that you go to? That great neighborhood restaurant? That store where you buy your books, pet food, art supplies, or clothes? Each of those businesses survives on around a 5 percent net profit margin. That means that at the end of the year, after all the expenses—the payroll, the supplies, the inventory, insurance, rent, etc.—we all will end up with only about 5 percent income in our pockets if we’re doing a half-decent job. Maybe a bit more, maybe a bit less—but you get the idea. This does not leave a small local business with much room to absorb even a small increase in costs, much less the 60 percent increase demanded by the well-meaning but ill-researched and biased reporters and neighbors involved in this discussion.

Here are some more boring facts:

Payroll is approximately 30 percent of my entire costs at Liberty, the bar I own (the average in this business seems to be 30 to 35 percent). If the minimum wage goes up to $12.50 an hour (a reasonable middle ground some have proposed), that would be an increase of 34 percent, which means just to stay even I’d have to raise prices 10 percent across the board—the labor’s percentage increase in total cost to operate Liberty.

If the minimum wage goes to $15 an hour, I’d have to raise my contribution to payroll by 18 percent. So my costs would have to rise by no less than 18 percent, just for payroll—and that’s before my vendors’ increases in costs have to be considered, which I believe will be around another 5 percent, and that’s before Liberty adds any profit.

So it’s not impossible to imagine that costs for business like mine in Seattle will go up by no less than 20 percent.

Those increases are way more than my income. Again, my profit is around 5 percent. And it’s not just me, that’s across the board—for restaurants, for bars, for clothing stores, for pet stores, for art supply stores—many of whom have set costs and are competing with online retail. This makes it very difficult for them to adjust their purchasing.

So, what are this business owner’s options? That’s his problem, not the Seattle city council’s.

Thomas Sowell has often observed that politicians almost never feel the economic consequences of the decisions they force on the rest of us. While they’re buying their way to reelection by handing out goodies and making themselves feel good by supposedly “fighting for the people,” someone else has to pay the cost — in this case, the businessman who takes less profit, the worker who gets fewer hours, or the consumer who pays higher prices.

I left a comment to Moran’s post and I want to share part of it here. It’s anecdotal, but I think it illustrates the very real effects of politicians thinking they can ignore the laws of economics:

A friend supervises minimum wage, hourly employees in an educational setting. Our minimum wage [in California] has just gone up to $9 per hour. She has told me that she knows for a fact her budget for hiring will not increase, so she has to cut employee hours and, perhaps, eliminate a couple of jobs. Now, someone explain to me again how this increase actually helped these workers? But it sure made the pols in Sacramento feel good about themselves.

Those employees are student workers, often from minority groups, who work to help pay their way through school. And they are very real victims of progressives’ “good intentions.”

(Crossposted at Sister Toldjah)


Be Thankful for Capitalism and Rich Entrepreneurs

June 3, 2014

Phineas Fahrquar:

Earned vs. unearned wealth, free market vs. statist.

Originally posted on International Liberty:

In previous columns, I’ve explained why a wealth tax is a very bad idea. And I’ve also pontificated on why leftists are wrong to pursue policies of coerced equality.

So it goes without saying that I’m a big fan of a new Wall Street Journal column by John Steele Gordon.

He writes that the anti-wealth ideology animating the political elite is based on a fundamental misunderstanding of how large fortunes are generated.

He starts by pointing out that many of today’s richest people earned their money as a result of the microprocessor, a technological development that has dramatically improved the lives of ordinary people.

The French economist Thomas Piketty, in his new book “Capital in the 21st Century,” calls for an 80% tax on incomes over $250,000 and a 2% annual tax on net worth in order to prevent an excessive concentration of wealth. That is a monumentally…

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Obama minimum wage edict leads to job losses at military bases

April 29, 2014
"But at least we won the election! Obama!!"

“But at least we won the election! Obama!!”

Democrats and their Leftist allies are desperate to find any issue to run on in the coming elections, other than Obamacare. One of their tactics has been to try to gin up class warfare based on raising the minimum wage. They argue that it will help the poor, raise living standards, and, of course, be more “fair.” Republicans, conservatives, and libertarians, on the other hand, contend that increasing the cost of labor will only mean higher prices to the consumer, fewer jobs for the marginally skilled, and be particularly harmful to minorities. This video is a good example of how minimum wage laws kill jobs.

Needless to say, I come down on the side of those opposed to the Democrats’ demands for a minimum wage increase. But honest, intelligent people (1) can reasonably disagree.  To help solve this disagreement, a real-world, real-time example would be nice. Fortunately (or unfortunately, as the case may be), we have one. As Byron York reports in The Washington Examiner, President Obama’s edict raising the minimum wage for federal contract employees on military bases is leading to the closure of fast-food restaurants on those bases, thus costing jobs:

Obama’s order does not take effect until January 1, 2015. But there are signs it is already having an effect — and it is not what the president and his party said it would be.

In late March, the publication Military Times reported that three McDonald’s fast-food restaurants, plus one other lesser-known food outlet, will soon close at Navy bases, while other national-name chains have “asked to be released from their Army and Air Force Exchange Service contracts to operate fast-food restaurants at two other installations.”

Military Times quoted sources saying the closures are related to the coming mandatory wage increases, with one source saying they are “the tip of the iceberg.”

