Neumark/Wascher Bitch Slap Card/Krueger

I was listening to Larry Elder interview Lee Ohanian, who is professor of economics, University of California, Los Angeles. During the conversation Larry asked the professor about the Card Krueger study, and he mentioned the book that I excerpt below.

  • David Neumark and William L. Wascher, Minimum Wages (Cambridge, MA: MIT Press, 2008), 71-77.

(See more in my MINIMUM WAGE section of my Economic’s “mantra page“)

[p.>71] 3.4.5 Reactions to the State Case Studies

The case studies that constitute the other strand of the new minimum wage literature soon generated considerable controversy. Some labor economists embraced the studies as praiseworthy examples of the use­fulness of the natural experiment approach to studying the economic effects of policy changes (e.g., Freeman 1995). Others, however, were more critical of these studies. For example, referring to the descriptions of these studies in Myth and Measurement, Welch writes: “I am con­vinced that the book’s long-run impact will instead be to spur, by neg­ative example, a much-needed consideration of standards we should institute for the collection, analysis, and release of primary data” (1995, 842). Likewise, Hamermesh concludes that “even on its own grounds, CK’s [Card and Krueger’s] strongest evidence is fatally flawed” (1995, 838).

The criticisms of the case study approach focus on three main is­sues. The first concerns the adequacy of the control groups used in the studies. On its face, for example, it seems reasonable to question the use of Georgia, Florida, and Dallas/Ft. Worth as appropriate control groups in Card’s (1992b) study of the California minimum wage increase, given that these places are far from California and likely influenced by very different demand conditions. But even for states in close geo­graphic proximity, using one state as a control for analyzing a policy change in another state can sometimes be problematic. For example, Deere, Murphy, and Welch (1995) point out that teenage employment [p.>72] rates in New Jersey diverged significantly from those in Pennsylvania beginning in 1988, casting doubt on Card and Krueger’s claim that res­taurants in Pennsylvania provided a sensible control group with which to compare restaurants in New Jersey. More broadly, Hamermesh notes that the variance in employment seems to be dominated by de­mand shocks, which suggests that “any changes in the relative demand shocks” affecting two geographic areas will easily “swamp the effect of a higher minimum wage” (1995, 837). In our view, this issue highlights a potential advantage of a larger panel with many minimum wage increases, over which these demand shocks would be much more likely to be, on average, uncorrelated with minimum wage changes.

A second criticism concerns the timing of the surveys used in the case study analyses. In each of the fast-food case studies, the post­treatment observation comes less than a year after the relevant mini­mum wage increase. As we noted earlier, however, there is substantial empirical evidence that the disemployment effects of an increase in the minimum wage may occur with a lag of one year or more. For the same reason, both Brown (1995) and Freeman (1995) suggest that these studies are more appropriate for examining the short-run effects of minimum wage changes than for estimating their long-run effects.

A third concern involves questions about the reliability of the data used in these case studies. In each study, the researchers conducted their own telephone surveys of fast-food restaurants, which were not subject to the same rigorous standards as those employed in develop­ing the surveys used in government statistical programs. Welch (1995) expresses significant doubts about the quality of the data, noting in particular some puzzling features of the sample collected for the analy­sis in Card and Krueger (1994). In Neumark and Wascher (2000), we document what seems to us to be an unusually high degree of volatil­ity in the employment changes measured with Card and Krueger’s survey data.

In light of these concerns, a number of researchers subsequently reexamined the results reported in the initial round of state-specific case studies. For example, Kim and Taylor (1995) revisit Card’s study of the effects of California’s 1988 minimum wage increase on employ­ment in the low-wage retail sector. Using data for the retail trade sector as a whole, Kim and Taylor first replicate Card’s finding that employ­ment growth in California around the time of the minimum wage in­crease was not statistically different from retail employment growth for the United States as a whole. However, they also point out that the [p.>73] volume of retail sales in California rose much more rapidly during that period than in the United States, which raises questions about the va­lidity of this experiment. Kim and Taylor then turn to more-detailed in­dustry data within the retail sector and examine whether differences across industries in wage growth in California relative to the United States as a whole were negatively correlated with differences across industries in California versus U.S. employment growth in various years. The results show a negative and statistically significant correla­tion for the changes from March 1988 to March 1989, the period that included the minimum wage increase, but not for the changes in earlier years; they interpret this result as consistent with a negative employ­ment effect of the minimum wage. A similar result emerges from their analysis of county-level employment growth and wage growth. The implied minimum wage elasticities that they calculate from their esti­mates range from —0.15 to —0.2.31

In Neumark and Wascher 2000, we revisit Card and Krueger’s anal­ysis of New Jersey’s minimum wage increase, paying particular atten­tion to data quality issues. In particular, we collected administrative payroll records on hours worked from 235 fast-food establishments that were in the universe from which Card and Krueger drew their sample, and compare the two data sources. The Card-Krueger data were elicited from a survey that asked managers or assistant managers “How many full-time and part-time workers are employed in your res­taurant, excluding managers and assistant managers?” This question is highly ambiguous, as it could refer to the current shift, the day, or per­haps the payroll period, and the respondents’ interpretation of it could differ in the observations covering the periods before and after the minimum wage increase. In contrast, the payroll data referred unam­biguously to the payroll period used by the restaurant. Reflecting this difference, the data collected by Card and Krueger had much greater variability across the two observations than did the payroll data, with changes that were sometimes implausible.32

We then replicate Card and Krueger’s difference-in-differences test after replacing their survey-based data with observations taken from the payroll records. In contrast to Card and Krueger’s results, the re­sults from our replication indicate that the minimum wage increase in New Jersey led to a decline in employment (FTEs) in the New Jersey sample of restaurants relative to the Pennsylvania sample. The elastic­ities from our direct replication analysis were a little larger than —0.2, while additional sensitivity analyses suggested a range of elasticities [p.>74] from —0.1 to —0.25, with many (but not all) of the estimates statisti­cally significant at conventional levels.

In their reply, Card and Krueger (2000) present several additional analyses of the effects of New Jersey’s minimum wage increase using both their original data and our payroll records. In addition, they re­port results from a separate longitudinal sample of fast-food restau­rants obtained from BLS records. In contrast both to their original study and to our replication, their reanalysis generally finds small and statistically insignificant effects of the increase in New Jersey’s mini­mum wage on employment, and they conclude that “the increase in New Jersey’s minimum wage probably had no effect on total employ­ment in New Jersey’s fast-food industry, and possibly had a small pos­itive effect” (1419). Of course, had this been the conclusion from Card and Krueger’s original analysis, there would have been much less scope for casting doubt on the standard competitive model of labor markets.

A more recent case study is contained in a paper by Powers, Baiman, and Persky (2007), who revisit the question of the effects of the mini­mum wage on employment and hours in the fast-food industry based on an increase in the minimum wage in Illinois. Their research design parallels very closely the original design of the Card and Krueger 1994 study, using survey data to examine employment changes in counties along the Illinois-Indiana border between the fall of 2003 and the fall of 2005, when the Indiana minimum wage was unchanged and the Illi­nois minimum wage rose from $5.15 (the federal minimum) to $6.50 in two steps.

As in Card and Krueger, Powers, Baiman, and Persky (2007) use two estimators: (1) a simple difference-in-differences comparison of em­ployment changes in Illinois to those in Indiana, and (2) a regression of employment changes on the wage gap between the average starting wage before the minimum wage increase and the new minimum wage. As dependent variables, they look at the change in FTE employees (weighting part-time workers at 0.5), changes in the numbers of full-time and part-time employees separately, and the change in weekly hours. In all cases, they examine both absolute and percentage changes.

One significant improvement in this study is the use of a more pre­cise employment question that asks “How many people … were on your restaurant’s payroll during the last pay period?” The responses to this question should correspond much more closely to the type of in‑[p.>75]-formation we collected from payroll records. Unfortunately, however, Powers, Baiman, and Persky do not provide any information on the distribution of employment changes to confirm that they obtained far fewer of the implausibly large employment changes that we docu­mented in Card and Krueger’s data (Neumark and Wascher, 2000).

