Quote of the Day

Marxism is a flight from the magic of the person and the mystique of hierarchy. It distorts the character of western culture, which is based on the charismatic power of person. Marxism can work only in pre-industrial societies of homogeneous populations. Raise the standard of living, and the rainbow riot of individualism will break out. Personality and art, which Marxism fears and censors, rebound from every effort to oppress them.

—Camille Pagila

A $15 Dollar an Hour Minimum Wage is Racist

All the arguments that have been presented for increasing the minimum wage to 15 bucks an hour rely on claims that a lesser wage does not provided enough money to a worker. Such claims are based in the use of arithmetic to compute the worker’s financial status and implicitly endorse the proposition that there is such a thing as a “right answer.” However, it now received educational theory that the very idea of a “right answer” is a racist concept. Thus, in order to advance minorities and suppress white supremacy, it is vital that we not only defeat the Fight for Fifteen but also must also repeal the existing minimum wage laws that have been used as tools of oppression for decades.

I’m So Old …

… I remember when we reformed what was then called “welfare as we know it.”

I remember that Joe Xiden voted for the Welfare Reform Act in 1996, but it seems that he’s changed what little is left of his mind. According to a report by The Heritage Foundation, the Administration’s welfare plan would significantly raise cash grants while ending existing work obligations in the current child credit program. It abandons any link between work and welfare established by welfare reform in the 1990s and goes back to the principle of unconditional entitlement to taxpayer-funded benefits.

Transferring Money From Red States to Blue

The fifty states have functioned as laboratories of democracy in their varied responses to the Wuhan Virus Pandemic. For the most part, it’s been the blue states who have done the most damage to their economies, and it’s these states that the Democrats in Congress want to bail out.

It might be wise for Congress to review some basic principles of planning and economics before they act. I’m providing a link to a basic economics text at Amazon that should be simple enough for most of the members of the House and Senate to understand.

Unjust Justice

Rev. William Barber has a post over at In These Times about The Fight for a $15 Minimum Wage Is a Fight for Racial Justice. He quotes a loose translation of the beginning of the 10th chapter of Isaiah in support of his argument—

Woe unto those who legislate evil and rob the poor of their rights, who make women and children their prey.

I agree with Rev. Barber that those of us who are better off have an obligation to treat the poor justly and to compassionately care for widows and the fatherless. However, I believe the minimum wage increase he supports will hurt rather than help the poor. Indeed, passing such a law will be legislating an evil.

The general effect of increasing the minimum wage is to price workers with marginal skills out of the labor market. Businesses don’t have bottomless funds from which they pay wages. They can only extract so much revenue from their customers, and that money must be divided among paying for inventory, rent, wages, and other expenses. A minimum wage bill doesn’t make expenses like rent disappear, so a business only has so much it can divide among its workers for payroll. When the law artificially increases each worker’s pay, simple arithmetic shows that fewer workers can be paid before the money is gone. Business that survive will keep their best employees and fire marginal workers. Business that grow will hire fewer workers.

Not every worker who loses his job because of a minimum wage increase will remain unemployed. Some will find work off-the-books in the informal economy, but increasing the minimum wage invariably increase unemployment among our poorest citizens.

We Americans generally believe that everyone has a right to work to support himself and family. Is it just to pass a law artificially pricing poor workers out of the labor market? I don’t think so.

CZ Buys Colt

The Czech gun manufacturer CZG has announced that it will acquire all of Colt’s business for $220 million and about 1.1 million new shares of the Czech firm’s stock.

I’m not surprised. I’ve often thought that there would be good synergy between the two companies’ engineering departments and that CZ’s management would be able to straighten out Colt’s history of chronic mismanagement.

CZ is building a factory in Arkansas. It will be interesting to see how long it will take for Connecticut’s anti-gun policies to drive Colt’s manufacturing from Hartford to Little Rock.

In Re Game Stop

You’d think that certain whining investment “professionals” would have read enough prospectuses to know that past performance is no guarantee of future results. Now they are shocked, shocked to learn that there is gambling going on in the stock market and they may not be the smartest or luckiest players in the game.

