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A list of economic myths from Don Boudreaux

Here is a list of economic myths from Don Boudreaux.  You can view them as a test of your understanding of basic microeconomics.

– prices and wages on markets are simply “set” by businesses;

– steep increases in the prices of fuel and bottle water in the aftermaths of natural disasters are caused simply by “greed,” and that government-imposed prohibitions on such “price gouging” simply make these goods more affordable and accessible;

– rent control obviously makes apartments more affordable;

– a hike in the minimum wage is a simple and obvious way to help all low-skilled workers;

– stricter government safety regulations obviously make people safer;

– imports from low-wage countries obviously reduce average wages in the U.S. or reduce overall employment in the U.S. (or both);

– trading with foreigners is of course economically different than trading with fellow citizens;

– taxes are obviously paid by the individuals and businesses that government makes responsible for paying the taxes;

– of course the chief source of economic strength and growth is consumer spending, and reductions in consumer spending are inevitably harmful;

– the interests of businesses are obviously at odds with those of consumers and workers;

– advocates of laissez faire simply are “pro-business” and (hence) “anti-consumer” and “anti-labor”;

– of course the rich get richer and the poor get poorer;

– government officials’ chief intention, of course, is to improve the well-being of the public;

– the consequences of any action are simply determined by the intentions of the actor.

John Cochrane critiques Professor Noah Smith on inflation

Here is a link to John Cochrane's critique of Professor (of economics) Noah Smith on inflation - and a few other things.

As usual, John is on target.

A snippet:

Noah Smith has an interesting Bloomberg View piece on Japanese inflation. Three crucial paragraph struck me

... Japanese unemployment is very low, and the economy is expanding at or above its long-term potential growth rate of around 0.5 percent to 1 percent. So according to mainstream theory, inflation would be an unnecessary and pointless negative for Japan’s economy. Why, then, are there always voices calling for Japan to raise its inflation rate?

Actually, there are several reasons. The main one is that inflation reduces the burden of debt. Japan’s enormous government debt represents the government’s promise to transfer resources from young people (who work and pay taxes) to old people (who own government bonds). Since Japan is an aging society, there are more old people than young people. That makes the burden especially difficult to bear. Young people also tend to have mortgages, the repayment of which is another burden.

Sustained higher inflation would represent a net transfer of resources from the old to the young. That would increase optimism, and hopefully raise the fertility rate, helping with demographic stabilization. It would also decrease the risk that the Japanese government will eventually have to take extreme measures to stabilize the debt.

I like these paragraphs because they so neatly distill the language used by the standard policy establishment to advocate inflation. Noah clearly separates the usual "stimulus" arguments from the new "debt" argument, which helps greatly.

Debt is a "burden." Sort of like snow on your roof, debt appears from the sky somehow and then represents a "burden" requiring "lifting," which would be beneficial to all.

Debt "represents the government’s promise to transfer resources from young people ... to old people.." Apparently, the government woke up one morning, and said "we promise to grab about two and a half years worth of income from young people and give it to old people." Undoing such an ill-advised promise does indeed sound worthy.

But, lest these soothing words lull you into idiocy, let us remember where debt actually comes from. The Japanese government borrowed a lot of money from people who are now old, when they were young. Those people consumed less -- they lived in small houses, made do with fewer and smaller cars, ate simply, lived frugally -- to give the government this money. The promise they received was that their money would be returned, with interest, to fund their retirements, and to fund their estates which young people will inherit.

Noah is advocating nothing more or less than a massive government default on this promise, engineered by inflation. The words "default," "theft," "seizure of life savings," apply as well as the anodyne "transfer." I guess Stalin just "transferred resources."

The True Nature of Government

Here is a link to an article by George Will, who describes a typical example of how Government is in the business of taking away your freedom, not enhancing it.  George is on target.

If you understand George's point, you will appreciate that this kind of Government behavior is widespread and costs you tremendously, both in dollars and freedom.