For the entire 2003-2005 period, the state difference-in-differences specifications for FTE employment yield an estimate of zero for the ab­solute changes, and a negative but insignificant (and imprecise) esti­mate for the relative changes, with an implied elasticity in the latter case of -0.14. For the gap specification, they also obtain negative but insignificant estimates. When they estimate specifications for part-time and full-time employees separately, the evidence for part-time em­ployment points to negative effects, while the evidence for full-time employment points to positive (and generally much smaller) effects. However, the only significant estimate is a negative effect for the absolute change in part-time employment in the state difference-in­differences specification. When they break the sample into 2003-2004 and 2004-2005 changes, they find significant negative effects on FTE employment from the second minimum wage change using both the difference-in-differences and gap specifications, but little evidence of any effect from the first minimum wage change. For the 2004-2005 pe­riod, the estimated elasticity for the difference-in-differences specifica­tion is -0.75, which is very large. The stronger evidence of negative effects for the latter change could reflect the fact that the minimum wage only rose by 35 cents in January 2004, while it rose by $1.00 in January 2005, as well as the possibility that the 2004-2005 change includes some lagged effects from the first increase.33

Powers, Baiman, and Persky conclude from this research: “While we can reasonably conclude that the Illinois-Indiana comparison shows no positive response to minimum wages (the most striking claim of the original Card-Krueger study), we cannot yet confidently assert that the overall response is negative (the conventional hypothesis)” (2007, 26). This statement closely parallels our conclusion based on our reevalua­tion of the Card and Krueger study.34

Regardless of what the case studies of the fast-food industry show, we think that their importance is overstated. For one thing, there is no reason to expect the predicted negative employment effect to show up in studies of a particular state minimum wage increase—especially in light of Hamermesh’s point about the importance of relative demand shocks in generating fluctuations in employment. In addition, as we [p.>76] discussed in section 3.2, the interpretation of evidence from case studies of a specific industry is unclear, given that the neoclassical model does not predict that employment in a particular sub-sector of the economy will decline in response to a general increase in the mini­mum wage. For example, it is possible that fast-food restaurant chains are less intensive in low-wage labor than are their competitors, in which case the effect of the higher wage floor on prices at the low-wage-intensive establishments could induce greater consumer demand for fast-food output and an increase in fast-food employment. As a consequence, the absence of an employment decline for a narrow industry should not be viewed as a contradiction of that model.

Finally, two recent studies attempt, in one way or another, to explore some of the explanations of the differences in results between the industry-specific case studies and the panel data analysis of broader af­fected groups. Dube, Lester, and Reich attempt to broaden the analysis by studying the restaurant industry as a whole, rather than the fast-food sector in isolation, and by computing difference-in-differences estimates for a large number of minimum wage increases over many geographic areas. Their preferred specifications yield estimated mini­mum wage effects that are near zero. The authors suggest that because they look at the entire restaurant industry, for which substitution in consumption between the output of subsectors of the industry is not problematic, their study can help to reconcile the findings of the fast-food studies and the state-level panel data studies of groups of low-skill workers (2007, 3 and 39).

In general, it seems preferable to estimate minimum wage effects from a large set of increases over many regions, in order to avoid the undue influence of idiosyncratic shocks that may plague a case study of a single minimum wage increase in an isolated region; and certainly, in that sense, their study is more like the state-level panel analyses. However, their focus on the restaurant industry is complicated by two factors. First, tip credits—which are important for non-fast-food restaurants—vary across states, making measurement of the effective minimum wage complicated.35 Second, as discussed earlier with refer­ence to the paper by Wessels (1997), monopsony-like effects can arise in an industry with tipped workers, raising questions about whether these results can be generalized to other industries (aside from other industry differences). As a result, the implications of these results for more aggregate state-level panel data studies are unclear.36

Hoffman and Trace (2007) attempt to bridge the gap between the state-level panel data analyses and the fast-food case studies in a differ‑[p.>77]-ent way. They focus on teenagers and other low-skill groups, as in the state-level panel data analyses, but they restrict their attention to New Jersey and Pennsylvania in the 1991-1993 period surrounding the minimum wage increase in New Jersey that Card and Krueger (1994) studied. In addition, they examine a “reverse” experiment for these two states for the 1995-1998 period, when Pennsylvania’s minimum wage went up faster than New Jersey’s in 1996 and 1997 because of the federal minimum wage increases in those years (coupled with New Jersey’s higher minimum wage prior to the federal increases).

Their results are mixed. For the 1991-1993 period, they find a nega­tive but insignificant effect on the employment of teenagers, but a posi­tive and significant effect for non-teenage dropouts. In contrast, in the 1995-1998 period, they find that employment of sixteen- to nineteen-year-olds and sixteen- to twenty-four-year-olds and of non-teenage high-school dropouts declined in Pennsylvania relative to New Jersey, with the results especially strong in a triple difference estimate that compares employment changes for these groups with changes in the employment of thirty- to forty-nine-year-olds. They also examine changes in the shares of teenagers in the restaurant industry in each state and find weak evidence suggesting that minimum wages reduced this share in the 1995-1998 period, but evidence of a positive effect in the 1991-1993 period. Thus, this study also does not successfully rec­oncile the fast-food case studies and state-level panel data analyses, al­though it does help to emphasize the fragility of results from studies that estimate minimum wage effects from the impact of an isolated minimum wage increase in a single pair of nearby regions.


31. A potential shortcoming of Kim and Taylor’s analysis is the absence of a direct wage measure in the County Business Pattern data they used (Card and Krueger 1995a; Kennan 1995). In particular, they computed wage rates by dividing total payrolls for the first quarter of each year by total employment for a single pay period in March, which may induce measurement errors associated with differences in the timing of the numera­tor and denominator and with variation in the average number of hours included in the pay period. Kim and Taylor were well aware of this data problem and noted that there is no indication of a negative correlation in years in which the minimum wage was con­stant; they also showed that IV estimates that use lagged wages and average firm size in the industry as instruments produce similar results. Card and Krueger address the first point by showing that there is a negative correlation in the 1989-1990 change (although this could reflect a lagged effect from the 1988 increase in the minimum wage). In addi­tion, they point out that the significant negative coefficient in the IV estimates relies on the inclusion of average firm size as an instrument, which they argue is inappropriate.

32. The same problem likely exists in the Katz and Krueger (1992) study. Although the paper is not very specific about the nature of the questions used to elicit the employment data for the Texas study, the survey instrument appears to be included in an appendix to a related paper (Katz and Krueger 1991), with wording similar to that used in Card and Krueger’s New Jersey study. Figure 2 in the 1992 study similarly indicates some very large changes in employment.

33. The estimates for total hours are somewhat stronger. All four estimates (for the two specifications, and with hours changes measured in absolute and percentage terms) are negative, with the state difference-in-differences estimates statistically significant at the 5 percent level. However, the estimated effects are very large, with the implied elasticities ranging from —0.85 to —0.92. The authors indicate that they are less confident about the hours results, however, because of measurement problems.

34. We concluded, “The payroll data raise serious doubts about the conclusions CK drew from their data, and provide a reasonable basis for concluding that New Jersey’s minimum-wage increase reduced fast-food employment … in New Jersey rela­tive to the Pennsylvania control group. Combined with the new evidence from the ES-202 data that CK present … we think we can be more decisive in concluding that New Jersey’s minimum-wage increase did not raise fast-food employment in that state” (2000, 1391).

35. Tip credits specify a dollar or percentage amount of the minimum wage that can be made up by tips. For example, a 50 percent credit coupled with a $5.00 minimum wage would imply that as long as hourly tips exceed $2.50, the employer has to pay only a base hourly wage of $2.50. The paper makes no reference to taking account of tip credits in defining state minimum wages, and tip credits vary across states; see http://www.dol .gov/esa/programs/whd/state/tipped.htm (viewed November 6, 2007).

36. Indeed, earlier work by Partridge and Partridge (1999) noted the potential for the tip credit to render results for the restaurant industry inapplicable to other industries. In their study, they present some evidence of disemployment effects for the retail sector as a whole and for the retail sector excluding eating and drinking establishments. However, the estimated effects for eating and drinking establishments, although negative, are mostly insignificant. That said, we also have doubts about their analysis, as they find sig­nificant negative effects of the minimum wage on overall nonfarm employment growth as well, which seems implausible.


Brown, Charles. 1995. “Myth and Measurement: The New Economics of the Minimum Wage: Comment.” Industrial and Labor Relations Review 48, no. 4 (July): 828-830.

Deere, Donald, Kevin M. Murphy, and Finis Welch. 1995. “Employment and the 1990­1991 Minimum-Wage Hike.” American Economic Review Papers and Proceedings 85, no. 2 (May): 232-237.

Freeman, Richard B. 1995. “Myth and Measurement: The New Economics of the Mini­mum Wage: Comment.” Industrial and Labor Relations Review 48, no. 4 (July): 830-834.

Hamermesh, Daniel S. 1995. “Myth and Measurement: The New Economics of the Mini­mum Wage: Comment.” Industrial and Labor Relations Review 48, no. 4 (July): 835-838.

Kim, Taeil, and Lowell J. Taylor. 1995. “The Employment Effect in Retail Trade of Califor­nia’s 1988 Minimum Wage Increase.” Journal of Business and Economic Statistics 13, no. 2 (April): 175-182.

Neumark, David, and William Wascher. 2000. “Minimum Wages and Employment: A. Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment.” Amer­ican Economic Review 90, no. 5 (December): 1362-1396.

Price Gouging During Emergencies | Are There Benefits?

