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.

http://tinyurl.com/oo7eptl

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”

Guest Editorial on Eminent Domain Abuse

The Virginian Pilot ran my most recent guest editorial today on Eminent Domain Abuse.

The case referred to in the article, the ODU University Village land grab comes to court in January.

Links to 0ther Pilot Guest Editorials by Don Tabor

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.

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.

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.

Fighting Insurance Abuse, SB622

I prefer a free market to regulations, but until we can free the market from previous regulation, sometimes new regulations are required to provide balance. Senate Bill 622 is such an example.  Because I am a dentist, I know, and am affected by, this particular abuse intimately, but the principle applies to health insurance across the board, so I will explain the problem from my own Point-of-View. But if the insurance companies get away with this in dental insurance, you can expect it to become a more widespread problem.

For what its worth

Below is the full text of a Letter to the Editor of the Virginian Pilot in response to their article on “real socialists” which they chose not to print.

Crushing the Human Spirit

The Socialists’ mantra of ‘From each according to his ability, to each according to his needs.’ sounds noble to the young and the naive of every generation, but while it works well for ants, it is contrary to the human spirit.

Tidewater LP Health Care Alternative

Health Care for a Free Country

An Alternative Solution Offered by the Tidewater Libertarian Party

Quicklink http://wp.me/paM4C-dx

The miracle of free markets has served us well in most parts of the economy, bringing us ever increasing value and declining real costs for the things we want and need, yet health care becomes increasingly unaffordable.  So, it is reasonable to ask what is different about health care that prevents the normal market forces from controlling the increases in costs of health care, before radically altering an industry which is, from a quality of care standpoint, the envy of the world.

The answer is that health care has become separated and insulated from market forces by well intentioned government interferences and mandates, followed by yet more interferences enacted in an attempt to mitigate the unintended consequences of previous interventions.  Libertarians reject yet another layer of bureaucratic interference and offer a series of changes intended to remove, in a responsible manner, those earlier economic distortions that have caused the problems.  To that end, we recommend the following:

The Parable of the Bulldozer

Some time ago, while guest hosting on Rush Limbaugh’s program, my favorite living economist, Walter E Williams, explained the necessity for individual capital accumulation as a means for lifting society as a whole out of poverty, in what I have come to refer to as the ‘Parable of the Bulldozer.’

As best I have been able to determine, he has never put the whole of that message into print, and I think it is an important lesson to preserve, and especially vital at this time, so I will retell and expand on that monologue here.