A snippet:

Dr. Ron Hines, 72, of Brownsville, is a licensed veterinarian with a PhD in microbiology. He is physically disabled but eager to continue dispensing his healing wisdom worldwide, which he does using the Internet and telephone. He estimates that about 5 percent of those he speaks to are in Texas. He neither dispenses nor prescribes medications. But in 2005, the Texas legislature, with time on its hands and nothing better to do to perfect the state, criminalized such electronic veterinary advice.

Students of contemporary government will instantly understand that this was not done to protect pets, none of whom has complained about, or been reported injured by, people like Hines. Rather, the legislature acted to protect those veterinarians who were vocally peeved because potential customers were getting online advice that, even when not free, is acquired at less expense and more conveniently than that gained from visits to a veterinarian’s office.

This is rent-seeking, the use of public power to confer private benefits on one economic interest by handicapping another interest. Rent-seeking is what the political class rewards when it is not brooding about why people think the political class is disreputable.

The Armed Citizen

From the NRA publication "American Rifleman".

Math Jokes

Why did the chicken cross the Mobius Strip?

     Answer 1:  To get to the same side.

     Answer 2:  Too get to the other . . . um . . .

A bicycle can't stand alone because it is two-tired.

A hungry clock goes back four seconds.

A calendar's days are numbered.

Old mathematicians never die; they just lose some of their functions.

The man whose best buddy is an abacus has a friend he can count on.

Statistics show that those who celebrate more birthdays live longer.

Without Geometry, life is pointless.

Phone operator:  "I'm sorry, the number you have dialed is imaginary.  Please rotate your phone 90 degrees and dial the number again."

There are 10 kinds of people:  those who understand binary, and those who don't.

Don Boudreaux - Why he opposes a minimum wage

Here is a link to a well written explanation by Don Boudreaux about why he opposes the minimum wage.  Don is on target.

A snippet:

First, I trust that everyone here shares the goal of having low-skilled workers paid incomes as high as possible with no one forced into the ranks of the unemployed or obliged to suffer other negative consequences. That is the value judgment that I carry with me throughout tonight’s discussion and in every discussion that I have about the minimum wage.

Second, my concern is exclusively for the well-being of low-skilled workers. My assessment of the minimum wage turns only on how well or how poorly it is likely to benefit such workers. I don’t care about the effects of the minimum wage on the welfare of employers, business owners, or investors.

You might disagree with my conclusions, but that disagreement will be over the predicted consequences of the minimum wage and not over values or goals.

I oppose the minimum wage. I oppose it in part because my economic reasoning makes me worry about its consequences for low-skilled workers.

I worry that, by raising employers’ costs of employing low-skilled workers, it makes the employment of such workers less attractive and, thus, reduces and worsens their employment options. The result is unintended harm to at least some – and perhaps many – low-skilled workers.

I worry, further, that the effects of the minimum wage – both positive and negative – are not distributed randomly. By reducing the number of jobs for low-skilled workers while simultaneously drawing more workers into the pool of those who compete for minimum-wage jobs, the risk is real that those who get and keep jobs at the higher minimum wage are workers who need higher incomes the least, and the workers who are denied jobs are those who need any incomes the most.

Choosing from a larger pool of applicants for a smaller number of jobs – a pool of applicants that includes college students and retirees drawn into the workforce by the higher minimum wage – employers are too likely, too often, to choose the ‘safe’ applicant over the recent immigrant, the single mom, or the inner-city minority teen.

Finally, I worry that this ignorance of the possibility that minimum wages actuallyharm some low-skilled workers – and harms those who can least afford to be harmed – causes voters and government officials to assess minimum-wage legislation more favorably than they would assess it were the possibility of such harm more widely recognized.

Matt Ridley sticks it to the wind power activists - and rightly so

Here is Matt Ridley's article.