FIRST, here is the article Larry Elder referenced in the audio above regarding the Chicago fire: “Lessons from the Chicago Fire.” WALTER WILLIAMS gives an excellent example of the benefits of price “gouging” (supply and demand) in helping families:

…Here’s a which-is-better question for you. Suppose a hotel room rented for $79 a night prior to Hurricane Katrina’s devastation. Based on that price, an evacuating family of four might rent two adjoining rooms. When they arrive at the hotel, they find the rooms rent for $200; they decide to make do with one room. In my book, that’s wonderful. The family voluntarily opted to make a room available for another family who had to evacuate or whose home was destroyed. Demagogues will call this price-gouging, but I ask you, which is preferable: a room available at $200 or a room unavailable at $79? Rising prices get people to voluntarily economize on goods and services rendered scarcer by the disaster.

After Hurricane Katrina struck, gasoline prices shot up almost a dollar nearly overnight. Some people have been quick to call this price-gouging, particularly since wholesalers and retailers were charging the higher price for gasoline already purchased and in their tanks prior to the hurricane. The fact of business is that what a seller paid for something doesn’t necessarily determine its selling price. Put in a bit more sophisticated way: Historical costs have nothing to do with selling price. For example, suppose you maintained a 10-pound inventory of coffee in your cupboard. When I ran out, you’d occasionally sell me a pound for $2. Suppose there’s a freeze in Brazil destroying much of the coffee crop, driving coffee prices to $5 a pound. Then I come around to purchase coffee. Are you going to charge me $2 a pound, what you paid for it, or $5, what it’s going to cost you to restock your coffee inventory?


Politicians of both parties have rushed in to exploit public ignorance and emotion. Last week Illinois Gov. Rod Blagojevich (Democrat) threatened to prosecute gas companies. Texas Attorney General Greg Abbott (Republican) is threatening legal action against what he called “unconscionable pricing” by hotels. Alabama Attorney General Troy King (Republican) promises to vigorously prosecute businesses that significantly increase prices during the state of emergency. The Bush administration has called for the Justice Department and the Federal Trade Commission to look for evidence of price-gouging, and Congress plans to hold hearings on oil company “price-gouging.”

There’s an important downside to these political attacks on producers. What about the next disaster? How much sense does it make for producers to make the extra effort to provide goods and services if they know they risk prosecution for charging what might be seen as “unconscionable prices”? Politicians would serve us better by focusing their energies on tax-gouging.

Even Leftists Get It – Minimum Wage (UPDATED)

(Rearranged for homogeneous play) This is originally from Southwest Business Association: “Small business owners share their story and how a Minneapolis specific minimum wage will impact their business.” (Learn more at their website)

I find it sad that Leftists HATE big-business and the corporate models of doing business… yet they are all for getting rid of the small business owner by pricing them out of the market. Much to the GLEE of corporations.

Here are the three business highlighted in the video:

  • Alaina Nelson – co-owner of Nicollet Ace Hardware (FACEBOOK)
  • Jane Elias – Owner of Simply Jane Art Studio (WWW)
  • Heather Bray – co-owner of The Lowbrow Burgers and Beer (WWW)

SEE MY: Economics 101 | Minimum Wage

Just to note though, as many of the comments to follow from my YouTube and LiveLeak also note… these are the same people running around screaming for “free college,” more welfare benefits, etc. They only speak up with economic common sense when THEIR bottom line is hit.

  • I’m sorry to say, but it serves you right… and I have no sympathy for you. These people who are proud Bernie supporters and die-hard “progressives” staunchly support these horrific agendas as long as it’s someone else who has to foot the bill.
  • The left is so f’ing stingy with their minimum wage anyway. Why not $50 a hour?
  • So basically they support Bernie and his socialist ideas, except for when they personally need to chip in. Tells you everything you need to know about the character of these a$%holes.
  • f&*k these twats, if it didn’t effect them they’d be out on the streets screaming for $15 an hour.
  • Libtards are economically illiterate people, and the only way to make them understand how idiotic their policies are is to hit them in the pocketbook. Unfortunately most of them own nothing of value and spend most of their time hating and envying people who are better off than them, so it’s not an easy battle.
  • Liberals only understand economics when it bites them in the ass personally.
  • Self hating Leftist…
  • funny how they wake up the minute it is not OTHER peoples money!
  • Sad that they’re speaking the truth, and yet nobody would believe them unless they identified themselves as far left. Because hey, if a conservative said the exact same thing, it MUST be a lie!
  • Hard to believe lefties get basic economics.
  • I want to ask these people why it’s okay for them to not pay 15 dollars an hour but say corporations are greedy for not wanting to pay 15 dollars an hour.

Quantitative Easing

Question, or Statement Often Made by Democrats

  • “The stock market relies on confidence, and the stock market has done incredibly well since Obama took over. How do you explain that?”

Click to Enlarge

(This is with thanks to Gay Patriot and the graph from Zero Hedge) Here is GAY PATRIOT’S summary: Fed pumping gobs of money into Wall Street? Market drifts upward. Fed stops pumping? Market doesn’t. The so-called “confidence” is drug-induced.

Credit Writedowns touches on this a bit:

…As for Bill Gross, he also said that the Federal Reserve knows that its easy money policies have a negative impact: “There are ultimately and presently negatives to these policies. The chairman recognizes that.”


On how to get out of the quantitative easing scenario that we’ve been in for so long:

“That’s very difficult, not just for the Fed, but other for other central banks. at the moment, the bank of japan is about to enter the pool, so to speak, the deep end. The Bank of England as well, perhaps, with carney indicating as much. Is it easy to get out of the deep end once you get into it? It gets difficult, because the market begins expects a constant infusion of liquidity–$85 billion a month into the bond market, which extends out into high-yield and equity credit as we move forward. Once you cut off the check writing and the purse strings, it becomes a problematic question in terms of valuation and the ability of markets, stocks, and bonds to continue on.

On his tweet on 2/20 saying that bond vigilantes are no more and central bankers are the masters of the universe:

“They are trying to let us know that they are vigilant. We saw the minutes yesterday and they were extensive and they meet every other month or more frequently. Are they vigilant? They are in terms of their objectives. what the fed is trying to do is reflate the economy, that means not only produce 2 to 3 to 4% real growth, but a modicum of inflation in combination such so we have a nominal 5% of GDP environment. Are they vigilant in terms of moving towards that goal? Yes. Will they be vigilant in terms of having reached it then pulling back and not disrupting markets? Perhaps not. We’ll have to see going forward.”

Above video description:

When Ben Bernanke announced that the Federal Reserve’s Open Market Committee was going to continue its monetary expansion program it calls Quantitative Easing, almost everyone in the financial media was taken by complete surprise. According to the mainstream media, the non-taper “surprised almost everyone out there.” Well it did not surprise me, nor anyone who had been paying attention to what I had been saying. As I said repeatedly over the past several months, the Fed knows that the appearance of economic health would evaporate if its stimulus were withdrawn, or even diminished. The Fed understands, as the market seems not to, that the current “recovery” could not survive without the continuation of massive monetary stimulus. In fact, the Fed’s next big move will likely be to increase, rather than taper, its monthly QE dosage! One reporter on this video said that its time for the Fed to take the training wheels off the economy. As I have been saying for years, QE is not the training wheels, its the only wheels the economy has. Take it away and the economy stalls. However, as the economy is now headed toward a cliff, taking the wheels off is much better than leaving them on and going over that cliff.

For more on how I knew the Fed wouldn’t taper, here’s an op-ed I released after the decision was announced.

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  • ….Until recently, the US had a coalition of allies at the G-20 to stand firm against the manipulation of the yuan. However, much to Barack Obama’s shock, they’re not as interested in scolding China for manipulating its currency while the Obama administration has done the same with its second round of “quantitative easing”….

The Blaze:

Washington Times:


Many currency analysts agree with Mr. Obama that the U.S. dollar stands to gain in coming months against the euro and Japanese yen, in particular, if the Fed is successful and the U.S. recovery picks up speed.

Nick Bennenbroek, analyst with Wells Fargo Securities, said the dollar actually has strengthened since the Fed’s announcement last week because, in an “ironic twist,” the economy has been showing unexpected strength. A report on Friday showed the best private job growth since April.

“Moreover, with the initial Fed announcement now out of the way, markets have refocused their attention on the ongoing European debt-market difficulties and, in particular, concerns over the state of the Irish government’s finances,” Mr. Bennenbroek said. The result is the euro may be due for a decline against the dollar.

But the Fed’s move only seemed to provide an excuse to many nations to dig in and further resist Mr. Obama’s call to curb global trade imbalances, starting with the massive Chinese trade deficit with the United States.

A Commerce Department report on Wednesday showed that the U.S. deficit with China fell $2.2 billion to $27.8 billion in September but remained near record highs. The U.S. blames the deficit in part on China’s currency policy, which makes Chinese imports cheaper in the United States.

