The Negative Effects of Minimum Wage Laws by Mark Wilson The federal government has imposed a minimum wage since 1938, and nearly all the states impose their own minimum wages. These laws prevent employers from paying wages below a mandated level. While the aim is to help workers, decades of economic research show that minimum wages usually end up harming workers and the broader economy. Minimum wages particularly stifle job opportunities for low-skill workers, youth, and minorities, which are the groups that policymakers are often trying to help with these policies. There is no "free lunch" when the government mandates a minimum wage. If the government requires that certain workers be paid higher wages, then businesses make adjustments to pay for the added costs, such as reducing hiring, cutting employee work hours, reducing benefits, and charging higher prices. Some policymakers may believe that companies simply absorb the costs of minimum wage increases through reduced profits, but that's rarely the case. Instead, businesses rationally respond to such mandates by cutting employment and making other decisions to maintain their net earnings. These behavioral responses usually offset the positive labor market results that policymakers are hoping for... Some federal and state policymakers are currently considering increases in minimum wages, but such policy changes would be particularly damaging in today's sluggish economy. Instead, federal and state governments should focus on policies that generate faster economic growth, which would generate rising wages and more opportunities for all workers.
This is the not so common sense that conservatives need to push. To secure economic longevity in the US (or any nation), the focus needs to be on the cost of living above all else. Raising min wage, excessive or unfair taxation, and overzealous regulation RAISE the cost of living for everyone, as those costs are passed through to the consumer and rightfully so. In fact, whether necessary or not ALL taxation and regulation, or floor in wages RAISES the cost of living. The best way a govt can help out is to cost its citizenry as little as possible in fulfilling its Constitutional obligations. Probably the worst thing they can do is print currency to provide cash flow to select institutions in order prevent bankruptcy while at the same time ensuring a reduction of the purchasing power of said currency when that new supply finds its way into circulation.
Good points. In addition, here's two other ideas: 1. Introduce a "learner's/trainee's" min wage below the regular amount, that employers of unskilled labor can pay for, say, the first couple years of one's employment. in this way, young people can enter the workforce and learn a trade so to speak, even if that's only how to be there every day to polish shoes of answer the phone. 2. Abolish large parts of welfare and replace it with workfare - where the government subsidizes your pay at pre-screened businesses to give you time to pick up new skills and re-enter the workforce on your own. Same for unemployment assistance if you choose to or if your skills belong to one of the at-risk categories. At the same time, restrict government unemployment assistance to 6 months or so. Essentially, stop giving out large sums of money for nothing in return.
Those seem like positions that could find compromise.. possibly. However they are drops in the bucket as a % of total govt spending. To add to your second point i think it might be less costly and more beneficial to the recipients of govt aid if they had an option to be relocated to an area where there is work. For example people are always making the argument for illegal mexican immigrants that they do work no American will do.. well what if people on the govt dole were offered those same jobs? Since they obviously don't have any $ the govt would have to relocate them but that one time cost might be less than providing near perpetual assistance. that could theoretically kill 3 birds with one stone, lower unemployment, less illegal immigrants, less govt aid. Also, to amend my previous post, the absolute WORST thing a govt can do is entitle people to unsustainable benefits and then 'borrow' money from the entitlement funds and spend it on other shit. silly me, that is the most blatantly asinine thing that could ever be done. Forcibly taking money from its citizens and then giving it to other countries as 'aid' is pretty stupid too.
Austerity Works by Michael D. Tanner As Greece, and now Spain and Italy, struggle with the crushing burden of debt brought on by the modern welfare state, perhaps we should shift our gaze some 1,200 miles north to see how austerity can actually work. Exhibit #1 is Estonia. This small Baltic nation recently had a spate of notoriety when its president, Toomas Ilves, got into a Twitter debate with Paul Krugman over the country's austerity policies. Krugman sneered at Estonia as the "poster child for austerity defenders," remarking of the nation's recovery from recession, "this is what passes for economic triumph?" In return, President Ilves criticized Krugman as "smug, overbearing, and patronizing." Twitter-borne tit-for-tat aside, here are the facts: Estonia had been one of the showcases for free-market economic policies and had been growing steadily until the 2008 economic crisis burst a debt-fueled property bubble, shut off credit flows, and curbed export demand, plunging the country into a severe economic downturn. However, instead of increasing government spending in hopes of stimulating the economy, as Krugman has urged, the Estonians rejected Keynesianism in favor of genuine austerity. Among other measures, the Estonian government cut public-sector wages by 10 percent, gradually raised the retirement age from 61 to 65 by 2026, reduced eligibility for health benefits, and liberalized the country's labormarket, making it easier for businesses to hire and fire workers. Estonia did unfortunately enact a small increase in its value-added tax, but it deliberately kept taxes low on businesses, investors, and entrepreneurs, refusing to make changes to its flat 21 percent income tax. In fact, the government has put in place plans to reduce the income tax to 20 percent by 2015. Cutting government spending, reducing taxes, and liberalizing labor markets brings more economic growth, increased employment, less debt, and more prosperity. Today, Estonia is actually running a budget