(Video) In praise of Calvin Coolidge, the “Great Refrainer”

May 4, 2015

Via Prager University, recent years have given me a far greater appreciation of the virtues of our 30th president:

The lecturer, Amity Shlaes, has not only written a well-received biography of Coolidge, but also a revisionist history of the Great Depression that should be must reading.


#RaiseTheWage – Seattle pizzeria to close thanks to economic ignorance

April 29, 2015
"But at least we won the election! Obama!!"

“But at least they raised the wage!!”

To paraphrase Mark 8:36, “For what good does it do a city to raise the wages of it workers, yet forfeit the jobs?” In Seattle, San Francisco’s northern soul-mate, they may well be asking that very question:

It may be one of the first casualties of Seattle’s new minimum wage law. The owner of Z Pizza says she’s being forced to close her doors, because she can’t afford the higher labor costs.

Devin Jeran was happy to get a raise, when Seattle’s minimum wage went up to $11 an hour at the beginning of the month.

“I definitely recognize that having more money is important,” he says, “especially in a city as expensive as this one.”

Unfortunately, he’ll only enjoy that bigger paycheck for a few more months. In August, his boss is shutting down Z Pizza and putting him and his 11 co-workers out of work.

“Fortunately she keeps us in the loop, she didn’t just tell us last minute.”

Ritu Shah Burnham doesn’t want to go out of business, but says she can’t afford the city’s mandated wage hikes.

“I’ve let one person go since April 1, I’ve cut hours since April 1, I’ve taken them myself because I don’t pay myself,” she says. “I’ve also raised my prices a little bit, there’s no other way to do it.”

Like I’ve said many times before: the laws of economics cannot be repealed by legislative fiat. Raise the cost of labor, and businesses will be faced with a choice from among four options — pass the costs on to the consumer; reduce labor costs by cutting hours or whole jobs; eat the costs and accept lower profits; or cease doing business in that jurisdiction, either by moving or closing shop. Ritu Shah Burnham may have loved her business, or she may have hated it. But, regardless, she’s come to the conclusion it isn’t worth staying in business in Seattle. She isn’t the first, and other small businesses in other progressive cities have made the same choice.

And their workers have wound up looking for work.

What’s especially galling about this, aside from the hubris of thinking one can bend economic laws to one’s will, like a financial Lysenko, is that the progressive, social justice warrior-pols passing these laws don’t have to live with the immediate consequences: it’s not their profits that get hurt, not their business that becomes unsustainable, not their job that’s lost. They’re not the kid looking for his or her first job, only to learn the employer has cut back on hiring because he can’t afford as many employees as he used to. But these politicians do it while appealing to the god “Fairness,” assuming that it will all work out in the end with a wave of the hand, or that it will be the next guy’s problem. Whatever. They still get to hug themselves for being such wonderful people.

Their self-righteous arrogance is astounding and infuriating. It’s genuinely harming people


California: SEIU demands increase in minimum wage, jobs be damned

April 16, 2015
"But at least we won the election! Obama!!"

“But at least we raised the minimum wage! Obama!!”

Fresno is fifth-largest city in California, the largest that’s not on the coast, and the largest in the Central Valley, that agricultural cornucopia that’s being destroyed by drought and environmentalist idiocies.

But don’t get me started on that.

Anyway, just by its position and population Fresno is important to the state’s economy, particularly our agricultural sector. (Where do you think your raisins come from?) But, like much of the Central Valley, it’s suffered more than the rest of California from the 2008 recession and the pathetic recovery: unemployment in the Fresno area in 2014 was still over 11%, well above California’s statewide average of 7.1% at the end of that year.

So, when your city is suffering from a lack of jobs, what’s the first thing you think of to increase opportunities for work?

That’s right! You demand an increase to the cost of labor!

On Wednesday, according to the Fresno Bee, over 150 people joined other workers around the country marking Tax Day by marching in rallies organized by unions as they demanded the current federal minimum wage of $7.24 an hour be raised, as well as the California $9 minimum wage.