Perhaps it’s time to buy some more popcorn futures.

UPDATE—

A Science Experiment

Whether or not they have realized what they were doing, the political leaders of several states have been conducting a scientific experiment. Their implied hypothesis is that extended draconian restrictions on the activities of the people in their states would result in fewer deaths from the Wuhan virus pandemic. Simultaneously several other states took the opposite approach to managing the pandemic, effectively providing a control group for the restrictive state experiment. We now have data comparing the results of the two approaches. Has the restrictive state hypothesis been falsified?

Here’s a chart of the relative performance of the states plowing relative levels of restriction versus death rate. A higher number on the death rate axis corresponds to a higher death rate. A higher number on the restriction axis corresponds to tighter restrictions.Chart Source: Wallethub

While there are more restrictive states among the ten best performing states, restrictive states account for half of the ten worst. Thus, the data do not support the hypothesis that tight restrictions on the public’s activities necessarily will result in relatively lower death rates.

It’s possible that tight restrictions on public activity might be beneficial in some circumstance, but the data also suggest the possibility that many other factors have affected the variation in performance among the states. For example, Hawaii and Vermont have relatively high restrictions, but are their low death rates a result of their relative isolation from the nation’s large population centers or some other factor? Could such relative isolation have a part in Nebraska’s low death rate? Could California’s high poverty rate be affecting its poor performance?

The science isn’t settled on exactly why some states are doing better than others, but it does seem to show that lockdowns and other such measures weren’t and aren’t a magic bullet.

Oh, one more thing …

The average unemployment rate in the the most restrictive states is 7.1% (9% in California). The national rate is 6.7%. The rate in the least restrictive states is 4.7% (3.1 % in Iowa).

The Cost of the Minimum Wage

There’s a push to raise the minimum wage to 15 bucks an hour. Of course, the actual cost to an employer will be greater. For example, the employer’s share of the FICA tax on $15 is 93 cents, and there will be other additional expenses. But for the this exercise, let’s use $15.93 an hour as the employer’s cost. What will happen to a marginally skilled employee who provides less than $15.93 of value to the business and whose presence is a net loss to the employer?

Let’s not always see the same hands.

The real effect of a minimum wage is not to make it illegal to pay workers less than some arbitrary wage. Instead, it outlaws the participation of marginally skilled workers in the on-the-books economy, forcing them to work in the shadow economy.

BTW, some politicians see that result as a feature rather than a bug.

I’m Not Making This Up, You Know

She Guevara is espousing Capitalism to support her Socialism—If you’d rather support genuine Capitalism (and save a few bucks while you’re at it), you can buy the Hogewash! Team Lickspittle sweatshirt for only $35.99 at The Hogewash Store.

Buy one and increase this blog’s taxable profits!

I Never Had a Student Loan

I graduated with my Bachelor of Engineering degree from Vanderbilt in 1970 after paying tuition in full each semester. Fairness dictates that if student loans are to be forgiven, then those of us who paid up front should receive tuition rebates with interest. At the current legal interest rate in Tennessee (Vanderbilt is in Nashville) I would be due a bit more that $90,000.

I’d be willing to take the rebate in the form of a tax credit that I could spread over several years.

My Personal Plan B If Biden Wins

I don’t believe that the Harris presidency will be good for the American economy. I expect it would have a devastating impact on the value of my retirement investments which are mostly in an IRA and a 401(k). I had planned retiring again (I’ve done it twice before) around my 75th birthday at the end of 2022, but I don’t believe putting away maximum contributions into my 401(k) will sufficiently offset the losses I expect over the next two years. Also, I expect that inflation will return and make up for lost time, further reducing the real value of my investments. I’m beginning to examine the possibility of postponing retirement until my 80th birthday.

Quote of the Day

This planet has — or rather had — a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn’t the small green pieces of paper that were unhappy.

—Douglas Adams

“New” Jobs

The Bureau of Labor Statistics is reporting that the unemployment rate is down because 2.5 million more people were working in May.

