As an undergraduate taking economics I learned that raising the minimum wage led to increased unemployment. However, David Card and Alan Krueger have done work showing that the minimum wage increase in the 1990s had no disemployment effects.
The problem with the public sector union is that they are essentially bargaining with the politicians, who have a vested interest in giving into the unions which give them campaign contributions. Not only this, but the politicians aren’t parting with their own money, they’re actually parting with the taxpayers’ money. So what you really end up with is a conspiracy of unions and politicians to rip off the taxpayer
I have no objection to collective bargaining in and of itself, but I do object to the sort of mafia style strong arm tactics that [private sector] unions often use which sometimes reach such a point that they make the companies themselves unproductive.
For many people, if they’re taxed at a higher rate when they make more money, it makes sense not to work as hard, or to be as creative or to show as much initiative, because they’re not going to be rewarded for it. If earning more money will only push a person into a higher tax bracket where they end up paying more, in effect, they’re actually working for somebody else, in this case, the federal government.
[Supporting a limited government role] doesn’t mean that there aren’t certain things which need to be done, but the question is whether it’s the role of the government to do them. For example, my neighbor’s child may be desperately in need of sex education, but it’s not my job to go provide it. The sex education should come from that child’s parents or possibly from the schools, but it’s not my job to provide sex education for my neighbor’s child.
Free mark capitalism is not so much an ideology as it is simply a doctrine of limitation. It’s a doctrine of letting human creativity go, letting people devise and make and exchange stuff freely, the fundamental premise of which is called the morality of content (or contentment).
[Under free market capitalism, if] I offer you a job and you freely take it, we’re both better off. I wouldn’t have offered the job and you wouldn’t have taken it if both of us weren’t better off by that transaction. So the corporation, for example, which refuses to hire someone, or the customer who refuses to buy something isn’t doing anyone an injustice. If I refuse to hire you, you’re no worse off than you were before and if you go into a store and you don’t want to buy some things, the store isn’t any worse off than it was before.
[The wealthy]provide capital for new investments, new inventions and new products ... the first computers cost a lot of money, likewise the first cell phones. The wealthy at the time bought the computers for $7,000 and the cell phones for $2,500, which subsidized the research that then allowed Apple and other companies to now sell the cell phone for $49.95. So the prices of things come down ... because the rich are the initial purchasers, and that money then goes towards making this new technology more widely available and cheaper.
[A] function of the wealthy in an economy is that they are the people who hire the rest of us, so that most people who have a job are being employed by a wealthy guy or a wealthy group of guys under the name of a corporation.
if ... $54 billion were to be taken away [from Bill Gates], who would be better to spend it? 535 guys in congress who didn’t do anything to earn that money, or Bill Gates himself? Who is more likely to be careful in spending the money and making sure that if it’s going to used philanthropically that it does a lot of good?
I think people disagree because they start from different premises. I think one of the great fallacies of conservative thought is that liberals have no logic to them. Liberals absolutely have a logic to them, it's just that they are starting from an incredibly different premise.
[Liberals start] from the premise that there are basically no rights in the individual, all rights reside in the state and it is the job of the state to equally distribute these rights among individuals. Conservatives believe that there are certain inherent rights in the individual and the government no matter how legitimately constructed has no right to violate those rights.
once you start from different premises you can make logical arguments on both fronts and people disagree. Law and politics is basically like an iceberg, and what people spend their time arguing over is the 10 percent above the water and they never attack the 90 percent that is below the water even though it is actually the important part.
Most people on the right agree that there are certain moral principles which cannot be violated, most people on the left believe that morality is created by the minds of men and is therefore changeable and malleable. These are very significant differences in the way that we see the world, because of basic premises not misapplied logic.
Collective bargaining is not anti-free market, rather, collective bargaining is an element of the free market and if workers get together and decide to strike for higher pay that's absolutely their prerogative. On the other hand, what is not their prerogative is to beat up those people who cross the picket lines, because at that point it's not a matter of economics.
The truth is that if you talk simply in terms of effectiveness, the most effective thing is to not tax the upper end of the income bracket very much at all because those people are the ones actually earning money, producing products, providing services and hiring people.