Standing in front of a McDonald’s, the protesters–comprised of home and child care workers, county and state workers, students and community leaders, but no fast-food workers–chanted, “Hold the burgers, hold the fries. Make our wages super-sized.”

Union members from the Services Employees International (SEIU) helped lead the way; one member, Beau Reynolds with SEIU Local 100, told the Bee, “We’re here to stand up. We’re here to join forces and we are here to demand better. To demand better wages, to demand better benefits and to demand the right and respect that all working families deserve.”

Notice that none of those protesting in front of McD’s actually work there: they’re just there in service of SEIU’s political goal, which is to get a general increase in the minimum wage, which would include the union’s members, leading in turn to higher dues-revenues for the union to spend on politics. (And union bosses’ salaries…)

But the fast-food workers on the inside? The ones inside who didn’t march, the supposed beneficiaries of SEIU’s fight for economic justice? Apparently they know what happens when you raise labor costs too high:

Welcome to the future

Welcome to the future

In other words, when government raises the cost of doing business —and labor is a cost!— business owners have just a few choices: pass the cost to the consumer and risk losing their custom; reduce profits to perhaps unacceptably low levels; reduce labor costs by cutting back hours, letting people go, and not hiring; or just getting out of the business. They’re already learning this in progressive Seattle, and it looks like the Fresno McDonald’s workers understand basic economics, too, unlike SEIU.

Or maybe SEIU just doesn’t care that fast food workers can be replaced with kiosks, as long as they themselves get their cut.

Either way, they’re not helping Fresno county’s unemployment problem.

(Crossposted at Sister Toldjah)


The Free Market Works in Health Care…When It’s Allowed

April 9, 2015

Phineas Fahrquar:

Best thing we can do to rein in healthcare costs is a) Get rid of Obamacare and b) return insurance to its traditional roe of protection against catastrophe.

Originally posted on International Liberty:

I’ve often complained that government-created third-party payer is the main problem with America’s healthcare system, and I was making that point well before Obamacare was imposed upon the country.

The issue is very straightforward. In a genuine free market, people pay “out of pocket” for routine expenses. And they rely on insurance only in cases where they may face large, unexpected costs.

But in our current healthcare system, thanks to Medicare, Medicaid, and the tax code’s healthcare exclusion, most of us buy services with other people’s money and that dramatically distorts incentives.

Here’s some of what I wrote about this messed-up approach back in 2009.

…our pre-paid health care system is somewhat akin to going to an all-you-can-eat restaurant. We have an incentive to over-consume since we’ve already paid. Except this analogy is insufficient. When we go to all-you-can-eat restaurants…

View original 1,086 more words


#RaiseTheWage – In which Seattle Leftists gets a needed lesson in economics

March 16, 2015
"But at least we won the election! Obama!!"

“But at least we raised the minimum wage!”

It must be nice to be a progressive; you never have to worry about the real-world consequences of your actions. Fighting for social justice? Great! Let’s raise that minimum wage in the interests of (all bow) fairness. Surely those petit bourgeois small business owners can afford it — they’re probably making more money than they should, anyway. It’s time to spread the wealth around. You, the city councilors and progressive voters of Seattle know better than any shop owner what he can afford to pay!

Strangest thing about choices: they have consequences.

Seattle’s $15 minimum wage law goes into effect on April 1, 2015. As that date approaches, restaurants across the city are making the financial decision to close shop. The Washington Policy Center writes that “closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.”

Of course, restaurants close for a variety of reasons. But, according to Seattle Magazine, the “impending minimum wage hike to $15 per hour” is playing a “major factor.” That’s not surprising, considering “about 36% of restaurant earnings go to paying labor costs.” Seattle Magazine,

“Washington Restaurant Association’s Anthony Anton puts it this way: “It’s not a political problem; it’s a math problem.”

“He estimates that a common budget breakdown among sustaining Seattle restaurants so far has been the following: 36 percent of funds are devoted to labor, 30 percent to food costs and 30 percent go to everything else (all other operational costs). The remaining 4 percent has been the profit margin, and as a result, in a $700,000 restaurant, he estimates that the average restauranteur in Seattle has been making $28,000 a year.