I’ll bet that very few of those people were hired for new created jobs. Most of them were rehired or recalled to an old job that was put terminated because of the Wuhan virus shutdown. I suspect that there will be a fairly rapid recall of employees to businesses that were able to withstand the shutdown. The unemployment rate is now around 13 or 14 percent, and I’m guessing that it will drop to 7 or 8 percent by Labor Day. At that point, we’ll need to be creating new businesses to replace those killed off by the pandemic shutdown in order to create the new jobs necessary to restore the 2021 economy to a level comparable to 2019’s.

It’s going to be easier to rebuild in those places where the residents haven’t trashed their communities’ physical and moral resources.

A substantial number of communities will now have to make hard choices. The cost of rebuilding housing, businesses, and public facilities and the cost of restoring standards of public behavior will undoubtedly make some previously fashionable luxury opinions untenable. It will be interesting to see who engages in what sort of bitter clinging.

Who Wants To Go To Work?

I don’t especially want to go to work. I’m doing just fine, sitting in my office at home and telecommuting. As long as I keep getting paid with money that has sufficient purchasing power in the economy, I’d just as soon not have to drive to someone else’s office to do what I can to across the hall from my kitchen. (And my coffee is better than the Folger’s junk that seems to infest so many workplace coffee pots.)

Looking around the neighborhood, I can see several other professionals who have moved their work into their homes and who are continuing to do well economically. Other neighbors aren’t doing so well. They normally engage in businesses, trades, and professions that require close one-on-one interactions with people. Some of them haven’t earned anything for weeks.

Gentle Reader, can you guess which group is more favorably disposed to reopening the economy quickly?

On the leading edge of the Wuhan virus pandemic, most Americans were willing to put up with some significant disruptions in their personal lives in order to protect the public health. There really was a sense of “we’re in this all together,” but that has dissipated as people who want to feed their families are told by a governor that they can’t buy seeds to plant in their gardens because of a virus lockdown. Another governor’s sending Covid19-infected patients to old folks’ homes has not increased the public’s trust in government’s competence either. Thus, we have a large group of Americans who are wanting to and are ready to go back to work—and who are losing or have lost patience with the “experts.”

Meanwhile, those of us doing “essential” work have been paid all along—at least so far—but now, the lack of tax revenue is eating away the ability of many states and localities to make payroll. Oh, and advertising is now down, resulting in media layoffs. It may be that some of the less protected members of the “essentials” may begin to favor reopening the economy as well.

So, who is still in favor of broad, non-targeted lockdowns? Cui bono?

That should be an interesting topic for research by a good investigative reporter.

You know, I once saw a movie about investigative reporters. The line in the film that helped them put their big story together was the advice, “Follow the money.” I’ll bet that would be good advice for this story.

Bankrupt States

There’s beginning to be a bit of noise about the possibility of states going bankrupt, but current bankruptcy law doesn’t provide for state bankruptcies. A state could default on its debts, but its creditors only real recourse would be to stop providing goods or services to the state government.

There have been several proposals floated for Congress the enact a new chapter in the Bankruptcy Code that would allow for state bankruptcy. However, the Eleventh Amendment prohibits citizens of one state suing another state in a federal court. IANAL, but that seems to prohibit out-of-state creditors from having standing in Bankruptcy Court. Also, Article IV, Section 4 requires the United States to guarantee “a Republican Form of Government” to each of the states. Placing a state under the control of a receiver in bankruptcy would likely violate that requirement.

So it may be that states can’t go bankrupt. But perhaps a territory can because territories don’t have the protections of the Eleventh Amendment and Article IV. Maybe Congress could enact legislation to allow for territorial bankruptcies and to allow insolvent states to revert to territorial status to go through bankruptcy. Of course, a state using the process would become a territory and lose its Senators and all of its Representative, but it should be allowed a non-voting delegate in the House, and after it had put its affairs back in order, it could apply for readmission to the Union.

Given that the states with the greatest insolvency problems are blue states, … oh, never mind.