O’Rourke on the minimum wage

P.J. O’Rourke is pretty funny no matter what the topic – and is painfully insightful at times – and he had a splendid bit on the minimum wage during a 60 Minutes appearance that economist Stefan Karlsson found on an old VHS tape:

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“Why is Congress even debating the minimum wage? Where does the constitution say that government sets the price of delivering pizza? And if government knows the best price of everything, then how come the B-1 bomber cost so much? And if minimum wage laws work, why fool around? Why not make it a thousand an hour? Molly, if workers are more expensive fewer workers are hired. I wish this weren’t so. I also wish I could wear the same size jeans I wore in College. Free market value isn’t good or bad, it’s a measurement. Laws won’t fix it. We can pass a law saying a foot has ten inches: then I put a tape around my waist – same size jeans I wore in College! But the gut is still there. Raise the minimum wage, pay goes up a little, prices goes up and poor people are back where they started. If we want to help the working poor, we should cut sales taxes, cut gas taxes, cut farm subsidies that keep food prices high. And get rid of all the nonsense regulations, such as minimum wage laws, that just keeps poor people from starting businesses and getting richer”.

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Economic sense is in short supply these days; we’re still experiencing the hangover from the first half of this century. The woes created by today’s decisions are yet to come. . .

Your papers, sir

I’m wary of and against just about every bill that Washington manages to legislate. There are many reasons to object to the way in which our government functions, but this piece highlighted for me one practical aspect of the upcoming heightened requirements that we’ll all have to adhere to:

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. . .[T]he bill would make it illegal to hire anyone for any work in the US for paid wages, unless both the worker and employer complete the new registration requirements, including providing the employee’s work history for the past five years even if they are American citizens each time they apply for a job.

“It is unlawful for an employer…to hire, or to recruit or refer for a fee, for employment in the United States an individual unless such employer meets the requirements of subsections (c) and (d),” says the bill referring to the new document rules and “electronic verification” systems.

As it stands, the new bill would require all employers to “register” with the federal government and report the data for new employees to the government within three days of hiring them.

As such, the bill would fill in one of the last gaps in the government’s tracking of wages, by making it a potential criminal or civil offense not to inform the government that a worker is receiving compensation of some sort, under the rubric of national security.

According to Section 274A of the version of the bill passed by the Senate in 2006, no employer would be exempt from having to register with the government and also having to verify the status of each of their new employees.

“The Secretary shall require all employers in the United States to participate in the System,” says the text of the bill.

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If that isn’t practical enough as a description for you, the article follows with this example:

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. . .[E]ven hiring your neighbor’s kid Johnny to mow your lawn could become a long and detailed process and if you didn’t follow the rules, you could get a knock at your door from Homeland Security.
First, you would have to register as a employer under the program and then call a 1-800 number with several items of information about the potential new employee (even if they have proper ID or an American passport).

Each time an employer hires someone, they would have to phone in (1) their own EIN or social security number if they are an individual (2) the social security number of the new employee (3) the state of birth of the new employee (4) the EIN number or social security number of every single place the new employee has worked in the last five years (5) and the date of birth and address for the potential new employee.

Then you’ll need to wait up to 10 days to receive an answer about whether or not Johnny is approved for work in the US.

Be sure to save the authorization codes given to you by the government if he is approved and also save all of the paperwork for three years or you could have to pay a large fine.

Even if you hired him for only one day’s worth of work, you’ll need to save his application forms and approval codes for at least one year, says the bill.

And don’t forget, under the new proposals, be prepared to give Johnny your own social security number so that he can use it the next time he applies for a job — he’ll need it under the new law for the next five years each time he applies for a job.

That provision will certainly help the government in making sure that they know not only where he worked this year, but everywhere else he has worked too.

Hopefully, no one that you hire will steal your identity in the process even though they have your social security number.

All of the information is to be housed in a database created by the Social Security Administration that will be shared with the Department of Homeland Security, which has the authority to initiate investigations into all employers who don’t participate in the system, including those who pay Johnny to mow their lawn.