“With the minimum wage spike, however, he says that if restaurant owners made no changes, the labor cost in quick service restaurants would rise to 42 percent and in full service restaurants to 47 percent.”

Restaurant owners, expecting to operate on thinner margins, have tried to adapt in several ways including “higher menu prices, cheaper, lower-quality ingredients, reduced opening times, and cutting work hours and firing workers,” according to The Seattle Times and Seattle Eater magazine. As the Washington Policy Center points out, when these strategies are not enough, businesses close, “workers lose their jobs and the neighborhood loses a prized amenity.”

I imagine reaction of residents must be like that of fans of a beloved local bookstore were shocked when it closed after The Special City raised its minimum wage — they cry “I had no idea!”.

Damn straight. It’s also called “magical thinking,” in which you get to do whatever you want with no blow-back. Then you wake up and realize it was all a dream.

Like I’ve written many times before, there are basic rules of economics our economically illiterate progressive compatriots need to hear. Again:

Labor is a cost, because the business owner has to provide wages and, often, benefits that cost him more money. When a government mandate increases that cost, the business owner has three choices: pass the cost along to the customer, who may decide it’s too much and stop shopping there; cut employee hours and stop hiring to save on labor costs, thus costing potential jobs and putting a burden on workers still employed; and, finally, just decide it’s not worth it anymore and close up shop. In the low-margin bookseller business, Borderlands’ owner chose the last course as the only one viable.

Do recall this mandated wage increase comes on top of any additional expenses required under Obamacare. No wonder owners in the thin-margin restaurant business are calling it quits!

Dan Mitchell calls it “Destroying Jobs with Innumerate Compassion.” Perfect.

Of course, this won’t stop the progressives who run the LA city council from making a similar mistake, here, because… magical thinking.

Via Rick Moran, who also quotes a great explanation from Reason about the connection between the value of labor and the minimum wage.

RELATED: Earlier posts on Seattle and the minimum wage.


San Francisco raises minimum wage, kills beloved local bookstore, residents shocked

February 8, 2015
Didn't pay attention

Didn’t pay attention

Call it a “teachable moment?”

Due to the new increased minimum wage law in San Francisco, a beloved bookstore and mainstay of the Mission District has been forced to close its doors for good.

The minimum wage for San Francisco workers, currently at $11.05 an hour, soars to $15 an hour in July 2018. The store’s projected labor costs, reported ABC7 News, impelled Borderlands Bookstore to write its final chapter.

The store owner had this to say:

In November, San Francisco voters overwhelmingly passed a measure that will increase the minimum wage within the city to $15 per hour by 2018. Although all of us at Borderlands support the concept of a living wage in principal and we believe that it’s possible that the new law will be good for San Francisco — Borderlands Books as it exists is not a financially viable business if subject to that minimum wage. Consequently we will be closing our doors no later than March 31st.

But the best line came from one of the stunned customers:

“You know, I voted for the measure as well, the minimum wage measure,” customer Edward Vallecillo lamented. “It’s not something that I thought would affect certain specific small businesses. I feel sad.”

Evidently Mr. Vallecillo and the other voters of the Special City were asleep during their economics lessons — assuming that’s even taught anymore. Let’s review, shall we?

Labor is a cost, because the business owner has to provide wages and, often, benefits that cost him more money. When a government mandate increases that cost, the business owner has three choices: pass the cost along to the customer, who may decide it’s too much and stop shopping there; cut employee hours and stop hiring to save on labor costs, thus costing potential jobs and putting a burden on workers still employed; and, finally, just decide it’s not worth it anymore and close up shop. In the low-margin bookseller business, Borderlands’ owner chose the last course as the only one viable.

(Aside: It wouldn’t surprise me if one of the Leftists on the San Francisco Board of Supervisors is considering a bill to prevent owners from doing just that. Can’t let the Kulaks get away with acting as if they own their own property, after all.)

In a functioning, literate polity that teaches its young fundamental lessons of civics and economics, an informed electorate could have looked at that proposal and said, “Nah, that’s going too far.” Instead, we have voters who feel good about themselves  for voting themselves more consequence-free stuff, and then feel sad when the consequences arrive.

