Democratic Party Presidential candidate Hillary Clinton has been making a big deal about what she claims is the outrageous pay of company CEOs compared to their employees. Here’s a graph, via AEIdeas‘ Carpe Diem and Mark Perry that indicates how well she’s walking that talk.
Or is this fact just another of campaign season distraction and attack from the Hillary Truth?
Hmm….
Electricity producers in several states are asking for hundreds of millions of dollars in financial support to keep costly nuclear power plants in business[.]
For instance,
New York and federal regulators are weighing whether to make customers subsidize the Ginna nuclear station in Ontario, NY, 20 miles northeast of Rochester.
And
Illinois is considering financial assistance for three Exelon nuclear plants that the company says are suffering from low power prices. State officials are considering several forms of aid, including legislation that would require utilities to support carbon-free generators like nuclear and renewable energy.
And
FirstEnergy’s proposal would obligate three regulated Ohio utilities it owns—Ohio Edison, Toledo Edison and Cleveland Electric Illuminating—to buy kilowatts from Davis-Besse and other company-owned plants even when cheaper electricity is available on the open market.
Consumers would pay an extra $400 million in the first three years of a 15-year contract….
These are the wrong answers.
There’s no question that users of electricity from nuclear power plants should be the ones to bear the costs of electricity generated by them. However, those costs are artificially high, hugely high. Permitting, licensing, and government regulation add billions (yes, that’s with a ‘b’) to the cost of building a new plant (which would be more efficient and generate at lower cost than existing nuclear plants) and of operating plants, whether old or new. Those impediments don’t need to be anywhere near so extensive to achieve their legitimate purpose: to ensure the plant builders know what they’re doing and to ensure the plant operators know what they’re doing.
Another artificial cost of nuclear plant existence (much less operation) is storage of spent fuel. Nuclear plant operators have been charged a fee to support building, transportation to, and storage at a nuclear spent fuel repository in Yucca Mountain. Even after that facility was prevented from opening and the nuclear plants forced to store their fuel on their own sites, that fee has continued to be charged, and it’s added up to additional billions of dollars of cost, held essentially in escrow in Uncle Sugar’s hot, grimy, little hands. It’s time to open the Harry Reid Nuclear Fuel Repository in Yucca with no further delay. Or to build a facility somewhere else (Nevada and New Mexico have several other useable sites) and in the meantime return those billions in collected and unspent fees to the plant operators for their use in on-site storage.
Ronald Bailey at Reason had this iteration of “more.” He brought this item up, even though it’s been described before:
In the absence of the higher minimum wage, employers would generally hire more workers to meet an increased demand for fast food. Boosting the minimum wage means that the revenues that would have otherwise been used to hire new workers is not available. The end result: fewer jobs created and more folks unemployed.
But then he cited some actual research:
…published in the December 2014 issue of the Journal of Labor Research, Andrew Hanson of Marquette University and Zack Hawley of Texas Christian University analyzed how low-wage employment would be affected in each state by the imposition of the national $10.10 per hour minimum wage supported by President Obama. The Hanson/Hawley study takes into account how wages relate to the varying cost-of-living levels among the states. First they report the number of workers in a state who earn less than $10.10 per hour. Next they apply the widely agreed upon formula that for every 10% increase in wages there is a corresponding 1 to 2 percent decrease in demand for labor. They then straightforwardly estimate that boosting the federal minimum wage from $7.25 per hour to $10.10 per hour would result in the loss of between 550,000 and 1.5 million jobs.
And this study, by Jeffrey Clemens and Michael Wither of the University of California, San Diego and published by the National Bureau of Economic Research in December, which used different methodology and reached a similar result.
[J]ob losses were considerably higher in states where unskilled workers had been earning less than the new minimum and employers were now forced to pay more. Overall, the authors estimate that the minimum wage increase “reduced the employment-to-population ratio of working age adults by 0.7 percentage points.” Stated otherwise, not raising the minimum wage would have boosted the 2012 employment-to-population ratio from 58.6 to 59.3, which implies that we actually had 1.4 million fewer jobs than we otherwise would have had.
Thus: on the one hand, raising the minimum wage will cost a million people, more or less, their jobs, and on the other hand, an additional 1.4 million jobs weren’t created in the first place.
Beyond that, there’s this. Raising wages raises prices, as even the Left acknowledges. What gets ignored in this is that those higher prices are paid by those who got the pay raise. Those who got the pay raise, also, are those who work low-skill jobs. Those low-skill jobs exist almost exclusively in commodity industries: food service, extraction, and so on. The goods produced in those commodity industries are the ones most susceptible to production costs like labor, yet those costs are most completely reflected in prices despite price competition. These are the goods with whose higher prices those low-skill workers will be confronted. Wage increase leading to price rise equals no net improvement for the low-skilled. That, though, also represents net harm for everyone else in our economy, who also are faced with those same higher prices.
It’s hard to believe those who claim to be so much smarter than us don’t get this. Which makes me wonder about their motive. Against the backdrop of why minimum wage laws were made national laws in the first place, back in the mid-30s.
Hanson and Hawley’s paper can be read here, and Clemens and Wither’s paper can be read here (paywall alert).
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2015 was 0.1% on April 2, up from 0.0% on April 1. Following this morning’s international trade release from the US Census Bureau, the nowcast for the change in real net exports in 2009 dollars increased from -40 billion to -33 billion. The nowcast for real equipment investment growth declined from 7.5% to 6.1% following the international trade report and the Census Bureau’s M3 manufacturing report.
That’s the Atlanta Fed’s prediction of our GDP performance in the just concluded first quarter of 2015. The official number will be out at the end of this month. The real equipment investment growth shrinkage is interesting, too: that’s future production capacity for our businesses, and they’re not optimistic.
As Power Line put it,
[L]iberal policies—extravagant government spending, steadily mounting debt, endless regulations, cronyism and the suppression of innovation, promotion of expensive energy, war on cheap electricity, and all the rest—have condemned a generation of Americans to limited opportunities for employment, promotion and the acquisition of wealth.
That’s limited government, modern Liberal style: government limits on individual opportunity.
The Inspector General for the Federal Housing Finance Agency (FHFA) recently reported that Fannie Mae and Freddie Mac might need more government bailouts if housing markets decline. The problem: lack of capital reserves to serve as a buffer against future losses.
That lack of capital, says Fannie Mae boss, Tim Mayopoulos,
increases the likelihood that Fannie Mae will need additional capital from Treasury at some point.
William Isaac, FTI Consulting Senior Managing Director (and former FDIC Chairman), and author of the piece at the link, has a solution: Treasury should stop sweeping Fannie’s and Freddie’s profits into the Federal government’s piggy bank. He’s right that this is illegal, but it’s the wrong solution.
The correct answer to the problems with Fannie Mae and Freddie Mac is not to bail them out in any way shape or form. The correct answer is to disband them completely, erase them from government, and replace them with…nothing. Full stop.