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Investing in Politicians


From Daniel Greenfield’s excellent blog, Sultan Knish, The Inequality of Access:


Battling income inequality leads directly to inequality of access by putting the equalizers in charge of picking winners and losers through the agency of an expanding government that promises to fill in the gaps in income while instead creating gaps in access. The equalizers promise to fix the unfairness of the marketplace and replace it with the ideologically determined unfairness of government.

The bigger government gets, the less sense it makes to invest in business and the more sense it makes to invest in politicians. Powerful politicians are a much less riskier investment than millions of customers whose behavior is hard to predict. The unpredictability of the public makes competition possible and reduces income inequality while the predictability of politicians is a monopoly that increases income inequality as political monopolies become economic monopolies.

Obama handed out hundreds of millions to the Green Energy tycoons who supported him and dispenses ambassadorships to unqualified bundlers who barely know the name of the major country they have been assigned to. Voters who came out in collective groups for Obama got wealth redistribution paydays. Everyone else got taxed.

There is no equality of access even within the ranks of his supporters. The Obama voter was rewarded with ObamaCare, but the ObamaCare website was outsourced to an incompetent company whose top executive was a pal of Michelle Obama. The company got a six hundred million dollar contract and the ObamaPhone voters got a broken website and hours on hold with operators and navigators.


It is probably impossible to measure the impact this has on new business start ups and job growth, but nobody wants to play a rigged game.

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Mazel Tov to Scarlett


from NBC News Scarlett Johansson quits Oxfam over SodaStream criticism

LONDON — Actress Scarlett Johansson has quit her role with the charity Oxfam after it criticized herpromotion of drinks company SodaStream, which has a factory in an Israeli settlement in the West Bank.

Israel-based drinks company SodaStream has its largest factory in Maale Adumim, a Jewish settlement in the West Bank. Israeli settlements are considered illegal under international law, and Oxfam has a policy of opposing trade with those areas.

The West Bank factory employs both Palestinians and Israelis. SodaStream cites it as an example of the two peoples working side-by-side. “Approximately 500 Palestinians work at our Mishor Adumim facility, supporting several thousand people and their families,” Yonah Lloyd, chief corporate development and communications officer for SodaStream, said in a statement to NBC News.


So Oxfam pretends to boycott Israel by taking a stand against a company that hires 500 Palestinians.  How stupid is this? More posing-  actions without results, and preaching without helping anyone.

Here is the ad:


another view from Debbie Schlussel –  Scarlett Johansson, Israel, Oxfam & SodaStream: Starlet’s No Hero; History of Hanging w Israel Boycotters

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Shedding Light on the Minimum Wage

Scott Grannis

Scott Grannis

from Scott Grannis at Calafia Beach Pundit,  Minimum Wage Factoids.


But don’t take my word for it, just look at the facts as calculated by the BLS, in their Characteristics of Minimum Wage Workers 2012:

In 2012, 75.3 million workers in the United States age 16 and over were paid at hourly rates, representing 59.0 percent of all wage and salary workers. 1 Among those paid by the hour, 1.6 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 2.0 million had wages below the federal minimum.2 Together, these 3.6 million workers with wages at or below the federal minimum made up 4.7 percent of all hourly paid workers.

The BLS also tells us that, as of the end of 2012, there were roughly 140 million non-farm employees in the U.S. So the percentage of all the people working who were making minimum wage or less is (1.6 + 2.0)/140 = 2.6%. Less than 3% of all those who work in the U.S. make minimum wage or less, and over half of those earn less than the minimum wage. By the same logic, over 97% of those who work already make more than the minimum wage without any help from government fiats.

But there’s more, and its impressive: “About three-fifths of workers earning the minimum wage or less in 2012 were employed in service occupations, mostly in food preparation and serving related jobs.” In other words, 60% of those making minimum wage or less work in restaurants, where they undoubtedly make more than minimum wage if you count their tip income. That means that approximately 1% of those who work (40% of 2.6%) in the U.S. actually make minimum wage or less for their hourly efforts. Fully 99% of those who work effectively earn more than the minimum wage.

