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The Good Life Is Not a Constitutional Right

May 07, 2014 By: Scott Spiegel Category: Economy

512XyOsXR8L._SY450_Lately there’s been a lot of chatter from midterm-campaign-theme-starved liberals about the scourge of income inequality.

In an entry in their lugubrious “Poverty in America” series, a National Public Radio reporter recently wailed that 95 percent of the wealth recovered since the 2008 recession has gone to the top 1 percent of income earners, and that the U.S.’s middle class is no longer the wealthiest in the world.

Adding fuel to the fire, French economist Thomas Piketty recently published the English translation of his anti-capitalist exposé Capital in the Twenty-First Century. Proud neo-Marxists and their acolytes briefly sent the book to number 1 on Amazon’s digital bestsellers list. (Clearly the left is no longer miffed at tech giants who exploited the physical labor of field peasants to harvest the Internet.)

Winner of the worthless Nobel Prize in Economics Paul Krugman gave Piketty’s volume a glowing review, calling it a “magnificent, sweeping meditation on inequality.” (Whenever a New York Times reviewer calls a book a “meditation” on something, I assume that’s code for “random fact-free musings scribbled while on drugs.”)

Piketty’s central argument is that unbridled capitalism is bad for society. According to economic data he’s reanalyzed, the concentration of wealth accelerates at a faster rate than the economy grows, such that even if society is doing well, disproportionately more wealth goes to a small percentage of the population. The solution to this non-problem is—you guessed it!—government regulation, including higher taxes on the wealthy.

Liberals are agog over Piketty’s brilliance and are parading his book around as though he’s offered some blindingly new and innovative insight. But anyone who argues, as Piketty does, that unchecked wealth accumulation is bad for capitalism doesn’t understand capitalism.

Wealth generation and accumulation aren’t zero-sum games; they can expand infinitely. The existence of more billionaires doesn’t squeeze the middle and lower classes out of their chance to become billionaires. Before there were hundreds of billionaires, there were only a few billionaires; yet no one claimed that letting these few billionaires get richer would prevent other people from becoming billionaires.

Restricting wealth accumulation for some doesn’t foster wealth accumulation for others; it just allows fewer people to join the ranks of the super-rich.

In fact, NPR itself ran a story just last week on Americans’ surprising mobility in and out of the 1 percent. According to Mark Rank and Thomas Hirschl, author of the book Is it just the One Percent, or is Affluence a Normal Life Course Event?, a whopping one out of five members of the U.S. population makes it into the top two percent at some point in their lives. Eight percent of Americans make it into the top one percent and stay there for at least a year. But seven out of those eight in a hundred don’t last a decade in the top one percent, which means that foolish investment can bump one out of the upper class just as easily as hard work and wise investment can propel one into it.

Yet liberals don’t see the good life as an aspiration. They see it as the default, and if some don’t have it—well, that’s a problem the government needs to fix. The good life doesn’t need to be painstakingly created, shaped, and built via imagination, planning, and hard work. It just comes into existence, is owed everyone as a birthright, and is absent only if it’s been stolen by greedy oligarchs.

Meanwhile, conservatives don’t view society as owing anyone anything; they favor “negative rights,” in which the government merely protects us from fraud and theft. Liberals capitalize on general public recognition of this genuine, small role for government regulation by endlessly complaining that the government isn’t meeting that minimal responsibility. But their efforts result in legislation like the 14,000-page Dodd-Frank Bill, which not only uses vague language to allow future regulators to impose all kinds of restrictions on business, but doesn’t even address the problem it was supposedly designed to solve.

So why is growing inequality even an issue? What difference does it make if a CEO earns 100 times his average employee’s salary of $75,000 vs. 50 times their salary of $50,000? As Margaret Thatcher once asked, would the left rather have everyone be poorer so that the gap between rich and poor can be smaller?

The default throughout human history hasn’t been the good life; it’s been an epic, bloody struggle for survival, in which successive generations have tried, with some success, to pass on a better way of life for their children. Miraculously, this has happened in recent times, especially in the West, as a result of capitalism, and is happening in developing nations as they adopt the Western model.

Capitalists didn’t take away the good life from the masses, because the good life didn’t exist until capitalism. But the more of capitalism that liberals chip away at, the less of the good life there will be for everyone.

Previously published in modified form at Red Alert Politics

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It Depends on What the Meaning of the Word “Al-Qaeda” Is

January 01, 2014 By: Scott Spiegel Category: War on Terror

iraq_al_qaeda_connectionNew York Times reporter David Kirkpatrick recently published a lengthy piece arguing that President Obama’s original al-Qaeda-free description of the September 11, 2012 attack on our Benghazi consulate was accurate, and that National Security Advisor Susan Rice’s claim that the attack was instigated by a YouTube video was correct.

Do we have to explain the Bush Doctrine to liberals all over again?

Since September 11, 2011, the major provision of the most brilliant foreign policy doctrine of the past half-century asserts that the U.S. will make no distinction between local thugs-for-hire who perpetrate terrorist acts, extremist militia offshoots of larger terrorist networks, international terrorist organizations, and state sponsors of terror that train and fund and harbor the above.  Is that so hard?

Apparently it is.

Kirkpatrick wrote, “Months of investigation by The New York Times, centered on extensive interviews with Libyans in Benghazi who had direct knowledge of the attack there and its context, turned up no evidence that Al Qaeda or other international terrorist groups had any role in the assault.”

Kirkpatrick’s argument rests on the premise that Ansar al-Shariah, the group believed to have plotted the Benghazi attack, is not technically part of the formal al-Qaeda leadership structure, but rather a local Libyan branch of a network closely allied with and supportive of al-Qaeda’s goals.