surplus. Its national debt is 6 percent of GDP. By comparison, Greece's is 159 percent of GDP. Ours is 102 percent. Economic growth has been a robust 7.6 percent, the best in the EU. And, although the unemployment rate remains too high, at 11.7 percent, that is down from 19 percent during the worst of the recession. It's hard to see how a Krugman-style stimulus would have done much better. Next door, Latvia has also embarked on a successful austerity program. In 2008, facing a deep recession â the worst in Europe, with a 24 percent drop in GDP from 2007 to 2009 â and a run on the country's largest bank, Latvia turned to Europe for a â¬7.5 billion bailout. But unlike Greece and other countries that seem to look at such assistance as a form of permanent welfare payment, Latvia used the EU loan as an opportunity to make the painful government reforms necessary to restore long-term economic health. Latvia embarked on the toughest budget cuts in Europe. Half of all government-run agencies were eliminated, the number of public employees was reduced by a third, and public-sector wages were slashed by an average of 25 percent. The third Baltic country, Lithuania, also dramatically cut government spending â as much as 30 percent in nominal terms â including reductions in public-sector wages of 20 to 30 percent and pension cuts of as much as 11 percent. Unfortunately, Lithuania may have undermined the effects of those cuts by also raising taxes, including a significant hike in corporate taxes. Still, Lithuania is expected to see its economy grow by 2.2 percent this year. Krugman and others do have a point in saying that the Baltic countries benefit from strong trade opportunities with neighbors such as Sweden and Finland that have growing economies. And it is true that, while their recoveries have been strong, none of the Baltic countries is expected to fully return to pre-recession levels of prosperity until 2014 at the earliest. On the other hand, when are Greece, Spain, or for that matter the United States â none of which has done much if anything to reduce government spending â likely to return to pre-recession growth? If the Baltics are not a sufficient example of the value of cutting government, we can look a bit to the west, to Switzerland. Switzerland's constitution includes provisions that limit the country's ability both to run debt (the growth in government spending can be no higher than average revenue growth, calculated over a multi-year period) and to increasetaxes (taxes can be increased only by a double-majority referendum, meaning that a majority of voters in a majority of cantons would have to approve the increase). As a result, total government spending in Switzerland at all levels of government is just 34 percent of GDP, compared to an average of 52 percent in the EU, and more than 41 percent in the United States. Switzerland's national debt is just 41 percent of GDP and shrinking at a time when other European countries are becoming more insolvent. Switzerland's economic growth has not yet returned to pre-recession levels, but it is better than the growth in, say, Greece or Spain. And its unemployment rate is just 3.1 percent, the lowest in Europe. If that's not enough evidence, we can just look to our own neighbor Canada. The Canadian federal government has been reducing spending in real terms since the 1990s. As a result, federal spending as a share of GDP has fallen from 22 percent in 1995 to just 15.9 percent today. Compare that to the United States, where the federal government spends 24 percent of GDP, roughly half again as much. And, while Canadian provincial governments spend appreciably more than do most U.S. states, total government spending at all levels in Canada has declined from 53 percent in the 1990s to just 42 percent today â still far too high, but clearly moving in the right direction. Canada has also cut taxes. Corporate tax rates at the federal level were slashed from 29 percent in 2000 to 15 percent today, less than half the U.S. federal rate. Capital-gains taxes were also cut, as were, to a lesser degree, income taxes. When Canada â led for so long by the ultra-liberal Pierre Trudeau â has smaller government and lower taxes than the U.S., something is seriously out of whack. As a result of these changes, Canada's national debt is now less than 34 percent of GDP. Its budget deficit this year will be just 3.5 percent of GDP, while ours will be 8.3 percent. Canada's economy will grow at 2.6 percent this year â a modest rate but faster than ours â and its unemployment rate is 7.3 percent, again better than ours. All these countries are following the successful examples set by other nations such as Chile, Ireland, and New Zealand in the 1980s and '90s, and Slovakia from 2000 to 2003. Of course, none of these examples is perfect, and cuts in government spending will not, by themselves, cure all ills. These countries often benefited from circumstances aside from fiscal discipline. Still, the evidence is there. Cutting government spending, reducing taxes, and liberalizing labor markets brings more economic growth, increased employment, less debt, and more prosperity. The opposite is also true: Bigger government and higher taxes result in more economic misery â see Greece, Spain, etc. As the United States looks to its future, it is time to decide which path we will follow.
A Scary Development, Getting Worse And Worse <object style="height: 390px; width: 640px"><param name="movie" value="http://www.youtube.com/v/xOAgT8L_BqQ?version=3&feature=player_detailpage"><param name="allowFullScreen" value="true"><param name="allowScriptAccess" value="always"><embed src="http://www.youtube.com/v/xOAgT8L_BqQ?version=3&feature=player_detailpage" type="application/x-shockwave-flash" allowfullscreen="true" allowScriptAccess="always" width="640" height="360"></object>
Government spending as a percent of GDP by country: (Tax revenue as a percent of GDP is included.) http://en.wikipedia.org/wiki/Govern...al_government_spending_as_a_percentage_of_GDP
OK, so, if I understand this right, we are doing better than Zimbabwe but not as well as Albania... Yeah, that's key, very important, I'll remember that... What's your point again?
Hey R: See how GGW's Blaise Ingoglia does it in his presentation? Clear premise, few key numbers, big message... He's good, learn from him! I wish I could do this - I share his concern but I can't explain it as well, and so I just post his stuff here