Carly Fiorina schools Hillary on the economy in Hillary Clinton Flunks Economics in The Wall Street Journal:
And yet Hillary Clinton said on Oct. 13 in the first Democratic presidential debate, “The economy does better when you have a Democrat in the White House,” and she offers variations on that line when campaigning.
Whose economy is she talking about? The middle class has shrunk under the Obama administration. According to government figures and industry analyses, median-income households have lost nearly $1,300 after inflation, while the prices of food, health care and college tuition have risen almost twice as fast as inflation.
Those struggling to find work are increasingly out of luck: Labor-force participation for working-age Americans has fallen to 62.4%, according to the Bureau of Labor Statistics (BLS), a level last seen in the Jimmy Carter-era recession. Millions have given up looking for work, and millions have fallen into poverty as a result.
While Mrs. Clinton touts her gender to bolster her campaign, 92% of the jobs lost during Mr. Obama’s first term—when Mrs. Clinton was secretary of state—belonged to women, according to the BLS. The National Women’s Law Center reports that the poverty rate among women is 16.1%—the highest level in 20 years—and the extreme poverty rate among women the highest ever recorded.
African-American unemployment is almost twice as high as the national average. The median household net worth for black families fell by 33% from 2010 to 2013. The left continually urges more spending for the Education Department, yet the achievement gap between black and white students has stagnated and remains far too wide—and only half of black male high-school students graduate on time. Meanwhile, liberals pander to the teachers unions while blocking merit pay and shutting down school-choice programs.
from Cafe Hayek – Quotation of the Day on Minimum Wage
The ‘new’ minimum-wage research that commenced in earnest in the mid-1990s is highly appealing to non-economists, for it supports their economically uninformed understanding of markets in general and of prices in particular. This research is an instance of credentialed economists, in effect, assuring the economically ignorant man-in-the-street that he is indeed correct in his simplistic understanding of the economy, while all those economists who are forever warning about ‘the unseen’ and about unintended consequences are the wrong-headed and unscientific ones.
Because economics – good economics – is very much the science of making that which is unseen seen, economists, of all people, should be keenly aware that much of what occurs in an economy is difficult, and often practically impossible, to detect – difficult or impossible to detect not only with the naked ‘eye’ but also with even the best quantitative data. This fact is why the burden of proof should weigh especially heavily upon those who claim to find in the empirical data evidence that foundational principles of economics do not apply or or suspended in this or that particular market. And the weight of this burden of proof should only further increase if popular and political sentiment runs strongly against the conclusions of foundational economics (as it does in the case of the minimum wage).
Bottom line: the empirical evidence against the standard economic analysis of the minimum wage is relatively scant and questionable, and the theoretical reasons offered in support of this ‘new’ minimum-wage research are even more questionable. The case that minimum wages have no negative employment effects for low-skilled workers is about as plausible as is the case for homeopathy or healing with crystals.
from the Cato Policy Report, Deirdre McCloskey writes How Piketty Misses the Point:
What caused the Great Enrichment? It cannot be explained by the accumulation of capital, as the very name “capitalism” implies. Our riches were not made by piling brick upon brick, bachelor’s degree upon bachelor’s degree, bank balance upon bank balance, but by piling idea upon idea. The bricks, BAs, and bank balances were of course necessary. Oxygen is necessary for a fire. But it would be unenlightening to explain the Chicago Fire of 1871 by the presence of oxygen in the earth’s atmosphere.
The original and sustaining causes of the modern world were indeed ethical, not material. They were the widening adoption of two new ideas: the liberal economic idea of liberty for ordinary people and the democratic social idea of dignity for them. This, in turn, released human creativity from its ancient trammels. Radically creative destruction piled up ideas, such as the railways creatively destroying walking and the stage coaches, or electricity creatively destroying kerosene lighting and the hand washing of clothes, or universities creatively destroying literary ignorance and low productivity in agriculture. The Great Enrichment requires not accumulation of capital or the exploitation of workers but what I call the Bourgeois Deal. In the historical lottery the idea of an equalizing liberty and dignity was the winning ticket, and the bourgeoisie held it.
That even over the long run there remain some poor people does not mean the system is not working for the poor, so long as their condition is continuing to improve, as it is, and so long as the percentage of the des-perately poor is heading toward zero, as it is. That people still sometimes die in hospitals does not mean that medicine is to be replaced by witch doctors, so long as death rates are falling and so long as the death rate would not fall under the care of the witch doctors. It is a brave book Thomas Piketty has written. But it is mistaken.
from Mona Charen at National Review, How Bernie Sanders Became the Conscience of the Democratic Party
The idea that “the rich” sit permanently atop a pyramid of worker drones is false. Consider the companies that were once ubiquitous but are now ailing or gone: The Sharper Image, Borders, Circuit City, Polaroid, Yahoo!, Sears, and Toys-R-Us. Creative new competitors take their places. A U.S. Treasury study in 2006 found that among taxpayers in the highest brackets in 1996, 30 percent had dropped below that ten years later, with 2.6 percent dropping all the way to the bottom. Among those in the lowest income quintile in 1996, more than half had moved up ten years later.
A dynamic economy grows out of respect for free markets, willingness to take risks (which includes tolerance for failure), reliable protection of property rights, future focus, light regulation, and openness to ideas. These traits traditionally made the American economy the most innovative in the world. From aeronautics to computers to medical equipment to energy to retailing to entertainment, U.S. creativity has produced the world’s most prosperous middle class. We still lead the world in patents, and we’re still inventing new business models like Uber and AirBnB. But we’ve layered so many stones onto the shoulders of businesses that the engine of innovation is slowing. For the first time since the 1970s, more businesses are dying than being born. In 2000, the U.S. ranked second in the world in economic freedom according to the CATO Institute. Now, we’ve dropped to 16th.
Contra Sanders, we’ve been smothered in quasi-socialism for the past six years. The U.S. economy desperately needs a shot of capitalism and growth. The middle class stagnates and poverty increases. The rich, as in Venezuela, Cuba, and Sweden, are making out fine in Obama’s America. It’s the middle class and the poor who need capitalism to lift them.
Economist John Cochrane wrote a 10,000 word essay, Economic Growth. Scott Grannis blogged some excerpts here: a few of them:
When we say broaden the base by removing deductions and credits, we should be serious about that. Thus, even the holy trinity of mortgage interest deduction, charitable donation deduction, and employer provided health insurance deduction should be scrapped. The extra revenue could finance a large reduction in marginal rates.
Americans remain generous. Even without a tax incentive, Americans will give to worthy causes, as they give now to political campaigns.
A simple code makes its incentives transparent. A simple code vastly reduces compliance costs. And most of all, a simple code is much more clearly fair. Americans now look at the tax code and suspect — often rightly — that rich smart people with clever lawyers are getting away with things. Our voluntary tax code depends vitally on removing this suspicion.
Zero is zero. If you don’t kill a tax completely, it keeps coming back like zombies in a science fiction movie. If you don’t kill a tax completely, you do nothing to simplification of the tax code.