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“Your papers, sir.” We are increasingly becoming a society where the government fears its people, and not vice versa.

I’m not doing your dirty work for you

Well, we had speakeasies, and I suppose that this only makes sense:

I’m smoking in a bar in Philadelphia and nobody says, “Boo!”

There are 20 other people, smokers and nonsmokers, hanging out, enjoying themselves, not doing any harm to anyone (except maybe themselves). The bar is spacious, the NCAA is on the TV screens, beer pennants hang from the ceiling, and through the large windows I see rain falling.

The owner is sitting at the bar chewing nicotine gum. He’s a former smoker.

Also a former cop.

“I’m an irresponsible bar-owner,” he says with a smile.

Despite the smoking ban - because of it, actually - Philadelphia now has “smoke-easies,” a play on “speakeasies” that came to us with the Prohibition of alcohol. Prohibition was enacted in 1920, repealed in 1933 and largely ignored in between. I’m surprised at how many Americans meekly obey smoking bans.

“It’s my bar, it’s my four walls, cigarettes are legal,” he says. “Why can’t I allow my customers to smoke?”

Six months before he opened, “a beautiful-looking restaurant, [he names it, I won't], opened a few blocks from here. They never allowed smoking. That is their right,” he says, leaving unspoken his belief that it’s his right to permit it.

A Health Department inspector dropped in not long ago. No one was smoking, but he asked why Friday had ashtrays on the bar. Friday told him they were heirlooms, something like that.

The law requires bar managers to enforce the ban by telling patrons they can’t smoke, but they are cautioned not to take any action other than to call the Health Department to report smokers.

The Health Department has a hotline to report smoking in bars. (If you want the number, look it up yourself, snitch.)

Friday says no patron ever complained to him, “but we did have a complaint to a barmaid.”

He tells his employees to say, “We don’t condone it,” but tells me: “We can’t enforce [the ban]. It’s not our job.”

It’s that kind of a place.

Unlike Friday, he’s been written up by Health.

Who ratted him out?

Health inspectors won’t ever say, but Seamus says, “It’s either a neighbor, a competitor or sometimes a customer, but it’s usually your competitors.”

Seamus tries “to adhere to the letter of the law” and tells customers, “You cannot smoke in here.” If they do, “there’s nothing within my legal authority to tell you not to smoke,” he says.

Seamus’ father was a cop for 35 years, but “I’m not in that business. I’m in the entertainment business,” he says.

“I have military men come in here, they’re just back from Iraq. If anyone, they have the right to smoke, you know,” Seamus says.

He wouldn’t stop them, even if he could.

Joe bar-owner walks the fine line between obeying the law but rebelling against its purpose. Be tyranical if you must, but don’t expect me to do your dirty work for you. I’m still thinking over all of the ethical implications at play.

Where does security come from?

Are liberty and security the daughters of order, or are order and security the daughters of liberty?

An excellent blog on liberty, security, and property rights here. Guess what you didn’t know about many of the recent shooting sprees (and who knew but wasn’t telling you)?

The troubling thing is that both mainstream parties look to restrict liberty in some way for the sake of security. Some want our privacy stripped so that they can see who are the potential terrorists; others want us to depend on socialized defense. Both parties think that liberty, in some way, opposes security and peace.

Edit / Followup: There is another good, if a little gruesome at times, article on the issue at Lew Rockwell.

Needless Luxury

Upon revisiting Benjamin Barber’s article, Overselling Capitalism with Consumerism, both mentioned in D’s previous post, and found here, I am compelled to comment.

It seems that Mr. Barber has a bad understanding of capitalism. He says,

“Capitalism’s core virtue is that it marries altruism and self-interest. In producing goods and services that answer real consumer needs, it secures a profit for producers. Doing good for others turns out to entail doing well for yourself.” (emphasis mine)

I am at a loss for where Barber found this understanding. I suspect it is the caricature of capitalism against which he can be most easily argue, but then again, how hard is it to knock down a straw man? I suppose by real consumer needs Barber means the essentials: water, food, housing from the elements, clothing, and in today’s world, oil (though, this last one would probably be a begrudged admission at best). From there, it is hard to glean what else would be considered to be in this category. Of course the luxuries of life are not real consumer needs. Indeed, he writes,

“The world teems with elemental wants and is peopled by billions who are needy. They do not need iPods, but they do need potable water, not colas but inexpensive medicines, not MTV but their ABCs. They need mortgages they can afford, not funny-money easy credit.”