This is like saying that Organizing for Action is not technically a Democratic Party outfit, because it isn’t listed in the Democratic National Committee’s org chart.

Ansar al-Shariah is an extremist militia that is known to be part of al-Qaeda’s fundraising network.  Therefore, according to the Bush Doctrine—which Obama has endorsed in practice—we do not distinguish between the two.

As head of the House Intelligence Committee Mike Rogers noted, “It is accurate that of the group being targeted by the bureau (FBI) at this point, there’s strong Al Qaeda ties.  You can still be considered to have strong ties because you are in the ring of operations of [the] Al Qaeda core.”  Fox News also reported that two of the key suspects in the Benghazi attacks had histories of working with al-Qaeda leadership.

Kirkpatrick also produced the following laughable line: “The attack also suggests that, as the threats from local militants around the region have multiplied, an intensive focus on combating Al Qaeda may distract from safeguarding American interests.”  So Obama’s obsessive focus on tracking down an arthritic Yemeni hermit living in a cave who no longer had any role in al-Qaeda was key in winning the War on Terror, but stopping the terrorist network and its affiliates who were responsible for the September 11 attacks and dozens of others is a “distraction.”  Got it.

Kirkpatrick also claimed that the attacks were instigated by the infamous 13-minute, low-budget YouTube movie trailer populated by out-of-work actors from a local L.A. repertoire.  He wrote, “And contrary to claims by some members of Congress, [the attack] was fueled in large part by anger at an American-made video denigrating Islam.”  His evidence?  After Egyptians in Cairo protested at the American embassy, some random looters and arsonists in Benghazi who had seen the video ransacked the compound following the initial attack.

But these Johnny-come-lately thugs were the equivalent of disaffected teens who wander into a flash mob half an hour after the organizers start it and grab sneakers and radios.  Their haste to take advantage of a chaotic situation doesn’t mean there weren’t instigators who carefully planned it.

As Kirkpatrick wrote, “Men looted suits of clothes and carried them out on their hangers.  They lugged out televisions.  Some emerged from buildings clutching food they had found, and one poured what appeared to be Hershey’s chocolate syrup into his mouth.  Others squabbled over trophies as small as a coil of rope left on the ground.”  If this behavior reflects proud Muslims upset over a religious insult high-mindedly defending their faith, I don’t see it.

Note also the independent analysis from December 2012 showing that the anti-Islam video didn’t garner a single reference in Libyan social media outlets until a day after the Benghazi attacks.

In sum, Kirkpatrick claimed that there is “no evidence that al Qaeda or other international terrorist groups had any role in the assault,” but he provided no evidence to support such a claim.  Kirkpatrick gave the most generous possible interpretation of Obama and Rice’s remarks, and held those who believe the attack was planned by an al-Qaeda affiliate to the strictest standards of evidence.

But this is not a criminal trial, in which the prosecution must prove its case beyond a reasonable doubt, and the slightest bit of contradictory evidence sets the defendant free.  Even if the truth lies halfway between Obama’s initial telling and the House Intelligence Committee’s version, the administration is guilty of grave distortion of the facts and possibly impeachable efforts to prevent the country from learning the truth in advance of a Presidential election.

As Kirkpatrick admitted, “The investigation by The Times shows that the reality in Benghazi was different, and murkier, than either of [the two] story lines suggests.”

Or, as President Clinton might put it, “It depends on what the meaning of the word ‘al-Qaeda’ is.”

Previously published in modified form at Red Alert Politics

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For Liberals, Mandela’s Communist Sympathies Are a Delightful Bonus

December 11, 2013 By: Scott Spiegel Category: Miscellaneous

MANDELA_SACP_RALLYWhile conservatives debate whether former South African President and African National Congress leader Nelson Mandela’s efforts to eradicate apartheid outweigh his one-time endorsement of violent terrorist tactics and shady alliances with despots, liberals seem curiously untroubled by the revelation that he used to be a communist.  In fact, it seems to make them like him even more.

In 2011, British historian Stephen Ellis documented Mandela’s one-time membership in the South African Communist Party and his ideological affinity with such communist leaders as Che Guevara, Fidel Castro, and Joe Slovo.  This was in addition to Mandela’s known political alliances with American foes such as Yasser Arafat, the Palestinian Liberation Organization, Hamas, and Muammar Gaddafi.

So what do liberals think of Mandela’s flirtation with communism?  In a purportedly tough-minded historical assessment titled “Nelson Mandela, Communist,” New York Times columnist Bill Keller asked, “Does it matter?” and then, implying that it doesn’t, sneered, “The news excited some critics and historical revisionists, who claimed it exposed the A.N.C. as a Stalinist front…  [But] Mandela’s Communist affiliation… doesn’t justify the gleeful red baiting.”

Keller went on: “Mandela’s brief membership in the South African Communist Party… say[s] less about his ideology than about his pragmatism…  The early collaboration of the A.N.C. with the Communists was a marriage of convenience…  Communist ideology undoubtedly seeped into the A.N.C., where it became part of a uniquely South African cocktail with African nationalism, Black Consciousness, religious liberalism and other, inchoate angers and resentments and yearnings.”

In other words, communism in the A.N.C. wasn’t an isolated pollutant that trickled into an otherwise pure mountain spring.  It was a contaminant that blended in with the roiling cauldron of other ideological toxins that made up the A.N.C., including Black Nationalism, Black Liberation Theology, and socialism.

Keller continued: “Perhaps the most important and lasting personal effect of the South African Communist Party on Mandela was that it made him… a committed nonracialist.  The A.N.C. in its formative years admitted only blacks.  For a long time, the Communist Party was the only partner in the movement that included whites, Indians and mixed-race members.  That relationship is one of the main reasons Mandela cited for his rejection of black nationalism and his insistence that multiracialism remain at the heart of the A.N.C. ethic.”

