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Minimum Wage Muddle
By Steve Sailer
VDARE.com | November 21, 2006

So, what was the midterm election all about anyway? Other than voters being profoundly sick of George W. Bush and the Republican Party? And Iraq?

One consistent theme was voter backlash against the high cost of cheap labor.

Many of the new winners were what Jacob Weisberg in Slate calls " Lou Dobbs Democrats" and "economic nationalists." The most striking addition to the Senate, Virginia's Jim Webb, war hero and intellectual, author of Fields Of Fire, which Tom Wolfe considers the finest Vietnam War novel, pointed out:

"In the age of globalization and outsourcing, and with a vast underground labor pool from illegal immigration, the average American worker is seeing a different life and a troubling future." [Class Struggle | American workers have a chance to be heard, OpinionJournal.com,  November 15, 2006]

In six states, initiatives were on the ballot to raise the minimum wage. They all passed, by an average margin of 65-35.

Back in April, a Pew Research Center poll found that 83 percent of the public favors raising the minimum to $7.15.

Nancy Pelosi has said she'll try to push through a minimum wage boost during her "first 100 hours" as the new Speaker of the House. President Bush doesn't appear to have any objections.

If you've taken Econ 101, you probably heard that minimum wage laws are a dumb idea.

Their impact on consumer prices, however, isn't an important objection to minimum wage laws. For instance, the Open Borders lobby has long put out scare propaganda about how higher wages for stoop laborers will make broccoli cost $5 per head, in reality, unskilled labor makes up a trivial part of the $13 trillion dollar American economy. Even in industries addicted to illegal alien labor, the cost savings to consumers are minimal: doubling the pay of strawberry pickers, for example, would raise the supermarket price by six pennies per pint.

No, the worst thing about minimum wage laws is their impact on the people they are supposed to benefit. The Law of Supply and Demand says that if the government enforces a minimum above the market wage, some workers will indeed get paid more, but others won't have jobs.

The late Milton Friedman observed many years ago:

"Many well-meaning people favor legal minimum wage rates in the mistaken belief that they help the poor. It has always been a mystery to me why a youngster is better off unemployed at $4.75 an hour than employed at $4.25.''

Yet, if you are a politician, minimum wage laws make lots of sense.

First, in many states, the market rate is now well above the federal minimum of $5.15 per hour, which hasn't changed since 1997. In Pelosi's ultra-expensive home district in San Francisco, for example, raising the federal minimum will be one of those purely symbolic gestures that politicians love.

Second, while lifting the minimum can cost you campaign contributions from business owners, you don't have to worry about losing many votes from people who are out of work because of it. They are simply unlikely to figure out the causal relationship between your vote in Congress and their lack of a job.

Say a business employs two workers at $5.15 an hour. The minimum wage goes up to $7.25 per hour, so the owner gives the smarter worker a $2.10 raise and lays off the dumber one. The smarter guy might remember to vote for his Congressman in gratitude. But is the guy who got fired because he wasn't worth the new minimum wage (remember, he probably didn't major in econ at the U. of Chicago) going to understand he's out on the street because Congress lifted the minimum? Is he going to look up how his Congressman voted? Is he going to remember to vote against his Representative the following year? Is he even going to remember that the first Tuesday in November is Election Day?

Then, consider all the businesses that would have hired new workers at the old minimum wage, but now can't afford it. How likely is the unemployed guy who would have been hired in the alternative universe where the minimum stayed $5.15 per hour even going to notice that he's still out of work due to the higher minimum?

Yet, misguided as it may be, raising the minimum wage is at least some kind of response to the genuine problem of employers of cheap labor privatizing profits while socializing costs. Americans don't let other residents of America live on $5.15 per hour. Instead, we massively subsidize them. We pay to educate their children in public schools, give them free medical care at emergency rooms, and police their neighborhoods.

A minimum wage above the market wage treats the symptom, not the underlying problem, which is that the balance of supply and demand doesn't provide a high enough market wage. While treating the symptom will help the more productive, it will keep the less productive (who are often young and black and likely to cause trouble when they aren't honestly employed) from finding jobs at all.

Of course, the reason the market wage is so low these days is the enormous supply of illegal aliens.

Moreover, raising the minimum above the market encourages employers to cheat by paying an illegally low wage. And which kind of workers are most likely to keep their mouths shut about making less than the minimum? Illegal aliens.

Raising the minimum without cracking down on illegal immigration is pointless.

Ironically, the same liberals who claim that the immigration laws can't be enforced simply assume that the minimum wage laws could be enforced. Even if all the current illegal aliens were "put on the path to citizenship," a high minimum wage would just attract new ones who would work for less than the legal limit.