While it seems obvious that iPods are not a necessity of life, the line between necessity (clothing), and unneeded luxury (fashionable clothing) is blurred. What about necessity (grain) and luxury (wine)? How would Barber respond to this entry from Lieutenant Colonel Mercin Willet Gonin DSO, a contributing member of the liberation of the Bergen-Belsen concentration camp in 1945. I shall post a good portion of it for context.

“It was shortly after the British Red Cross arrived, though it may have no connection, that a very large quantity of lipstick arrived. This was not at all what we wanted, we were screaming for hundreds and thousands of other things and I don’t know who asked for lipstick. I wish so much that I could discover who did it, it was the action of genius, sheer unadulterated brilliance. I believe nothing did more for these internees than the lipstick. Women lay in bed with no sheets and no nightie but with scarlet red lips, you saw them wandering about with nothing but a blanket over their shoulders, but with scarlet red lips. I saw a woman dead on the postmortem table and clutched in her hand was a piece of lipstick. At last someone had done something to make them individuals again, they were someone, no longer merely the number tattooed on the arm. At last they could take an interest in their appearance. That lipstick started to give them back their humanity.” (This was found in Rob Bell’s new book, Sex God)

Think upon that last line. That lipstick gave them their humanity. People dying. Sick. Utterly forgotten. No longer human. And it was lipstick. A luxury. Bread would have fed them. Wool would have clothed them. Wood would have sheltered them. But lipstick gave life, human life, to the dying. Dignity to the undignified. Respect to the disrespected. Lipstick. A luxury.

Subprime mortgages and capitalism

Every so often the economy experiences a boom period followed by a bust period; every 1920’s has its 30’s; every 1990’s has its . . . well, early 2000’s, although there may be darker days ahead.

The Austrian business cycle theory points out that this nation-wide period of ‘over-investment’ followed by its doomsday — recessions and depressions — is not primarily a function of entrepreneurs who are either evil or somehow uniformly deceived across the nation in a free market. Instead, the ABCT points to a far more obvious explanation for cycles: the way in which the Federal Reserve controls the money supply.

Money in its primitive form was simply a convenient way for chicken farmers needing shoes to forgo finding a cobbler badly in need of eggs. Having a medium between these exchanges — that is, using indirect exchange — seems inefficient on its surface, but it turns out to be an incredibly effective way to get from eggs to shoes and also from eggs to legal services. Without trading for gold first, the farmer depends on shoe-makers who need eggs, or likewise lawyers that need them. But when a commodity, historically gold and silver for many fascinating reasons, arises as a good in high demand everywhere, the farmer need not worry about the “market” of eggs for legal services or eggs for shoes.

Thus, it is clear that money had its value not simply as an arbitrary token, but that a given society would have already recognized the value of gold or silver, and therefore prices for any given good could be expressed in terms of the metal. Its use as money came from its pre-existing value and its convenience for the purposes of exchange; it was not due to gold’s use as money that it became valuable.

It is easy to see, then, why paper fiat currencies are inherently unstable. The value of a dollar is necessarily predicated on its use as a medium of exchange — and not the other way around. A central bank that has been given the task of regulating fiat currencies finds itself in a crisis of calculation. How much money should there be on the market at any given time? Should the money supply increase, and if so, at what rate? Should the money supply ever decrease? In what way should “new” money be pumped into circulation — to whom do we give the money that we have created out of thin air? Since the banks “make up” how much money exists, they are prone (and bound) to make lots of damaging mistakes. You can’t fudge up how much gold is in the warehouse, unless you lie. But how can you hold someone accountable when they can simply create something from nothing?

