Whoopee – Raises for everyone!
So the US minimum wage was increased to $7.25, to the cheers and adulations of the nice, but economically-illiterate, multitudes. Of course, it’s never enough, so there are already calls for further significant increase; for example, a group of churches and religious leaders are calling for an increase to $10 an hour next year.
Look, I’m not a particularly mean guy, and I worked for less than $4 an hour at my first job back in the mid ’80’s — and I sure would have liked to have earned more! But, the thing is, in our still-slightly-market-based economy, wages, like any other prices, are set by the combination of supply and demand for a product; in this case, a particular set of skills, experience, and capabilities.
My first job was as a cashier at a grocery store; it was an entry level job, requiring no experience and no skills beyond the ability to type numbers on a 10-key keypad and smile nicely at the customers. There were lots of other high school kids who wanted — and were equally qualified for — the job, so the price (wage) was low.
At the other end of the scale, let’s think about neurosurgeons, the folks who do simple stuff like cut tumors out of your head, repair aneurysms, that sort of thing. After 4 years of college, 4 years of medical school, an internship, and 5 – 7 years of residency, the small number of people who can actually do this job well can expect to make base salaries of about $400,000 a year; many make total compensation well above half a million.
John Stossel has a good piece on this topic:
Politicians have tried to defy the market process with minimum-wage and living-wage laws for years. The consequences are never good for the people they claim to want to help. When will we learn what workers need is not meddling politicians but free and competitive markets?
While the math of supply and demand can get complicated, the logic is really very simple. If it’s worth it to me to pay the neighborhood kid $30 to mow my lawn, and he’s willing to do it for $20, then we’re going to be able to come to a mutually-beneficial deal. If the town government says passes an ordinance that the minimum price for mowing a lawn is $50, then I’m not going to pay the kid to do it. I’m worse off because I have to waste my Saturday afternoon, and he’s worse off because he doesn’t get to earn money. The townspeople are worse off because they now have an “unemployed” kid running around making trouble and needed some sort of benefits program — leading to increased taxes.
It’s the Market, Stupid
From Reason:
The New York Times calls it “possibly the most complex legislation in modern history.” The health care “reform” currently being hammered out by the Democratic leadership of the House of Representatives already clocks in at $1 trillion and 1,000 pages—and it’s nowhere near done. But one thing is clear: the legislation attempts to substitute top-down mandates from a centralized bureaucracy for the distributed decisions made by millions of consumers, physicians, and insurers acting in a marketplace. This will fail.
While I agree that the legislation will fail — in the sense that it will ultimately produce worse health outcomes at higher cost than our current system — I am quite concerned that the legislation will not fail to pass.
It’s embarrassing — and should be offensive to anyone who has ever taken a civics or US History class — that a piece of legislation this big and complex, that affects a huge portion of our economy, could be rushed through without being read, in an attempt to create yet another “entitlement” that will be nearly impossible to take away.
Read the article for a great summary of what a true market in healthcare might look like…
Lets think this through
So, an idea to raise taxes by specifically going after elective cosmetic surgery raises 25% of its anticipated goal:
Malcolm Roth, vice president for health policy and advocacy at the American Society of Plastic Surgeons, said the New Jersey tax has only brought in about 25 percent of anticipated revenue since it was enacted in 2004 and imposes “another bureaucratic layer,” including questions of how to determine what procedures are eligible. Roth said lawmakers at the federal level could expect the same administrative headaches and lack of anticipated revenues if they went down the New Jersey route.
and the Congress is thinking about doing this nationally? Seriously, lets think this through. It didn’t work for boats and other luxury items and devasted the US Maritime industry in the process. I am sure it will work this time.
Fat Chance
According to a study released Monday by experts at the Urban Institute and the University of Virginia, a 10% excise or sales tax on fattening foods could raise $522 billion over the next 10 years. A 20% tax could raise $937 billion. Among its other uses (like paying down the deficit), that money could be used to defray the costs of health care reform or to curb the rise in obesity.
Makes me wonder, though…
Wouldn’t it be better to create a lipids market? Let people who are slightly underweight sell their credits to those who are overweight. It would be a boon to the healthy. It would ease the transition, in the same manner that we see in the proposed carbon markets.
“But wait, you’re being silly! That would encourage people to engage in anorexia, bulemia and other destructive behavior!”
Limiting one’s consumption to an artificially-mandated level also carries risks to our general health and well-being. So if markets are good for carbon, turn them loose on fat. It’s the same set of choices, but with more easily-recognized outcomes.
Democrats Favor 10% Tax on Cosmetic Surgery
That didn’t work out well with the luxury yacht tax in the 1980’s, which decimated the maritime industry here in the US.
I love my Botox, but no botox for you
“Starting in 1991, Washington levied a 10 percent tax on cars valued above $30,000, boats above $100,000, jewelry and furs above $10,000 and private planes above $250,000. Democrats like Ted Kennedy and then-Senate Majority Leader George Mitchell crowed publicly about how the rich would finally be paying their fair share and privately about convincing President George H.W. Bush to renounce his ‘no new taxes’ pledge,” the newspaper said in an editorial.
“But it wasn’t long before even those die-hard class warriors noticed they’d badly missed their mark. The taxes took in $97 million less in their first year than had been projected — for the simple reason that people were buying a lot fewer of these goods. Boat building, a key industry in Messrs. Mitchell and Kennedy’s home states of Maine and Massachusetts, was particularly hard hit. Yacht retailers reported a 77 percent drop in sales that year, while boat builders estimated layoffs at 25,000. With bipartisan support, all but the car tax was repealed in 1993, and in 1996 Congress voted to phase that out too. January 1 was disappearance day.
Via the Washington Times
I never use botox.
This won’t work too well for the US either. Cosmetic surgery will just move offshore. It is already cheaper to have this type of elective surgery in other countries and this will just drive more out of the US.
Is this the best leadership that we deserve?
Gov’t Spending Goes Ballistic
$4 Trillion by September. All for what end?
The legislators are on pace to burn through a record $4 trillion in fiscal year 2009 — approximately $1 trillion more than 2008’s history-making expenditure, according to the White House Office of Management and Budget.
Here they go:
Fiscal Ruin
The Fed’s doctrine – New Keynesian Synthesis – has let it down time and again in this long saga, and there is scant evidence that Fed officials recognise the fact. As for the European Central Bank, it has let private loan growth contract this summer.
Lets hope not, but with deficits increasing, the debt load spiraling out of control, and no end in sight, it doesn’t look like it will end well.