The far more practical solution is to drive up the market wage by rectifying the balance of supply and demand for unskilled labor. How? By closing the borders.

I'm always amused that so many free market economists think that Neal Stephenson's 1992 dystopian sci-fi novel Snow Crash (which was heavily influenced by Jean Raspail's Camp Of The Saints) about a globalized America where "the Invisible Hand has taken all those historical inequities and smeared them out into a broad global layer of what a Pakistani bricklayer would consider to be prosperity" is actually a utopian book.

Simplistic Libertarians need to realize that their beloved Open Borders inevitably lead to a political backlash in favor of laws, like Nancy Pelosi's minimum wage boost, that meddle with the economy. Why? Because American voters won't put up with a completely globalized labor market. The simplest way to make libertarian economics more politically feasible in America is to insulate our labor market through better border controls. "Libertarianism in one country" is possible but there is staggeringly too much inequality in the world for America's love affair with capitalism to survive importing massive amounts of it.

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Should We Copy Europe?

by Walter E. Williams
Posted Nov 22, 2006

Some Americans look to European countries such as France, Germany and its Scandinavian neighbors and suggest that we adopt some of their economic policies. I agree, we should look at Europe for the lessons they can teach us. Dr. Daniel Mitchell, research fellow at the Heritage Foundation, does just that in his paper titled "Fiscal Policy Lessons from Europe."

Government spending exceeds 50 percent of the GDP in France and Sweden and more than 45 percent in Germany and Italy , compared to U.S. federal, state and local spending of just under 36 percent. Government spending encourages people to rely on handouts rather than individual initiative, and the higher taxes to finance the handouts reduce incentives to work, save and invest. The European results shouldn't surprise anyone. U.S. per capita output in 2003 was $39,700, almost 40 percent higher than the average of $28,700 for European nations,.

Over the last decade, the U.S. economy has grown twice as fast as European economies. In 2006, European unemployment averaged 8 percent while the U.S. average was 4.7 percent. What's more, the percentage of Americans without a job for more than 12 months was 12.7 percent while in Europe it was 42.6 percent. Since 1970, 57 million new jobs were created in the U.S., and just 4 million were created in Europe.

Dr. Mitchell cites a comparative study by Timbro, a Swedish think tank, showing that European countries rank with the poorest U.S. states in terms of living standards, roughly equal to Arkansas and Montana and only slightly ahead of West Virginia and Mississippi. Average living space in Europe is just under 1,000 square feet for the average household, while U.S. households enjoy an average of 1,875 square feet, and poor households 1,200 square feet. In terms of income levels, productivity, employment levels and R&D investment, according to Eurochambres (The Association of European Chambers of Commerce and Industry), it would take Europe about two decades to catch up with us, assuming we didn't grow further.

We don't have to rely on these statistics to make us not want to be like Europeans; just watch where the foot traffic and money flow. Some 400,000 European science and technology graduates live in the U.S. European migration to our country rose by 16 percent during the 1990s. In 1980, the Bureau of Economic Analysis put foreign direct investment in the U.S. at $127 billion. Today, it's more than $1.7 trillion. In 1980, there was $90 billion of foreign portfolio investment -- government and private securities -- in the U.S. Today, there's more than $4.6 trillion, much of it coming from Europeans who find our investment climate more attractive.

What's the European response to its self-made economic malaise? They don't repeal the laws that make for a poor investment climate. Instead, through the Paris-based Organisation for Economic Co-operation and Development (OECD), they attack low-tax jurisdictions. Why? To support its welfare state, European nations must have high taxes, but if Europeans, as private citizens and businessmen, relocate, invest and save in other jurisdictions, it means less money is available to be taxed.

Dr. Mitchell addresses this issue through his research at the Center for Freedom and Prosperity. The OECD has a blacklist for countries they've identified as "tax havens." The blacklisted countries include Hong Kong, Macao, Malaysia (Labuan) and Singapore. Also targeted are Andorra, Brunei, Costa Rica, Dubai, Guatemala, Liberia, Liechtenstein, the Marshall Islands, Monaco, the Philippines and Uruguay. The blacklisted jurisdictions have strong financial privacy laws and low or zero rates of tax.

