The Economy Outside the Beltway


The President claimed in his State of the Union speech that the national economy is doing well. That may seem true inside the Beltway, but out here in the Real World, it doesn’t look so good.

Salena Zito writes that economic discontent is widespread.

The economy is dismal not just in the old Rust Belt but nationwide. On Tuesday, the National Association of Counties released its gold-standard study that shows, six years after the economic expansion began, 93 percent of U.S. counties have failed to fully recover from the devastating contraction they suffered during the recession.

Only 7 percent, or 214 out of 3,069 counties nationwide, recovered by 2015 to their pre-2008 numbers on total employment, economic expansion, home values and unemployment.

Read the whole thing. She suggests that the economic malaise of the Obama economy is one of the key drivers of the populist unrest pushing both the Trump and the Sanders presidential campaigns.

John Hinderacker chimes in, noting that the economic recovery over the last 7 years has been the worst in the past 70, in large part because of government disincentives.

In other words, government welfare programs are crushing America’s economic growth.

He’s posted a staggering chart of federal welfare programs that spend over a terabuck (a trillion dollars) each year. It’ll still be too hard to read after you click to enlarge it.

Meanwhile, back inside the beltway, DC city officials are bent out off shape because their minimum wage hike has caused Walmart to have second thoughts about building more stores in the city.

Hmmmm.

A $70k Per Year Minimum Wage


The Seattle company that has set a $70k per year minimum wage for employees has fallen on hard times. It seems that in a real world economic system some employees work harder than others and expect to be rewarded for hard work. They vote with their feet when they feel unfairly denied their share of the salary pie.

Another way of analyzing the problem is to consider poor performing employees as system losses. When a system has more losses, it runs down more quickly.

[youtube https://www.youtube.com/watch?v=6vxHkAQRQUQ]

TANSTAAFL.

TANSTAAFL


One of the amenities that attracts well-to-do folks to San Francisco are the small businesses such as Comix Experience, a well-regarded comic book and graphic novel store. Unless it can quickly develop a new revenue stream, the store is headed out of business because it can’t afford to pay its employees San Francisco’s new minimum wage of $12.25 an hour. (It will rise to 15 bucks an hour by 2018.) Ian Tuttle writes about the store owner’s efforts to save his business at NRO.

Hibbs is not inclined to circumvent the market: “Despite being a progressive living in San Francisco, I do believe in capitalism. I’d like to have the market solve this problem.” That applies not just to his plight, but to the question of the minimum wage: “We’re for a living wage, for a minimum wage, in principle. . . . But I think any law that doesn’t look at whether people can pay may not be the best way to go.”

Read the whole thing.

Even in San Francisco, the Laws of Thermodynamics wind up superseding Blue State policy.

Intended Unintended Consequences


People are often surprised by the unintended consequences of their actions. For example, it was forest management policy to aggressively put out wildfires for many years. That resulted in forests full of quick-burning fuel in the understory—and spectacular, devastating forest fires.

The government’s attempts to manage the economy have been no better. The more it has fiddled, the worse things have become. Now, the Brookings Institution is reporting an across the board decline in business dynamism around the country.

The Blue State Model suggests responding with more government intrusion into the economy. States such as Maryland are doing things such as raising their minimum wage above the national level. The unintended consequence will likely be that marginally skilled workers will be priced out of the legal job market to become more of a drag on a state budget starved because of reduced economic growth.

DaTechGuy suggests that the conservatives in the Blue States should call the Left’s bluff and let them pass such ill-conceived laws. He suggests that the result would be to drive economic and population growth to the Red State, increasing their clout at the national level. It’s a strategy not unlike letting a drunk keep going till he hits bottom.

Hmmmmm.