But Chinese President Hu Jintao, ahead of a scheduled meeting with Mr. Obama on Thursday, called on other countries to “face their own problems” rather than cast blame for their giant trade imbalances on China. Mr. Hu also defended China’s currency controls as a boon to the world economy.

…(read more)…

Scandinavian Socialism

(Jump to the challenges directed at me dealing with America protecting these smaller countries)

The Myth

Gay Patriot introduces us to the myth often put forward by the left. This post by Gay Patriot will add to the video by Bill Whittle that follows it:

One of the myths Progressive Leftists elevate to “fact” by constantly repeating it to each other is the idea that Scandinavian countries are the closest on Earth fulfillment to their socialist dream utopia. ~ Gay patriot


Scandinavian Hell

Kyle Smith, writing in the NY Post, digs a little deeper and discovers that, like almost everything Progressive leftists believe, the Myth of Scandinavian Utopia really is as much a myth as the college rape epidemic, the genius of Barack Obama, or the popularity of gun control.

Visitors say Danes are joyless to be around. Denmark suffers from high rates of alcoholism. In its use of antidepressants it ranks fourth in the world. (Its fellow Nordics the Icelanders are in front by a wide margin.) Some 5 percent of Danish men have had sex with an animal. Denmark’s productivity is in decline, its workers put in only 28 hours a week, and everybody you meet seems to have a government job. Oh, and as The Telegraph put it, it’s “the cancer capital of the world.”

So how happy can these drunk, depressed, lazy, tumor-ridden, pig-bonking bureaucrats really be?

I think my favorite paragraph is where he cites the Scandinavian Social Contract as the “Ten Commandments of Buzzkill.”

“You shall not believe that you are someone,” goes one. “You shall not believe that you are as good as we are,” is another. Others included “You shall not believe that you are going to amount to anything,” “You shall not believe that you are more important than we are” and “You shall not laugh at us.”

They read like the 10 Commandments of Progressive Leftism…

…read it all…

Economics 101

In an excellent Bloomberg article entitled, “Booming Sweden’s Free-Market Solution,” the myth is dismantled in toto by Anders Aslund. Here is a snippet:

…From 1970 until 1989, taxes rose exorbitantly, killing private initiative, while entitlements became excessive. Laws were often altered and became unpredictable. As a consequence, Sweden endured two decades of low growth. In 1991-93, the country suffered a severe crash in real estate and banking that reduced GDP by 6 percent. Public spending had surged to 71.7 percent of GDP in 1993, and the budget deficit reached 11 percent of GDP.

The combination of the crisis and the non-socialist government under Carl Bildt from 1991 to 1994 broke the trend and turned the country around. In 1994, the Social Democrats returned to power and stayed until 2006. Instead of revoking the changes, they completed the fiscal tightening. In 2006, a non-socialist government returned, and Finance Minister Anders Borg, with his trademark ponytail and earring, has led further reforms. Sweden successfully weathered the global financial crisis that started in 2008, and the Financial Times named Borg Europe’s best finance minister last year.

Before 2009, Sweden had a budget surplus, and it has one again. For the past two years, economic growth has been 4 percent on average, and the current-account surplus was 6.7 percent in 2011. The only concerns are the depressed demand for exports caused by the current euro crisis and an unemployment rate that is about 7.5 percent.

Sweden’s traditional scourge is taxes, which used to be the highest in the world. The current government has cut them every year and abolished wealth taxes. Inheritance and gift taxes are also gone. Until 1990, the maximum marginal income tax rate was 90 percent. Today, it is 56.5 percent. That is still one of the world’s highest, after Belgium’s 59.4 and there is strong public support for a cut to 50 percent.

The 26 percent tax on corporate profits may seem reasonable from an American perspective, but Swedish business leaders want to reduce it to 20 percent. Tax competition is fierce in some parts of Europe. Most East European countries, for example, have slashed corporate taxes to 15-19 percent…. Weighs in on the “Swedish” experiment, how it got its wealth, noting how it squandered it, and how it is returning to the pre-70’s ideology:

  • Sweden is a powerful example of the importance of public policy. The Nordic nation became rich between 1870 and 1970 when government was very small, but then began to stagnate as welfare state policies were implemented in the 1970s and 1980s. The CF&P Foundation video explains that Sweden is now shifting back to economic freedom in hopes of undoing the damage caused by an excessive welfare state.

And do not think for a moment that the free-market has not allowed Sweden or other Nordic nations to get back on their feet. This is is pointed out in the following “101” presentation on economics:

The Above Video Description via

For those of us who place more trust in free markets than state-directed economies, we must inevitably (and repeatedly) confront the skeptical interlocutor who details the “successes” of Swedish social democracy. “If state intervention into the economy is so bad, high taxes so destructive, then why is Sweden such a success?” It’s an irritatingly simple question with a incredibly complicated answer, though I do recommend pointing out, when the conversation turns to health care and secondary education, that nothing, in a state the confiscates a massive portion of your income, is “free.” But as many have pointed out, during its boom years, Sweden was a pretty free market place; from the 1970s through the 1990s—when taxes and regulation dramatically increased—the economy slowed until it spun out in the early 1990s…


…So here is my bottom line: When some American pundit, with expertise is everything, explains why some European welfare state “works,” or how everything you know is wrong about taxing income at 75 percent, do a little digging, make use of Google Translate, and don’t trust that, because Swedes and Danes tell researchers that they are happy, the United States should introduce “daddy leave” and provide subsidies to syndicalist newspapers.

The best English-language explication of the Swedish model comes from my pal Johan Norberg, who wrote this brilliant piece for The National Interest a few years back. And watch my interview with Norberg on Swedish welfare politics here and on Naomi Klein here.

The following interview is Johan Norberg, author of In Defense of Global Capitalism, sits down with’s Michael C. Moynihan to sort out the myths of the Sweden’s welfare state, health services, tax rates, and its status as the “most successful society the world has ever known.”

National Review seems like a good place to continue the theme of showing how the Nordic countries have used the free-market system to recoup what it has lost with previous regulations that crippled free-enterprise. Here is a comparison between Sweden and Venzuala that was helpful in explaining how Sweden has less regulations that us in many places (a recent phenomenon BTW):

Talk to a Bernie Sanders voter about “socialism” — and they can be very insistent about using the word — and you’ll get paeans to Sweden, which is not a socialist country but a country with large, expensive welfare state. The distinction is not trivial: There is relatively little in the way of state-run enterprise in Sweden; the Swedish government is in fact only a 60 percent partner in the postal service. The Swedish government is, alas, in the casino business, albeit in a more transparent way than American government is. On the Heritage economic-freedom rankings, Sweden isn’t that far behind the United States. It has very high taxes, but taxes are not the only burden that governments put on the economy, not necessarily even the most important, and Sweden outscores the United States on a number of important metrics: free trade, property rights, freedom from corruption, investment freedom, monetary policy, etc. The United States’ small edge in the rankings comes mainly from relatively low taxes and a much less regulated labor market. again weighs in on whether Sweden is the right model for the U.S. to emulate:

The Above Video Description:

To the American mind there may be nothing more quintessentially Swedish than the leggy, blond supermodel.

But there’s another Swedish model that inspires almost as much admiration—the Swedish economic model. With a generous welfare state and high living standards, Sweden seems to prove that socialism works. Much of the hope that swept Barack Obama into the White House rests on the belief that America could reach new heights under a regime of enlightened progressivism, that we could be more like the Swedes.

Not so fast, warns Stockholm University sociologist Charlotta Stern: “If an American told me that the US should be more like Sweden I would say I don’t think it’s possible.” The United States can centralize its health care system and pass other laws that mimic Sweden’s welfare state polices, says Stern, but it’s impossible to replicate a culture that allows those policies to operate about as smoothly as possible. Swedish bureaucracies inspire trust, but their American counterparts (DMV, TSA, IRS) inspire punch lines, if not outrage.

But America could emulate some of the Swedish policies that don’t require extensive bureaucracies. Take school vouchers. Teachers unions in America regard the idea as free-market radicalism, but families in Sweden enjoy universal school choice. Sweden adopted its famously progressive policies during the 1970s, but after years of sluggish economic growth the land of ABBA altered its course in the 1990s, adopting a host of free-market reforms, from deregulation to tax cuts.

Although much of the disco-era welfare state remains, economist Andreas Bergh credits the free market reforms with reviving his nation’s economy. “Sweden is moving in the market economic direction,” says Bergh, “but that does not mean America should be moving in the socialist direction.”

What if the two nations continue on in different directions? Maybe some day when America is looking for a way to rejuvenate its economy, pundits will point to a different kind of Swedish model. One that increases individual choice and competition.