So the definitive 20th century international hero for multiracialism and racial justice didn’t reject racism on his own, but only once his organization was infested by communist doctrine.  That’s how high-minded Mandela’s philosophy was: communism actually improved it, rather than making it worse.

For that reason, one wonders whether the American left is more excited by Mandela’s multiracialism or his one-time affinity for redistributing wealth.

For example, New York City Mayor-elect and self-described socialist Bill de Blasio, who supported Nicaragua’s Sandinistas after they left power, and honeymooned in communist Cuba, extolled to a Harlem audience the virtues of Mandela’s campaign against economic inequality—which coincidentally parallels De Blasio’s raison d’être.  He urged the crowd, “If you believe in progressive values… all you need to do is look to the example of Nelson Mandela.”  Could Mandela’s death have come at a more propitious time for the candidate who campaigned on the promise of grinding his heel into the faces of New York’s high-income earners and tossing their custom-made suits to the crowd?

For his part, Obama recently announced his intention to spend the rest of his Presidency spreading the wealth around—at least when he’s not busy slobbering all over communist leaders like Raul Castro.  In Obama’s view, income inequality is the greatest factor holding back our economy.  Not sluggish business investment, not stifled entrepreneurial spirit, not excessive government regulation or anemic job creation or artificially low interest rates.  No, the most important influence on our economy is hard-working capitalists getting paid too damn much.

Similarly, Elizabeth Warren and other Democrats have renewed their push for raising the minimum wage for burger flippers to the starting salary of high school teachers.

And David Simon, creator of Obama’s favorite TV show “The Wire,” with its relentless left-wing propagandizing, recently wrote a long, incoherent essay in The Guardian arguing that America should become more Marxist.

As Michael Goodwin noted in the New York Post, the Democratic Party has no more centrists.  The closest equivalents exist within the Republican Party, and they’re called RINOs.

Today’s Democrats aren’t troubled by Mandela’s former communist sympathies, because they share them.

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For Obamacare to Work, We Must Ignore What Insurance Is

August 07, 2013 By: Scott Spiegel Category: Health Care

3193124-man-closing-his-eyes-while-covering-his-earsLiberals are just now grasping the economic case against Obamacare that Tea Party protestors and townhall attendees have been making for four years—and they’re still getting it wrong.

Witness economics professor Robert H. Frank’s Sunday column in The New York Times called “For Obamacare to Work, Everyone Must Be In.”  In it Frank notes that there are two incompatible propositions framing the Obamacare debate: that people shouldn’t be denied coverage based on preexisting medical conditions, and that government shouldn’t force individuals to buy health insurance.  Both conditions, Frank writes, cannot be adhered to simultaneously.  (Guess which one he thinks we should drop?)

Frank describes how banning denial of coverage due to preexisting conditions without instituting an individual mandate leads to an “adverse-selection problem,” whereby people with expensive illnesses are willing to pay the universally-priced premiums, but healthy people drop out of the market, thus driving up the price of insurance.  This process continues, with relatively healthy people leaving the market as premiums steadily increase, until insurance becomes exorbitantly expensive.  (For evidence of this phenomenon, see California, Washington, New York, or New Jersey.)

This problem with government-regulated markets is also known as the insurance “death spiral” (not to be confused with “death panels,” another correctly-anticipated Obamacare consequence.)

Frank argues that the only way around the adverse-selection problem is to force everyone to buy health insurance: “The adverse-selection problem explains why almost no countries leave health care provision to unregulated private insurance markets.”  He labels the problem “a profound source of market failure that renders unregulated insurance markets a catastrophically ineffective way of providing access to health care.”  He challenges, “We must ask those who would repeal Obamacare how they propose to solve the adverse-selection problem.”

Leaving aside the suggestion that we should take what socialist and authoritarian states around the world do as a model for our behavior, there is in fact a way around this dilemma, and it doesn’t involve forcing anyone to do anything.  It also demonstrates, not the failure of the market, but its genius.

The solution is to treat health insurance as—surprise!—insurance; that is, to treat it as a voluntary plan that you can invest in if you want, or take your chances and decline to purchase if you’re young, healthy, non-risk-averse, and believe you can do better things with your money.

The catch is that whatever you decide, you have to live with.  If you decline to buy health insurance and get sick, you could be in trouble, and may have to rely on savings or loved ones or loans or charity to pay for the care you need.

In this system, there are lots of people forking over thousands of dollars a year to insurance companies and getting nothing in return, because they are “unlucky” enough to remain healthy.  But this is how insurance companies stay in business: in order to be able to pay a “jackpot” to the few people who develop expensive illnesses, their reserves have to be funded by thousands of other people who don’t get sick.

The insurance market is inherently risky and uncertain; as with casino gambling, the house wins in the long run.  Buying insurance usually doesn’t get you anything tangible—it buys you peace of mind.

Naturally, in a free market, premiums go up the older you get and the more illnesses you acquire.  This is insurance companies’ only method of being able to provide insurance to most people without their business model collapsing.

As for people with preexisting conditions, the reason it’s so hard for them to get coverage is that their likelihood of acquiring the illness they wish to hedge against approaches 100%.  Walking into an insurance company and demanding that they pay for your existing or soon-to-develop illness isn’t insurance, it’s welfare.

Switching metaphors, what kind of casino lets you decide whether to bet on the blackjack table only after you’ve seen all your cards?

Insurance with high deductibles is still generally available for people with preexisting conditions for some serious illnesses.  People who have trouble finding any insurance can often join voluntary high-risk pools set up in their states.  But sick people can’t claim that getting their treatment paid for when they already know they’re going to get sick is insurance.

