Tag Archives: regulation

A Thought on Minimum Wage

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The current minimum wage is $7.25/hr, and under the guise of that being not enough to live on (it works out to about $15,000/yr before taxes), there’s move afoot to raise the minimum—to anywhere between $9/hr and $15/hr.

I’ll ignore in this post the fact that the jobs that get minimum wage are low-skill and/or entry-level jobs whose product simply isn’t worth very much money.  I’ll ignore, also, the fact that very few minimum wage earners have this job as their sole source of income—it’s a second job, intended to supplement the income from the primary job.

I want, instead, to propose a wholly radical idea: how about reducing regulations, especially for small businesses (the ones hardest hit by minimum wage laws) and lowering tax rates (of which min-wage earners aren’t paying much, but which taxes contribute to the cost of the goods min-wage earners are trying to buy)?  Those tax and regulatory costs drive up our (which includes min-wage earners) cost of living, as the cost of the things we buy is driven by those regulatory and tax costs of doing business.

Here’s a brief look at (aggregated) regulation costs for small businesses.  Daniel Sutter, a Professor of Economics at Troy University, had this information in a recent piece in the Troy Messenger:

…compliance [with Federal regulations] often requires spending on new equipment, signs, or other changes to workplaces.  Both the Competitive Enterprise Institute and Small Business Administration estimate the cost of regulations at around $1.8 trillion.  …this $1.8 trillion (largely hidden) cost of [Federal] regulatory compliance exceeds the revenue from Federal individual and corporate income taxes combined.  It represents almost 12% of GDP, or nearly $15,000 per family, annually.

There’re those $15,000, again.  Also, that aggregate cost equals 10% of the current national debt.

Sutter also had this:

Automobile dealers, for example, must comply with over forty Federal regulations affecting every aspect of their business, from the showroom to the service bays.

They aren’t even allowed to run their own businesses without the Feds looking over their shoulder, telling them how to do so.

And it goes beyond compliance costs.

Regulation reduces the freedom of individuals and businesses to innovate or create new products.  Regulation reduces productivity growth, ultimately reducing standards of living, and particularly burdens small businesses, which are the source of many new jobs.  The greatest cost is likely the new products, services and businesses that are never created because of regulation.

Now, about those taxes….

The small business owner, rather than the business itself, typically pays the taxes on the business’ income, as that, and its costs, typically are passed through to him.

A small business might have an annual income of, oh, say, $500,000—and if it’s really successful, that’ll generate a profit of $50,000.  Any salary he might take out of the business is on top of that, but let’s ignore salary and only concern ourselves with the income tax on that profit.  On those $50k, he’ll pay roughly $8,400 in ordinary income tax—nearly 17% of that profit ultimately lost to the government—at 2013 single rates.  At married, filing jointly, the bite will be roughly $6,600—13% of his profit lost.

Rather than raising the minimum wage, and pricing the worker out of the labor market, it’d be better to enable the existing wage to go farther by getting rid of all those Federal regulations, and their costs, and lowering tax rates.

Another Government Takeover of an Industry

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…and for what purpose?

The US government has used the merger-approval process to increase its influence over the telecom industry, bringing more companies under its oversight and gaining a say over activities as fundamental as equipment purchases.

The leverage has come from a series of increasingly restrictive security agreements between telecom companies and national-security agencies….

And

The security agreements…compel [telecom companies] to honor requests to access their systems.  What’s new is that consolidation in the industry and an influx of overseas investment have left much of the industry under the government’s sway.

Thus,

Three of the top four wireless carriers now operate under such agreements….

Three of the major equipment suppliers have come under these agreements in recent years as well.

What requests?

The deals routinely require the companies to give the government streamlined access to their networks.  At their most restrictive, they grant officials the right to require firms to remove certain gear and approve equipment purchases and directors.

And

when T-Mobile and MetroPCS sought approval for their merger this year…the US secured 30 days’ notice before the company uses a new vendor for network equipment, and T-Mobile agreed to resolve any security concerns the government raises relating to new equipment providers, according to a 2013 amendment to the 2001 security agreement.

All of this comes under the mirage of trading freedom for security.

Makes me wonder what the government isn’t telling us about why they blocked the AT&T-T-Mobile merger a couple years ago.

What Do Progressives

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…have against equal opportunity?

The Justice Department is trying to stop a school vouchers program in Louisiana that attempts to help families send their children to independent schools instead of under-performing public schools.

The agency wants to stop the program, led by Republican Gov Bobby Jindal, in any school district that remains under a desegregation court order.

Because, you know, helping students actually to do better so that they can be effectively integrated with their age peers is a Bad Thing.

The federal government argues that allowing students to attend independent schools under the voucher system could create a racial imbalance in public school systems protected by desegregation orders.

After all, parents of underperforming students might wind up aggregating them into schools that actually teach and get academic results in their students.  Since most of the underperforming students in Louisiana tend to be minority children, especially black children, this might tend to aggregate black children into those successful voucher schools rather than leave them trapped in Louisiana’s failing public school system.

Eric Holder’s DoJ made their argument with a straight face.  Consummate actors, they are.

Let’s look at that “minority” status in the Louisiana schools, though.

The New Orleans public school system is 88% African-American.  Now, how could allowing 570 kids to flee the public school system possibly “create a racial imbalance”?