And increasing the minimum wage isn’t the only way Washington is increasing the cost of labor:

The administration is making it very expensive to do business on military bases, and not just because of the minimum wage. Under federal contracting law, some businesses operating on military installations must also pay their workers something called a health and welfare payment, which last year was $2.56 an hour but which the administration has now raised to $3.81 an hour.

In the past, fast-food employers did not have to pay the health and welfare payment, but last fall the Obama Labor Department ruled that they must. So add $3.81 per hour, per employee to the employers’ cost. And then add Obama’s $2.85 an hour increase in the minimum wage. Together, employers are looking at paying $6.66 (2) more per hour, per employee. That’s a back-breaking burden. (Just for good measure, the administration also demanded such employers provide paid holidays and vacation time.)

As I wrote above, the natural business response to this is to either raise prices for the consumer, or cut back on employee hours — or cut jobs altogether. Well, guess what? York reports that military contracts do not allow the businesses to raise their prices above what’s common in the outside community. So, even though Obama is raising wages well above the prevailing standard, employers are forbidden to recoup their costs. What does that leave?

Closing the business altogether.

If there’s no chance for profit, why stay open? When you add up the numbers for all four major services, we’re looking at potentially 10,000 jobs going up in smoke. Not to mention the ripple effect in the outside communities.

Here we have a current, ongoing example of how raising the minimum wage harms people by killing jobs. (3) How then, is the Democratic proposal a good idea?

I’m waiting. smiley well I'm waiting

 

Footnote:
(1) Thus excluding Democratic pols and activists.
(2) How fitting.
(3) Yes, military contract law made the situation worse by forbidding compensatory price increases. So, increasing costs for the consumer –including minimum wage earners!– is a good thing? And what’s to say the Obama administration, if they got their way on the minimum wage, wouldn’t try to extend price controls when the inevitable complaints arose? We are talking dyed-in-the-wool statists, after all. One bad policy, raising the minimum wage, inevitably leads to more bad policy. Just look at the history to-date of Obamacare.

(Crossposted at Sister Toldjah)


Greetings from Obamaland…Oops, I Mean Greece

March 29, 2014

Phineas Fahrquar:

It’s easy to mistake the two; Obama has us well down the same road.

Originally posted on International Liberty:

As much as I condemn American politicians for bad policy, things could be worse.

We could be Greek citizens, which would be very depressing. Indeed, you’ll understand why I put Obamaland in the title after you read today’s column.

Simply stated, Greece is a cesspool of statism. The people seem to be wonderful (at least outside of polling booths), but government intervention is pervasive and atrocious.

Here’s an example. As I was coming in a taxi from the airport to the city yesterday, we passed some sort of protest. There were a couple of hundred people at the rally and probably about 50 riot cops.

I naturally wondered about the situation, expecting that it was radical statists or some of the crazies from Golden Dawn. But the cab driver explained that it was pharmacists.

So why are pharmacists protesting? I found out from some of the locals at…

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Time for a Free-Market Postal System

March 25, 2014

Phineas Fahrquar:

Revisiting one of my pet peeves: privatizing our hugely inefficient and money-losing postal service. In this case, Mitchell presents Britain’s success at doing just that.

Originally posted on International Liberty:

It’s not often that I agree with the Washington Post, but a government-run monopoly is not the best way to get mail delivered.

Moreover, it’s not often that I agree with the timid (and sometimes reprehensible) Tory-led government in the United Kingdom, but they just put the Royal Mail into the private sector. And that’s something deserving of loud applause.

Here’s a slice of the big news from the Financial Times.

The goal of privatising Royal Mail had defeated governments for 40 years. …Even prime minister Margaret Thatcher balked at the political risk of selling off a public service that carried the Queen’s head on its stamps. This time, the legislation went through parliament.

My Cato colleague, Chris Edwards, is suitably impressed.

Here’s some of what he wrote for Cato-at-Liberty.

Britain privatized its Royal Mail in 2013, proceeding with an initial public offering of shares that raised about…

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Social Democratic Sweden headed for private health insurance?

January 22, 2014
Wave of the future?

Wave of the future?

The poster-child for European social democracy seems to be learning that government-controlled healthcare just doesn’t work. Via Reason:

According to Sweden’s insurance trade industry organization, Svensk Försäkring:

“The number of private health care insurance policies has increased in recent years. In 2011 about 440,000 people had private health care insurance. Most of these people have their policy paid by their employer.”

The trend continues, with the English-language The Local reporting last week that “One in ten Swedes now has private health insurance.” The site also says, “More than half a million Swedes now have private health insurance,” though that seems to refer to the growth in the number of policies, with many more of the country’s 9.5 million people actually covered by private insurance.

Why the growth? From The Local:

“‘It’s quicker to get a colleague back to work if you have an operation in two weeks’ time rather than having to wait for a year,” privately insured Anna Norlander told Sveriges Radio on Friday. “It’s terrible that I, as a young person, don’t feel I can trust the health care system to take care of me.'”

In a separate article about Sweden’s shrinking welfare state, The Local also noted that “visitors are sometimes surprised to learn about year-long waiting times for cancer patients.”

There’s more about Sweden’s move away from Socialism and toward free-market solutions. I’ve written about this trend myself, with regard to education and prosperity in general.

Like many people living on either coast, I have friends who are downright Europhiliac — anything Europe does is better, wiser, and more fair than what’s done in the United States, and we should move toward their model.

I can’t wait to tell my progressive friends how Sweden proves they’re right.

(Crossposted at Sister Toldjah)


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