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The Rich and Poor Rise and Fall Together


Alan Reynolds writes The Truth About the One Percent in The National Review Online


The table shown here — which uses Piketty and Saez’s data — shows the top 1 percent’s average real income fell by 16.3 percent from 2007 to 2012, and ended up 6.4 percent lower than it was back in 2000:

Average Real Income of the Top 1 Percent (2012 dollars)
2000 $1,350,006
2001 1,063,706
2002 933,878
2003 964,989
2004 1,143,104
2005 1,323,935
2006 1,414,985
2007 1,510,932
2008 1,213,199
2009 961,785
2010 1,076,379
2011 1,056,640
2012 1,264,065

What about the “other 99 percent,” whose income supposedly rose by only 0.4 percent from 2009 to 2012? Piketty and Saez compare real incomes at different income levels without including Social Security, unemployment and disability benefits, food stamps, Medicaid, etc. Government transfers totaled $2.3 trillion in 2012, up 24.6 percent in real terms from 2007 and up 68 percent since 2000. Because Piketty and Saez estimate only pre-tax, pre-transfer income, they also ignore $149 billion in Treasury checks to lower-income families from refundable tax credits. They’ll also ignore huge Obamacare subsidies next year.

Once transfers and taxes are properly taken into account, my own research for the Cato Institute shows no clear trend toward greater inequality after 1989, aside from the tech-stock boom of 1998–2000. Instead of any predictable trend, data on income shares are dominated by cyclical variations in which rich and poor rise or fall together: When the top 1 percent’s share rises, the poverty rate falls, and when the top 1 percent’s share falls, the poverty rate rises.

There are numerous conceptual and measurement problems with attempting to judge the relative living standards of the rich, middle-class, and poor by relying on income reported on individual tax returns (ignoring, for a start, income that’s unreported or reported on corporate returns).

Saez himself has hinted that the seemingly strong surge in top-percentile incomes in 2012, for example, was largely a matter of strategic tax timing — reporting bonuses and capital gains in 2012 to avoid higher tax rates in 2013. The same thing happened in late 1992, when professionals and executives arranged to cash in bonuses and stock options in December rather than in January 1993, when income-tax rates went up. It also happened in 1986, when investors rushed to cash in capital gains before the capital-gains tax went up, briefly inflating reported real income of the top 1 percent by 34.6 percent in a single year.

Because reported capital gains and bonuses were similarly shifted forward from 2013 to 2012, we can expect a sizable drop in the top 1 percent’s reported income when the 2013 estimates come out a year from now. The befuddled media will doubtless figure out some way to depict that drop as an increase.


Alan Reynolds has done an extensive job challenging the income disparity data in his book Income and Wealth.  You can find excerpts in the search feature in this blog.  In short the data is manipulated depending on what is included in the wealth distribution data, what is measured (household income vs individual income), and what periods are selected.  For example much of the growth in income in the 1980′s had much to do with changes in the tax law that caused Subchapter C corps to convert to Subchapter S status.  Income data that used to show up on corporate returns now showed up on personal returns via K-1 reports. Similarly wealth that resided in tangible assets during the inflationary 1980′s returned to reportable financial statements in the 1980s as inflation was tamed.

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The Amazon Phenomenon


I think that the Amazon model may be as significant a step in commercial innovation as the assembly line or the department store.   One Click shopping is just absolute genius.

My most recent purchases:

Amazon is cheaper 87% of the time, but most of these were items that I could never have found in Macon.  Never once had to wait in line, never once had to be put on hold.  It is the state of the art shopping experience.

Other observations:

I would hate to be in a location bound product retailer.  With the exception of clothing and firearms I just do not know how one would compete.

While some moral supremacists blast location bound retailers for making their employees work on holidays, the sales system at Amazon and most online retailers are available 24/7 – 365 days a year – all holidays included.  Nobody is protesting them.  This seems a little unfair.

Elitists who know more than the market also criticize the minimum wages paid at most retailers, even threatening to boycott some.  How do you boycott Amazon?  Does anyone protest what Amazon pays?  Does anybody know? Does anybody care?  Think how many human touches have been removed from the buying and shopping process.