“Sweden—A Supermodel for America?” is produced by Daniel B. Klein, and written and produced by Ted Balaker, who also hosts. Shot by Jonathan Liberman and Henrik Devell, with additional production support by Zach Weissmueller and Sam Corcos and post production by Hawk Jensen and Austin Bragg. Special thanks to Niclas Berggren, Martin Borgs, Nils Karlson, and the Ratio Institute.

A Challenge Directed At Me

In conversation about an audio upload to my YouTube Channel of Dennis Prager discussing Bernie Sanders, I was challenged with this:

  • Sweden is not a Nato member so how does the US pay for Sweden defense? Pointing at Whittle and saying “because he say they do” won’t cut it.

To which I responded with a quote from an International Business Times article:

Finland is joining military exercises with other Scandinavian countries, as well as several members of NATO, in late May, Finnish media report. The maneuvers called Arctic Challenge will span 12 days, starting May 25, and include nine countries and close to 100 planes. The drills, over Sweden and northern Norway, come amid increased tensions between Russia and its Baltic and Nordic neighbors.

Sweden and Switzerland, which like Finland are not members of NATO, are expected to join the exercise, along with NATO members Norway, the Netherlands, Britain, France, Germany and the United States. Finland plans to send 16 F-18 Hornet fighter jets, while the other countries will supply Gripen “multirole” fighters, F-16s, Eurofighters and Jet Falcons, as well as transports and tankers, Russian news agency Sputnik reported. The Norwegian armed forces said the purpose of the Arctic Challenge exercise is to “learn to coordinate efforts in complicated flight operations conducted in cooperation with NATO.”

Russia has ramped up military activity along its borders with northern Europe, causing consternation in several Baltic and Nordic countries and pre-emptive actions to head off — or prepare for — a possible military crisis. Latvia, which reported a Russian submarine near its coast in mid-March, is beefing up security on its eastern border, while Finland recently began a letter campaign notifying some 900,000 reservists of their duties in a potential crisis. Sweden also intercepted four Russian planes flying over the Baltic Sea in March with their radios off. Russian jets have been intercepted in other instances while flying in European international airspace….

I also pointed out that this promise went back to the Cold War, and was not known about till a Swedish defense think-tank/security firm uncovered the agreements in 1994. The original story’s link has been lost, but it is here on FOI’s site. FOI’s “about us” page has this:

  • FOI is one of Europe’s leading research institutes in the areas of defence and security. We have 1,000 highly skilled employees with various backgrounds. At FOI, you will find everything from physicists, chemists, engineers, social scientists, mathematicians and philosophers to lawyers, economists and IT technicians…. The Armed Forces and the Swedish Defence Material Administration are our main customers. However, we also accept assignments from civil authorities and industry. Our clients from the defence sector place very high demands on advanced research, which also benefits other customers.

Here is the info from the old article via WIKI:

Initially after the end of World War II, Sweden quietly pursued an aggressive independent nuclear weapons program involving plutonium production and nuclear secrets acquisition from all nuclear powers, until the 1960s, when it was abandoned as cost-prohibitive. During the Cold War Sweden appeared to maintain a dual approach to thermonuclear weapons. Publicly, the strict neutrality policy was forcefully maintained, but unofficially strong ties were purportedly kept with the U.S. It was hoped that the U.S. would use conventional and nuclear weapons to strike at Soviet staging areas in the occupied Baltic states in case of a Soviet attack on Sweden. Over time and due to the official neutrality policy, fewer and fewer Swedish military officials were aware of the military cooperation with the west, making such cooperation in the event of war increasingly difficult. At the same time Swedish defensive planning was completely based on help from abroad in the event of war. Later research has shown that every publicly available war-game training, included the scenario that Sweden was under attack from the Soviets, and would rely on NATO forces for defence. The fact that it was not permissible to mention this aloud eventually led to the Swedish armed forces becoming highly misbalanced. For example, a strong ability to defend against an amphibious invasion was maintained, while an ability to strike at inland staging areas was almost completely absent.

In the early 1960s U.S. nuclear submarines armed with mid-range nuclear missiles of type Polaris A-1 were deployed outside the Swedish west coast. Range and safety considerations made this a good area from which to launch a retaliatory nuclear strike on Moscow. The submarines had to be very close to the Swedish coast to hit their intended targets though. As a consequence of this, in 1960, the same year that the submarines were first deployed, the U.S. provided Sweden with a military security guarantee. The U.S. promised to provide military force in aid of Sweden in case of Soviet aggression. This guarantee was kept from the Swedish public until 1994, when a Swedish research commission found evidence for it. As part of the military cooperation the U.S. provided much help in the development of the Saab 37 Viggen, as a strong Swedish air force was seen as necessary to keep Soviet anti-submarine aircraft from operating in the missile launch area. In return Swedish scientists at the Royal Institute of Technology made considerable contributions to enhancing the targeting performance of the Polaris missiles.

Some More Discussion

In this first back-and-forth, I noted some of the above and got this response:

  • Seems Sweden is searching for the viable balance of Capitalism and Socialism. Good for them. Bernie Sanders seeks the same.

To which I respond:

They want [and have] a lower tax rate than Sanders wants. They dumped their “wealth tax” and “death tax.” They lowered their corporate tax-rate and want it at 20% and below. Lessened regulations on businesses… on-and-on.

Bernie wants the 70’s through 90’s Sweden… I am down with the 2006 and beyond Sweden.

Someone else joined the discussion, and mentioned the following:

  • My family is Swedish and I can tell you with 100% accuracy they are way better off than we are…. Across the board pretty much.

Again, I respond:

There is a Swedish economist in the post that from first hand experience (and expertise in his field) telling you they are where they are because of the free market and a reduction [greatly] of the welfare state/socialism enterprise. [And, BTW, they use the many life saving drugs produced by the profit motivated “Big Pharma” spending on R&D to extend the lives of their fellow Swedes.]

When you get all these health care services for “free” then people start taking them for granted, calling ambulances without second thoughts, and going to the doctor for simple things that you don’t really need to see a doctor for… False alarms for ambulances and fire trucks end up costing the government and indirectly tax payers huge amounts of money every year. Which is why Sweden has as of late started to reform its health care system by privatizing parts of it. Mind you, these are somewhat limited in scope, but people are able to pay now for private care (1-in-10 now have private insurance/health-care).

…The paradox is that America has been doubling down on government authority over healthcare with the Affordable Care Act, just as more and more European governments, including Denmark, England, Finland, Ireland, Italy, the Netherlands, Norway, Spain, and Sweden, have been forced by public outcry to address the unconscionable waits for care by introducing new laws. But it is even more essential for American voters to realize, and for our government leaders to acknowledge, what other countries are beginning to recognize all over the world. These governments have started to understand that the cure for their failed nationalized health systems is a shift to privatization. And citizens under government-dominated health systems are increasingly circumventing their own systems, pursuing private healthcare to solve the uniformly poor access to care and limited choices.

Let’s consider Sweden, often heralded as the paradigm of a successful welfare state. The facts tell a very different story. Having failed its citizens in healthcare access, the Swedish government has aggressively introduced private market forces into healthcare to improve access, quality, and choices. Although once entirely public, over a quarter of Swedish primary care clinics are now run by the private sector. Sweden’s municipality governments have increased spending on private care contracts by 50% in the past decade. Private nursing facilities now receive substantial public funding to care for patients. Widespread private sector competition has also been introduced into pharmacies to tear down the pre-2009 monopoly over all prescription and non-prescription drugs. Since the Swedish government sold over half of its pharmacies to private firms in 2009, 20 private firms entered the market and over 300 new pharmacies opened, not only improving accessibility but providing the first pharmacies ever to many small towns.

Moreover, despite the fact that an average Swedish family already pays nearly $20,000 annually in taxes toward healthcare according to Swedish economist Per Bylund, about 12% of working adults bought private insurance in 2013, a number that has increased by 67% over the last five years. Half a million Swedes now use private insurance, up from 100,000 a decade ago, even though they are already “guaranteed” public healthcare….

(Hoover Insitute, “Defining Ideas: The Surprising International Consensus on Healthcare“)

Gay Patriot ends the beginning of this post well:

…In the pre-Reagan Era, the media was just as left-leaning and reluctant to discuss the poverty and oppression that permeated the Soviet Union. But there were enough people willing to talk about it outside the media for the truth to get out. The pervasiveness of social media should make it easier, not harder, for conservatives to get a message out around the media gatekeepers. Millennials should be told what happened in Venezuela after his ideological brother Hugo Chavez took over; they should be told how toilet paper became a black market commodity and supermarket shelves became bare. And they should be made aware that Sweden is not quite the utopia they’ve been taught it is, either.

Economics 101

JUMP to the minimum wage section below

No really! The Russian jeep carrying the ashes of the late Cuban leader

Fidel Castro broke down and had to be pushed for a period on Saturday.