A flat tax is the best balance between equity and efficiency. I think it's perfectly equitable because by nature percentages are perfectly equitable - it's not a flat sum, it's a flat rate. If someone has a smaller pie, a smaller piece will be taken out of the pie.
In terms of efficiency, a national sales tax is probably slightly more efficient, because it allows consumers to buy products based on their actual needs and desires, and to decide for themselves how much they want to be taxed. If they don't want to be taxed very much, they don't have to buy luxury items.
When the government does become involved [in an economy], it's almost invariably detrimental. For example, people like to say that the Securities and Exchange Commission (SEC) is evidence that when the government becomes involved, things become better, but the fact is that all it does is create more hazard by encouraging people not to conduct their research before investing in things like stock.
What causes an economy to prosper is giving freedom to the people who are able to produce new products and services that other people want. It's really as simple as that. If you allow the productive people to be productive and you don't penalize them for being productive through excessive taxation and excessive regulation, an economy will prosper.
A minimum wage requirement always impacts an economy horrifically. A minimum wage doesn’t work and always increases unemployment. It's just basic common sense that the minute you tell people that they have to pay more for labor, they're going to buy fewer units. If the price is raised on gasoline, people tend to buy less gasoline, if the price is raised on cereal, less cereal will be sold and if the price of labor is raised, people tend to buy less labor.
Adversity should not be seen as an enemy but as a friend because it causes people to explore deeper truths, to look for greater understanding and to think about eternity ... in homes where people are unemployed, contemplating losing their house and grappling with tough decisions, I guarantee that a whole lot more prayer is going on.
We will always have the poor because there will always be somebody at a starting point, but what is often overlooked is that the poor which exist today aren’t the same poor which existed yesterday. The more education one receives, the harder one works and the more that one’s family remains in tact, the more likely that a poor person will leave poverty behind. ... poverty is not a permanent class status, it’s simply a stage of life, which is what makes America so exceptional.
[Workers' unions] were established in the United States to prevent African Americans from working. After the American Civil War when four million slaves were released, one million of them immediately left the south and started moving north looking to work in coaling and on docks, and because they were willing to work for less money, they undercut the wages of established workers. In order to prevent this, workers’ unions set about establishing a minimum wage requirement which effectively priced African Americans out of the market in order to protect their own jobs.
The purpose of taxation is to fund the activities of government, so defining the proper role of government will naturally determine the amount of money required to fund these activities and the kind of tax system necessary to generate it.
Because government is run by people, money creates power and power tends to corrupt, the government’s ability to tax should be limited and the tax system impartial, something like a flat rate income or sales tax. The more power that the government wields, the more corruptible and corrupt it becomes, communism and socialism being the obvious examples. So the problem with a progressive tax system is that the government becomes a tool of social engineering by rewarding groups and behaviors which it favors with tax breaks and subsidies and punishing those it disfavors
A minimum wage requirement increases unemployment because it simply means that people whose employment value isn’t worth the minimum wage won’t be employed. If a certain job isn’t worth the going minimum wage rate, then an established business simply won’t hire somebody to work. Unfortunately, those who most need low paying, low skilled jobs and are able and willing to work for less than the minimum wage - the young, uneducated and poor - are those who suffer the most.
The wealthy don’t simply horde their money, or bury it in the ground, they invest it in such a way that all of society benefits, by producing products and services that people want which then creates jobs which people need.
while liberals protest that free market capitalism exploits workers because it allows employers to pay them as little as possible, conservatives point out that the term "possible" isn't absolute because it accounts for competition. In the same way that consumers can't simply hire a plumber at any low rate of their choosing, employers will not find it possible to hire willing workers at any low rate of their choosing.
Liberalism is an intoxicating ideology because its proponents can feel good about themselves without having to do much thinking or investigation. And because of this, it's almost always true that every liberal law results in the exact opposite of its intention.
Naturally, people want to be rich and when they are free to profit by satisfying people's desires through ingenuity, creativity and hard work, they will do so. This not only causes them to be productive in meeting the desires of others, but causes others to be productive in meeting their desires.