Maybe they’ll learn something from the experience.

Nah.

RELATED: This isn’t the first time we’ve seen the consequences of ill-thought policy regarding the minimum wage. Seattle voted a high minimum, and now businesses are considering leaving. Some companies are considering replacing now-expensive minimum-wage workers with computerized kiosks. Los Angeles wants to raise the minimum to $13.25. Can’t wait to see how many entry-level jobs are lost thanks to that, or how many low-skill young workers looking for their first job are priced out of the market because of it. More from Ron Radosh, and more posts on the minimum wage.

(Crossposted at Sister Toldjah)


Sweet, sweet schadenfreude: Harvard faculty who championed #Obamacare angry for being subject to Obamacare

January 5, 2015
"Another Obamacare supporter learns the truth."

“Another Obamacare supporter learns the truth.”

Via Charles Cooke, this is too delicious for words:

For years, Harvard’s experts on health economics and policy have advised presidents and Congress on how to provide health benefits to the nation at a reasonable cost. But those remedies will now be applied to the Harvard faculty, and the professors are in an uproar.

Members of the Faculty of Arts and Sciences, the heart of the 378-year-old university, voted overwhelmingly in November to oppose changes that would require them and thousands of other Harvard employees to pay more for health care. The university says the increases are in part a result of the Obama administration’s Affordable Care Act, which many Harvard professors championed.

The faculty vote came too late to stop the cost increases from taking effect this month, and the anger on campus remains focused on questions that are agitating many workplaces: How should the burden of health costs be shared by employers and employees? If employees have to bear more of the cost, will they skimp on medically necessary care, curtail the use of less valuable services, or both?

What’s the old saying? “Be careful what you wish for; you might get it!”

Thomas Sowell has observed that the problem with letting government regulate so much is that the regulators seldom have to live with the consequences of their decisions. It’s the ordinary people who suffer. The same can be said for academics at Harvard (and other universities): state-run healthcare sounds great in theory –the libraries are full of books and articles endorsing it, as well as the conversation in faculty lounges– but make them live by the rules they advocated and they scream “UNFAIR!!”

What they’re being asked to do, of course, is what many of us already do: pay an increased but still small portion of their healthcare costs, which are going up for the university. This, in turn has caused a ruckus, though Harvard argues that provisions of the Affordable Care Act for them to take these steps:

In Harvard’s health care enrollment guide for 2015, the university said it “must respond to the national trend of rising health care costs, including some driven by health care reform,” otherwise known as the Affordable Care Act. The guide said that Harvard faced “added costs” because of provisions in the health care law that extend coverage for children up to age 26, offer free preventive services like mammograms and colonoscopies and, starting in 2018, add a tax on high-cost insurance, known as the Cadillac tax.

The quoted complaints are a treat, too:

Richard F. Thomas, a Harvard professor of classics and one of the world’s leading authorities on Virgil, called the changes “deplorable, deeply regressive, a sign of the corporatization of the university.”

Mary D. Lewis, a professor who specializes in the history of modern France and has led opposition to the benefit changes, said they were tantamount to a pay cut. “Moreover,” she said, “this pay cut will be timed to come at precisely the moment when you are sick, stressed or facing the challenges of being a new parent.”

You should take them seriously, because PhD’s in Classics and History are experts in the economics of health care. Apparently they need a refresher in one of the basic rules of economics: When you increase a business or other institution’s cost, it will deal with it in one of four ways. It will cease operation, deciding the expenses are too great; it will absorb the cost; it offset the cost by reducing other expenses; or it will offset the cost by passing all or a portion of it to the consumer. Harvard has chosen this last option. What, really, did these degree-bearing men and women expect?

I know, I know. A continued ride on the gravy train, because they’re educators, damn it!

On the other hand, Professor Lewis is right: this is tantamount to a pay cut, something many of us have experienced thanks to the skyrocketing premiums and massively increased deductibles under our new “affordable” system.

Why should Ivy League academics be exempt?

Congratulations, folks! You got what you asked for!

smiley popcorn

 


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