Simplistic Economics on the Minimum Wage

President Obama has called for an increase in the Minimum Wage,making the claim that it would be good for business because those receiving the higher wage would have more to spend. Higher demand would lead to increased consumption. That boon is easy to see, but serious policy makers must also consider the less visible consequences.

Where does the money for the raise come from?

No business has a money tree from which to pluck dollars, the raise must be accounted for either by reducing the wages of other employees or the number of employees, reducing their consumption, or raising the prices of the company’s products or services, leaving the customers with less to spend somewhere else, or from the business owner(s) pockets, reducing their consumption, or investment in their own business, or those of others through stock purchases, reducing the consumption of those businesses or their employees.

In every case, the increased consumption by minimum wage earners comes at the expense of reduced consumption by someone else. There is no net benefit to the economy.

Increased wages can bring true increases in consumption and economic growth only if they are the result of increased wealth creation by the employee.

Either the President is being guided by extremely simplistic economic theory or he is simply pandering and hoping no one will notice the fallacy. Neither option is encouraging.

The President’s advisers should point out to him that ‘pulling oneself up by his bootstraps’ is only a figure of speech.

The Warren Buffet Lie

From the President down to the water cooler, we hear that Warren Buffet pays a lower tax rate than his secretary. That is simply untrue.

The fallacious statement is based on the assumption that his secretary pays about 25% of her income in FICA and income taxes while Buffet pays a 15% rate on capital gains and qualified dividends. It sounds terribly unfair, but it ignores the double taxation of investment income.

The Virginia Constitution Forbids Charity By Force

I know this notion ruffles the feathers of our state senators for Fairfax, but the rules are very clear. Ken Cuccinelli’s “opinion” was not earth-shattering or “irrelevant.” He simply quoted Article II section 16 of our Constitution. The General Assembly obeyed this section all the way up until 2006 (debunking our wonderful state senators’ claim that we have always done this) which prompted delegates to ask the Attorney General for a ruling on the matter. He sided with the Virginia Constitution and there are good reasons for him doing so.

In 2008, former national LP chairman Bill Redpath and Virginian came to speak to the Tidewater Libertarian Party. He was running for US Senate at the time and he said something that really stuck with me:

“We won’t begin to address the fundamental problem of government overspending until the American People position government as an agent for justice, not an agent for good, as there is an infinite amount of good to be done in this world”

Told you so

Well, I did, the day after the 2008 election, in a post titled Well, There You Go Again, I warned that the Democrats would mistake voter anger at Bush for a mandate to rush toward socialism and the voters would recoil. And they did.

I did not foresee the rise of the Tea Party movement and the swiftness of the Democrats fall, but nobody’s perfect.

Now we will see if the Republicans will make the same mistake and believe the voters anger at the excesses of the Democrats will be mistaken for a mandate to advance their social issues agendas. It is not, this is a rebellion of the voters against the excesses of government, not a choice for different excesses.

Juggling in an Elevator

Once it has finished its initial acceleration, and has reached its steady speed of about 30ft/sec, you can juggle in a descending  elevator just like you would standing on the floor waiting for the elevator. Seen from outside, your upward toss of maybe 15ft/sec would be revealed as not an upward toss, but a reduction in how fast the ball is descending, but from inside the elevator, it still looks like an upward toss. Looking at inflation only from the perspective of consumer prices can lead us to a similar deception.

ABC , Yeah, you know me!

This video was brought to my attention by one of the many Libertarian Party emails I and many Libertarians get from Wes Benedict, Executive Director of the Libertarian National Commitee.

Thought you might like to see how screwed up Virginia’s liquor laws are. I LOVE the reference to some of our Founding Fathers!!!!!!

- Britt Howard

Fishing in the Federal Pond

If I were to suggest we meet at City Hall, and for every Twenty dollar bill you take from your wallet and burn, you can also burn one of mine, you would think me an idiot for making the offer and yourself a bigger idiot if you accepted. Yet we do this every day in pursuit of Federal funds. It’s really not so different from fishing.

Illegal Immigration Affecting Health Care

A Libertarian Remembers Earth Day

Earth Day Promotion 1970, Nicholls University

One of the difficulties for a Libertarian is resolving our distrust of regulations and regulatory agencies with good stewardship of our environment. That doesn’t mean we don’t care about the environment just like everyone else, we do. The photograph to the right is a promotional display for the very first Earth Day Teach In at Nicholls University in Thibodaux, LA, forty years ago today. I was the organizer, and I glued the cans on that display. We thought the world was on the brink of destruction then too. Then it was the Population Explosion and Chlorinated Hydrocarbon pesticides.  It was the year after the Cuyahoga River caught on fire. For those who are young, and only know the last 20 years, it is hard to imagine how bad it was then or to see how much progress has been made. Yet we are told the sky is still falling and only government can save us.

In general, Libertarians believe that voluntary transactions between individuals are best managed by the marketplace acting in accordance with the basic laws of economics. But when dealing with issues of the environment, there are two areas where market  economics fail to adequately address problems. These are the economic paradoxes of External Costs and the ‘Tragedy of the Commons’ but we must find ways to resolve these issues without destroying our Liberty.

Who Pays the Baker’s Taxes

This is a reposting of an editorial I wrote for the LPVA newsletter in 2003, which is timely again as tax season approaches and which someone has been trying really hard to find for some reason. I hate to disappoint anyone who tried to google this essay in a half dozen different forms. So, here’s an old but goody.