(By the way, note the irony of a writer in The Times scolding us that “Everyone must be in,” when “Everyone” apparently excludes thousands of unions and businesses who have received Obamacare waivers, employers who complained that they couldn’t follow the law in time for its rollout, and legislators and thousands of their aides.  Apparently Obamacare will work just fine without their forced participation.)

The flaw in Frank’s case is his presumption that insurance for preexisting conditions is a reasonable provision and should be offered at all.  It shouldn’t, or at least it shouldn’t be called insurance.

Frank’s argument is a barely more sophisticated version of former White House health advisor Ezekiel Emanuel’s embarrassing plea to young people several months ago to buy health insurance in order to show their support for Obama.  But neither Frank nor any other economist is ever going to come up with a satisfactory resolution to the adverse-selection problem if they refuse to grasp the fundamental concept of insurance.

Previously published in modified form at Red Alert Politics

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Detroit Happens

July 24, 2013 By: Scott Spiegel Category: Economy

130718130808-detroit-protests-bankruptcy-620xaAh, Detroit!  The most liberal metropolis in the country, a city that hasn’t elected a Republican city council member since Nixon’s first term, a city that hasn’t elected a Republican mayor since Eisenhower was president.

Naturally, Republicans are responsible for Detroit’s woes.

Last week Detroit filed for bankruptcy, the largest municipal bankruptcy filing in U.S. history.  The city is $18 billion in debt and owes $3.5 billion to city employees in unfunded pension and health care obligations.

Kevyn Orr, Detroit’s emergency city manager, proposed cutting pension benefits and interest to bondholders as part of his Chapter 9 filing.  Last Friday a circuit judge ruled that Detroit’s bankruptcy filing was unconstitutional, because it violated municipal employee contracts with predefined pension payments.

Commentators have been tossing around a variety of explanations for Detroit’s problems, including: residential and business flight to the suburbs, a lost manufacturing base, auto plants closing, mismanagement and corruption in city government, racial segregation, and the national housing crisis and recession.

I’ve noticed a curious thread running through most commentators’ explanations: namely, the suggestion that no one is at fault for what happened in Detroit; or that everyone is at fault; or that many factors contributed to Detroit’s decline and we can’t say which had the most influence; or that it doesn’t really matter who’s at fault because all we can do now is move forward.

New York Times columnist Paul Krugman expressed the following passive account: “Detroit does seem to have had especially bad governance, but for the most part the city was just an innocent victim of market forces.”  You know, like those Republican-led cities and states that suffered through the same recession as Detroit and somehow managed to emerge prosperous.

But something is clearly at fault for the budget shortfall of the city’s pension system, which continues to offer guaranteed retirement income and health care benefits to recipients, no matter how long they live, no matter how expensive their medical care.  Where does that exist in the private sector these days?

Why do municipal employees—some of whom perform dangerous jobs, but many of whom sit at library checkout desks or hospital reception counters all day—think they deserve such privilege?

The resistance to cutting pensions is probably driven in part by what decision-making psychologist Daniel Kahneman calls loss aversion—or, alternatively, the endowment effect.  Namely, losses seem more unjust to most people than gains seem just, so instead of cutting benefits and lowering taxes to spur wealth creation, society resists touching entitlements to prevent anyone from ever losing anything, even if this hamstrings entrepreneurs.  Another way of looking at this is to say that people who already have benefits feel that they are “endowed” with them and have more of a right to them than if they had never possessed them.

The American Prospect’s Harold Meyerson makes this case in ethical terms: “[T]oday’s bankruptcy filing is likely to reduce [city] services still further, while likely reducing the monthly pension checks of its retirees, though they and their unions have a strong moral claim to most favored creditor status.”  According to Meyerson, the businessmen and investors who created the jobs that allowed taxes to be collected and city services to be provided—well, their moral claim on much of anything is moot.  But the people cashing in on those services—now, they’re the ones whose rights we have to protect, whose claim to pensions and free health care are enshrined in the Michigan State Constitution.

But for an even more direct answer to the question of why city employees feel so entitled, see the comments of 65-year-old Michael Wells, plaintiff in a city union-sponsored lawsuit against Detroit’s bankruptcy: “He said he viewed the pension as part of the overall pay he was promised…  ‘Had I not had a pension, perhaps I would have gotten several dollars an hour more and that would be O.K.  I would have taken that money and invested it in some kind of mutual fund or stock.’”

That last sentence is key: Because he was relying on government to fund his retirement, Wells did no financial planning.  Why should he feel the need to?  And hundreds of thousands of other Detroiters no doubt put similar faith in government, and now find themselves in the same predicament.  Their thinking must be, Government not only gives us jobs and salaries, it takes responsibility for our financial well-being right on up through retirement.  How can it possibly withdraw its services now?

Also see Times columnist Steven Rattner’s rationale for why “We Have to Step In and Save Detroit”: “[T]he 700,000 remaining residents of the Motor City are no more responsible for Detroit’s problems than were the victims of Hurricane Sandy for theirs, and eventually Congress decided to help them.”  Right.  Retiring, being the victim of a historically destructive weather event that occurs once a century—they’re equally unpredictable, and people shouldn’t be expected to build up savings any more than they should be expected to build bunkers and hurricane shelters in Manhattan.

The Pittsburgh Post-Gazette, wary of that city’s potential slide into Detroithood, mused, “There has been finger-pointing about who is to blame.  The answer is everyone.”  No.  The answer is Democratic politicians, moderate Republican politicians who enable them, and voters who elect them all on the platform of making government a nanny-state protector of able-bodied human beings to the absurd extent of doing their retirement planning for them.  That’s who’s to blame.

