Month: November 2014

More Minimum Wage Foolishness

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2014-11-06 Min Wage Fixed

I saw the image above on a friend’s Facebook profile on Tuesday. Well, not exactly. You can probably tell what parts I added to it. Don’t get me wrong, minimum wage isn’t the only thing I take issue with on that list, but it’s just the one that is just objectively dumb. We’ve written about exactly why the minimum wage is foolish here at DR many times already, but life handed me a fresh example, so here goes. The WSJ reports that (1) McDonald’s profits were down 30% in Q3 2014 and that (2):

By the third quarter of next year, McDonald’s plans to introduce new technology in some markets “to make it easier for customers to order and pay for food digitally and to give people the ability to customize their orders,” reports the Journal.

In other words: the Golden Arches are losing money and plan to economize by replacing workers with machines. Is it any coincidence that this announcement comes just after CEO Don Thompson signed endorsed President Obama’s call to raise the minimum wage? No, it isn’t. It’s politics. Ignorant people call for hiking the minimum wage without realizing that they’re going to cannibalize jobs. Astute CEO gives up on trying to be reasonable and just goes with the flow, knowing full well that if/when the minimum wage rises, his company will be able to survive through automation.

There are much, much better policies to fight poverty. Why is no one rallying around making the efficient and effective Earned Income Tax Credit even more powerful? Politics. Calling for minimum wage hikes is like having the village pressure the one doctor into bleeding the patient to save his life. “But this won’t make the patient better,” the doctor cries. “What,” says the rabble rouser, “Are you saying you want the patient to die! Apply the leeches!” It’s a great way to make the doctor look heartless. It’s not a good way to help the patient get better.

The US Military Made Your Cell Phone Possible

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Business Insider has an arresting chart showing which of the major technologies that make cell phones possible are directly attributable to the United States military.

2014-11-04 DARPA Cell Phone Tech

Don’t get me wrong: I’m a big believer that government is an evil that is necessary. But there are a few things that it does well. The canonical examples are national defense and civil/criminal justice. I’m starting to think that research might be another exception to the rule, however. I’d love to see even more investment in R&D. Want to see more STEM graduates? Well, start up a few more government labs and there you go. While you’re at it, consider giving preferential access to resulting tech to companies that locate their workforces in the United States. Seems like a great way for an advanced nation to compete for private investment dollars.

New Manhattan Institute Report on Inequality

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Inequality expert Scott Winship
Inequality expert Scott Winship

Scott Winship at the Manhattan Institute has a new study[ref]A summary can be found here.[/ref] out on inequality and prosperity. His key findings are:

1. Across the developed world, countries with more inequality tend to have, if anything, higher living standards. The exception is that countries with higher income concentration tend to have poorer low-income populations.

2.  However, when changes in income concentration and living standards are considered across countries—a more rigorous approach to assessing causality—larger increases in inequality correspond with sharper rises in living standards for the middle class and the poor alike.

3.  In developed nations, greater inequality tends to accompany stronger economic growth. This stronger growth may explain how it is that when the top gets a bigger share of the economic pie, the amount of pie received by  the middle class and the poor is nevertheless greater than it otherwise would have been. Greater inequality can increase the size of the pie.

4. Below the top 1 percent of households—and prior to government redistribution—developed nations display levels of inequality squarely in the middle ranks of nations globally. American income inequality below the top 1 percent is of the same magnitude as that of our rich-country peers in continental Europe and the Anglosphere.

5. In the English-speaking world, income concentration at the top is higher than in most of continental Europe; in the U.S., income concentration is higher than in the rest of the Anglosphere.

6. Yet—with the exception of small countries that are oil-rich, international financial centers, or vacation destinations for the affluent—America’s middle class enjoys living standards as high as, or higher than, any other nation.

7.  America’s poor have higher living standards than their counterparts across much of Europe and the Anglosphere, while faring worse than poor residents of Scandinavia, Germany, Austria, Switzerland, the Low Countries, and Canada.

 

Check it out.

Population and Resources

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The state of the earth’s resources and population has been a hot topic for a while now. The most common refrain is that we simply need fewer people. How that goal is accomplished can range from mild like family planning to inhuman like a one-child policy. Yet the unchallenged premise remains that reducing the amount of people is the main way to achieve this goal. I reject this premise. I contend that the main cause of resource crises on earth is how much people use, not how many people there are.

On this note, the BBC ran an article recently on the topic. The most relevant parts in my mind:

The picture is complicated by the fact that while the overall figures have been growing, the world’s per-capita fertility has been declining for several decades.

The impact on the environment has increased substantially, however, because of rising affluence and consumption rates.

….

As a result of this long-term impact, the world should focus on curbing consumption and designing ways to conserve species and ecosystems.

“Society’s efforts towards sustainability would be directed more productively towards reducing our impact as much as possible through technological and social innovation,” says Prof Bradshaw.

The BBC repeats the idea that less people forms part of the equation, and in light of my argument, people will often ask, “Can’t we do both?’ In theory, I agree that responsible resource usage goes hand-in-hand with family planning, but so long as people keep before their minds that they can just prevent people from existing, they develop very little desire to conserve resources. So by compromising we end up right back where we started, staking our future on the dangerous premise that we need to prevent people from existing in order to live life comfortably.

Furthermore, as the BBC mentions, even a catastrophic decline in population will do very little to arrest any resource problems so long as resource consumption remains the same as now or increases, without even considering the effect of extreme population decline on other areas such as economics and culture. Overall, I see a picture of resource management centered around population control that will at best be ineffective, at worst outright immoral, and very likely detrimental to society in the long run.

I also believe we are meant to be fruitful and multiply. I believe human life is inherently good. We can live with an increasing number of people on earth. What we cannot live with is a world where people use vastly more than they need. People will often point out how the development of China and India is putting strain on the world’s resources and how they need to use less, but if Americans continue to live well in excess of what we need, on what grounds can we possibly tell the rest of the world to use less? We must be the change we want to see, especially when we’re 4% of the world population and use 20% of the world’s resources.

I realize my vision is a bit pie-in-sky. However, I think more evidence is mounting that all the family planning in the world and even outright authoritarian population control will do nothing if we do not reduce our desire for objects. Then on the flip side, I believe if we do learn to desire less, more people will not create crises. A family of four wanting to live a luxurious American lifestyle will place more demand on resources than a family of eight living modestly.

Therefore, I believe we have two choices set before us. We can sacrifice objects, or we can sacrifice people. Which do we choose?