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Sunday, January 5, 2014

Pat Buchanan would get it

Randall Parker on the benefits of a higher minimum wage and his support for Ron Unz' California initiative:
The public health benefit: Since fast foods are harmful higher prices will discourage people from eating them. 
Smaller welfare state: People who make more money will qualify for fewer social welfare programs. We net taxpayers will save money. The Gray Lady's article actually mentioned this benefit. 
The immigration benefit: The average skill level of immigrants will go up when the supply of low skilled jobs suitable for low skilled immigrants gets radically curtailed by high prices. 
The innovation benefit: High prices for labor are a great incentive for innovation. Look at what manufacturing unions did to boost investments in equipment that raises productivity. 
Cheaper restaurants in the long run: The automation of food preparation will ultimately lead to cheaper restaurants (so, yes, the public health benefit will be transitory).
When I was in college, I used to unctuously argue that red state governments should ditch the trickle down argument and instead capitulate, admitting they are unable--and their constituents unwilling--to give the poor and downtrodden the legs up they need. Instead, they should use the meager funds they were squandering on such attempts to transport their impoverished populations to blue states where they could be more adequately coddled. It's how someone with a distinctly middle class background morally postures while simultaneously trying to demonstrate independent thought, which I naively thought at the time was something the college atmosphere was actually designed to foster. It made for decent undergraduate discussions at a state university, anyway!

Randall's support for the minimum wage is a variant on that thinking, and unlike urging red states to gift wrap their huddled masses and ship them to the coasts, his idea is practicable. Randall mentions some other western states that allow for ballot initiatives like California does. In addition to the golden state, he mentions Arizona, Oregon, and, worst of all, Colorado. If he had his way, lots more terminally poor immigrants would find low cost-of-living Kansas a reasonable destination. Zip it, Randy!

Contemporary political alignments in the US are such that there isn't one party that backs a bunch of policies that all have the real-world consequences of increasing (or decreasing) the total levels of human capital in the locales that adopt them, or at least not clearly so (ie, the left's support for environmental and other zoning restrictions on commercial and residential construction on one hand and its support for affirmative action hiring practices on the other, etc).

High minimum wages discourage illegal immigration because they negate the the major advantage illegals offer. If slavery still existed as an institution in the US, a mandated minimum wage would, principally, similarly damage it. What it didn't wipe out, it would at least push it underground. Indeed, an almost certain consequence of Ron Unz' initiative, if passed, will be an expansion in the size of the cash (or, more aptly referred to, underground) economy. It's an example of a putatively leftist cause that has the effect of increasing human capital.

Welfare benefits, on the other hand, encourage illegal immigration. This is still one of the biggest issues the left pushes (and the mainstream right opposes) and it has an effect on human capital opposite of what hiking the minimum wage has.

The traditional right needs to get behind artificially pushing up the wage floor while maintaining opposition to increases in social spending. A state that adopted this seemingly 'contradictory' set of policy initiatives, especially one with a large illegal immigrant population (Arizona being the most plausible trailblazer, as it has a heroic recent history when it comes to combating foreign settlement within its borders) could really see an exodus in illegal immigrants from said state as a consequence.

Saturday, January 4, 2014

Not everything in life is muddled and befuddled

Ben Southwood left the following comment worth remarking upon in the thread on a previous post concerning feminism's War on Biology:
Mainly interesting and reasonably plausible, but the bit about female entry into the labour market and wages is almost certainly untrue, something I'd bet practically any economist could agree on. When a woman enters the labour force she adds to demand as well as supply. When this sort of argument comes from someone with other reasons they don't like women working, then it sounds very much like motivated reasoning.
Perhaps, though it seems nearly every economist professes to believe that immigration exerts no meaningful downward pressure on wages, too, and I'm unconvinced on that front as well!

In fact, I think there is a lot of overlap in the two fallacies. Adding wage earners will increase total consumer spending, but that's not what anyone outside of GMU cares about. The important issue is whether or not it raises per capita spending power. Annexing Mexico tomorrow would increase the United States' GDP by 8% in one fell swoop, but we'd be a poorer country as a consequence.

If the new wage earners earn more than the existing wage earners, then it is possible (though not necessarily the case) that income per wage earner will increase overall, but if the new wage earners earn less than the existing wage earners--as is overwhelming the case in the US with both women and immigrants--per capita wages are going to stagnate or even decline despite improvements in productivity. Additionally, a growing labor pool and the subsequent increase in competition among wage earners that larger labor pool brings with it, allows those who own the means of production to reap more benefit from productivity gains than those who work for them as employees do. That's been the story for decades now.

Women continue to earn less than men not because of irrational discrimination in the workplace--if that was the case, you or I could get rich tomorrow by starting a firm in an industry where such irrational discrimination is commonplace, overwhelmingly hire the qualified, underpaid women in the field who are getting snubbed, and watch the profits flow in... Okay, that's hyperbolic and oversimplified, and there is of course some level of irrationality in virtually all human affairs, but this sort of irrational discrimination is isolated and marginal in the contemporary scheme of things.

Instead, it is because they are less interested in and less devoted to their careers than men are for obvious biological and cultural reasons--reasons that the vast majority of people instinctively understand. Additionally, they aren't as adept men in industries that pay exceptionally well--primarily those requiring lots of high level math, like engineering and physics.

Parenthetically, immigrants in the US earn less than natives because they tend to be less educated, less intelligent, and less entrepreneurial than indigenous Americans are, and the gap doesn't close even after multiple generations of their descendants have been in the country.

Thursday, January 2, 2014

Since the phrase "nation of immigrants" was first used in reference to the United States 80 years ago, it's regularly been invoked by politicians, chambers of commerce, journalists, charities, and ethnic activist groups as the most vitally important aspect of our collective national character.

Here is a list of countries who put us to shame by outdoing America and its Dreamers by boasting higher shares of immigrants in their contemporary populations than we do: Andorra, Qatar, the United Arab Emirates, Monaco, Kuwait, Macau, Palestine, Singapore, Hong Kong, Bahrain, Jordan, Nauru, Israel, Luxembourg, Liechtenstein, Brunei, San Marino, Saudi Arabia, Oman, Switzerland, Antigua and Barbuda, Australia, Latvia, Canada, Gabon, Lebanon, Kazakhstan, the Cook Islands, New Zealand, Gambia, Estonia, Belize, Palau, Austria, the Ukraine, Croatia, Cyprus, Ireland, Norway, the Ivory Coast, and Moldova.

I wonder if Bryan Caplan is more troubled by how far down we are on this list or how far down we are in the PISA rankings, because going up in one means going down in the other. As the economist well knows, life is about trade offs, after all.
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