Labor unions tend to operate in a very short sighted manner, most often by attempting to maximize the pay and benefits of their members in the short term even as it ends up costing their jobs in the long term by bankrupting the employers.
because labor unions tend to bargain for wages collectively on behalf of their members, employers aren't free to pay individual employees based on merit or productivity. When employees are given equal pay for unequal productivity, it not only results in lower wages for better employees, it also reduces a company's productivity as a whole by reducing employee incentives to be more productive.
labor unions ... become a detrimental [force] ... largely because they're able to use their political clout to persuade politicians to enact laws which mandate union membership and certain worker benefits and protections which make hiring costs prohibitively expensive
The absolute worst type of tax is an income tax because, in effect, it's a tax on people for working, producing and investing, based not on what they take out of an economy, but what they put into it.
because an income tax makes no distinction between, for example, income used to buy luxury goods and income saved and invested in starting or growing a business, it naturally reduces the amount of money which is available to be invested.
The founders of the United States held a skeptical view of government understanding that greater government involvement always comes at the expense of freedom which in turn restrains progress and lowers standards of living.
although it seems counter-intuitive, higher education in the United States is so expensive precisely because government subsidizes it. At its current cost, many people wouldn't be able to afford to attend universities, but because the government guarantees their student loans, universities can charge virtually any price they desire.
when a government intervenes in an economy, despite its best intentions, the regulations and taxes which it imposes impedes the ability and willingness of these people to start businesses and employ workers.
An economy suffers when money is taken from a rich person and sent to the government because this is the very money that the rich would have otherwise used to fund the growth of their own or other people's businesses which in turn creates jobs for a population.
I believe that there is often wishful thinking about how government works and human beings act. We've seen throughout history how governments with lots of power tend to be corrupt and often fail the people they are supposed to serve.
today most union workers don't work for businesses, they work for the government. ... They aren't negotiating with a counterpart focused on the bottom-line. They negotiate with politicians -- and often politicians that they help elect. In fact, unions pour millions into electing politicians who in turn give unions (particularly union bosses) sweetheart deals at taxpayer expense.
the government wants to guide the economy, often choosing which technologies and industries deserve favored status (tax breaks or subsidies), which is an inherently corrupt process and counter-productive to economic growth. It's impossible to imagine that a cadre of politicians or bureaucrats are best suited to decide which businesses and industries deserve resources.
For most of civilization, man had to attempt to secure food for himself and his family, build a shelter, and create clothes. How have we moved so far beyond that now? It's because some bright people figured out better ways to produce things so that we could all start specializing in the duties for which we are best suited.
Minimum wage laws make hiring workers more expensive and price some workers out of employment ... overwhelmingly, those working for minimum wage are teenagers and those just entering the workforce. These first jobs may be low-paying, but they are critical for skill building. Raising the minimum wage makes it less likely that companies are going to hire those who really need that critical first job -- which is one of the reasons our teen unemployment rate is so high today. It's far worse to have no job than to have one that pays relatively little.
Voluntary unions are like any voluntary organization and do no damage. Mandatory unions where workers are forced by law or threats of violence to pay union dues to union bosses create a monopoly power that extorts money from workers without their permission.
A single rate tax, either an income tax or a sales tax means that every single American has the same relationship with their government. Graduated or progressive income taxes allow the government to divide Americans into different groups and mug them one at a time.
Why should government be limited in scope and function? Well, the Constitution says so. The list of legitimate, Constitutional powers the federal government has are spelled out. There is a list of things they definitely cannot do the Bill of Rights. The ninth and tenth amendments reiterate that if they are not listed in the Constitution they are denied to the federal government and reserved to the states or the people.
Low taxes increase the return to work, savings and investment. If the top rate is 90% (as it was during World War II) and you work on Saturday to earn $100 then you keep ten dollars and the state gets 90 dollars. When Reagan brought the top rate to 28%, the same amount of work yields 72 dollars for you and 28 for the government. The return to work increased by seven times.
A minimum wage is a law that makes it illegal for two people to agree on a labor contract the government disapproves of. It violates the rights of the worker and the employer. Both would voluntarily sign a mutually beneficial contract but the government gets in the way.
