Tag Archives: political economy

Why Does Seattle Hate The Unskilled?

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The Seattle city council, in its infinite Know Better wisdom, has passed what it’s pleased to call a “secure scheduling” ordinance.  This is an ordinance that requires “certain” employers

to tell their workers two weeks in advance which shifts they will be working.

Should an employee be called in for extra hours, say, to replace a sick co-worker, the employer will have to pay him added “predictability pay.” Should an employee be sent home early—maybe because business is slow or a delivery is late—the employer must compensate him for half the hours he was scheduled to work.

And, if you can believe it,

[O]n-call staff will earn half pay for shifts when they are not called into work, while those employees that have less than 10 hours between two shifts will receive time and a half. Managers will also be required to offer any additional hours to current employees before taking on new hires.

Never mind some well-known actual facts.

In response to Seattle’s recently passed minimum wage law that will quickly raise the minimum to $15/hr, a University of Washington study released last summer

found that the mandated wage increase has led to fewer hours worked per-employee and slightly less overall employment for Seattle’s lowest-paid workers, compared to similar earners in other parts of the state.

And last spring the San Francisco Chronicle reported that in response to San Francisco’s “secure scheduling” ordinance,

1 in 5 surveyed businesses had cut back on the number of part-time hires, and a similar number were scheduling fewer employees per shift[.]

Of course, the worthies on Seattle’s city council know these things—the histories are much too recent for them not to know—hence the question in my title.

Systemic Risk Sources

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The Wall Street Journal has identified one.

…the US Justice Department is seeking a fine of up to $14 billion for selling mortgage-backed securities between 2005 and 2007. That is well beyond Deutsche Bank’s ability to pay, given its $18 billion market capitalization before the story broke.

A Deutsche Bank bankruptcy from this raid would thoroughly disrupt the EU’s economy.  But never mind that, because Panic of 2008, and somebody’s gotta pay.

No.  This is nothing but another raid on OPM by Obama and his coterie of Progressives, whose motto harks back to an earlier time: “Anything that ain’t nailed down is mine, and anything I can pry loose ain’t nailed down.”

Oil in a Free Market Economy

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When oil prices began to plunge two years ago due to a global glut of crude, experts predicted US shale producers would be the losers of the resulting shakeout.

But the American companies that revolutionized the oil and gas business with hydraulic fracturing and horizontal drilling are surviving the carnage largely unbowed.

Though the collapse in prices caused a wave of bankruptcies, total US oil production has only fallen by about 535,000 barrels a day so far this year compared with 2015, when it averaged 9.4 million barrels, according to the latest federal data.

And

As the oil markets ponder where production will resume when prices pick back up, one clear answer has emerged: America. Goldman Sachs forecasts the US will be pumping an additional 600,000 to 700,000 barrels of oil a day by the end of next year—making up for every drop lost in the bust.

RT Dukes, of Wood Mackenzie:

The US isn’t the marginal barrel but the most flexible.  We’ll be the fastest to snap back.

Among other reasons,

Even as banks and other traditional lenders tighten their purse strings, alternative sources of money are cropping up, from private-equity funds to distressed-debt specialists.

“The very existence of that capital means prices are likely to be lower for longer, because it compounds the supply problem,” [Senior Vice President of Corporate Advisory and Banking for Brown Brothers Harriman, Lewis] Hart said.

Alternate sources of capital are willing to provide those funds and take these risks because American producers always find ways to cut costs and enhance efficiencies when things get tough.  The underlying innovativeness that competition encourages, here fracking, produces technologies that also drive toward cheaper, more efficient ways of doing things.

This is the agility that the oil business, that businesses in general, can have in a free market economy.  It’s an agility that government, however well meaning, cannot have, whether in a free market economy or a government planned (or even just government led) economy.

See, for instance, the last eight years of our economy under government regulation.  Oil is succeeding despite that because our economy remains largely free market, although government intrusion is starting to threaten that freedom.