Since the functioning of a central bank are necessarily political — that is, not based on pleasing consumers through voluntary exchange but rather backed by simple government edict — its decisions will not direct resources to their most urgent needs. Practically, this works out in many ways. For example, recipients of “new” money fresh off the press have historically been those closest to the central bank — the financial district in New York — and the government. Since the government has no need of money other than to spend it, it immediately goes to those with the best political connections: in most cases, government contractors. The poor and those on fixed incomes (retired people, pastors, those working the lowest jobs, etc.) are hurt the most.

Subprime mortgages, a recent bubble-burst that will undoubtedly be evaluated ad nauseum for the next decade, are a great example of how central planning causes credit and finances to go awry. The Federal Reserve has been pumping money into housing as a part of the government’s efforts to boost production and growth that particular industry. Many people bought, expanded, or built homes who otherwise wouldn’t have, and they were financed by banks who were getting cheap credit from the central bank. For a while, the trend was toward loaning and spending, investment, and growth. But as the Federal Reserve has reset interest rates higher than before, it makes it difficult for those most in debt to keep up with interest rates and their payments. Whatever the cause, it is clear that the poor have been given false messages of easy money, en masse, and are now facing a bill that they can’t afford.
Two authors, with completely different perspectives, analyze the problem as follows:

Benjamin Barber, professor at the University of Maryland, full article here:

Highlights:

“The crisis in subprime mortgages betrays a deeper predicament facing consumer capitalism triumphant: The “Protestant ethos” of hard work and deferred gratification has been replaced by an infantilist ethos of easy credit and impulsive consumption that puts democracy and the market system at risk.

“Capitalism’s success, however, has meant that core wants in the developed world are now mostly met and that too many goods are chasing too few needs. Yet capitalism requires us to “need” all that it produces in order to survive. So it busies itself manufacturing needs for the wealthy while ignoring the wants of the truly needy.

“When we see politics permeate every sector of life, we call it totalitarianism. When religion rules all, we call it theocracy. But when commerce dominates everything, we call it liberty. Can we redirect capitalism to its proper end: the satisfaction of real human needs? Well, why not?

“To do this, we will require the assistance of democratic institutions and an adult ethos. Public citizens must be restored to their proper place as masters of their private choices. To sustain itself, capitalism once again will have to respond to real needs instead of trying to fabricate synthetic ones — or risk consuming itself. “

My response to this is that Prof. Barber makes a quick jump from subprime mortgage rates to a canned critique of capitalism. His tactic is the “this is but one more sign of X,” without ever showing how the this applies to X.

Mr. Barber quickly jumps on consumers, and rich consumers in particular, but it’s difficult to see how he got there. After all, what group of people has been over-consuming in the case of failing subprime mortgages? The answer is people who are generally not able to secure loans, unless the money is particularly easy to get ahold of. The poor. So why is capitalism at fault for these poor people trying to secure housing for themselves? I don’t know. There’s a possible answer here, but Barber quickly shifts away from this to his ‘core concerns’ with capitalism, and we never seem to get back to subprime loans. The answer, in other words, is: “Capitalism is at fault in this case. Don’t ask me why I think so in this case, but I can show you why I don’t like capitalism in general.”

While Mr. Barber’s critique of capitalism qua critique of capitalism might have some merit on its own (I don’t think that it does), nothing that he said really applies to subprime mortgage rates.

Analysis on Mises.org goes more directly to the heart of the matter, in my opinion (full article here):

Highlights:

“However, barring such an unexpected positive shock, it seems increasingly clear that we will see a US recession this year. The main reason for this is that the housing bubble that fueled the recovery of the last few years has essentially burst.

