At The National Review Online, Deroy Murdock writes Minimum Wage: $100 Per Hour? Don’t be small-minded, America. 3/26/12

Excerpt:

This super-stimulus would propel America’s GDP to Himalayan heights. A $100-per-hour minimum wage would give America’s 133 million workers at least $27.7 trillion in combined buying power — every year!

Of course, this figure will climb even higher as the hefty new wage inspires virtually everyone not currently working to flood the labor market. With all the money that employers will make in increased sales, it will be a snap for them to hire America’s12.8 million jobless people, at a minimum cost of some $2.7 trillion annually. At long last, this will end — not mend — unemployment.

HKO Comments:

Good use of sarcasm.  The minimum wage will affect employment if it is higher than the market wages.  The problem is that market wages change with economic cycles and varies based on region an employee segment. The minimum wage rate was increased over 40% after the 2006 Congress when the economy was booming, but it’s effect lingered after the collapse and the unemployment rate for entry level workers exceeded 40%in some labor and market segments.  Markets can respond quickly to market shifts, laws and regulations do not.

Economist Scott Grannis hits a home run in his blog, Calafia Beach Pundit in The natural forces of recovery, 3/28/12

This post is worthy in every sentence and is hard to excerpt.  Please read it in its entirety.

Still, excerpts:

Businesses have cut staff in order to reduce costs. Some have relocated or shut down. Some have sold assets for a loss, thus allowing another business to redeploy those assets in a new, more profitable venture. Some have created new products; some have figured out how to make their products better or more cheaply. Some entrepreneurs have taken a risk and started a new business. Some have paid down debt, others have taken on new debt. Some have increased hiring. Some have discovered new ways of finding and producing natural gas while risking their fortunes in the process.

Workers have relocated to find a new or better job elsewhere. Many have decided to work harder or longer hours. Many have tightened their belts and cut back on their expenses. Many have decided to start their own business, or to work part-time, or to accept a pay cut. Many have learned new skills, or taken a job in a different field.

Growth is not made in Washington. Growth happens in the heartland, and it is mainly driven by people who are trying to put food on the table and create a better life for themselves and their families. This is the force that has given us a recovery, and I believe it is an enduring force; it is the unique and dynamic nature of the U.S. economy that should never be underestimated.

HKO summary:

Our minuscule recovery is not because of Washington’s efforts, but in spite of them.  For Washington to take credit for this recovery is like the man handing a struggling swimmer an anchor and taking credit because, through the swimmer’s own effort, he has managed not to drown.

Investor’s Business Daily Thomas Sowell writes Obscure Court Decision Gives Government Sweeping Power, 3/26/12.

Excerpt:

Roscoe Filburn was an Ohio farmer who grew some wheat to feed his family and some farm animals. But the U.S. Department of Agriculture fined him for growing more wheat than he was allowed to grow under the Agricultural Adjustment Act of 1938, which was passed under Congress’ power to regulate interstate commerce.

Filburn pointed out that his wheat wasn’t sold, so that it didn’t enter any commerce, interstate or otherwise. Therefore the federal government had no right to tell him how much wheat he grew on his own farm, and which never left his farm.

The 10th Amendment to the Constitution says that all powers not explicitly given to the federal government belong to the states or to the people. So you might think Filburn was right.

But the Supreme Court said otherwise. Even though the wheat on Filburn’s farm never entered the market, just the fact that “it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market” meant that it affected interstate commerce. So did the fact that the home-grown wheat could potentially enter the market.

The implications of this kind of reasoning reached far beyond farmers and wheat. Once it was established that the federal government could regulate not only interstate commerce itself, but anything with any potential effect on interstate commerce, the 10th Amendment’s limitations on the powers of the federal government virtually disappeared.

HKO comments:

When you go to the polls next election, remember that the president’s impact on our lives through his court appointments drags out far beyond the attention span of his media fans and sychophants.

The Wall Street Journal editorial board writes Liberty and Obama Care 3/23/12:

Select Excerpts:

The Supreme Court will not be ruling about matters of partisan conviction, or the President’s re-election campaign, or even about health care at all. The lawsuit filed by 26 states and the National Federation of Independent Business is about the outer boundaries of federal power and the architecture of the U.S. political system.