Government Needs to just Butt Out

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A bipartisan group of senators is pushing to include municipal bonds in bank-safety rules, the latest wrinkle in a continuing fight over how safe—and salable—the debt of states and localities would be in another financial crisis.

The proposed regulation would “allow” banks to include municipal bonds on their balance sheets in the category—mandated by existing rules requiring banks to have sufficient (government’s definition) cash to fund operations for 30 days in the next “financial crisis.”  The proposed regulation also specifies the safety rating for those munis: the banking rules’ “high quality liquid assets” category, albeit at the lowest level of “high quality.”

So Chicago’s bonds should be on a par with Dallas’.

No.  These are decisions—every single one of them, the definition of “sufficient,” of “crisis,” whether to include munis as high quality assets, even whether to count munis as assets at all—are best made by banks and by businesses generally in a free market, not made by Government from the center of a government-managed economy.

Discretionary Spending

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Much is made of the limits imposed on the Federal government’s discretionary spending by such “mandatory” spending items as Social Security, Medicare and Medicaid, and interest on the national debt.  Indeed, after mandatory items—these three major items and a few others—discretionary spending amounts to only 33% of total Federal spending as of 2015.

This dichotomy, though, isn’t only misleading, it’s entirely wrong.  The fact is, nearly all of Federal spending is discretionary: Congress sets the spending levels everywhere, and it decides the things on which to spend nearly everywhere.  There are only three categories of spending that our Constitution requires of Congress: to pay the Debts and provide for the common Defence and general Welfare of the United States.  Even in these three mandatory areas, though, the amounts to be spent are left to the discretion of Congress, even if the requirement to pay the Debts implies a requirement to spend at least enough to keep the debts current if not actually to move the size toward zero, and even if the requirement to provide for the common Defence implies a requirement to spend at least enough to keep our defense establishment superior to all threats.  Even the requirement to spend for the general Welfare is limited to the 16 items enumerated in Article I, Section 8; here, too, the amounts actually to be spent are left to Congress’ discretion.

There is, then, no requirement for Congress to spend Federal monies—citizens’ tax money—on Social Security or Medicare and Medicaid.  And no Federal money should be spent on these items, which as of 2015, comprised 49%, or $1.8 trillion of the total $3.7 trillion in Federal spending.

Think about the uses to which that money could be put were Social Security and Medicare privatized and Americans allowed to be responsible for their own health and futures, rather than being required to spend their money on others’ current retirement and health costs.  Think about the effects of block granting Medicaid payments to the individual States and then annually reducing the size of those grants to zero, so that the States would be allowed to be responsible for their own budgets and their citizens could spend that money on themselves.

Think about how $1.8 trillion could be redirected: lower tax rates and less government spending, so that Americans could keep more of their own money to spend on their own imperatives, needs, and wants, and the effect of their being able to spend in a market in which the Federal government isn’t crowding out private enterprises, private buyers and sellers with government competition for the same goods and services.

Think about other redirections of those $1.8 trillion: keeping lowered spending less than lowered tax revenues and so eliminating Federal deficits: budget surpluses and a significant fraction of those $1.8 trillion could be redirected toward paying down our nation’s exploding debt.  Another significant fraction of those $1.8 trillion could be redirected toward rebuilding and then vastly improving our national defense establishment, so that we can, not merely match, but exceed and defeat the threats against us, defeat our enemies and friends’ and allies’ enemies acting on those threats.

Congress has the discretion to do all of these things; its spending decisions—its revenue decisions generally—are not limited to those $1.2 trillion misnamed “discretionary.”

Unfortunately, the present Government doesn’t trust its employers, We the People, collectively and individually, to see to our own needs and wants; Government insists on determining these for us.  This Government, too, doesn’t believe we need a very large defense establishment at all.  It prefers, instead, to retreat from the world stage, to talk to Russia about its aggressions in eastern Europe and the Middle East, to talk to the People’s Republic of China about its aggressions in the East and South China Seas.  This Government doesn’t even recognize the Islamic terrorist threat and their war actively being prosecuted against us.

This needs to change.  Every single bit of it.