By preventing investment in gas, the dash for wind has done real harm

My Times article on wind power is below. An astonishingly poor attack on the article was made in The Guardian by Mark Lynas. He failed to address all the main points I made: he failed to challenge the argument that wind power has not cut emissions, failed to challenge the argument that wind power has raised the cost of electricity, he failed to challenge my argument that wind speeds are correlated across Europe. And he made a hash of attempting to criticise my argument that wind has made the system less reliable. The gist of his case was that the recent short-term emergency that gave rise to price spikes was caused by coal-fired power station outages. But the point was that these coincided with a windless day. In a system of coal and gas, the weather would not matter, but in a system dependent on wind, then coal outages on a windless day cause problems. Surely this was not too difficult to understand, Mark? Note that Germany had a windless day too.

Mark Lynas then took to twitter boasting in troll-fashion that he had debunked my article where he was joined by the usual green cheerleaders. They have shot themselves in the foot, I am afraid. I remain astonished at the fervour with which greens like Mark defend wind power at all costs, despite growing evidence that it does real environmental harm, rewards the rich at the expense of the poor and does not cut carbon dioxide emissions significantly if at all. It might even make them worse, as I argue here. If they really are worried about emissions, why do greens love wind? It isn't helping.

Anyway, here's the article

Suppose that a government policy had caused shortages of bread, so the price of a loaf had shot up and was spiking even higher on certain days. Suppose that the high price of bread was causing massive job losses. Suppose that the policy was justified on the grounds that the bread was now coming from farmers whose practices were better for the environment, but it turned out they were probably worse for the environment instead. There would be a rethink, right?

For bread, read electricity. The government needs to rethink its electricity policy. Last week’s emergency was a harbinger of worse to come: because the wind was not blowing on a mild autumn day, the National Grid had to call for some large electricity consumers to switch off, and in addition offered to pay up to £2,500 a megawatt-hour — 40 times the normal price — for generators capable of stepping into the breach at short notice.

Among other lessons, this teaches us that letting Liberal Democrats run the Department of Energy and Climate Change (DECC) for five years was an expensive mistake. What puzzles me is how little the current government seems to realise it must make a U-turn or get the blame itself.

The coalition promised secure, affordable and low-carbon power, but instead gave us unreliable, expensive and high-carbon power. What is worse, this outcome was “wholly predictable but wholly unanticipated by policymakers”, in the words of Rupert Darwall of the Centre for Policy Studies, speaking to a House of Lords committee (on which I sit) earlier this year.

Mr Darwall’s argument is that wind farms, which cost a lot to build and maintain but pay nothing for fuel, can sell electricity for very low prices when the wind’s blowing. Being intermittent, this power therefore destroys incentives to invest in highly efficient “combined-cycle” gas turbines (CCGTs).

If, when the wind blows, a new gas plant has to switch off, then the return on investment in gas is negative. Combined-cycle plants are sophisticated machines and don’t like being switched on and off. Therefore the gradual replacement of coal-fired power by much more efficient gas-fired power has stalled as a direct result of the wind-power boom.

To solve this problem, the government came up with a “capacity mechanism”, a fancy name for subsidising fossil fuels. But this further impost on the hard-pressed bill payers (likely to exceed £1.3 billion by 2020), instead of bringing forward new gas turbines, last year went mostly to keep old coal-fired stations going. The next auction, due in December, has brought a rash of bids from diesel generators. This is madness: wind power has made the country more reliant on dirty, high-carbon coal and diesel. (I declare my usual interest in coal, but note that coal has probably benefited from the policy I am criticising.)

Meanwhile, the old coal stations that have not attracted a subsidy are closing because of the coalition’s unilateral carbon tax (sorry, “floor price”). Eggborough, for instance, tried to switch to subsidised biomass, better known as wood — a fuel that emits even more carbon dioxide than coal per unit of energy — but was refused and so is closing. Thus, when the wind drops, we are plunged into crisis.

Wind’s advocates have long argued that cables to Europe would help on windless days because we could suck in power from Germany when the wind’s blowing there but not here. Yet last week, as we were debating this very issue in the Lords, I checked and wind was generating about 1 per cent of our electricity, and even less of Germany’s. Studies by the Renewable Energy Foundation published as long ago as 2008 have shown that wind speeds are well correlated across Europe most of the time. Was anyone listening?

