Much is being made of computer maker Dell’s decision to go private and the implications that has for the PC in a rapidly changing personal computing device industry.
Another thought occurs to me on this. Perhaps Dell thinks they’ll be more agile as a private company in this age of excessive regulation of anything and everything not private.
In his Tuesday State of the Union speech, President Barack Obama, among other spending demands, called for a boost to the Federal minimum wage from the current $7.25/hr to $9/hr.
Obama insists such a wage boost will “take millions of Americans out of poverty.” However, this 24% increase in hourly wage represents a 24% increase in the cost of labor to an employer or potential employer. This hinders employment; it doesn’t help it: that 24% is money with which an employer could do a number of other things: more product development, more advertising, more capital plant improvement, all of which lead to more hiring, or more hiring directly.
Worse, a government-mandated minimum wage increase is a permanent drag on employment and on our economy. The ones who are the most hurt by this thing—the ones who will be laid off because the value of an hour of their work doesn’t reach $9 or those who won’t be hired in the first place, because the job available isn’t worth $9—are those who can least afford the damage. Our youth, teens and early-20-yr-olds, already are suffering 20%-plus unemployment (almost 38% among black teens, a sharp increase during Obama’s administration), and have done for a number of years. This is experience and job skills these people are not accumulating, and so future wage gains—even future jobs—they’re denied for that lack of experience/skill. They’ll always be behind where they could have been had they been employable at a wage an employer could afford (which is based not just on a company’s top line, but also on those alternative uses for the money).
That lack of experience, with its concomitant loss of income potential, virtually locks those folks into their poverty condition—which represents an additional drain on our nation’s resources in the form of higher welfare support costs.
It also represents lost opportunities for our society, our nation, in the form of foregone creativity, productivity, innovation that these folks might have been able to provide had they only been employable early enough in their lives that they could have developed the knowledge base and the skills to generate these.
No, instead, we don’t have enough people employed, so we’ll raise the price of employment. Yeah. That’s the ticket. We’ll go with that. And we’ll ignore the inherently racist nature of minimum wages (or don’t disparate outcomes apply here?).
The US spent $277 billion last year on farm subsidies of all stripes; the amount includes $37 billion for conservation payments, most of which goes to large agribusiness.
The EU is learning about the costs of farm subsidies; it’s time we did, too. The article at the link has a lot of environmental items in it; I’ll generally deal with the fiscal items.
The European Union plans to spend about €60 billion, or about 40% of the entire EU budget, on agriculture this year alone. It’s a lot of money for an economic sector that generates less than 2% of the bloc’s gross domestic product and employs less than 6% of its workforce.
Individual (small) farmers can get €10,000 ($13,500), or more, from the EU’s spending. However,
[t]he main beneficiaries of this policy, according to the authors of the journal Der Kritischer Agrarbericht (Critical Agricultural Report), are “large-scale, streamlined farming operations, which receive annual payments of up to €120,000 ($162,000) per employee.”
(That’s a helluva salary, were the money actually going to the employees.)
And
In Germany, 1.9% of businesses collect about 30% of payments, and they are not always farms. Ice hockey clubs, aristocratic families and companies like candy maker Haribo and sugar producers Südzucker and Nordzucker also benefit from EU agricultural subsidies. In 2009, defense contractor Rheinmetall also received a hefty sum of cash—for planting trees in a former tank training area.
Sound familiar?
While the EU is trying to tie continuance of these subsidies to environmental questions (a forced set-aside of 7% of farmland, for instance, since the claim is that plowing that land releases massive amounts of CO2), this won’t solve the underlying problems.
Farm subsidies of such magnitude (indeed, of any size, as is the case with all subsidies) drive up the cost of food for the consumer. Taxpayers pay those subsidies, those wealth transfers, and so taxpayers are paying twice for those artificially inflated prices—once with the subsidy, and again when they buy the food being subsidized. Further, those inflated prices drive the demand for food stamps.
…unions have lost their usefulness and now are anathema to free markets and to freedom generally.
A December memo from Michigan Education Association President Steven Cook to his local union officials, that the West Michigan Policy Forum got hold of, lays out a series of steps for unions to mitigate Michigan’s just-passed the right-to-work law. For instance:
Members who indicate they wish to resign membership in March [Michigan’s RTW law takes effect 1 March], or whenever, will be told they can only do so in August. We will use any legal means at our disposal to collect the dues owed under signed membership forms from any members who withhold dues prior to terminating their membership in August for the following fiscal year.