Conservatives prefer to maximize freedom, even if it means sacrificing equality of outcomes – like wealth, education, etc. Liberals prefer to maximize equality, even if it means sacrificing freedom (higher taxes, more government control of economic choices).
A liberal sees a rich person and a poor person, who both work equally hard at their jobs, and sees injustice. A conservative sees the liberal take money from the rich person and give it to the poor person, and sees injustice. They disagree because they’re both right. Liberals are right to believe life isn’t fair. Conservatives are right to believe liberals can’t change that fact.
The cause of poverty is human imperfection. Some people are poor because they do not work, and some people are poor because they can not work, and some people are poor because of horribly unlucky personal circumstances. (Some people are born into wealthy families in America, and some people are born into poor, sick villages in the Third World.)
Fairness dictates that people should keep the fruits of their labor, period. Government doesn’t deserve any share of your income, property, or wealth, and thus should not determine its budget based on how much money it can confiscate.
As a rule, market competition more efficiently rewards virtue, punishes irresponsibility, and more fairly distributes resources and opportunities than government. Markets favor the most accountable, innovative, and best companies, while government policies usually only favor the most politically well-connected companies.
Ideally, everyone should have the freedom to succeed and the freedom to fail based on his own merit, work ethic, and pluck. Government’s job should be to guarantee equal rights and equality of opportunity, and leave the outcomes up to individuals, their families, neighbors, businesses, and customers.
Economies controlled by informed consumers and competitive entrepreneurs – and not by politicians and bureaucrats – meet the needs of a society far better than political manipulation of economics. Market-oriented economies create jobs, opportunities, and wealth – undue government intervention in the economy squelches all three.
Economics is more sociology, psychology and philosophy and less math to me. It's the study of human nature and human action. There is often a disconnect between intentions behind policies and their outcomes ... but economics requires sitting down and thinking rationally about things.
In the private sector, [workers' unions play] an increasingly small [role] ... [the] issue of unions is really important in the public sector because I think private sector unionism is at an all-time low in the United States, but public sector unionism continues to rise. It artificially increases the cost of labor for governments which means tax payers. For example, a Stanford University found that California's unfunded pension liability is about $500 million (about 6 times their annual budget). They're already inherently parasitic in that a government employee can't exist without the tax payer who is the host.
if the federal government were a size that it should be ... we wouldn't even be discussing which kind of tax system we would need because it could probably be conducted on user fees alone. But that's not the country we live in and if I had to pick, I'd favor taxing consumption rather than the income tax which penalizes savings and investment. It's inevitable, though, that they would all end up looking like the mess we have now because politicians like to use the tax code to spend money and to engineer certain outcomes. At the end of the day it's more important to reduce the size of government at which point how you tax becomes increasingly less important. If the money's there, they're going to spend it.
The problem with government is that anything it does necessarily comes at a cost. There's no such thing as a free lunch. The government can do nothing positive without also simultaneously doing something negative. Let's say that a factory was given a $500,000 grant which saved 500 jobs, that's what's seen, but what isn't so readily seen is what could have been created or what was lost in the private sector because the federal government borrowed or taxed that money out of the economy to create those jobs.
These days, the US government does much more infringing upon our rights than protecting them. Chiefly among them is property rights. If a citizen is secure in their ability to freely conduct trade, or commerce, it decreases the risk of and increases the willingness to, put up one's own money or to borrow or to invest. Private investment suffers when there's a concern about what Washington is going to do with regard to legislation, from health care mandates to increasing taxes which, to me are all infringements upon the ability of investors, entrepreneurs and individuals to conduct commerce.
[It's] just Economics 101. If you raise the cost of labor [through a minimum wage requirement], you've raised the cost of doing business, so businesses are going to hire fewer employees. Let's say you have a business which would be willing to hire an additional person at $6 per hour and there's somebody out there who's unemployed who would be happy to have that $6, because of the price control, that guy isn't getting a job and that job is not being offered.
While the formula for eliminating relative poverty in rich nations is relatively obvious[through income redistribution], the world continues to struggle with solutions to the problem of absolute poverty in those nations where the vast majority of the population have experienced chronic poverty over many decades.
In spite of his support for free markets, John Stuart Mill, the father of modern liberalism, argued that the excessive bargaining power of employers in relation to individual employees meant that the formation of unions to redress the imbalance should be facilitated by the state
Beyond bargaining around wages, unions have been responsible for enormous changes in hours of work, work practices and worker entitlements over the years. If the recent trend of declining union membership on the part of workers is anything to go by, it appears that unions have been so successful in pursuing their aims that, at least for now, their major work has been done.
Unfortunately, the most efficient taxes are often the most inequitable so governments must seek a compromise. They must also consider the ease of avoidance of taxes and the costs of collecting them. With the rise in importance of adverse environmental effects of human activity there are increasing opportunities for taxes which unequivocally increase well-being because they both raise revenue for government and, at the same time, discourage environmental damage. A good example would be a tax on carbon emissions.
[What causes an economy to prosper] is a highly contested issue ... contemporary libertarian economists, exemplified by Milton Friedman and his followers, believe that social well-being is maximized by minimizing government involvement in the economy ... At the other extreme, socialists believe in a strong role for government and government ownership of the means of production and distribution ... The reality is that the last century has seen the mixed economy prosper with government involvement through legislation and regulation pervading the economy.
As it is with nations, so it is with families. Thus well organized families comprising well educated individuals with a strong savings ethic and a creative streak will, on average, prosper to a greater degree than unimaginative, disorganized families with low educational levels and a spendthrift nature.
if there is a tendency for minimum wages to cause unemployment amongst the unskilled, then this provides a powerful incentive for them to seek to raise their skills through education ... It has also been argued that minimum wages call forth more individuals to join the workforce and thus result in higher levels of national output.
The fact that people disagree on what the truth is only demonstrates that there is no objective truth, or at least that we don’t yet know what it is ... Those who are open to reasons why they may be wrong are willing to re-assess their ‘truths’ and take society further. Those who will only consider reasons why they are right, stunt progress.
when the majority have a good deal of the information through TV, talk radio, and so on, which plays to their emotions and is not necessarily factual, then you get ignorant passion. I have a doctorate degree but having an education doesn't make you smarter than anyone else. In a university environment you're supposed to be taught how to be analytical, to look at things in a critical manner, but I think over time we've discouraged people from being analytical, from looking at it from both angles and saying, for example, "If that was me, would I want to make $200,000 knowing that when I go above a certain threshold my tax bracket jumps up expeditiously?". Too often we get into the emotional responses, not factual responses. I would tell young people to get to know all that they can about a certain subject before making a decision.
Workers unions can be a stranglehold on the economy where the only way you can hire labor is if you pay these astronomical figures which, to some extent, influences businesses to move overseas or to move to different parts of the country ... I think the union movement was designed to protect the workers from mistreatment but there were a lot of people who played on the system. Having to play with the union, and you can see it with the teachers union, it's clear that we don't necessarily get quality because we pay top-notch money ... [Employees] need to be responsible and not assume that they're protected by the union so that they can be slack workers, because then what you've done is strangle-held the business owner who has no recourse.
I would like to see the government play less of a role [in the economy] because when the government gets involved, it creates failures and discourages rather than encourages people to be entrepreneurs because of burdensome regulation and taxation. I think the government tries to be all things to all people and subsequently takes away individual rights under the auspice of uniform rights. The challenge, as individuals, is that we find ourselves working hard for those who choose not to work and yet enjoy the same benefits ... One of the challenges we have today is that we're creating a system where people become more dependent upon the government versus relying upon themselves.
It's not about what the government can do for me, but what I can do for myself and I ask that the government restrict itself to its constitutional responsibilities and allow me to go out and look for those opportunities. I want everybody to eat, I just don't want the responsibility of catching it for them. I would rather teach them them how to fish, so they can catch carp, they can catch bass, they can catch catfish or whatever they want to catch. I think we have a host of people who want you to catch it for them, clean it for them, cook it for them, and even feed it to them then wipe their face when they're done eating.
[The reason that people disagree about the truth is that in] ... many cases they are operating on different facts. The facts may be be part of a larger story but in many cases people pay attention only to those they like rather than all of the facts which bear on the issue.
Private unions don't play much of a role anymore. The percentage of the private labor force that is unionized has dropped precipitously since 1950, but the dominant effect of the unions right now is in the public sector and that has led to an appreciable increase in the relative compensation of public employees vs. private employees and increases the amount of expenses for government. There are still some powerful unions in the private sector but in many cases those powerful unions have driven their companies almost out of business. I used to be the chief economist for Ford Motor Company and I saw it almost destroy the American automobile industry ... In the private sector, unions ended up killing themselves and in the public sector they have increased expenses for government and consequently taxes.
The problem with [a flate rate consumption tax] ... is that it leads to making government look less costly and so the historical experience, particularly in Europe, is that the absolute size of government is very much a function of what their flat rate is and I think if we move toward a flat rate consumption tax (VAT) that we would need to have an independent process to approve an increase in the size of government that requires a larger approval, maybe two thirds of the vote in Congress or approval by number of states.
I think the primary role [which the government should play in an economy] is to enforce property rights and contracts. In order to have a meaningful market and property, you have to have clear, enforceable property rights and contracts are necessary to have any kind of market ... In addition, the government should be responsible for ... [for providing] an effective, honest, strict, forward police force, law enforcement and defense establishment. [Ultimately] I think you have to limit the power of government because the incentives of the people within the government are very likely to try to expand their role.
[An economy will prosper if] each individual has the opportunity to exploit his or her own comparative advantage which means that they have the opportunity to do what they do best relative to other people.
We should strive to have an information-based society, where accurate facts are available to everyone. In a country with freedom of speech, people will always be entitled to their opinions on how things should be run. The numbers don’t lie though.
History shows that societies where the state has first claim on the people’s resources do not produce the same level of income growth and general well-being as societies that allow individuals, working together, to innovate and increase their wealth to everyone’s benefit.*[
Limits on the amount that government may consume from the private sector are also vitally important [to the prosperity of an economy] over the long run. For example, one of the world’s most stable and prosperous societies, Switzerland, has strong constitutional limits on government taxing, spending, and borrowing.
Generally, in the United States, it has been said that there are three things which a person can do to almost guarantee that poverty will be avoided: graduating from high school, marrying, and not becoming a single parent by having a child if not married. The vast majority of people who follow those three prescripts, something like 98.8%, don’t wind up in poverty in the United States.
Ultimately there’s a collective responsibility on the part of government to foster a system which creates opportunities and there’s a personal responsibility on the part of the individual to take those opportunities.
Private workers’ unions play a diminishing role in the economy, partly because once we move to a global marketplace, the costs that they impose through higher wages and benefits in industries where pricing is very sensitive, makes the unions a liability.
it’s mostly true that in ... [specialized] industries, ... [highly educated workers] find themselves in a stronger bargaining position than that of low skilled workers who rely on the strength of the union rather than the strength of their qualifications.
The simpler the tax system is, the better, otherwise it quickly become a vehicle for social engineering or other schemes (through the use of things like tax deductions and tax credits), rather than simply a way to raise revenues for the government.
The government’s role in an economy should be to create an environment in which people feel as though they will be rewarded for, and reap the benefits of, their innovation, by doing things like protecting property rights, enforcing contract rights and ensuring that taxes aren’t prohibitively high.
From government’s point of view, a democratic system with a fair and just set of laws and a reliable courts system encourages ... [an economy to prosper] because people can feel confident that they can keep the fruits of their labors.
in general, while a minimum wage requirement might raise the wages of certain unskilled workers, because these requirements don’t come with any additional revenues for the businesses paying them, they also tend to destroy some jobs at the lower end of the economic spectrum.
a number of economists argue that the impact on wages is more important than the impact on jobs. So the debate is really over the trade off - whether it’s better to have fewer people employed at a higher rate or more people employed at a lower rate.
As an undergraduate taking economics I learned that raising the minimum wage led to increased unemployment. However, David Card and Alan Krueger have done work showing that the minimum wage increase in the 1990s had no disemployment effects.