Prices charged to electricity consumers have been rising because of the high cost of subsidies for wind power, especially offshore wind. The DECC’s numbers show that small businesses will be paying 77 per cent more per unit for electricity by 2020 than they would be if we were not subsidising renewables. The cost of the subsidies is on track to hit roughly £10 billion a year in 2020 and that’s before paying for the fleet of diesel generators being subsidised under the capacity mechanism and extra grid infrastructure costs. What are we getting for that money? A less reliable electricity system, a big increase in cost, lost jobs in the aluminium and steel industries and no discernible cuts in carbon dioxide emissions.

If that last claim seems far fetched, consider the following calculation. According to the wind industry, a 2-megawatt onshore wind turbine could cut emissions by about 1,800 tonnes a year in average conditions, offshore a bit more. With about 13 gigawatts of wind now in service, that would mean the total wind fleet can displace at most 15 million tonnes, or 2 per cent of our 700 million tonnes of total annual emissions.

But, since the effect of the wind boom (solar production, by the way, is an irrelevance lost in the decimal points) has been to deter new gas and prolong the life of inefficient coal, and since it wastes power to get a fossil-fuelled power station up to speed when the wind drops, and since expensive wind power has driven energy-intensive industries abroad to more carbon-intensive countries, the actual emissions savings achieved by wind are lower and probably negative. We would have been far better off buying new gas or “clean-coal” capacity instead: replacing coal with gas more than halves emissions.

After Wednesday’s near emergency, ministers must surely realise that we cannot rely on the weather to produce the right amount of electricity, and gas is far cheaper and more environmentally friendly than the DECC’s dirty diesel solution. As for nuclear power, Hinkley C was supposed to help with the supply crunch, but it will only come on stream in the mid-2020s, and at a gigantic cost.

The poor and the elderly are hardest hit by high electricity bills. What Chris Huhne and Ed Davey have done to our electricity supply, following the lead of Tony Blair’s foolish 2007 decision to accept a European Union target for renewables, is bonkers.

It has cost wealth, jobs, landscapes, wildlife, security of supply: and all for nothing in terms of emissions savings. It is no comfort to know that some of us have been predicting this for years.

Don Boudreaux: A Sufficient Reason To Oppose The Minimum Wage

Don Boudreaux gets it right again.  Here is his comment.

In my opinion as an economist and as a human being who believes that no one has a right to use force to extract unbargained-for benefits from anyone else, a sufficient reason to oppose the minimum wage is that it prices some people out of jobs that they would otherwise have voluntarily chosen to take. The number of people priced out of jobs is, for me, irrelevant to this assessment (although, of course, the greater the number of people priced out of jobs by the minimum wage, the worse is the magnitude of its undesirable and unwarranted effects).

Even if only one person is priced out of a job by the minimum wage (or more precisely, even if only one person is priced out of the job that he or she would have chosen to take in the absence of the minimum wage), I have sufficient reason to oppose it.

Moreover, I believe that most people – or, at least, most Americans – share my normative view. The reason for this belief is that nearly all politicians and popular pundits in the U.S. who endorse the minimum wage insist that it has no ill consequences for low-skilled workers. I have never heard the likes of Barack Obama, Hillary Clinton, Bernie Sanders, Andrew Cuomo, Jerry Brown, or Robert Reich ever, when pleading for a higher minimum wage, say something akin to “Many of you low-skilled workers will get a raise but some of you will be priced out of your preferred jobs. Indeed, some of you low-skilled workers are likely actually to be cast indefinitely into the ranks of the unemployed. But worry not, I’m guessing that each of you prefers to have a higher chance of being indefinitely unemployed because this higher chance of being unemployed comes along with a higher wage in the event that you do find jobs.”

At least the above announcement would be more honest than is the typical announcement that portrays the minimum wage either as a miraculous free lunch or as a policy the full costs of which are borne exclusively by people other than low-skilled workers. [By the way, the above announcement would be even more honest if the pol or pundit making it would add that the increased prospects of being rendered unemployed by the minimum wage are not randomly distributed. In fact, those workers who are disproportionately likely to be rendered unemployed are workers who are least-attractive at the higher wage to employers (workers, say, such as inner-city minority single moms with neither high-school diplomas nor reliable means of personal transportation) while those workers who are disproportionately likely to remain employed at the higher wage are the ones who are most-attractive at the higher wage to employers (workers, say, such as retirees with long work experience who are drawn out of retirement by the higher minimum wage).]

