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Zingerman’s and Subway

President Obama at Zingermans-  courtesy of Bob Nadelberg and Plunko

President Obama at Zingermans- courtesy of Bob Nadelberg and Plunko

From the Wall Street Journal, Michael Saltsman writes Why Subway Doesn’t Serve a $14 Reuben Sandwich:

Start with Costco, whose CEO, Craig Jelinek, is an outspoken advocate of raising the minimum wage. “At Costco, we know that paying employees good wages makes good sense for business,” Mr. Jelinek said in a statement in March of last year. Mr. Jelinek offers new employees $11.50 an hour, but his narrative omits a few key details. First, Costco charges its customers as much as $110 a year for the privilege of shopping at the store. That’s a $2 billion-per-year luxury no grocer or restaurant enjoys.

As a result, the warehouse retailer rakes in what amounts to a more than $10,000 profit per employee, according to data from business research company Hoovers. A casual dining restaurant, on the other hand, earns a roughly $2,000 profit per employee, which explains why most businesses aren’t following the president’s “just be more like Costco” advice.

There are exceptions. In a visit this month to the University of Michigan, for instance, the president stopped at the local deli Zingerman’s. He raved about its Reuben sandwich as well as the generous wages that the business offers. Like Mr. Jelinek, Zingerman’s co-founder Paul Saginaw supports hiking the minimum wage. He posted a minimum-wage manifesto on a company website last September.

As Mr. Obama relished the perfect sandwich prepared by well-paid employees, he neglected to mention how much he paid for the happy experience: Zingerman’s Reuben costs $14. That’s about three times as much as a Subway foot-long. When I was an undergraduate student at Michigan, I rarely dined at Zingerman’s because it was so expensive.

If every deli could charge $14 a sandwich, then perhaps an $11 or $12 minimum wage would be feasible. But your local sandwich shop cannot match the price points of a shop serving a parent-subsidized clientele in a college town. Expecting restaurants everywhere to do so is a recipe for business failure.


This is why our love of one size fits all, government knows best central planning can be so dangerous.  It also shows how out of touch our elitist moral supremacists are with the working class.

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Reading Meaning into Nature

The real risks of cherry picking scientific data by Matt Ridley and his blog The Rational Optimist


The Tamiflu tale is that some years ago the pharmaceutical company Roche produced evidence that persuaded the World Health Organisation that Tamiflu was effective against flu, and governments such as ours began stockpiling the drug in readiness for a pandemic. But then a Japanese scientist pointed out that most of the clinical trials on the drug had not been published. It appears that the unpublished ones generally showed less impressive results than the published ones.

Imbued as we are with an instinctive tendency to read meaning into nature, we find it counter-intuitive that many experiments get significant results by chance and that the way to check if this has happened is to repeat the experiment and publish the result. When the drug company Amgen tried to replicate 53 key studies of cancer, they got the same result in just six cases. All too often scientists publish chance results, or “false positives”, like gamblers or fund managers who tell you about winners they backed.

Outside medicine, we popular science authors are probably guilty of too often finding startling results in the scientific literature and drawing lessons from them without waiting for them to be replicated. Or as Christopher Chabris, of Union College in Schenectady, New York, harshly put it about the pop-psychology author Malcolm Gladwell: cherry-picking studies to back his just-so stories. Dr Chabris points out that a key 2007 experiment cited by Gladwell in his latest book, which found that people did better on a problem if it was written in hard-to-read script, had been later repeated in a much larger sample of students with negative results.


We seem unsettled by not knowing.  We are also today drowning in data that will support conclusions that can prove to be very deceptive.  This requires us to be more skeptical, not less.  If we do not try to duplicate research results aggressively we risk drawing a lot of wrong conclusions.  This is also easily abused by interested parties who can prey on the statistical ignorance of even our most educated leaders.  When these conclusions support political objectives, hostility greets skepticism and verification.

Google and our mobile devices gives us all the answers and endless information at the touch of a finger.  The questions and the wisdom to understand what we read is still up to us. Without this most human part of intelligence all we have done is speed up ignorance.

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Consumptive Inequality

Do people mind more about inequality than poverty? from Matt Ridley at his blog The Rational Optimist


If you measure consumption inequality, it is far lower than pre-tax income inequality, because the top 40 per cent of earners pay more in than they get out, while the bottom 60 per cent get more out than they pay in. Indeed, in Britain the top 1 per cent generate about 30 per cent of the total income-tax haul. After such redistribution, the richest fifth of the population has only four times as much money to play with as the poorest fifth.

With big increases in housing benefit and other redistributions, consumption inequality may be as low as it has ever been. Add in the value of pensions (including the state pension), free healthcare, the fall in the price of food and clothing relative to wages, plus the dramatic fall in the cost of much technology and it is clear that for most basic needs, the country has never been less poor or less unequal. A smartphone’s search engine may be about as capable as a plutocrat’s full-time secretary was in 1960.

Imagine being told that one of the people in a meeting is a genuine billionaire (I owe this idea to Professor Don Boudreaux). How would you tell which one? His bodyguards, private jets and grouse moors are outside the room; his shirt and jeans are unlikely to give him away (as they would in 1900); his Rolex could be a cheap imitation; his teeth, girth and height are probably unremarkable (unlike in 1800); even his Diet Coke is the same as everybody else’s. Much more than in the past, most inequality in this country these days — though by no means all — is in luxuries, rather than necessities.


Measurements of inequality are not always indicative of the truly experienced equality.  Making the rich poorer does not inevitably make the poor richer.Income is only one measure of the wealth of any class. The quality of consumption is missed by much of the data.

Inequality occupies the minds of the elite and the academics.  Most people at the low end of the scale just wants to improve their lot in life.  That is more important than how well others are doing.  Other than the new political elite who get massive checks from their crony relationships with the government, few people who depend on government subsistence will ever get enough of it to escape poverty.

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Don McNeeley on The Minimum Wage, Optimism for Manufacturing

Don is smartest man I know  in the steel industry.  The relative vs absolute cost of the minimum wage. Bullish on manufacturing because of frustrated demand- not because of legislation, but in spite of it.

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Bad Fortune vs Bad Choices

From the Pittsburgh Tribune Review Donald Boudreaux writes Questions for redistribution’s proponents

• Suppose that Jones chooses a career as a poet. Jones treasures the time he spends walking in the woods and strolling city streets in leisurely reflection; his reflections lead him to write poetry critical of capitalist materialism. Working as a poet, Jones earns $20,000 annually. Smith chooses a career as an emergency-room physician. She works an average of 60 hours weekly and seldom takes a vacation. Her annual salary is $400,000. Is this “distribution” of income unfair? Is Smith responsible for Jones’ relatively low salary? Does Smith owe Jones money? If so, how much? And what is the formula you use to determine Smith’s debt to Jones?

• While Dr. Smith earns more money than does poet Jones, poet Jones earns more leisure than does Dr. Smith. Do you believe leisure has value to those who possess it? If so, are you disturbed by the inequality of leisure that separates leisure-rich Jones from leisure-poor Smith? Do you advocate policies to “redistribute” leisure from Jones to Smith — say, by forcing Jones to wash Smith’s dinner dishes or to chauffeur Smith to and from work? If not, why not?
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The argument for redistribution often assumes that citizens are only objects subject to the whims of capitalism, and not subjects whose own decisions have impacts on their own lives.  It is true that many fall victim to bad fortune and probability, but many are victims of their actions and choices.  Should we distinguish between these two group, and how should we do it?