Previously published in modified form at Red Alert Politics

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Minimum Wage Is Too High For Paul Krugman

February 20, 2013 By: Scott Spiegel Category: Economy

Wage_labour.svgIn his State of the Union Address last week, President Obama called for yet greater federal interference in the economy via a $1.75 per hour minimum wage hike, from $7.25 to $9.00, with additional increases tagged to inflation.

New York Times gossip columnist Paul Krugman opined that, “surprisingly,” increasing the minimum wage may be good policy: “Why ‘surprisingly’?  Well, Economics 101 tells us to be very cautious about attempts to legislate market outcomes.”  No, I didn’t make up that disclaimer; that’s just Krugman trying to sucker you in with a little false modesty.  Don’t worry—he still comes out all in favor of the wage increase.

And what an increase it would be: Raising the minimum wage $1.75 an hour would be by far the biggest single hike since the federal minimum wage was established in 1938.  The next biggest increase—of $0.70 an hour—occurred three times in 2007, 2008, and 2009, when newly sworn-in Democrats spiked the rate three years in a row.  Before the 2006 wave of Democrats rode into power, the minimum wage had never increased more than $0.50 at a time.

The proposed 24% increase would be the largest hike by percentage since 1974, when Congress raised it 25% from $1.60 to $2.00.

So what’s the argument for raising the minimum wage?  Proponents claim that raising it:

(1) Is moral, because workers at the bottom of the economic ladder will earn more;

(2) Helps the economy, because those workers will spend more and stimulate the economy;

(3) Increases employment, because more spending will lead to more hiring.

(Never mind that the employers who will supposedly do all that extra hiring will be the ones paying their workers to buy more of their products in the first place.)

In contrast, opponents argue that raising the minimum wage:

(1) Is immoral, because it restricts employers’ ability to hire low-wage workers, and thus reduces their employment;

(2) Hurts the economy, because it forces employers to direct financial resources in less efficient ways;

(3) Decreases employment, because small businesses can’t keep up with the need to increase all of their workers’ wages to maintain relative parity.

So what happens after minimum wage increases take effect?  Do employers hire more or less?  Does the economy improve or worsen?

To answer this question, I took a look at all federal minimum wage increases since World War II, to see what transpired after these hikes—in particular, what happened to the unemployment rate and the gross domestic product (GDP).

First I looked at the monthly U.S. national unemployment rate following the passage of each post-WWII federal minimum wage increase, to see what effect minimum wage legislation had on employment.  I found that the average unemployment rate during the first full month after each minimum wage increase, for all increases from January 25, 1950 to July 24, 2009, was 6.00%.  From three months out through ten months out, the average monthly national unemployment rate progressed as follows: 6.01%, 6.09%, 6.10%, 6.11%, 6.13%, 6.23%, 6.25%, and 6.33%.  So over the ten months following mandatory federal minimum wage increases, the unemployment rate steadily and reliably increased, on average a third of a percentage point from what it had been upon passage of the law.

Next I looked at the quarterly percent change in GDP following passage of each hike, to see what effect minimum wage legislation had on GDP.  The average percent change in GDP for all quarters from 1950 to 2012 was +3.31%.  In contrast, the average percent change in GDP during the first full quarter after each wage increase was +2.48%, almost a full point lower.  In the second quarter after the wage increase, the percent change was +3.00%, and in the third it was +2.63%.

These aren’t huge differences, largely because many factors besides minimum wage affect employment and GDP.  Other economists have done more detailed studies and isolated the deleterious effects of minimum wage laws.  But even my cursory analysis confirms that Krugman and his ilk are loons if they think that placing restrictions on employers’ hiring practices—which is what minimum wage laws do—will somehow increase hiring and strengthen the economy.  (Other pet theories of Krugman’s are that wearing leg irons helps you walk faster and having laryngitis makes you speak more mellifluously.)

Krugman pooh-poohs the detrimental effects of minimum wage increases: “Now, you might argue that even if the current minimum wage seems low, raising it would cost jobs.  But there’s evidence on that question…  And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.”

Krugman is such a pathological liar that when he says “the great preponderance” of evidence shows “little if any” negative effect, you know he’s brushing aside mountains of data contradicting his position.  Krugman cites just one paper titled “Why Does the Minimum Wage Have No Discernible Effect on Employment?,” published by leftist D.C. think tank the Center for Economic and Policy Research, whose founder recently authored a book called “The End of Loser Liberalism: Making Markets Progressive.”

If liberals want a minimum wage hike, why don’t they just come right out and demand more redistribution of wealth from the bourgeois to the proletariat?  Could they spare us the act of dressing up their request in convoluted economic theories using data that can be manipulated to give them any results they want, and whose conclusions no one with common sense believes?

Previously published in modified form at Red Alert Politics


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Liberal Myths: Holiday Edition

December 12, 2012 By: Scott Spiegel Category: Economy

three donkeys copyHow many liberal myths can a mainstream news announcer cram into one innocent, 90-second, top-of-the-hour news briefing?  On WABC’s New York affiliate one recent December evening, I counted eight.

First the news reader (as they more appropriately call them in Japan) cheerfully announced that seasonal hiring—inventory control agents, sales clerks, deliverymen—was way up this year compared to last year; that increased holiday spending was a sign the economy was improving; and that goods being purchased in the U.S. are unfortunately being made more often overseas.

There’s three myths right there: (1) elevated part-time hiring reflects economic health; (2) consumer spending drives growth; and (3) trade imbalances are harmful.

(1) That retailers are hiring more temporary help isn’t a sign the economy is thriving; it’s a sign there are more underemployed workers taking part-time work below their skill level.  If permanent, full-time employment were stable, we wouldn’t see such a leap in short-term hiring during peak economic season.  Increased part-time hiring also reflects employers’ reluctance to take on “full-time,” 30-hour-a-week employees whom they must soon provide health insurance per Obamacare.