Oh, it’s those minority white students, who would become even more concentrated, that Holder is worrying about.  Yeah, that’s the ticket.  We’ll go with that.

Jindal had this about Holder’s move:

After generations of being denied a choice, parents finally can choose a school for their child, but now the federal government is stepping in to prevent parents from exercising this right.  Shame on them.  Parents should have the ability to decide where to send their child to school.

Can you say disparate impact?  This is the racist outcome—intended or not—of using this meme, even sotto voce.

Republican Non-Ideas for Health Insurance

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Here are some of those ideas put forward by Evil Republicans that President Barack Obama insists don’t exist.

  • Senators Tom Coburn (R, OK) and Mike Enzi (R, WY) have long advocated making health insurance completely portable so workers can take their plans with them from job to job.  Enzi first introduced a comprehensive bill including GOP reform proposals in 2007 and has updated it regularly.
  • Congressmen Sam Johnson (R, TX) and Charles Boustany (R, LA, and a cardiovascular surgeon) want to allow smaller companies to pool their risk to get the same discounts from insurance carriers that bigger companies do.
  • Congressmen Marsha Blackburn (R, TN) and Paul Ryan (R, WI) want to spark increased competition by allowing health-insurance policies to be sold across state lines, as are auto insurance policies.
  • Congressman Lamar Smith (R, TX) has championed medical liability reform at the federal level to rein in junk lawsuits, despite qualms that the issue should be left to the states.
  • Congressmen Mike Burgess (who practiced obstetrics and gynecology) and Joe Barton (both R, TX) have introduced bills to establish transparency in pricing and medical outcomes so patients can compare the costs for procedures at area hospitals and their relative success in performing them.
  • Congressman Bill Cassidy (R, LA), also a physician, has introduced a bill that would allow Medicaid patients to convert the value of their government benefit to pay for private coverage.
  • Congressman Tom Price (R, GA), an orthopedic surgeon, has introduced a comprehensive alternative to ObamaCare that includes many of the GOP’s reforms.
  • Congressman Phil Roe, (R, TN), a retired OB/GYN, will introduce a new ObamaCare replacement package next month when Congress returns.
  • The House Republican Study Committee wants to restore (even increase) amount families can save tax free for medical expenses; ObamaCare reduces that amount. Paired with health-savings accounts, such a move can put quality health care within the reach of many more families.  At competitive (read: lower) rates.

Notice all the actual doctors in that mix.  Possibly, they’re more worth listening to than a bunch of politicians whose only imperative is their personal political gain.

What are Republicans doing about these ideas?  Introducing, as noted above—and when they’ve controlled the House, passing—legislation.  But the obstructionist, Democrat “Just say no” Senate won’t even allow debate, much less voting on the bills.

Instead, these worthies, and President Barack Obama, oppose any reform that’s patient/doctor-centric, that omits government involvement, and that has actual competitive market forces—competition that strengthens the markets for health insurance and for health services—in play.  Indeed,

Senate Majority Leader Harry Reid (D, NV) recently called ObamaCare “a step in the right direction,” but noted that his goal is “absolutely” a single-payer system in which government delivers all health care.  When he was running for president in 2008, Mr. Obama admitted he “would probably go ahead with a single-payer system” if he was “designing a system from scratch.”

Truly, a paucity of ideas.  However, it’s the Democrats who are lacking.  All they’ve got is the crashing train of Obamacare—as Obama himself has admitted with his extra-constitutional decision not to enforce critical components of that law, and thereby cutting those cars loose, only to crash into the wreckage after a short delay.

Wondering Why?

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…your gas prices are as high as they are?  It isn’t only the summer driving season.  It isn’t only limits on gasoline production at our refineries.  It isn’t even that ethanol-laced gasoline doesn’t even store well so that inventories can be built to smooth out the ebbs and flows of supply and demand.  Here’s another reason, alluded to in a Wednesday op-ed by Kimberly Strassel on a related topic.

Last week, the Environmental Protection Agency issued its annual renewable-fuels mandate, telling refineries how much ethanol they must blend into the nation’s gas supply.  This quota, which grows each year, is becoming a horrific financial burden on the industry, forcing many refineries to buy federal ethanol “credits” to satisfy the rules.  The skyrocketing price of those credits is adding hundreds of millions of dollars to refineries’ annual costs.

Those costs are passed on.  To gasoline-buying customers like our neighborhood filling stations—and you and me.

Refiners say that, with declining demand for gasoline, next year (2014—oddly, a mid-term election year), the existing quota for ethanol use will force them to blend in more than 10% of ethanol into their gasoline production, which both adds to gasoline costs and isn’t safe for many of the engines that use gasoline—like some cars that are optimized only for 10% blends, and smaller engines such as those used in our lawnmowers.

Even at that, the mandated ethanol use quotas simply aren’t possible to get to.  The 2013 mandated quota is 6 million gallons (down, incidentally, from the EPA’s original laughable requirement of 1 billion (that’s with a “b”) gallons to be used this year); the nation’s total ethanol production for this year will top out below 50 thousand gallons.  The quota stands, though, so the refiners are required to go onto the EPA’s ethanol credit market that Strassel mentioned, and buy up enough credits to make up for their collective failure to use 950,000 gallons of ethanol.

Costs.