Workers can’t resign from the union when they want to, even though they can resign from their jobs at will. And they’ll be haled into court for exercising their right under the new law not to pay the union’s vig.
And
We’ve looked carefully at this and believe the impact of RTW can be blunted through bargaining strategies[.]
The union will bargain—in their members’ name, yet—for contracts that trap their members into paying the vig, even though RTW says they don’t have to. Which lines up well with the union leadership insisting that members can’t leave at convenience.
Hmm….
In his press announcement last week, President Barack Obama made a lot of…interesting…comments. Here are some, with some editorial remarks associated.
We’ve created more than 6 million jobs in the last 35 months.
However, if our economy were undergoing the recovery he promised his stimulus spending would produce, it would have produced 8 million jobs in that time, and we wouldn’t have fewer Americans working today than at the start of that spending. If we were undergoing a normal recovery, we’d have even more jobs “saved or created” by now.
But we’ve also seen the effects political dysfunction can have on our economic progress. The drawn out process for resolving the fiscal cliff hurt consumer confidence. The threat of massive automatic cuts have already started to affect business decisions.
And
Deep, indiscriminate cuts to things like education and training, energy, and national security will cost us jobs and will slow down our recovery.
True enough. But given that, he shouldn’t have demanded such indiscriminacy in his sequester demand of 2011. Today, he needs to get out of the way and let budgets be passed that cut spending responsibly and in a carefully targeted manner. More, he needs actively to help this process by requiring his Party-controlled Senate to put House-passed budgets (see below) up for vote and passage.
[W]e’ve been reminded that while it’s critical for us to cut wasteful spending, we can’t just cut our way to prosperity.
As someone said repeatedly in 2008, “Yes, we can.”
He also had this riff:
Democrats and Republicans have been able to come together and cut the deficit by more than $2.5 trillion…. [A] balanced approach [of tax increases and spending cuts] have achieved $2.5 trillion in deficit reduction. That’s more than half way toward…$4 trillion in deficit reduction…required to stabilize our debt.
And
There’s no reason why we should keep [loopholes and deductions] at a time when we’re trying to cut down on our deficit.
And
If we’re serious about paying down the deficit, the savings we achieve from tax reform should be used to pay down the deficit.
Notice that: deficit, and not debt. Obama cares not a fig for the magnitude of our national debt—100% of our GDP today, including all of our national debt, not just the publicly held portion—and its rapid growth. “Reducing” our deficit leaves a continuously growing debt—not stabilization.
He also was careful to include his stock demand for higher taxes as a quid pro quo for even token spending reductions:
And I still believe that we can finish the job with a balanced mix of spending cuts and tax reform.
Obama’s speech adds up to an ignorance of how a free market economy actually works that’s breathtaking in its scope. Or a cynical disdain for free markets and the associated individual freedoms.
The WSJ noted,
House Democrats have drafted a plan to replace all of the March 1 spending cuts with a plan that calls for both tax increases and spending cuts. The proposal, drafted by rep. Chris Van Hollen (D, MD), calls for tax increases on the wealthy, reducing tax breaks for oil and gas companies and a reduction in farm subsidies.
Notice this, too: more tax increases, especially on the hated wealthy, and the Progressives’ standard singling out of evil oil and gas producers. Van Hollen carefully is seeking to protect “green” energy companies (I hesitate to call them producers) from a similar reduction in tax breaks or subsidies for “green” energy companies. The Progressives—not just Obama—are busy designating winners and losers in our economy.
There are, though, some in Congress (not on the left side, alas) who do understand. House Ways and Means Committee Chairman Dave Camp (R, MI), for instance:
Tax reform should be about making the code simpler and fairer for American families and helping employers create more jobs. The president’s proposal is nothing more than another tax hike to pay for more Washington spending.
House Speaker John Boehner (R, OH) said before Obama’s speech,
Republicans have twice voted to replace these arbitrary cuts [Obama’s sequester] with common-sense cuts and reforms that protect our national defense. We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes. The president’s sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years.
Because balancing the budget—actually eliminating the deficit, not just “paying it down”—is a critical first step to reducing—paying down—our debt. After all, the CBO says that
continuing large deficits would push the level of government debt held by the public—a commonly used measure that excludes the US Treasury bonds held in Social Security and various trust funds—to 76.3% of GDP at the end of September, the highest level since 1950.
and
[Failure to fix will cause] the gross domestic product, the value of all goods and services produced in the US, to grow by just 1.4% this year, measured from the fourth quarter of 2012 to the fourth quarter of 2013.
That’s less than last year’s 1.9% growth. And full employment won’t be reached before 2017, the CBO says.