“So far, the economy has seemingly handled this fairly well and experienced what one might call a “soft landing,” with growth being slow but still well above zero. Yet there are increasing signs that the worst is yet to come. Much of the housing bubble was financed by so-called subprime mortgages, mortgages to people with a low credit rating. Subprime mortgages were encouraged greatly by the government, with the Federal Reserve providing a cheap source of credit and with Bush encouraging it as part of the “ownership society” that he envisioned. But after the Fed was forced to raise interest rates again, and as the introductory teaser offers expired, the cost of borrowing for the subprime borrowers increased sharply. And as subprime lenders almost by definition have weak personal finances, many have proven unable to handle that.”

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The constant in both of these opinion / analysis pieces is credit. Too much credit fosters over-consumption beyond realistic means. The problem of over-consumption can only be ignored for so long before reality must be dealt with. Barber sees the main problem as a vague cultural value that “we” need to fix through politics; Karlson looks to the source of the credit and asks why the system has been set up this way.

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I’ll close by drawing this analogy. Suppose that I’m in charge of a restaurant that provides dinner for 50 people every night, and that I have the legal rights to a monopoly on salad production. I discover that I can make a great-looking salad substitute with grass from the field behind our building. Lettuce costs money, but the grass is an abundant resource (and free!), so how much grass I stick into the salads is limited only by my own discretion. I am able to charge less for my salads the more grass I sneak in, and as time passes more people come to eat my cheap (and seemingly delicious) salad, since it’s so cheap here and they can’t get it anywhere else.

After a time, as always, reality kicks in, and it becomes readily apparent that people are getting quite sick after eating my salad. Word gets out that I’m committing fraud, that my salad was really grass, and that I “created” fake salad out of nothing in order to satisfy consumer demand without paying for more lettuce.

If you’re Professor Barber, the natural response would be: “Obviously capitalism has oversold itself on consuming. Producers created so much stuff that people had to believe that grass was good for them in order to fulfill wants that weren’t actually needs. We need to rethink our system of salad distribution so as to better meet the needs of the poor.” The implication, of course, is that the salad-producer needs more funds, or perhaps a change of personnel (which, unfortunately, doesn’t happen in the Federal Reserve).

If you’re Stefan Karlsson, the natural response is: “Let’s hold the salad-counterfeiter accountable. Fraud is no laughing matter.” The implication, of course, is that it was a bad idea to put one guy in charge of the salad, next to a field of grass and with immunity from punishment, in the first place.

O’Rourke and Aquinas (of course!)

  I happened upon some P.J. O’Rourke quotations on a blog, and wanted to get a couple down, for potential future use.

 ”Everybody wants to save the earth; nobody wants to help Mom do the dishes.”

“And whom do you draft in a war against drugs? Certainly not eighteen-year-old boys. They’re the enemy.”

“You say we’re distracting Clinton from the business of government. Well I hope so. Distracting a politician from governing is like distracting a bear from eating your baby.”

“Politicians are interested in people. Not that this is always a virtue. Fleas are interested in dogs.”

“You can’t get rid of poverty by giving people money.”

(on socialism) “Everyone knows that life ought to be fair and that God’s a lousy guy for not making it happen. Everyone should get what everyone else gets. And, if everyone else gets broke, hungry, and dead, well fair’s fair.”

and, of course: “Always read stuff that will make you look good if you die in the middle of it.”

Which reminds me; I’ve got some reading to do in Aquinas. . .

Oh!  Which reminds me again . . . in two ways.  Thing one: my birthday present from my mom and dad, namely these two books, will be arriving at my doorstep any afternoon now.  (Said my mom when telling me about my present, “I had a really hard time buying this, even though it was on your list.  I just kept thinking, ‘this doesn’t look like fun.’”)  Do I need to add that I am tremendously excited?

Thing two: I am putting together material for a book of philosophy, to be used by the discussion group in which I participate.  The book will contain writings from Dionysus, Boethius, Maimonides, and more — including Tommy ‘Nas.  I’m going through the Summa Theologiae to gather selections for the book, and I’m working with Google Documents to compile everything.  One of the nice things about Google Documents — among many, many things — is that you can ‘publish’ your work.

My progress on the Summa can be found here, and as I continue to add / edit the document, these changes will be reflected on that webpage.  In other words, that web link will always display the most recent ‘version’ of my work.