(2) Consumer spending does not drive economic growth; investment and production do.  There’s nothing to consume if manufacturers don’t have the capital and the optimism that investing in productive enterprise will be worth it.  And manufacturers don’t think production will be worth it if they’re saddled with confiscatory tax rates, burdensome regulations, and long-term uncertainty.  Consumer spending is the last step in the economic chain of production, not the first.

(3) Trade imbalances reflect the fact that some countries have more stable economies and reliable currencies than others, the latter of whom must depend more on tangible production efforts to demonstrate they have something of value to trade.  Trade imbalances also signal advanced nations’ capacity to provide high-tech, intangible services and sophisticated knowledge transfer that aren’t as concrete or visible as shiploads of dry goods.

After this trio of falsehoods, the announcer chirped that gas prices were lower than they’d been in months—a boon for the economy—but higher than this time last year, which could reflect rising wages.

There’s two more myths: (4) seasonal fluctuations in gas prices reflect economic growth; and (5) high gas prices reflect improving wages.

(4) Gas prices are always higher in the summer; this is a reliable, cyclical variation, and gas prices declining from June to December say nothing about comparative economic performance at the end of the year.

(5) Our current high gas prices are less likely a reflection of increasing income—which we know is at historically low levels—and more likely the result of instability in the Middle East (due to our President’s weak foreign policy), forecast scarcity of oil (due to drilling restrictions), and looming inflation (due to the Federal Reserve’s currency devaluation).

After a commercial break, the reporter referenced the recent renewal of the Kyoto Protocol and uncritically repeated the news that (6) scientists are alarmed because 2012 is on track to be one of the hottest years on record.

(6) The Met Office in Great Britain recently released a report showing global temperature the same in 2012 as it was in 1996.  The period over which no global warming has been taking place (1996-2012) is thus the same length as the period over which it was supposedly taking place (1980-1996).  But never mind: news outlets such as The New York Times inveigle us to “Bundle Up: It’s Global Warming.”

The announcer then mentioned Obama’s recent trip to Michigan to grandstand on the end-of-the-year fiscal showdown, and parroted his claim that (7) spending cuts must be balanced with tax increases to balance our budget.  The announcer concluded that (8) the Dow Jones Industrial Average was up slightly due to optimism over progress in the fiscal cliff talks.

(7) Liberals refuse to understand that revenue increases are not the same as tax increases.  One means more money going to the government; the other means a higher percentage of people’s income being taken from them.  Paradoxically, lowering marginal tax rates on high-income earners increases revenue, because then they don’t scale back their investment and hiring to avoid being gouged.  Cutting taxes increased revenue under JFK, Ronald Reagan, and Bill Clinton.  Yet liberals forever believe Republicans want the government to run with no revenue.

(8) No one can say on any given day why the Dow is up or down, and analysts frequently project their prejudices onto such causal pronouncements.  It’s equally possible that the DJI is up because investors believe little progress is being made as the end of the year approaches, automatic budget cuts are going to kick in, and we’re finally going to start reining in spending.

At this rate, the mainstream media will soon be reporting flying reindeer sightings.

(For more liberal howlers, see Liberal Myths: Tax Day Edition!)

Previously published in modified form at Red Alert Politics


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Quinnipiac: Only 8% of Voters Think Polls Biased Toward Obama!

October 03, 2012 By: Scott Spiegel Category: Elections: 2012

Contrary to popular opinion, which is being grossly distorted by the detestable misreporting of left-leaning pollsters, Mitt Romney is not floundering in the race against President Obama.

Every time you read a story about how Romney must “reverse course” after a “disastrous month” of “Obama momentum,” realize that this narrative was entirely created by biased pollsters and a complicit media seeking to sway election turnout.

Left-leaning pollsters are actively trying to discourage conservative voters and donors, put the Republican ticket on the defensive, and suppress GOP turnout.  What’s the proof?

Modern-day pollsters weight their raw sample results to match the electorate by expected turnout for key demographic groups.  Almost every poll showing Obama ahead of Romney in swing states by double digits uses a weighting model that predicts Democratic turnout equal to or greater than it was in 2008.  Specifically, these polls overweight demographic groups that flocked out en masse for Obama in 2008 and underweight anti-Obama groups.

Rather than assuming that unemployed college students and African Americans are more excited about voting for Obama this year than in 2008, reliable polling agencies such as Rasmussen, Purple Strategies, Gallup, and AP are using a weighting model that predicts Democratic voter turnout closer to what it was in 2004, or to a combination of 2004 and 2008.  These firms have consistently found the race to be a toss-up, or for Obama to have only a slight lead.

The issue of weighting is not a statistical lacuna, a minor methodological difference that leads to slight differences among polls without affecting the overall result.  In close cases, weighting is everything.  It determines the predicted results.

Imagine a state with 5.1 million registered Democrats and 4.9 million Republicans.  If both parties saw 75% turnout in 2012, the Democratic candidate would beat the Republican 51% to 49%.

Now suppose that Democrats saw 80% turnout and Republicans only 70%, comparable to 2008.  In this case the Democrat would win 54% to 46%.  But if Democrats saw 70% turnout and Republicans saw 80%, closer to what happened in 2004, the Republican would win 52% to 48%.

Assuming only slight differences in numbers of registered voters across parties, as in most swing states, turnout decides results.  And most pollsters are relying on an outdated turnout model that enormously benefits Democrats, despite the fact that Democratic voter enthusiasm is down and Republican enthusiasm is up.