If most Americans did not share my normative view – that is, if most Americans believe it to be just dandy if government arbitrarily raises the wages of some low-skilled workers with a policy that is admitted to arbitrarily render other low-skilled workers unemployable – we’d likely have no evidence of reluctance by pro-minimum-wage pols and pundits to make this admission publicly.

Further, no matter what are the relative numbers of workers earning higher wages compared to the number of workers earning $0 per hour because they are now unemployed – no matter what is the aggregate size of the income gains enjoyed by the former, fortunate group of workers compared to the size of the income losses suffered by the latter, unfortunate group of workers – the economy as a whole is made poorer. Total output declines. The pie is made smaller. Andsomeone or some group must bear this loss.

How can the economic pie here not be made smaller? Some people who would otherwise be voluntarily employed and producing are instead involuntarily unemployed and not producing. That this diminution in total output likely remains undetectable in the quantitative data in no way means that this diminution isn’t real. Only the most naive empiricist economist – someone who, in effect, believes that the economy is only that which is quantitatively detectable by human students of the economy – would deny that a policy that causes some resources that would otherwise be productively employed to be unemployed does not shrink total output.*

A final note: many people – foe and friend – ask me why I spend so much energy and pixels on the minimum wage. My reasons are four:

(1) politicians and ‘activists’ spend lots of energy defending the minimum wage; such efforts warrant responses;

(2) the ill-effects of the minimum-wage are especially pernicious; the harm it inflicts is concentrated on those individuals who can least afford to be harmed, and this harm is largely invisible to eyes not equipped with a clear economics lens; this combination makes the minimum wage a policy tool especially useful to those who would unjustly steal benefits for themselves from others;

(3) discussing the minimum wage is an excellent way to teach basic economics because those who support the minimum wage commit an unusually large number of fallacies – economic, methodological, logical, philosophical, factual, statistical, and historical – when mustering their arguments in support of this policy; and

(4) if proponents of the minimum wage get away with their fallacies, these proponents will not only prop up a policy that harms society’s most-vulnerable individuals, but they will also help to spread the very dangerous fallacy that market prices are arbitrary figures that can be forced up or down by government diktat with no, or only minimal, unintended and unseen negative consequences. (In short, here, to expose the fallacies spread by minimum-wage proponents is to defend scientific economics from man-in-the-street superstitions masquerading as scientific economics.)

….

* It’s possible that a higher minimum wage can, by causing many minimum-wage jobs to be more onerous than they would otherwise be for the workers who hold them, cause total output to rise. Any such increase in output, however, still represents a diminution of total economic prosperity because it is the result of the exertion of super-optimal work effort by low-skilled workers.

UPDATE: As the always-insightful young economist Jon Murphy points out in a comment to this post, a Reason-Rupe poll finds support for the claim that Americans’ support for the minimum wage plummets if they belief that it will cause some workers to lose jobs.

The First Amendment is Dying

From Reason.com, written by David Harsanyi.

David is on target.  Too few people appreciate what is freedom.

"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;"

Unless we're talking about a white chocolate-paneled cake for a gay wedding or perpetual funding for "women's health" clinics because it's the "right thing to do."

"or abridging the freedom of speech;"

Unless that speech is used by boorish climate change denialists to peddle dirty fossil fuels and run capitalist death machines that wreck the Earth, by anyone engaging in upsetting hate speech or other forms of "aggression," by a wealthy person supporting candidates who undermine "progress," by a pro-life protester who makes people feel uncomfortable about their life decisions, by a cisnormative white male who displays insufficient appreciation for the "systematic oppression" that minorities experience in places of higher learning or by anyone who has a desire to undermine the state-protected union monopolies that help fund political parties.