God’s warning. . .

. . .against the State.

“These will be the rights of the king who is to reign over you. He will take your sons and assign them to his chariotry and cavalry, and they will run in front of his chariot. He will use them as leaders of a thousand and leaders of fifty; he will make them plough his ploughland and harvest his harvest and make his weapons of war and the gear for his chariots. He will also take your daughters as perfumers, cooks, and bakers. He will take the best of your fields, of your vineyards and olive groves and give them to his officials. He will tithe your crops and vineyards to provide for his eunuchs and his officials. He will take the best of your manservants and maidservants, of your cattle and your donkeys, and make them work for him. He will tithe your flocks, and you yourselves will become his slaves. When that day comes, you will cry out on account of the king you have chosen for yourselves, but on that day God will not answer you.”

(1 Sam. 8:11–18)

We have a few thousand kings in Washington, but the principles are the same. Are we really to believe that God was going to rule Israel personally, and with an iron fist, or did He originally plan for the Hebrew society to organize itself around His law?

Batter up

Sometimes news stories speak for themselves:
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NEW YORK — The mayor said Monday he would veto a bill to ban metal bats from high school baseball in the nation’s largest school system, a change that supporters say would make the game safer.

“I don’t know whether aluminum bats are more dangerous or less dangerous,” Mayor Michael Bloomberg said. “But I don’t think it’s the city’s business to regulate that.”

It appeared that the City Council would have enough votes to override a veto.

Sponsors of New York City’s bill, passed last month, say non-wood bats produce faster, harder hits that can endanger young players.

Similar measures have been proposed by youth leagues and lawmakers in other states, including New Jersey, where a 12-year-old boy suffered cardiac arrest when he was struck in the chest by a batted ball last year. The is still in rehabilitation.

Opponents, including Little League Baseball and sporting goods makers, say there is no scientific evidence proving these bats pose more of a risk than wooden bats.

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I have to quibble with the mayor on this one. The city schools are under the city jurisdiction; it is their business to regulate the schools’ activities. If he really thought that it wasn’t the city’s business, he could point out that they shouldn’t be in the business in the first place. Just a thought.

An ironclad argument

I simply have to record this post on the Mises blog for my future use. It’s clearly tongue in cheek, but eerily on-target at the same time.

“The little government that could

Lisa Casanova

The story of the debacle at Walter Reed that the Washington Post broke has generated commentary all over the place. [after reading commentary, she now sees that] Walter Reed, and every other story like it, provides absolutely no proof that government-provided health care doesn’t work, and this can be proven by ironclad logical argument.

It goes like this:
1. Walter Reed is run by the Army.
2. The Army is run by the government.
3. The government is currently run by George Bush and his administration.
4. George Bush and his administration do not believe that government can accomplish anything, help people, or do anything right.
5. When you do not believe that government works, you underfund it and starve it of resources.
6. When you do not believe that government works, you appoint your political cronies to important jobs as patronage instead of appointing competent people who will do the job right.
7. People who believe in government give it all the resources and funding it needs.
8. People who believe in government appoint competent people who will do the job right.
9. Therefore, the cause of government failure is the failure to believe that government can succeed.
10. Besides, medical care is much better in countries where it’s run by the government, with everyone receiving great care and living much longer than Americans do.

So there you have it- proof that government works if you just elect people who believe that government works. It’s not an incentive problem, it’s not a calculation problem, it’s not a scarcity problem, it’s not problem with the lack of competition or the inherently corrupting nature of power. You just have to have…faith. There is nothing to fear about the future of government run health care as long as we all make sure it’s always run by the right people (which isn’t hard to do, right? right?) Don’t quite know what you’re supposed to do if the wrong people get elected to run it, but who’s worried about that when their health care is free? Having embraced this epiphany, I am now an intellectually honest person instead of a libertarian ideologue. I look forward to voting for competent, enthusiastic believers to run my health care system. Anyone who experiences similar enlightenment upon reading this may thank me in the comments section. Have a nice day.”

Oh my. . .