The OECD member countries want the so-called tax havens to change their laws to help them identify the earnings of their citizens. Most of all, OECD wants these countries to legislate higher taxes so as to reduce their appeal. A suggestion that we should be more like Europe is the same as one suggesting that we should be poorer.
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The American press should count its blessings

By Michelle Malkin

http://www.JewishWorldReview.com | 11/22/2006

 In between breathless condemnations of the Bush administration for stifling its free speech, endless court filings demanding classified and sensitive information from the military and intelligence agencies, and self-pitying media industry confabs bemoaning their hemorrhaging circulations (with the exception of the New York Post), my colleagues in the American media don't have much to time to give thanks. Allow me:

Give thanks we don't live in Bangladesh, where you can be put on trial for writing columns supporting Israel and condemning Muslim violence. Just ask Salah Uddin Shoaib Choudhury, editor of Blitz, the largest tabloid English-language weekly in Bangladesh. He is currently facing a sedition trial for speaking out about the threats radical Islam poses in Bangladesh. He has been imprisoned, harassed, beaten, and condemned. In court last week, his persecutors read tese charges against him: "By praising the Jews and Christians, by attempting to travel to Israel and by predicting the so-called rise of Islamist millitancy in the country and expressing such through writings inside the country and abroad, you have tried to damage the image and relations of Bangladesh with the outside world." For expressing these dissident opinions, he faces the possibility of execution.

Give thanks we don't live in Egypt, where bloggers have been detained by the government for criticizing Islam and exposing the apathy of Cairo police to sexual harassment of women. Just ask Abdel Karim Suliman Amer, 22, who was arrested earlier this month for "spreading information disruptive of public order", "incitement to hate Muslims" and "defaming the President of the Republic." Ask Rami Siyam, who blogs under the name of Ayyoub, and has been outspoken in his criticism of Egyptian brutality. He was detained this week along with three friends after leaving the house of a fellow blogger. His host, 24-year-old reformist Muslim Muhammad al-Sharqawi, had been detained by the Egyptian government this spring as he left a peaceful demonstration in Cairo where he had displayed a sign reading, "I want my rights." Sharqawi was beaten in prison over several weeks.

Give thanks we don't live in Sudan, where editors can lose their heads for not kowtowing to the government line. Ask the family of Mohammed Taha, editor-in-chief of the Sudanese private daily Al-Wifaq, who was found decapitated on a Khartoum street in September. He had been kidnapped by masked jihadi gunmen. What did Taha do that cost him his life? He insulted Islam, and dared to question Muslim history, the roots of Mohammed, and other Muslims. Before his murder, his paper was shuttered for three months and he was hauled into court for "blasphemy."

Give thanks we don't live in China, the world's leading jailer of journalists and Internet critics. Consider Yang Xiaoqing, jailed for five months because he reported corruption among local officials in the central Hunan province. Or Yang Tianshui, sentenced to 12 years in jail this spring for posting essays on the Internet supporting a movement by exiles to hold free elections. Or Li Yuanlong, a Guizhou reporter for the Bijie Daily jailed for two years on subversion charges because he dared to criticize the ruling Communist Party on foreign websites. Or any of the other 32 journalists and 50-plus bloggers behind bars.

Give thanks we don't live in Lebanon, where outspoken writers pay with their lives. Journalist and Christian Orthodox activist Samir Kassir, who was critical of Syrian involvement in Lebanon, was assassinated in a Beirut car bombing in 2005. His colleague, An-Nahar newspaper manager Gibran Tueni was killed in a car bombing last December. Lebanese TV anchorwoman and Christian journalist May Chidiak survived a separate car bombing last fall, but lost an arm, leg, and use of one eye.

Give thanks we don't live in Russia, where investigative journalists routinely wind up dead. Last month, unreleting reporter and Putin critic Anna Politkovskaya was found shot dead in her apartment. In the days before her death, Politkovskaya had been working on a story about torture in Chechnya, according to her newspaper Novaya Gazeta. She joins a death toll that includes Paul Klebnikov, the U.S.-born editor of the Russian edition of Forbes, who had been investigating the Russian business underworld, and was gunned down outside his Moscow office in 2004; Valery Ivanov, editor of the newspaper Tolyatinskoye Oborzreniye, also shot dead after investigating organized crime and drug trafficking in 2002; and Larisa Yudina, editor of the opposition newspaper Sovetskaya Kalmykia in southern Russia, who was stabbed to death by former government aides.

Give thanks we don't live in Denmark, where the cartoonists who dared to caricature Mohammed and challenge creeping sharia are still in hiding, in fear for their lives.

Give thanks we don't live in Italy, where a spineless judge bowed to jihadists and put famed war journalist Oriana Fallaci on trial for her sharp-tongued critiques of Islam. She succumbed to cancer before they could exact a vengeful penalty against the lioness. But they made the price of "insulting" Islam known far and wide to the cowering Western media.

Give thanks we live in America, land of the free, home of the brave, where the media's elite journalists can leak top-secret information with impunity, win Pulitzer Prizes, cash in on lucrative book deals, routinely insult their readership and viewership, broadcast enemy propaganda, turn a blind eye to the victims of jihad, and cast themselves as oppressed victims on six-figure salaries.

G-d bless the U.S.A.