"or of the press, or the right of the people peaceably to assemble,"

Unless the press invades safe spaces designated by mobs or writes about incorrect topics at incorrect times.

"and to petition the Government for a redress of grievances."

Unless someone is a member of a predesignated special interest group, he should report to the IRS before doing so.

That's pretty much the state of the First Amendment today. Climate change, abortion, gay marriage, race, taxes, what have you, even in mainstream political debate, these interests outweigh your piddling concerns about the First Amendment. So the notion that a bunch of students and leftist professors would agitate to shut down free expression in a public space in Missouri because they feel their special issue trumps your antiquated list of rules is not particularly surprising.

Now, we shouldn't overstate the problem. Most of us are able to freely engage in arguments and express ourselves without worrying about the state's interfering. This will not end tomorrow. But it is difficult to ignore how creeping illiberalism has infected our discourse and how not many people seem to care.

The thousands of other University of Missouri students, for example, could have held a counter-protest against dimwitted fascists cloistered in safe spaces. Where are those student groups? Why was there no pushback from those kids—and really, there was none as far as I can tell, at either Missouri or Yale—against the bullies who want administrators fired for thought crimes? It can mean that students are too intimidated, too uninterested or not very idealistic about these freedoms. None of those things bodes well for the future.

And where is the faculty, those brave souls who value the freedom to debate and champion sometimes-controversial ideas when mobs of students are making wild accusations against their school without any real evidence? Where are they when students shut down conservative, libertarian or not-progressive-enough Democrats from speaking at their schools?

In fact, the campus police—not the hissy-fitting communications professor or the would-be authoritarian student—asked students to call authorities and report "incidents of hateful and/or hurtful speech" in detail. A school, the place where young people supposedly ponder challenging ideas, now has students reporting any instances of unsavory speech. What does "hurtful speech" entail anyway? Is it enough for someone to challenge your priggish worldview? Is it enough for someone to hurt your brittle feelings? And what is the consequence?

You may also remember when Chris Cuomo of CNN, a lawyer, tweeted (since deleted) that "hate speech is excluded from protection" under the First Amendment. He wasn't alone.

Not long ago, 51 percent of Democrats in a YouGov poll claimed to support criminalizing "hate speech." (A third of Republicans did so, as well.) Another study, by the First Amendment Center a few years back, found that nearly 40 percent of Americans said the First Amendment "goes too far" guaranteeing rights—a record high.

People are scared. They're scared to be accused of bigotry or racism, an ugly accusation that is easy to level but impossible to disprove. It's a lazy but effective method of intimidation.

So we can laugh at the confused millennial J-school major, but he is not alone. When the mayors of Chicago and Boston used their positions of power to keep Chick-fil-A out of their cities because of the CEO's thoughts on same-sex marriage, they were working under the same notion as kids who want to be in safe spaces where their worldviews remain unchallenged. (Using the state to punish a person or company for its beliefs is even worse.) When Bill Nye argues that climate change skeptics are nuts who hate science and should be ignored by any right-thinking person, he is attempting to convince you of something. When Nye contends that America needs to drum climate change skeptics completely "out of our discourse," he's no longer a liberal.

Because what's happening on college campuses hasn't happened in a vacuum.

Math Jokes

How are mathematicians like the Air Force?

     They both use pi lots.

What does a mathematician use to measure the weight of trees?

     A log scale.

What do you call the matching shirt and pants of an Eskimo?

     Polar coordinates.

What does a logician pick when faced with a choice between ham salad and eternal bliss?

     Ham salad - because nothing is better than eternal bliss, and ham salad is better than nothing.

What is the value of the contour integral around Western Europe?

     Zero, because all poles are in Eastern Europe.

How do you make one burn?

     Differentiate log(fire).

What is a mathematician's shortest joke?

     Let e<0.

Why do mathematicians often confuse Christmas and Halloween?

   Because Oct 31 = Dec 25.

Don Boudreaux on the Obama Administration's Labor Economics

A great comment from Don Boudreaux.