The Commerce Clause that the government invokes to defend such regulation has always applied to commercial and economic transactions, not to individuals as members of society.

This is another way of describing plenary police powers—regulations of private behavior to advance public order and welfare. The problem is that with two explicit exceptions (military conscription and jury duty) the Constitution withholds such power from a central government and vests that authority in the states. It is a black-letter axiom: Congress and the President can make rules for actions and objects; states can make rules for citizens.

The Commerce Clause was initially seen as a modest power, meant to eliminate the interstate tariffs that prevailed under the Articles of Confederation. James Madison noted in Federalist No. 45 that it was “an addition which few oppose, and from which no apprehensions are entertained.” The Father of the Constitution also noted that the powers of the states are “numerous and infinite” while the federal government’s are “few and defined.”

The best the government can do is to claim that health care is unique. It is not. Other industries also have high costs that mean buyers and sellers risk potentially catastrophic expenses—think of housing, or credit-card debt. Health costs are unpredictable—but all markets are inherently unpredictable. The uninsured can make insurance pools more expensive and transfer their costs to those with coverage—though then again, similar cost-shifting is the foundation of bankruptcy law.

The reality is that every decision not to buy some good or service has some effect on the interstate market for that good or service. The government is asserting that because there are ultimate economic consequences it has the power to control the most basic decisions about how people spend their own money in their day-to-day lives. The next stops on this outbound train could be mortgages, college tuition, credit, investment, saving for retirement, Treasurys, and who knows what else.

HKO comments:

The entire article is well worth the time to slowly read.

I am no lawyer and could probably not even play one on TV.  Besides the legal issues which can be argued much better than I can, there is the feeling by many of us that the federal government has lost all boundaries.   I think this legal battle is an effort to define or re clarify those boundaries.  Is it not enough that our toilet’s performance and the light bulbs we use are subject to political whims? Do we have to have the government intervene in our most intimate and valued decisions such as health care? Are we not allowed to exercise any personal judgment and responsibility over our lives?   Do the imperfections of market forces allow the government to direct all of our decisions?

However the courts decide the mandate issue this health care bill is terrible on both economic and moral terms.  We all realize that everything has a cost.  It is the ability to recognize both the seen and unseen costs that escapes the supporters of this bill.  When you expand coverage and place pressure on costs, quality and service will inevitably suffer.  The reason that most Americans oppose this bill is that few want the government to make that judgment.

I recall the response of Richard Timberlake, the noted PhD economist, when someone asked him if he was an Austrian economist, a monetary economist or a Keynesian economist.  He responded that there is bad economics and good economics.

Good economics looks for the unseen effects of policies that politicians too often miss or just refuse to see.  But if there is one aspect of economics that almost any school believes in- it is that incentives matter.

Politicians have pushed for a higher tax on wealthy, particularly the estate tax, as an attempt at fairness.  But there is a gap between the intention and the results.

Many would find that frugality and saving for the future is a virtue, and that conspicuous consumption is not.  Yet the estate tax encourages the latter at the expense of the former.

If I forgo consumption for investment, my money will likely go into stocks that support business investment,  economic  growth and job creation, even if the result is that it increases my net worth (if I invest wisely).  But if I follow that path I will have to give up a significant portion of my wealth when I die to estate taxes.  My family will not benefit from my frugality or my delayed gratification.

If instead I spent that money on expensive vacations, mansions, a fleet of cars, a boat, expensive wines,  overpriced dinners, and other such luxuries I will have enjoyed that money when I was alive but I would not have to give up a portion of it to the government when I died.  I have lived better and the result to my family is the same.

Yes, my conspicuous consumption would have stimulated the economy to some degree, but it would not have had the long term benefit that investing in growing businesses would have had.

Those who advocate a higher tax on the estates of the wealthy think they are taxing the unfair advantage and benefit that has accrued to the upper class.

What they are taxing are the virtues that created the wealth they now covet.