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On Monday, state lawmakers in California, where the minimum wage is already $15 an hour, passed legislation that raises it to as much as $22 for fast-food workers. The bill would create a state commission with the authority to determine not only wages but also hours and working conditions at fast-food franchises. Democratic Gov. Gavin Newsomhasn’t said whether he’ll sign it into law and has until Sept. 30 to decide. But labor leaders and progressive activists, who know that what starts in California often doesn’t stay there, are hoping that the bill will serve as a model for workplace regulation nationwide. Heaven help us.
Proponents of a higher wage floor always say it’s needed to help lift the poor, and they play down or ignore significant trade-offs. Most poor people already make more than the minimum wage, and the people who do earn the minimum are much more likely to be teenagers or young adults working part-time (as I was) than they are to be the family’s sole breadwinner. Poor people need jobs more than they need a minimum-wage hike, and raising the minimum results in fewer employment opportunities than would otherwise be available. California’s new commission would be able to mandate how much Burger King pays you, but it can’t force Burger King to hire you in the first place.
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Last year, the economists David Neumark and Peter Shirley released an assessment of academic research on minimum-wage hikes that had been published over the previous three decades. The authors found that close to 80% of the papers they surveyed showed negative employment effects in the form of fewer jobs or hours, and that the negative impact was strongest for teenagers, young adults and people with less education. Because blacks and Hispanics are overrepresented among such workers, minimum-wage increases can also widen racial disparities.
Empirical evidence matters little to social-justice do-gooders, who maintain that government mandates are the best way to address inequality. But people in California and the rest of the country ought to know the cold facts and disappointing history of such schemes. You don’t help people by destroying low-paying jobs or by making it too expensive for employers to hire them. Rather, you help people by making them more productive. And that first job, however menial or low-paying, can be the first step in developing productive attitudes and skills that will serve someone well for a lifetime.
James Harrigan and Antony Davies identify three ill-consequences of student-loan ‘forgiveness.’ [3] A slice:
Second, colleges and universities will respond to this new reality by raising tuition commensurately. Tuition and fees were a pretty constant 18 to 19 percent of family income from the 1960s until 1978. In 1965, the federal government started guaranteeing student loans. In 1973, Congress established Sallie Mae and charged it with providing subsidized students loans. And by 1978, tuition and fees had started a steady march to 45 percent of family income today. When the government makes it less painful for students to borrow, whether by guaranteeing, subsidizing, or forgiving loans, it takes away some of the pain of student borrowing, which makes it easier for colleges and universities to raise tuition.
GMU Econ alum Dominic Pino, writing at National Review, explains that Robert Lighthizer is not a national hero [4]. Two slices:
Two Republican senators, Ben Sasse (Neb.) and John McCain (Ariz.), opposed Lighthizer’s nomination in 2017 on the grounds that his trade-war policies would harm American farmers by restricting their export markets. (Cory Gardner of Colorado was the only other Republican to vote against his nomination.) Their fears turned out to be justified when U.S. agricultural exports declined by $27 billion due to retaliatory tariffs under Lighthizer’s watch. Seventy-one percent of those losses were from soybean exports, and farmers had to be bailed out in 2019. Direct farm aid ballooned to $32 billion in 2020, larger than the entire Department of Agriculture’s discretionary budget. And American soybean farmers are still feeling the effects now.
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With lines such as “America became great by using subsidies, but mostly tariffs, and an America First policy,” Lighthizer is telling [Harry] Scherer that he fundamentally holds the same view as the Left on how economic growth happens. It was Barack Obama who told American entrepreneurs, “You didn’t build that,” and pointed to government policies as the ultimate source of economic prosperity. If subsidies make America great, then the billions of dollars in green-energy subsidies the Biden administration is doling out are smart policy, and subsidies for baby formula should be producing a thriving and resilient market.
In one important sense, Lighthizer is no different from the radical environmentalists who want to raise energy prices and transportation costs. Both want to make you poorer for your own good. They would define “good” differently, but the instinct is the same. It’s an instinct conservatives ought to reject. We ought to believe in the American people and their ability to create, adapt, prosper, and enjoy the fruits of that prosperity without the heavy hand of government to guide them.
Colin Grabow continues to document damage done by the cronyist Jones Act [5].
Scott Gerber reviews GMU law professor David Bernstein’s new book, Classified [6]. A slice:
Bernstein is the libertarian law professor and blogger who has done more than anyone else to “rehabilitate” the U.S. Supreme Court’s widely reviled liberty of contract decision, Lochner v. New York (1905). In fact, he titled his book about the case Rehabilitating Lochner: Defending Individual Rights Against Progressive Reform [7] (2011). Bernstein’s thesis in Rehabilitating Lochner was that the Court’s decision in Lochner was well grounded in precedent, and that modern constitutional jurisprudence owes as much to the limited-government ideas of Lochner proponents as to the more expansive vision of its Progressive opponents.
Turning to Bernstein’s new book, most Americans already know that racial classifications are ubiquitous in American life. What makes Classified a must-read, however, is Bernstein’s legal history of their origins, his avalanche of evidence about how increasingly arbitrary and incoherent they are, and his proposed solution for cleaning up the mess they have created that, a mess that quite frankly, must be cleaned up if America is to truly be a nation committed to equal opportunity for everyone.
George Will is correct about Mikhail Gorbachev [9]:
He is remembered as a visionary because he was not clear-sighted about socialism’s incurable systemic disease: It cannot cope with the complexity of dispersed information in a developed nation. Like Christopher Columbus, who accidentally discovered the New World, Gorbachev stumbled into greatness by misunderstanding where he was going.
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In 1988, when the French were about to celebrate and sensible people were about to regret a bicentennial, Gorbachev impertinently lectured [10] the United Nations: “Two great revolutions, the French Revolution of 1789 and the Russian Revolution of 1917, exerted a powerful impact on the very nature of history.” Two? It was America’s revolution that unleashed the world-shaking passion for freedom grounded in respect for natural rights. The Soviet Union, hammered together by force and held together by iron hoops of bureaucracy, never achieved legitimacy as the United States has exemplified it — the consensual association of a culturally diverse population.
“Remembering the madness of lockdown [11].” A slice:
“A few enterprising barbers in my area began offering ‘illegal’ hair-cuts in the local park. I was half-way through getting my hair balayaged when the police arrived and we had to hide in the bushes until they’d gone.”
Tracy Høeg tweets [12]: (HT Jay Bhattacharya [13])
New paper from @sdbaral [14] et al on early impact of the covid-19 response
In LMIC [low- and middle-income countries], could lead to
1.4 million excess TB-related deaths by 2025
28,000 additional maternal deaths yearly
36% increase in malaria deaths over 5 yrs
6.7 million additional children <5 w/malnutrition
+ more