My former GMU student (and SUNY-Purchase economics professor) Liya Palagashvili and I just completed writing the first draft of a paper (to be published by the Mercatus Center) analyzing the likely economic consequences of the recent proposal by the Obama administration to extend what it calls “overtime protections” to millions of workers in America who have had the good fortune until now to be exempt from such “protections.” These workers’ good fortune is about to expire. Uncle Sam will soon impose on them and their employers labor-contract terms that will at best fail to improve the well-being of the targeted workers and, more likely, harm nearly all of them. (But what the heck?! The proposal [1] appeals to economically uninformed pundits, professors, and voters, [2] is likely to artificially increase the demand for highly paid workers, and, [3] creates more work for officious bureaucrats and opportunistic lawyers.)

In this post I’ll not discuss the main points of Liya’s and my paper. Instead, I write now only to flag a deep inconsistency in the Obama administration’s labor economics.

The administration’s overtime proposal will force millions of workers who do not currently charge their employers extra for any overtime hours that these workers work (that is, for hours worked in excess of 40 hours weekly) to charge their employers a minimum wage of time-and-a-half for each and every such hour worked. Although some of the public commentary on this proposal asserts that it will raise the annual incomes of the affected workers, the proposal itself argues that the principal effect of forcing workers to charge 1.5X overtime will not be to increase these workers’ incomes but, instead, to incite these workers’ employers to hire other workers to perform the tasks that were previously performed by the affected workers when they worked more than 40 hours weekly.

In short, the proposal argues – boasts! – that, by forcing up the cost of using worker Jones to perform certain tasks, the government will cause employers to substitute worker Smith for worker Jones. (Quoting page 14 of the proposal: “The first [objective of the proposal] is to spread employment by incentivizing employers to hire more employees rather than requiring existing employees to work longer hours, thereby reducing involuntary unemployment.”)

What a fascinating prediction coming from an administration that, in arguing elsewhere for raising the minimum wage, insists that a higher minimum wage willnot discourage the use of workers whose wages are thereby increased.

That is, in pushing for subjecting more workers to government’s so-called “overtime protections,” the administration argues that employers, being sensitive to the higher cost of using worker Jones to perform task OT, will be led by the higher cost of using Jones to perform OT to substitute away from using Jones to perform OT by opting for lower-cost alternatives – such as worker Smith – to perform OT. But in arguing for raising the minimum wage, the administration dismisses as faulty predictions that the higher wage will cause employers of the affected workers to substitute away from using these workers.

Wow.

What reason have we to believe that forcing up the price of a worker in situation A will cause no substitution away from that worker in situation A, while forcing up the price of a worker in situation B will indeed cause substitution away from that worker in situation B? I see no good reason to entertain any such fanciful belief.

Yes, yes, yes – clever boys and girls can (and will) attempt to impress us with displays of analytical acrobatics that show that, under juuusst the right set of circumstances with juuusst the right set of finely calibrated wage hikes, substantial substitution occurs in one situation while no (or de minimus) substitution occurs in the other. But the burden of intellectual proof is heavily on the Obama administration to explain this glaring apparent contradiction in its labor economics – a contradiction that, I suspect, it does not even notice. Obama & Co. certainly gives no evidence of even attempting to explain it.

What If There Were No Prices

A nice video - "What If There Were No Prices?"  Very well done and makes the valid point that an economy without market prices is one that doesn't work.

Walter Williams on Minimum Wage Laws

Here is a link to a short interview of Walter Williams, who explains why minimum wage laws hurt the people they are intended to help.

John Lott: Twisting Statistics to Smear Cops

Here is an article by John Lott that shows the kind of bias you are likely to run across in the media.  In this case, Nicholas Kristof showed that, for him, agenda trumps facts.

----------------------------------------------
False claims about police brutality are poisoning race relations.

This feeling of “unfairness,” as President Obama noted in his weekly address on May 16, is “fuel(ing) the kind of unrest that we've seen in places like Baltimore, Ferguson and New York.”

The riots it incites threaten people's lives and destroy businesses. Police officers' lives are put at greater risk.

And even though, as in Baltimore, many of the police officers involved are black, the debate has inflamed tensions between whites and blacks.