To get a flavor of how off-the-mark most polling firms’ numbers are, consider the regularly updated Real Clear Politics average of poll averages.  As of September 30, it predicts Obama beating Romney by a greater margin than he did McCain in Ohio, Florida, and North Carolina, three key swing states; and by similar margins in other swing states.  Factor out the more reliable, unbiased polls, and Obama is outpacing Romney to such a degree as to make the 2008 election look like a nail-biter.  In North Carolina, the average of averages predicts that Obama’s margin of victory over Romney will be almost four times greater than his win over McCain.

Taking an average of several polls doesn’t solve the problem, because most polls are making the same mistake.  This isn’t a case of some polls being a little biased one way, some another way, so let’s take the average and call it even.  It’s a case of almost all polls being hugely biased in the same direction and for the same reason.

Defenders of the insanely optimistic pro-Obama polls claim that even right-leaning pollsters such as Rasmussen and Fox show slight Obama leads.  Fine—they show slight Obama leads, not double-digit leads.  But pollsters with an agenda know that a lead of a point or two six weeks before an election is not enough to dispirit and demoralize half the population.

As former New York Times columnist Bob Herbert noted, “There’s a disconnect between what the polls are showing and… what the feel is… among the electorate.  The polls are showing within the margin of error or close races.  But there is this feeling that Romney is losing it, and if that becomes the general impression, that’s really bad for Romney…  If this impression of Romney gets set in stone, that’s very difficult to overcome, debates or no debates.”

If we’re lucky, left-leaning pollsters’ efforts will be overcome by Romney and Ryan performing well in the upcoming debates, September and October jobs reports proving the economy still disastrous, Romney parlaying his monetary advantage over Obama, states implementing new voter fraud laws, and undecided voters breaking against the incumbent as they have historically done.

If pollsters successfully influence voter turnout by suppressing Republican enthusiasm and push the election to Obama, they will have electoral blood on their hands.

Previously published in modified form at Red Alert Politics

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NYT Charges for Content People Avoided When It Was Free

March 30, 2011 By: Scott Spiegel Category: Media

paywall

With the news that Frank Rich and Bob Herbert have left The New York Times, the selection of my 20 free Times articles a month couldn’t be less strongly affected if Paul Krugman and Maureen Dowd decided to quit.

Recently John Gruber of Daring Fireball deconstructed the imbecilic, overly complicated pricing structure the non-business-adept Times has spent a year-and-a-half and tens of millions of dollars devising to undergird its new digital subscription plan.

The Times’ business model, in addition to being extraordinarily confusing, includes the following giant loophole: “Readers who come to Times articles through links from search engines, blogs and social media will be able to read those articles, even if they have reached their monthly reading limit.”

So if you find a story on the Times site that looks worthwhile (suspend your disbelief for a moment), but you’ve reached your monthly limit, you can just copy the title, paste it in a search engine, and click on it from a site that links to it.

Admittedly, this is too much work for most people to bother to find out, say, Dowd’s opinion on the rise of Mormons in popular culture, but some tenacious fans will undoubtedly make the effort.

Perhaps The Times hopes its free backdoor policy will lead more social media outlets to link to their articles.  Maybe they’re afraid they won’t easily be able to regulate access from third-party sources.  But either way, doesn’t this aspect of their plan defeat the purpose of limiting content in order to make people buy subscriptions?

All articles from the Top News section will continue to be available for free via New York Times smartphone and tablet apps.

Also, purchasing just the Sunday print version will give you the most comprehensive tier of unlimited access to digital content, including online, smartphone, and tablet.  This leads Reuters’ Felix Salmon to wonder, “[I]f you get a Sunday-only subscription and then suspend delivery of the physical newspaper while you ‘go on vacation’ for a month or two at a time, how long can you drag out your free access to the website before the NYT gets wise to what you’re doing?”

I guess we shouldn’t expect a sterling business model from a paper whose editorial board believes the way to create wealth is to blow up federal spending and increase federal regulation of the economy by an order of magnitude.

Isn’t The Wall Street Journal’s model much more sensible: everyone has free access to most online content, but key articles require a subscription?  Isn’t it easier to tie access to content, rather than try to tabulate the ephemeral surfing activities of millions of users out there in the ether?

The Times and Journal’s payment plans seem to reflect their ideological worldviews: The Journal, which leans right, offers general content funded via advertising and charges for premium content readers are willing to pay for, a typical capitalist arrangement.  In contrast, The Times, which leans left, will rely on a cadre of loyal followers willing to donate the equivalent of welfare to keep the sputtering paper going, regardless of how frequently the journal offers specific content worth paying for.

In the same way that liberal celebrities frequently announce how much they love paying taxes, soon I can imagine New York elites sanctimoniously defending the Times’ plan by declaring how much they adore shelling out for its superlative content.

Given the astronomical cost of the Times’ plan, only rich liberals will be able to afford it anyway.

At least the new digital subscription plan is an improvement over the short-lived TimesSelect debacle, in which the paper charged for online access to the site’s premium content—which included such must-read material as the repetitive, stale-as-a-cigarette-butt columns of Krugman, Herbert, Rich, and Dowd.

Borrowing language from President Obama’s State of the Union address, New York Times publisher Arthur Sulzberger, Jr. announced in a letter to readers that the new subscription plan is an “investment in our future.”

In other words, Obama implied that taxpayers should subsidize inefficient, underused high-speed rail—so more people will be forced to use something they didn’t use when they didn’t have to pay for it, and other options hadn’t been driven from the market.  Similarly, Times readers will now have to pay for biased, slanted content so more people will be forced to read something they didn’t want to read when they didn’t have to pay for it, and other options hadn’t been driven from the market.