Dennis Prager Series – Left vs. Right:

  1. How Big Should Government Be?
  2. Does it Feel Good or Does it Do Good?
  3. How Do You Judge America?
  4. How Do You Deal With Painful Truths?
  5. How Do We Make Society Better?

MINIMUM WAGE (>>> Main Page <<<)

“Any Econ 101 student can tell you the answer: ‘The higher wage reduces
the quantity of labor demanded, and hence leads to unemployment’.”
(Larry Elder)

See more on their website, HERE.

  • Economists aren’t certain about many things, but on the minimum wage, nearly all of them (90 percent, according to one survey) believe that the case is open and shut. All else being equal, if you raise the price of something (for instance, labor), then the demand for it (for instance, by employers) will decline. That’s not just a theory; it’s a law.

James Glassman, “Don’t Raise the Minimum Wage,” Washington Post (Feb 24, 1998).

  • A majority of professional economists surveyed in Britain, Germany, Canada, Switzerland, and the United States agreed that minimum wage laws increase unemployment among low-skilled workers. Economists in France and Austria did not. However, the majority among Canadian economists was 85 percent and among American economists was 90 percent. Dozens of studies of the effects of minimum wages in the United States and dozens more studies of the effects of minimum wages in various countries in Europe, Latin America, the Caribbean, Indonesia, Canada, Australia, and New Zealand were reviewed in 2006 by two economists at the National Bureau of Economic Research. They concluded that, despite the various approaches and methods used in these studies, this literature as a whole was one “largely solidifying the conventional view that minimum wages reduce employment among low-skilled workers.”

Thomas Sowell, Basic Economics: A Common Sense Guide to the Economy, 4th Edition (New York, NY: Basic Books, 2011), 241. [Link to 5th edition]

  • …percentage of economists who agree…. A minimum wage increases unemployment among young and unskilled workers. (79%)

Robert M. Beren, Professor of Economics at Harvard University ~ (More: Wintery Knight)

  • Economically, minimum wages may not make sense. But morally, socially, and politically they make every sense…

Jerry Brown (

Minimum Wage

(I am changing some of my “Pages” to “Posts,” so some of this info is older to my site)

The above video is a good one-two-three punch explanation that is concise and short!

These people must be crazy! When there is near [damn] consensus on a topic… people should know about it, especially when the raising the minimum wage hurts the black community. But the left thinks and rants that not raising minimum wage is hurting the poor and minorities… when it is the exact opposite. What a crock!

Hurting the Poor

Thomas Sowell (left) and Walter Williams (right) explain the negative effects of the minimum wage.

(Minimum wage laws make discrimination on ethnicity and gender easy, via Milton Friedman) Here is Walter Williams referencing some statistics to make his point (including Neumark), followed by the excellent lead-up to the debate between [included as well] between L.A. Times columnist, Michael Hiltzik, and professor of economics at UC Irvine, David Neumark:

….University of California, Irvine economist David Neumark has examined more than 100 major academic studies on the minimum wage. He states that the White House claim “grossly misstates the weight of the evidence.” About 85 percent of the studies “find a negative employment effect on low-skilled workers.” A 1976 American Economic Association survey found that 90 percent of its members agreed that increasing the minimum wage raises unemployment among young and unskilled workers. A 1990 survey found that 80 percent of economists agreed with the statement that increases in the minimum wage cause unemployment among the youth and low-skilled. If you’re looking for a consensus in most fields of study, examine the introductory and intermediate college textbooks in the field. Economics textbooks that mention the minimum wage say that it increases unemployment for the least skilled worker.

As detailed in my recent book “Race and Economics” (2012), during times of gross racial discrimination, black unemployment was lower than white unemployment and blacks were more active in the labor market. For example, in 1948, black teen unemployment was less than white teen unemployment, and black teens were more active in the labor market. Today black teen unemployment is about 40 percent; for whites, it is about 20 percent. The minimum wage law weighs heavily in this devastating picture. Supporters of higher minimum wages want to index it to inflation so as to avoid its periodic examination….

…read more…

From the video description:

Larry Elder has on an L.A. Times columnist Michael Hiltzik on to defend his statements made in the column*, as well as professor David Neumark to debate some of the finer points. I do include the build up to the interview/debate, which includes and evisceration of anything deemed moderate at the L.A. Times — pointing out the bias lays firmly on the political-left.

More by Walter Williams:

How will the forced raising of the minimum wage hurt the poor?

As the #FightFor15 movement get fast food workers to strike in order to get a $15, and they watch businesses in Seattle closing because of the forced raise in wages. Automated cashier options are now an option to be weighed. Of course a business wants a human face to represent it. But the business wants to stay in business, so many are being forced to choose a cheaper, more sustainable option for its budget.

McDonald’s is buying 7,000 automated machines to replace people

Would you like some microchips with that burger? McDonald’s Europe strikes another blow against human interaction by installing 7,000 touch-screen computers to take your order and money.


McDonalds recently went on a hiring binge in the U.S., adding 62,000 employees to its roster. The hiring picture doesn’t look quite so rosy for Europe, where the fast food chain is drafting 7,000 touch-screen kiosks to handle cashiering duties.

The BELOW is and update to the above story about MceeDee’s in Seattle:

Via BizPic!

While it seems liberals may think that raising the minimum wage will raise living standards for poor Americans, they should have seen this coming.

With Los Angeles joining Seattle in setting a $15 minimum wage (Los Angeles by 2020, and Seattle by 2021), it stands to reason that McDonald’s would find a way around simply paying workers more, as Vox pointed out the obvious fact that “the reality is that McDonald’s just wants to make money.”

In a very real-world example of big business’ response to liberal policies, a conservative Twitter user sent Labor Day wishes from McDonald’s workers whose minimum wage never goes up.

And this real world affect of what politicians can merely raise taxes to meet budgets with (or, on the Federal level just print more money [a dumb move BTW]) is that small business go out of business, thus affecting the poor who want jobs.

But now the option through technology is to replace workers for businesses altogether:

(Washington Policy Center) Everyone is predicting what the real world impact of Seattle’s newly passed $15 minimum wage will be. The truth is there will not be a mass exodus of businesses from the city, nor will the economy crash.

Certainly, some businesses will move or close down, consumers will pay more, some workers will receive fewer benefits and the lowest skilled workers will have a harder time finding a job because they are competing with more experienced workers.

But many businesses will simply figure out how to employ fewer low-wage workers. They will do that by substituting machines and technology for people.

Service industry CEOs have cautioned a higher minimum wage is “encouraging automation,” which can improve efficiency. Even Microsoft co-founder Bill Gates warns that a higher minimum wage would “encourage labor substitution” and incentivize employers to “buy machines and automate things” and ultimately “cause job destruction.”

He’s right. When government increases the cost of labor, employers find other ways to save money.

Just look at how McDonald’s has responded to France’s $12 an hour minimum wage. In 2011, McDonald’s invested in 7,000 touch screen computers in France to reduce the number of workers needed. Restaurants around the country are already exploring automation as a means to cut costs; Applebee’s is installing 100,000 tabletop tablets for ordering and payments.

Many food businesses are considering a machine that can freshly grind, shape and custom grill 360 gourmet burgers per hour, no human labor needed. Alpha, the burger-making robot, can even slice and dice the pickles and tomatoes, put them on the burger, add condiments and wrap it up. The manufacturer makes the point that cashiers or servers aren’t even needed: “Customers could just punch in their order, pay, and wait at a dispensing window.” The maker says Alpha will pay for itself in a year.

…read it all…

See also: Businesses Forced To Hurt The Poor ~ Thanks Dems

  • “I’m hearing from a lot of customers, ‘I voted for that, and I didn’t realize it would affect you.’” (IJ-Review)

Powerline has a great short article about minimum-wage laws pushed by Democrats bumping into the steel reinforced wall of reality:

Via InstaPundit, a lesson in economics for liberals. This time, it’s the minimum wage:

San Francisco’s Proposition J, which 77 percent of voters approved in November, will raise the minimum wage in the city to $15 by 2018. As of today, May 1, [Brian] Hibbs is required by law to pay his employees at Comix Experience, and its sister store, Comix Experience Outpost on Ocean Avenue, $12.25 per hour. That’s just the first of four incremental raises that threaten to put hundreds of such shops out of business. …

Hibbs says that the $15-an-hour minimum wage will require a staggering $80,000 in extra revenue annually. “I was appalled!” he says. “My jaw dropped. Eighty-thousand a year! I didn’t know that. I thought we were talking a small amount of money, something I could absorb.” He runs a tight operation already, he says. Comix Experience is open ten hours a day, seven days a week, with usually just one employee at each store at a time. It’s not viable to cut hours, he says, because his slowest hours are in the middle of the day. And he can’t raise prices, because comic books and graphic novels have their retail prices printed on the cover.

If he can’t stay in business, all of his employees will lose their jobs.