“It's outrageous when officers use excessive force against young, unarmed African-American men, who are 21 times as likely to be shot dead by the police as young white men,” claimed Nicholas Kristof in a recent New York Times op-ed.

If this claim were indeed true, it would surely be outrageous. But the claim originating from ProPublica and further exaggerated by Kristof is completely false. This is not based on national data but comes from a couple hundred police departments (217 in 2012, just 1.2 percent of all the departments in the country). Nor that these few departments are unusual: They are predominantly in urban areas, which have much higher concentrations of blacks. This skews the numbers to over-represent black deaths.

But other factors also must be taken into account. Nationally, black male teenagers were nine times more likely to commit murder than were their white counterparts, thus presumably posing more of a risk to police. Adjusting for that and that the data are from heavily black areas leaves no significant difference in the risk that police pose for young black and white men.

ProPublica justified the flawed claim by quoting Professor David Klinger of the University of Missouri-St. Louis. But it turns out that he never viewed the data as reliable. Indeed, last October, Klinger complained to me that he had strongly warned ProPublica against using the FBI Uniform Crime Report data on justifiable police homicide.

Like other academics who have worked with this data, he labeled it as “no good.” (One ProPublica author, Ryan Gabrielson, denied to me that Professor Klinger told them this.)

Yet, Klinger repeatedly has stated that ProPublica misquoted him. In a later interview with St. Louis National Public Radio, Klinger was very clear: “The ProPublica thing needs to be shut down. They cherry-picked the three years that had the worst disparity instead of being honest about the whole picture. The ProPublica analysis is absolute garbage because it is based on the FBI's supplemental homicide reports. I told them, don't do it because the stats are (expletive deleted).”

Yet, as misleading as ProPublica's outrageous claim already was, Kristof managed to make it even more inflammatory. He added his own twist and put the term “unarmed” in front of “African-American men.”

The actual claim, however, did not refer to unarmed men but to justifiable police homicides. And those justifiable homicides involve people threatening others with death or serious injury — usually attackers armed with some type of weapon.

What terrible reporting. Kristof and The New York Times could have discovered these errors by fact checking on the Internet.

Still, despite being personally told of these errors, Kristof still has not posted a correction. And The New York Times never published a letter pointing out these errors.

Journalists need to be careful about the supposed facts they use. Mistakes that “fuel” feelings of “unfairness” can have dire consequences on the streets.

John R. Lott Jr., president of the Crime Prevention Research Center, is author of “More Guns, Less Crime” (University of Chicago Press, 2010).

John Lott: The New York Times Keeps Getting Its Gun Facts Shockingly Wrong

Here is a link to an op-ed by John Lott that shows how disingenuous the New York Times is when it comes to guns.  For the New York Times, facts don't matter if they conflict with agenda.

A snippet:

Last week, a New York Times editorial shockingly claimed that American concealed handgun permit holders have been responsible for 763 non-self-defense deaths since 2007. The Times editorial cites these numbers as proof of the “myth of the vigilant citizen” and “foolhardy notion of quick-draw resistance.”

But the numbers they rely on from the Violence Policy Center are fatally flawed, quadruple counting legitimate self-defense cases as criminal murders and blaming suicides on permits when the suicides don’t even involve guns. More disturbing, the Times has been called on using these same numbers before, but they keep on using the numbers and never acknowledge any of the problems.

Math Jokes

Why is 6 afraid of 7?
     Because 7 8 9.

How do you make 7 even?
     Take away the "s".

What do you call 3 feet of trash?
     A junk yard.

What is the difference between a new nickel and an old dime?
     Five cents.

How much do pirates pay for corn?
     A buccaneer.

How much does it cost to buy sixty female pigs and forty male deer?
     One hundred sows and bucks.

What type of lingerie does a math mermaid wear?
     An algae-bra.

Although horses may be able to add, why shouldn't you try to teach them analytic geometry?
     You shouldn't put Descartes before the horse.

What's the only cure for a bad case of right angles?
     The Pythagorean serum.

Have you heard the latest statistics joke?
     Probably