Except that The Times won’t continue to dominate the news market the way government-subsidized boondoggles like high-speed rail and ObamaCare will take over their markets.  Does The Times really think they’re the only game in town?  The Times is one of those papers everyone reads because everyone else reads it.  That won’t be true once people start getting charged hundreds of dollars a year to read it.

Unless the federal government steps in and gives The Times a giant bailout, consumers are going to wise up and start getting their content elsewhere.  Not only does the sclerotic, past-its-prime paper’s poorly conceived paywall fail to invest in its own future, it indirectly invests in its competitors’ futures.

Which is fine with me.

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Doesn’t Matter What This Column Says—You’ll Call It Racism

September 16, 2009 By: Scott Spiegel Category: Racism

Jonathan Martin of Politico notes that, even though racism against the president is supposedly widespread, “it’s still a sensitive enough issue that the [Democratic] party doesn’t broach it directly.”  By “sensitive,” of course, he means “far-fetched, ludicrous, and laughable.”

Representative Hank Johnson (D-GA) claims that in Senator Joe Wilson’s outburst toward the president last week, Wilson “kind of winked at that element” of the U.S. that disrespects Obama because he is black.  I’m not sure what criminal statutes are on the books for “kind of winking” at an “element,” but I do know that Democrats’ charges of racism until recently have been so timid and indirect, because they know that if they made them openly, they might have to produce actual evidence of racism.

Lately some of the attempts to label opposition to socialized medicine and trillion-dollar deficits as racism have gotten more blatant.

The Reverend Jeremiah Wright was just caught on video snarling, “I think the racists in the right wing are upset because poor people are about to be helped.”  And it wasn’t even during one of his weekly sermons!

Jimmy Carter weighed in on the subject over the weekend: “[A]n overwhelming portion of the intensely demonstrated animosity toward President Barack Obama is based on the fact that he is a black man… [and] a belief among many white people… that African Americans are not qualified to lead this great country.”

MSNBC bloggers recently wrote, “Whether it’s fair or not, there is a perception growing that race is driving some elements of the opposition to Obama.”

Maureen Dowd wrote of Wilson in the New York Times, “[F]air or not, what I heard was an unspoken word in the air: You lie, boy!”  Oh, the New York Times doesn’t need to be fair!  Stop being so hard on yourself!

According to Dowd, who was praised by liberal bloggers everywhere for finally stating openly what they believed but didn’t feel comfortable expressing, “Wilson clearly did not like being lectured and even rebuked by the brainy black president presiding over the majestic chamber.”  Note to Dowd: None of the conservatives in Congress did, and it had nothing to do with Obama’s being brainy or black—it had everything to do with his being wrongheaded and pompous.

Dowd lamented “the frantic efforts to paint our first black president as… socialist, fascist, Marxist, racist, Commie, Nazi; a cad who would snuff old people.”

I don’t know—some would say that taking over banks, car companies, and the health care industry is a bit socialist; wanting to “spread the wealth around” is a bit Marxist; having a spiritual mentor who railed against white people in church for 20 years is a bit racist; nominating former communists as czars is a bit Commie; receiving material support from groups that beat up health care protestors at townhall meetings is a bit Nazi; and planning to set up government panels to ration end-of-life care implies a willingness to snuff old people.  Then again, some don’t write for the New York Times.

Dowd added, “Wilson’s shocking disrespect for the office of the president… convinced me: Some people just can’t believe a black man is president and will never accept it.”  Yes, and the “shocking disrespect” for the office of Congressman at mostly white Senators and Representatives’ townhall meetings has convinced me: Some people just can’t believe white people can be in Congress and will never accept it.

Dowd charged that Obama is “at the center of a period of racial turbulence sparked by his ascension” and that “this president is the ultimate civil rights figure—a black man whose legitimacy is constantly challenged by a loco fringe.”

For liberals, the equation is “challenged” plus “black” = “victim of racism.”

I suppose we need to inform Thomas Sowell, Larry Elder, Walter Williams, Sonja Schmidt, Mychal Massie, and other fantastic black conservative and libertarian commentators and harsh Obama critics that their opposition is based on mere black self-hatred.

It was also insinuated by major media outlets that the massive tea party held in Washington over the weekend was fueled by racist resentment of a black man in the White House.  As amply documented by photos of the event, however, signs protested the actions of not just Obama but: Bush, Congress, Nancy Pelosi, Harry Reid, Barney Frank, Steny Hoyer, Saul Alinsky, government, and the mainstream media, among many other targets.

Tea party signs protested Medicaid and Medicare’s insolvency, passing on trillions of dollars of debt to future generations, providing health care to illegal immigrants, paying for abortions through health care legislation, excessive taxes, cap-and-trade schemes, government takeover of the automobile industry, and the appointment of czars.  (Take that, NAACP!)

Finally, signs supported tort reform, health savings accounts, a flat tax, gun rights, the war on terror, and a strange, unheard-of cult called “Liberty.”

Notably absent from protest signs were calls for the repeal of the Civil Rights Act and the resegregation of water fountains.  As Obama correctly observed in one of his health care speeches this summer, “This is not about me.”

As for the occasional reference to race on protest signs, Martin writes, “Republicans see an important distinction between Obama critics who are genuinely worried about his… policies and those whose fears go beyond the president’s liberalism…  But for some Democrats, it’s difficult to make that distinction when conservative marchers take to Washington bearing images of Martin Luther King, Jr. and Obama that read, ‘He had a dream, we got a nightmare.’”  And for some Republicans, it’s difficult to make a distinction between signs comparing King and Obama that would be acceptable to liberals and those that would be branded “racist.”

As one prescient and widely photographed sign at the protest read, “It doesn’t matter what this sign says—you’ll call it racism anyway.”