“Why,” he asks, “can’t two consenting people make arrangements for less than x dollars per hour?”

Exactly. Conservatives should oppose minimum wage laws on fairness grounds. If a person is willing to work for, say, $8 an hour, how dare liberals tell him he must remain unemployed instead? There are many, many people whose best offer of employment will be for less than the $15 an hour that San Francisco will soon mandate. Liberals are, in effect, making it illegal for these people to work, even though they are ready, willing and able to do so.

Minimum wage jobs are overwhelmingly entry level employment. They provide valuable training, experience and opportunity for advancement. Making it illegal for young people, especially, to seek employment at the wage they can command isn’t just economically stupid, it is deeply unfair.

…read more…

Click to Enlarge


“Any Econ 101 student can tell you the answer: ‘The higher wage reduces
the quantity of labor demanded, and hence leads to unemployment’.”
(Larry Elder)

Economists aren’t certain about many things, but on the minimum wage, nearly all of them (90 percent, according to one survey) believe that the case is open and shut. All else being equal, if you raise the price of something (for instance, labor), then the demand for it (for instance, by employers) will decline. That’s not just a theory; it’s a law.

James Glassman, “Don’t Raise the Minimum Wage,” Washington Post (Feb 24, 1998).

A majority of professional economists surveyed in Britain, Germany, Canada, Switzerland, and the United States agreed that minimum wage laws increase unemployment among low-skilled workers. Economists in France and Austria did not. However, the majority among Canadian economists was 85 percent and among American economists was 90 percent. Dozens of studies of the effects of minimum wages in the United States and dozens more studies of the effects of minimum wages in various countries in Europe, Latin America, the Caribbean, Indonesia, Canada, Australia, and New Zealand were reviewed in 2006 by two economists at the National Bureau of Economic Research. They concluded that, despite the various approaches and methods used in these studies, this literature as a whole was one “largely solidifying the conventional view that minimum wages reduce employment among low-skilled workers.”

Thomas Sowell, Basic Economics: A Common Sense Guide to the Economy, 4th Edition (New York, NY: Basic Books, 2011), 241. [Link to 5th edition]

…percentage of economists who agree…. A minimum wage increases unemployment among young and unskilled workers. (79%)

Robert M. Beren, Professor of Economics at Harvard University ~ (More: Wintery Knight)

Economically, minimum wages may not make sense. But morally, socially, and politically they make every sense…

Jerry Brown (

The Paris Agreement B.S. (Updated)

“I was elected to represent the citizens of Pittsburgh, not Paris,” ~ TRUMP

(ABOVE) The Paris Climate Agreement will cost at least $1 trillion per year, and climate activists say it will save the planet. The truth? It won’t do anything for the planet, but it will make everyone poorer–except politicians and environmentalists. Bjorn Lomborg explains.

I Love Capitalism over at GAY PATRIOT notes quickly this:

Yesterday I wrote a lot of text on this. Thanks to all commentators who made helpful additions.

Today I want to give the short version. With short sentences. For lefties.

  • The Paris Agreement did not control CO2. It let China, India and Russia do what they wanted. Oooh, Russia! Bad!!!!1!! Right?
  • The Paris Agreement did not control CO2. Even the UN scienticians agreed that it made almost no difference to their Global Warming projected temperatures.
  • The Paris Agreement was a krazy-bad deal. It made the U.S. almost the only leading country that has to wreck its workers’ lives and futures.
  • The Paris Agreement was a krazy-bad deal. It made the U.S. almost the only leading country that has to give away tens or hundreds of billions of dollars, to pay Third World kleptocrats to hold back their countries.

Hey lefties: If you didn’t know these things, I’m sorry you’re so gullible…

(read it all)

Here is an excellent article via IBD:

The Paris Climate Deal Was A ‘Fraud’ And A ‘Sham’ … Until Trump Decided To Ditch It

Shouldn’t environmentalists be celebrating the fact that President Trump decided to withdraw from the Paris climate-change agreement? After all, when it was signed, many of them called it a fraud, or worse.

The reaction to Trump’s announcement was ferocious.

Billionaire environmentalist Tom Steyer said Trump is “committing a traitorous act of war against the American people.”

John Kerry declared that Trump’s decision “will rightly be remembered as one of the most shameful any president has made.”

The ACLU said that dropping out of the Paris agreement is “a massive step back for racial justice and an assault on communities of color across the U.S.”

These are the more polite responses.

Yet it was only a little more than a year ago that climate scientists and environmentalists were viciously attacking the Paris agreement itself. The goals were too low to make a difference. There was nothing binding any of the signatories to live up to their promises, and no enforcement mechanism if they didn’t. It just kicked the can down the road.

James Hansen, the undisputed hero of the climate-change movement, called the Paris deal “a fraud really, a fake. … It’s just worthless words. There is no action, just promises.”

A joint letter signed by nearly a dozen top climate scientists said the agreement suffered “deadly flaws lying just beneath its veneer of success.” These scientists complained that the agreement could actually be counterproductive, since it gave the impression that global warming was being dealt with when in fact it wasn’t.

A study in the peer-reviewed journal Global Policy said that even if every country lived up to its CO2 emission reduction promises through 2030, the Paris deal would “likely reduce global temperature rise about 0.17°C in 2100.”

“Current climate policy promises will do little to stabilize the climate and their impact will be undetectable for many decades,” the study concluded.

Kevin Anderson, a climate-change professor at the University of Manchester told the London Independent that the Paris deal was “worse than inept” and that it “risks locking in failure.”

Friends of the Earth International labeled it “a sham of a deal” that will “fail to deliver.”…

(read it all)

Food Stamp Mantra[s] from Democrats Rebutted

Michael Medved responds to the food stamp issue that Democrats and the Left are bringing up. I take a clip from yesterday’s show and insert it into the middle of today’s show to give the listener some ammunition when these banal arguments come up. At the 5:17 mark, the caller mentions taxes for the millionaires as part of his argument. Medved Responds well to this challenge at the… and at the 6:24 mark you hear the caller respond with a bumper sticker jingle. In other words, talking about facts matters little to these people, but at least you will be able to influence those around you eavesdropping in on the conversation.

I posted this video on LIVELEAK, and a comment got me “clicking around” the internet to test what the person said. Here is the comment:

For every $1 spent on food stamps there’s a $1.80 stimulative effect to the economy. The poor person spends the funds at the grocery store, which allows the store to employ more people, the store spends the funds to buy more food which helps farmers and food producers. On the other hand, tax cuts for the wealthy have a negative effect on the economy, it just doesn’t trickle down enough so it drains economic growth. Plus it helps feed poor people that can’t afford to eat. — Warren H.

First, it should be noted that this idea was championed mainly by Moody’s chief economist Mark Zandi, a hard-core Keynesian. However, it should be noted that unfortunately “for Zandi, there has never been any empirical evidence of the Keynesian multiplier.  Government doesn’t take one dollar and turn it into more by spending it.  God doesn’t live in the White House, no matter how much Paul Krugman prays.” (AMERICAN THINKER)

HERITAGE FOUNDATION puts it like this:

…The Keynesian argument also assumes that consumption spending adds to immediate economic growth while savings do not. By this reasoning, unemployment benefits, food stamps, and low-income tax rebates are among the most effective stimulus policies because of their likelihood to be consumed rather than saved.

Taking this analysis to its logical extreme, Mark Zandi of has boiled down the government’s influence on America’s broad and diverse $14 trillion economy into a simple menu of stimulus policy options, whereby Congress can decide how much economic growth it wants and then pull the appropriate levers. Zandi asserts that for each dollar of new government spending: temporary food stamps adds $1.73 to the economy, extended unemployment benefits adds $1.63, increased infrastructure spending adds $1.59, and aid to state and local governments adds $1.38. Jointly, these figures imply that, in a recession, a typical dollar in new deficit spending expands the economy by roughly $1.50. Over the past 40 years, this idea of government spending as stimulus has fallen out of favor among many economists. As this paper shows, it is contradicted both by empirical data and economic logic…

They then respond to the above:

The Evidence is In

Economic data contradict Keynesian stimulus theory. If deficits represented “new dollars” in the economy, the record $1.2 trillion in FY 2009 deficit spending that began in October 2008–well before the stimulus added $200 billion more–would have already overheated the economy. Yet despite the historic 7 percent increase in GDP deficit spending over the previous year, the economy shrank by 2.3 percent in FY 2009. To argue that deficits represent new money injected into the economy is to argue that the economy would have contracted by 9.3 percent without this “infusion” of added deficit spending (or even more, given the Keynesian multiplier effect that was supposed to further boost the impact). That is simply not plausible, and few if any economists have claimed otherwise.

