Category Archives: Economics

Corportations Are Evel Greedy Killers

Further evidence that the government is too slow and inefficient to react and that the private space will always do a better job:

On Tuesday federal officials said that there had been at least 19 previous outbreaks involving more than 1,000 illnesses and three deaths resulting from cantaloupe consumption since 1984. The current outbreak, caused by cantaloupes grown in Colorado, has sickened more than 70 people and killed at least 13, making it the deadliest food-borne outbreak in the United States in more than a decade.

“I don’t think the cantaloupe industry can continue on doing the very same thing and expecting a different result,” said Craig Wilson, the head of food safety for Costco, the Seattle-based warehouse retailer, which is regarded as a leader in requiring food safety measures from its suppliers.

Why would a private company do this?

It turns out that a company is more profitable when its products don’t kill its customers.

Cause and Effect

Economics 101 people, econ 101:

Bank of America, the nation’s biggest bank, said on Thursday that it planned to start charging customers a $5 monthly fee when they used their debit cards for purchases. It was just one of several new charges expected to hit consumers as new regulations crimp banks’ profits.

Wells Fargo and Chase are testing $3 monthly debit card fees. Regions Financial, based in Birmingham, Ala., plans to start charging a $4 fee next month, while SunTrust, another regional powerhouse, is charging a $5 fee.

And why are banks now looking to charge their customers who use their cards to access their money?

The round of new charges stems from a rule, which takes effect on Saturday, that limits the fees that banks can levy on merchants every time a consumer uses a debit card to make a purchase. The rule, known as the Durbin amendment, after its sponsor Senator Richard J. Durbin, is a crucial part of the Dodd-Frank financial overhaul law.

This shouldn’t surprise anyone except Liberals:

The More Liberal You Are – The Less You Know About Economics

If Obama simply announced he wasn’t running for President in 2012, the market would go up by 1000 points.  I guarantee it.

Class Warfare

Okay, if we wander back to the tax levels just before Dubya lowered ’em, what would it look like?

Well, we can go look…

2001
Tax Rate Over But Not Over
15.0% $0 $27,050
27.5% $27,050 $65,550
30.5% $65,550 $136,750
35.5% $136,750 $297,350
39.1% $297,350

Not a bad rate, right?  Taxes seem reasonable and we all enjoy our money.

But look what Dubya did:

2011
Tax Rate Over But Not Over
10.0% $0 $8,500
15.0% $8,500 $34,500
25.0% $34,500 $83,600
28.0% $83,600 $174,400
33.0% $174,400 $379,150
35.0% $379,150

He lowered the rate.  By how much?

For the very poor among us, he lowered the rate by 33%.

For the very very rich among us, he lowered it by 33%.  Wait.  No?

Oh, he lowered it by 10%

And for just the very rich?  Yeah, 7%.

So, now, some of us wanna go back to the good ‘ol days when tax rates were at the levels before Dubya came around.  But……we ONLY wanna raise those rates for the very very rich.  We don’t wanna raise rates for the very very poor.

I would suggest this.  If you wanna raise the rates on the rich from 35% to 39.1%, which is a 12% increase, you should be willing to raise the lowest tax rates from 10% to 11.2%, also a 12% raise.

If you can’t do that, then you are asking one group of people to bear the burden while allowing another group of people to reap the benefits.  THAT is class warfare.

If you wanna raise taxes, then fine, raise taxes, but raise ’em.

Be a man!

Public School Teachers: Compensation

Can you imagine working in an environment that doesn’t reward merit?

In that vein, here are some complains I have regarding public education:

  1. Compensation takes many forms.  Days off, training, health care and what not.  One form of compensation is that of being safe from firing for poor performance.  This pushes down the salaries of teachers.
    1. Competent highly motivated people willingly trade such safety nets for higher salaries.  They have no fear of being perceived as incompetent.  Find a teacher unwilling to fire poor performs, rest assured that you are speaking to a poor performer.
  2. Highly motivated proficient teachers have no hope of earning more than older incompetent teachers.  This applies downward pressure on innovation and motivation.
  3. Teachers complain that salaries can not be merit based because there is no good method to measure merit.  Teachers fight tests and test scores in the same way a vampire fights garlic and mirrors.

Much of the reason teachers feel underpaid is due directly to how the system is set up.

Impact of Minimum Wage on Employment

Some time ago the boys over at Poison Your Mind commented on the fact that Obama nominated Alan Krueger for Chairman of the Council of Economic Advisors.  When Obama made the nomination I didn’t think much of it, but then as I read the commentary I noticed that Krueger is the gentleman that has provided me some small amount of consternation.  See, it turns out that Krueger is none other than the author of the report that showed a rise in the minimum wage did not negatively impact employment.  He did this by studying the impact of a rising minimum wage in New Jersey compared to a static minimum wage in Pennsylvania.  Specifically he focused on fast food restaurants.

See, I’ve long been a proponent of abolishing the minimum wage in order to give people the opportunity to work.  The idea being that the minimum wage unfairly discriminates against low skilled and low educated individuals.  When the price of labor rises, some labor will be idled.  It has long been a thorn in my side that this study showed a rise in the minim wage did not cause labor markets to react as I thought they would.

Poison Your Mind’s post gave me reason to study.

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Social Security and The Ponz[i]

Rick Perry made waves; lot’s of waves.  He compared Social Security to a Ponzi Scheme.  And in so doing, open a massive wave of defense for the gentle program.  I suspect that more people have issue with the implicit, or explicit, slight on Social Security than they do with the actual definitions of the scheme itself.

In other words, I firmly believe that people are afraid to admit that their faith in the program called Social Security is more based on emotion than on actual facts.  This can be demonstrated whenever you enter into a conversation with anyone on the topic of Social Security reform.

Anyway.  I was willing to let sleeping dogs lie, but then I found these two gems, back to back, in the Letters to the Editor page of my local newspaper.

Ugh.

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Has Paul Krugman Outlived His Usefulness?

I noticed this past week that for quite some time now, any blogger, right or left, libertarian, democrat or republican, that leads his or her story with:

Paul Krugman writes…

Get’s skipped and the story gets ignored.  To waste electrons on what an ex-economist has to say seems worse than sleeping with the lights on.

Teacher’s Unions: We Hate Kids

Let’s face it, teachers might be in this gig for the kids, in fact, I’d say many are.  But not all, and certainly not their unions.

I have found that there are three very strong methods to identify what is important to a person or to a group of people:

  1. Listen to what they say
  2. Watch what they do
  3. Look where they spend their money

Teacher’s Unions?  There is little doubt that they do not care for kids.  They care only for themselves.

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Light Bulb Technology: Update I

Earlier this week I mentioned that I had come across the three types of light bulbs at Home Depot.  I bought one of each:

  • 40 Watt incandescent
  • 40 Watt CFL
  • 40 Watt LED

I’m gonna try and see how big the difference is between the three and how long the payback period is for switching.

I started with the incandescent bulb and let it burn for 72 hours.  When I turned off the lamp at that time, the bulb had consumed 2.93 KWH.  At 17.01 cents per KWH, that bulb cost me $0.498 to run for those three days.  Or .7 cents per  hour.  The bulb itself cost me $1.00.  Further, the life of the bulb is listed as 2,000 hours.

Here’s what it looks like:

Bulb Cost per Bulb Cost per KWH Cost per hour Lifespan 50,000 Hour Cost
Incandescent $1.00 $0.1701 $0.0070 2000 $375.00

I’m using a 50,000 hour cost because the LED bulbs are rated for 25,000 hours. Imagine, 25,000 hours. THAT is a long time.

Government Regulation: Equal Opportunity Basher

Not surprisingly. as President Obama is trying to create jobs all across America, the government is working just as hard as it can to make it as hard as possible to hire and keep people employed.  See, it turns out that there is an amount of work that American’s don’t wanna do.  In order to allow business who need that work done, the government has a program, a program called H-2B:

The H-2B non-agricultural temporary worker program allows U.S. employers to bring foreign nationals to the United States to fill temporary nonagricultural jobs. A U.S. employer must file a Form I-129, Petition for Nonimmigrant Worker, on a prospective worker’s behalf.

To qualify for H-2B nonimmigrant classification:

  • The employer must establish that its need for the prospective worker’s services or labor is temporary, regardless of whether the underlying job can be described as permanent or temporary. The employer’s need is considered temporary if it is a one-time occurrence, a seasonal need, a peak-load need, or an intermittent need
  • The employer must demonstrate that there are not sufficient U.S. workers who are able, willing, qualified, and available to do the temporary work
  • The employer must show that the employment of H-2B workers will not adversely affect the wages and working conditions of similarly employed U.S. workers
  • Generally, a single, valid temporary labor certification from the U.S. Department of Labor (DOL), or, in the case where the workers will be employed on Guam, from the Governor of Guam, must be submitted with the H-2B petition. (Exception: an employer is not required to submit a temporary labor certification with its petition if it is requesting H-2B employment in a position for which the DOL does not require the filing of a temporary labor certification application)

So, how does this impact us today?

After years of complaints from employers that the program was inefficient and cumbersome, the administration of President George W. Bush sought to streamline the application process, putting new regulations into effect in January 2009. Farmworker organizations sued the Labor Department to reverse them.

In August 2010, a federal court in Pennsylvania hearing one of those lawsuits ordered department officials to issue new rules on how employers should determine wages for H-2B workers. The new wage rules were issued in January, but department officials, acting under court order, announced only last month that they would go into effect Sept. 30.

So, a year ago, the courts ordered the administration to issue new rules.  Rules that, in essence, will replace the old rules issued under Dubya.  Rules that objected to by … Farmworker organizations.

These new rules?

Starting Sept. 30, they would have to pay guest workers at crawfish and shrimp processors wage increases that range from 51 percent to 83 percent of current hourly rates, according to the suit.

And the result?

The employers said these sudden increases would be crippling and would expose them to unwinnable competition from foreign imports and from other businesses that hire illegal immigrants.

Again, no one in the Obama administration seems to have learned Econ 101.

Finally, a lasting testament to the angelic intentions of government that lead us down a road populated with devils, we have this little gem:

Many here cannot afford to lose year-round government benefits if they take seasonal, piece-rate jobs with Mr. Guillory, he and several of his full-time American employees said.

Perfect.  The government is providing benefits such that people don’t wanna work for fear that they lose ’em.

Keep on keepin’ on baby.