And if the original $1.2 trillion in deficit spending failed to slow the economy’s slide, there was no reason to believe that adding $200 billion more in 2009 deficit spending from the stimulus bill would suddenly do the trick. Proponents of yet another stimulus should answer the following questions: (1) If nearly $1.4 trillion budget deficits are not enough stimulus, how much is enough? (2) If Keynesian stimulus repeatedly fails, why still rely on the theory?

This is no longer a theoretical exercise. The idea that increased deficit spending can cure recessions has been tested repeatedly, and it has failed repeatedly. The economic models that assert that every $1 of deficit spending grows the economy by $1.50 cannot explain why $1.4 trillion in deficit spending did not create a $2.1 trillion explosion of new economic activity.

(read it all)

CATO likewise notes that the numbers were fudged to provide exaggerated outcomes:

Food stamps are effective economic stimulus. Led by Mark Zandi and other Keynesian economists, food-stamp advocates have made wildly exaggerated claims about the program’s role in stimulating the economy. Zandi, for instance, claims that “extending food stamps is the most effective way to prime the economy’s pump.”

But aside from the fact that those economic models just as well predict an alien invasion would be a boon to the economy, there is little evidence to support the theory. Even the Agriculture Department’s own inspector general concluded that it was unable to determine whether the additional dollars in the stimulus’s food-stamp expansion were in any way effective in meeting the 2009 Recovery Act’s goals. Three of the four performance measures the program was supposed to use, the office found, “reflected outputs, such as the dollar amount of benefits issued and administrative costs expended” and did not provide any insight into outcomes.

On the other hand, we do know that a failure to get government spending under control will have long-term economic consequences. Food stamps are hardly the major cause of deficits and debt — that distinction lies with middle-class entitlements such as Social Security and Medicare — but every little bit helps.

Valerie Jarrett and Nancy Pelosi said similar things:

  • JARRETT: Let’s face it: Even though we had a terrible economic crisis three years ago, throughout our country many people were suffering before the last three years, particularly in the black community. And so we need to make sure that we continue to support that important safety net. It not only is good for the family, but it’s good for the economy. People who receive that unemployment check go out and spend it and help stimulate the economy, so that’s healthy as well.
  • PELOSI: Economists agree that unemployment benefits remain one of the best ways to grow the economy in a very immediate way. It immediately injects demand into our markets and increases employment. For every dollar spent on unemployment benefits, the economy grows by, according to one estimate, $1.52; by others, $2. So somewhere in that range, but much more than is spent on it…. We have a responsibility to the American people. These are people who have played by the rules, have lost their job through no fault of their own, and need these benefits in order to survive. So we must extend this insurance before the end of the year and we must extend it for at least a year. And I’d like to see that as we go forward before this year ends. Hopefully it could be part of a budget, but it doesn’t have to be part of a budget. It could be in its own vehicle as it goes forward, but it’s something we must consider.

Again, similar responses happened then as well:

Economists at the Heritage Foundation have written about this claim, explaining:

The theory behind extending UI [Unemployment Insurance] benefits as a stimulus assumes that unemployed workers will immediately spend any additional UI payments, instantly increasing consumption, boosting aggregate demand, and stimulating the economy.

This is not a new idea. Economists in the 1960s thought that unemployment insurance could function as an important automatic economic stabilizer. Empirical research in the 1970s demonstrated that this was not the case, and studies since then have concluded that unemployment insurance plays at best a small role in stabilizing the economy. Empirical research at the state level also finds that UI plays a negligible role in stimulating the economy.

Studies that have found that UI stimulates the economy effectively — such as studies by the Congressional Budget Office and economist Mark Zandi — rely on two faulty assumptions, thereby drawing a false conclusion:

They assume that unemployed workers spend every dollar of additional UI benefits almost immediately and that extending unemployment insurance does not affect workers’ behavior. In that case, every dollar spent on unemployment insurance adds a dollar to consumption without any direct effects on the labor market. Both assumptions are false.

Unemployment Insurance Prolongs Unemployment. One of the most thoroughly established results in labor economics is the effect of unemployment benefits on unemployed workers’ behavior. labor economists agree that extended unemployment benefits cause workers to remain unemployed longer than they otherwise would.

This occurs for obvious reasons: Workers respond to incentives. Unemployment benefits reduce the incentive and the pressure to find a new job by making it less costly to remain without work…..

“Game of Loans” ~ College Tuition Costs (ECON 101)


There is a law in economics, it deals with artificially propping up businesses, “goods” politicians deem necessary, production, etc. George Gilder notes this in a clip I isolated in an interview:

  • “A fundamental principle of information theory is that you can’t guarantee outcomes… in order for an experiment to yield knowledge, it has to be able to fail. If you have guaranteed experiments, you have zero knowledge”

R-PT’s note: this is how the USSR ended up with warehouses FULL of “widgets” (things made that it could not use or people did not want) no one needed in the real world. This economic law enforcers George Gilder’s contention that when government supports a venture from failing, no information is gained in knowing if the program actually works. Only the free-market can do this.

This applies to the real world in many ways, one being the co$t of college. Here is a very short video explaining this well:

OF course, one of my favorite videos of ALL TIME shows how students “benefit” from a subsidizing of college majors when in reality if they had to pay for college themselves it would be (a) cheaper, and (b) they would go into careers other than their majors… like sign flippers and bartenders (or other fields that are hurting):

The great conundrum of the U.S. economy today is that we have record numbers of working age people out of the labor ‎force at the same time we have businesses desperately trying to find workers. As an example, the American Transportation Research Institute estimates there are 30,000 – 35,000 trucker jobs that could be filled tomorrow if workers would take these jobs–a shortage that could rise to 240,000 by 2022.

While the jobs market overall remains weak, demand is high for in certain sectors. For skilled and reliable mechanics, welders, engineers, electricians, plumbers, computer technicians, and nurses, jobs are plentiful; one can often find a job in 48 hours. As Bob Funk, the president of Express Services, which matches almost one-half million temporary workers with emplo‎yers each year, “If you have a useful skill, we can find you a job. But too many are graduating from high school and college without any skills at all.”

The lesson, to play off of the famous Waylon Jennings song: Momma don’t let your babies grow up to be philosophy majors.


Kids commonly graduate from four year colleges with $100,000 of debt and little vocational training. A liberal arts education is valuable, but it should come paired with some practical skills.

Third, negative attitudes toward “blue collar” work. I’ve talked to parents who say they are disappointed if their kids want to become a craftsman–instead of going to college.This attitude discourages kids from learning how to make things, which contributes to sector-specific worker shortages….


(For full disclosure, my degree — theology — is one of the lowest paying degrees out there, and the lowest in employment opportunities.) In a short debate of the issue, Peter Schiff notes this “propping up” of useless degrees:

In the above discussion, Diana Carew seems to want jobs created by the government to fit the degrees earned. Otherwise, how would you force the private sector to create such opportunities unless you artificially demand [create] such opportunities? ~ There was zero unemployment in Soviet Russia, but all this “opportunity” collapsed due to economic laws… “this is how the USSR ended up with warehouses FULL of “widgets” (things made that it could not use or people did not want) no one needed in the real world. This economic law enforcers George Gilder’s contention that when government supports a venture from failing, no information is gained in knowing if the program actually works. Only the free-market can do this.” (Peter Schiff gets into the weeds a bit in this video.)

Here is another great PRAGER U video discussing the issue:

This is one of the areas Gary Johnson was correct — supply and demand:

FORBES notes well that most on the Left-end of the spectrum “don’t hate entrepreneurship and innovation,” but that their Econ 101 “part of the brain that deals with economics tends to shut down when discussing sectors like higher education (or healthcare).”

A WASHINGTON FREE BEACON post relates findings from a Federal Reserve Bank (NY) study showing that the federal student loans have increased the cost of college tuition while at the same time college enrollment did not increase:

The expansion of federal student loans has caused tuition prices to increase without increasing college enrollment numbers, according to a report from the Federal Reserve Bank of New York.

The report evaluated student financial data as well as federal student aid programs “to identify the impact of increased student loan funding on tuition.”

According to the report, yearly student loan originations grew from $53 billion to $120 billion between 2001 and 2012, an increase of about 126 percent. During this time frame, average sticker-price tuition nearly doubled, rising from $6,950 to $10,200 in constant 2012 dollars.

The report found that for each dollar of federal aid applied, tuition increased as well.

“We find that each additional Pell Grant dollar to an institution leads to a roughly 55 cent increase in sticker price tuition,” the report says. “For subsidized loans, we find a somewhat larger passthrough effect of about 70 percent.”


The report makes reference to a hypothesis put forth by William Bennett, the Reagan-era secretary of education. The so-called “Bennett Hypothesis” holds that “increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that federal loan subsidies would help cushion the increase.”

Many have compared the market for postsecondary education to the housing market…. [see video at the top]

Which brings me to finish this post with a humorous look at the hipster douche-bags scratching his or her head in regard to high tuition costs via REASON-TV: