Published on 25 Feb 2015
Price floors, when prices are kept artificially high, lead to several consequences that hurt the consumer. In this video, we take a look at the minimum wage as an example of a price floor. Using the supply and demand curve and real world examples, we show how price floors create surpluses (such as a surplus in labor, or unemployment) as well as deadweight loss.
July 20, 2015
Price Floors: The Minimum Wage
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July 18, 2015
“No Irish need apply”
Megan McArdle on the imaginary-then-not-so-imaginary prejudice against Irish workers in the United States:
“No Irish Need Apply.” The signs are legendary in the collective memory of Irish Americans. Our ancestors were warned away from the jobs that were open only to “real Americans,” not to the Papist hordes streaming across the Atlantic, with their drinking and their brawling and their unsavory politicking. It is the epigraphic summation of a long war with America’s WASP elite, one that may now be forgotten by the Anglo Protestants who waged it, but not by the great-great-grandchildren of Erin.
I call it legendary. Historian Richard Jensen actually called it a myth.
Jensen, a professor at the University of Illinois, Chicago, wrote a long article in 2002, in which he argued that these advertisements were rare, and when they were found, applied almost exclusively to women, who disproportionately worked as domestics. Jensen searched the digital archives of a number of newspapers, and found that “ads for men were extremely rare — fewer than two per decade. The complete absence of evidence suggests that probably zero such signs were seen at commercial establishments, shops, factories, stores, hotels, railroads, union halls, hiring halls, personnel offices, labor recruiters etc. anywhere in America, at any time.”
This is a bit of a blow to the pride of Irish Americans, who do love a good martyrdom. Something in me rebelled when I saw this article, but as an empirical matter, there’s no reason it couldn’t be true. I filed it away under “History, maybe not quite as bad as you thought, though still quite bad” and moved on to contemplating the perfidy of Oliver Cromwell.
Then, the other day, another article caught my eye. It seems that Rebecca Fried, a high school student from the Sidwell Friends school in Washington, has done a more thorough search of newspaper archives, made possible by advances in digitizing archives since Professor Jensen did his work. Her results have been published in the Oxford Press Journal of Social History, the same place where the original paper was published. And she found lots of examples of both “No Irish Need Apply” advertisements and newspaper accounts of “No Irish” signs, even though the available archives still cover only a small fraction of the thousands of papers in which such ads and accounts might have appeared.
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July 17, 2015
QotD: Feminism’s uneasy attitudes to motherhood
Last week a person named Amy Glass wrote a breathtakingly honest — and breathless — rejection of traditional motherhood:
I hear women talk about how “hard” it is to raise kids and manage a household all the time. I never hear men talk about this. It’s because women secretly like to talk about how hard managing a household is so they don’t have to explain their lack of real accomplishments. Men don’t care to “manage a household.” They aren’t conditioned to think stupid things like that are “important.”
Women will be equal with men when we stop demanding that it be considered equally important to do housework and real work. They are not equal. Doing laundry will never be as important as being a doctor or an engineer or building a business. This word play is holding us back.
First, a few small points.
I hear men talk about how hard it is to manage a household and raise kids all the time. (We may not talk about it in terms Glass can recognize, but as a subscriber to the Happy Wife, Happy Life school of marriage, it’s my experience that husbands who don’t recognize and appreciate how hard it is to run a home soon become ex-husbands or miserable husbands.) Glass also may only be hearing what she wants to hear. Or, she may know only asinine men. Who knows? Frankly I don’t care which one is right because I don’t put a lot of stock in what Glass has to say.
Second, this is truly shabby work:
Doing laundry will never be as important as being a doctor or an engineer or building a business. This word play is holding us back.
Talk about word play! You see the sleight of hand, right? “Doing laundry” is a single, discrete task, a subset of a vast realm of responsibilities that often come with running a household and being a mother. Being a doctor, engineer, or business-builder are total careers or vocations. In other words, it’s a false analogy. Like saying being a chef isn’t as worthwhile as being a truck driver because chefs “cut vegetables.” Every career or calling involves unpleasant or tedious tasks.
Just in case you still don’t get it, another illustration. Raising kids involves taking the barbarian clay of a baby and through the alchemy of love and the application of intellect turning it into an emotionally, spiritually, and physically healthy human being and citizen. Meanwhile, doctors put their fingers in old men’s butts. So, to sum up: “Putting fingers in old men’s butts will never be as important as raising children. The word play is holding us back.”
Third (as a reader flagged for me), Glass is not exactly a rigorous thinker. On January 15 she writes:
Every time I hear someone say that feminism is about validating every choice a woman makes I have to fight back vomit.
On January 17 she writes:
The great thing about Feminism is that it means that women can do anything. You can be a working woman or a stay at home mother and both choices are equally valid. There is no “wrong way” to do feminism.
This means that as good feminists, we never judge the choices of other women.
Assuming there isn’t a technical explanation for what’s going on here (a false byline, a prank, or maybe an angry capuchin monkey loose in the IT department) this is the kind of inconsistency that doesn’t invite refutation so much as medication.
Jonah Goldberg, “It’s Still Only Two Cheers for Capitalism”, The Goldberg File, 2014-01-31
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June 29, 2015
More on the “self-driving truck” issue
In the comments to this post, Tom Kelley provided a worthwhile digression on the topic that I felt deserved a wider audience, so with his permission, here’s Tom’s response:
Given that the trucking industry has been my sandbox for quite some time, I can safely extend Megan’s prognosis to also include the low long-term risk of job losses due to self-driving vehicles.
Frankly, I have to be wary of any “expert” who can’t even get the name of his source (the American Trucking Associations — yes, plural — not the American Trucker Association) transcribed correctly.
Apart from the myriad technical issues standing in the way of driverless trucks, the insurmountable barrier is anti-competitive trucking regulations passed on behalf of the government’s favorite white elephant, the rail industry. Invariably, these regulations are tarted up under some guise of safety (Let’s see, was it a truck or a train that blew the town of Lac-Mégantic off the map??? Hmm).
The bottom line is that any change that would have the slightest possibility of making trucking more productive is quickly met with massive dis-information campaigns, and even more massive lobbying from the rail industry. Even the most minor dimensional changes designed to reflect the current realities of truck freight transportation stand little if any chance of making it past regulators with a permanent disdain for free enterprise.
We can’t have electronically actuated brakes on trucks because the regulators have no grasp of brakes or electronics, and somebody wants to replace the driver with electronics? Seriously? Of course these same folks seen to have no problem flying cross-country at 500 MPH in a commercial jetliner that is literally flown by wire.
And even if the government types were perfect actors in this little tale, then you have the American tort law system, run/regulated by, for, and about the trial lawyers. Even with professional truck drivers who can deftly avoid putting incompetent car drivers on their way to a Darwin award, hundreds of four-wheeler drivers still manage to commit suicide-by-truck every year, followed quickly by their otherwise destitute estates suing innocent trucking companies for millions.
Can’t you just hear the jury summation now: “The eeevvilll trucking company wanted to save a few pennies by outsourcing the driver’s job to a microchip! The must be punished! My client, a fourth cousin of the homeless man who jumped off a bridge in front of a truck MUST be awarded $10 million for the pain and suffering from losing a relative he never met. No justice, no peace!”
No insurance company in their right mind would insure a driverless truck for real-world operation.
There’s no question that the technology is available to make the concept work, I was on-board numerous autonomous vehicles of all sizes back in 1997.
It will take several major societal shifts before any serious degree of autonomy makes it into real world trucking operations.
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June 26, 2015
The self-driving truck won’t displace many human truck drivers for years to come
I’m far from being a Luddite, but I find Megan McArdle‘s analysis of the low short-to-medium term risk of job losses due to self-driving vehicles to be pretty convincing:
… my objections are actually to the understanding of the trucking industry works and of self-driving vehicles. Fully automated trucks, with no drivers at all, are probably going to arrive later than Santens thinks, take longer to roll out than he projects, and displace fewer workers than he thinks they will. I’m not saying it will never happen. I’m just skeptical that this is going to be a major policy problem in the next two decades.
Why?
Start with what truckers do, and how many of them there are. Santens quotes the American Trucker Association to get 3.5 million. The Bureau of Labor Statistics puts that figure a bit lower, around 2.8 million. More importantly, only 1.6 million of those are long-haul truckers. The rest are “driver/sales” employees or “Light truck or delivery services drivers.” Those are short-haul services that will not quickly be replaced by automated cars, both because chaotic urban roads are harder for autonomous vehicles to handle and because part of the job is loading and unloading the truck (something that long haul drivers may also do).
Also: Why would we assume that the advent of driverless trucks would be bad for trucking support jobs? Those folks are doing stuff like maintenance or loading that still has to be done. Moreover, other jobs will be created, in designing and maintaining the new systems. Someone has to map all those roads.
But I think it will be a while before we get to a fully autonomous vehicle with no people in it. The “driverless truck” that Santens links is not actually driverless; it’s partially autonomous. If it foresees something it can’t deal with, such as heavy snow, it signals to the driver to take over; if the driver doesn’t respond, it slows to a stop. That’s an improvement in the lives of truck drivers, not a job killer.
June 20, 2015
June 3, 2015
The great Los Angeles minimum wage experiment
I missed this post a few weeks back from Kevin Drum at Mother Jones, pointing out that we won’t really know the full impact of the Los Angeles experiment with significantly higher minimum wages:
So my near neighbor of Los Angeles is poised to raise the minimum wage to $15. How should we think of that?
Personally, I’m thrilled. Not because I think it’s a slam-dunk good idea, but because along with Seattle and San Francisco it will give us a great set of natural experiments to figure out what happens when you raise the minimum wage a lot. We can argue all we want; we can extrapolate from other countries; and we can create complex Greek-letter models to predict the effects — but we can’t know until someone actually does it.
So what do I think will happen? Several things:
In the tradeable sector, such as clothing piece work and agriculture, the results are very likely to be devastating. Luckily, LA doesn’t have much agriculture left, but it does have a lot of apparel manufacture. That could evaporate completely (worst case) or perhaps migrate just across the borders into Ventura, San Bernardino, and other nearby counties. Heavier manufacturing will likely be unaffected since most workers already make more than $15.
In the food sector, people still need to eat, and they need to eat in Los Angeles. So there will probably be little damage there from outside competition. However, the higher minimum wage will almost certainly increase the incentive for fast food places to try to automate further and cut back on jobs. How many jobs this will affect is entirely speculative at this point.
Other service industries, including everything from nail salons to education to health care will probably not be affected much. They pretty much have to stay in place in order to serve their local clientele, so they’ll just raise wages and pass the higher prices on to customers.
Likewise, retail, real estate, the arts, and professional services probably won’t be affected too much. Retail has no place to go (though they might be able to automate some jobs away) while the others mostly pay more than $15 already. The hotel industry, by contrast, could easily become less competitive for convention business and end up shedding jobs.
While I’m certainly in favour of people being able to afford to live on their base income, I’m afraid that this experiment is going to hurt a lot of already at-risk poor people who will have few other options if their jobs go away. I’m especially amused that LA-area union reps are now reported to be pushing to exempt the businesses where their members work (so that unions will have an effective monopoly on low-wage jobs because non-unionized companies would have to pay a higher wage). That, after putting all their organizational muscle behind getting the minimum wage raised in the first place. That’s a high grade of cynicism.
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May 29, 2015
“Lean in” may not be the best advice for women to follow
In The Observer, Amy Alkon suggests that following the “lean in” advice may lead to unanticipated problems for a lot of women:
Remember junior high? Well, the reality is, if you’re a woman, you never really get to leave.
This rather depressing truth about adult mean girls isn’t one you’ll read in Facebook COO Sheryl Sandberg’s best-selling book, Lean In.
Unfortunately, according to a near mountain of research on sex differences, the “You go, career girl!” advice Ms. Sandberg does give is unrealistic and may even backfire on women who take it.
The problem starts with her book’s title, unreservedly advising women to “lean in” — to boldly assert themselves at the office — without detailing the science that lays out the problems inherent in that.
Ms. Sandberg goes clueless on science throughout her book; for example, never delving into what anthropological research suggests about why women are not more supportive of one another and why it may not be reasonable for a woman to expect other women in her workplace to be supportive of her in the way men are of other men and even women.
Joyce Benenson, a psychologist at Emmanuel College in Boston, doesn’t have Sandberg’s high profile, but she’s done the homework (and research) that’s missing from Sandberg’s book, laying it out in a fascinating science-based book on sex differences, Warriors and Worriers: The Survival of the Sexes.
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May 25, 2015
Wage Subsidies
Published on 3 Feb 2015
What’s the difference between a wage subsidy and a minimum wage? What is the cost of a wage subsidy to taxpayers? We take a look at the earned income tax credit and how it affects low-skilled workers. We also discuss Nobel Prize-winning economist Edmund Phelps’ work on wage subsidies.
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May 9, 2015
Everybody panic! The robots are coming to steal our jobs!
Tim Worstall explains why we can easily disregard the calls to panic about the impending invasion of our new robotic overlords:
Essentially, what [economist Joe] Stiglitz is saying is that under certain conditions the advance of the robots means that we all lose our jobs and the capitalists, the people who own the robots, get to have all of the economy. And one can see his mechanism to get there: if robots become ever more productive then yes, we can see the idea that there will be more robots and fewer people employed by the capitalists and so on. But it’s still impossible for that end state to arrive: simply because we non-capitalists aren’t going to let it.
[…]
So, let’s recast that end state. There’s the 1% (the plutocrats, the capitalists, whatever) and then there’s us, the 99%. Robots become ever more productive and we the 99% all lose our jobs working for the capitalists. Hmm, tant pis in one telling of this story because as Karl Marx pointed out that’s a precondition for true communism, that we overcome the scarcity problem. But even leaving that aside what is going to happen next?
That 1% owns all the robots and gets all the production from them. We, the 99%, have no jobs and thus no incomes. We cannot purchase any of that robotic consumption from the capitalists. This is the very point that Stiglitz is making, that the capitalists will own and consume 100% of the robotic output. Well, yes, OK, but what are we the 99% going to do? This new peasantry: do we all just wander around the fields until we keel over from starvation? No, quite obviously we don’t. Sure, the robots are more efficient than we are, produce things for much lower prices. But we don’t have any of the currency with which we can buy that production. So, what are we going to do?
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May 6, 2015
QotD: “Science needs women”
Science does not need women any more than it needs foot fetishists, pole-vaulters, or Somalis. What science needs (if an abstraction such as science can be said to need anything) is scientists. If they happen also to be foot fetishists, pole-vaulters, or Somalis, so be it: but no one in his right mind would go to any lengths to recruit for his laboratory foot fetishists, pole-vaulters, or Somalis for those characteristics alone.
[…]
It is true, of course, that women are demographically underrepresented in the ranks of scientists, but so are many other groups. (This means, of course, that others are overrepresented.) This may be for more than one reason: lack of aptitude or interest, for example, or deliberate or subtle obstructiveness. But historical attempts to recruit scientists according to some demographic criterion or other have not been met with success, even as far as the advancement of science itself is concerned, and have been made by the very worst dictatorships that in other respects have been abominable. Social engineering and engineering are two very different activities. It would be no consolation to know while on a collapsing bridge and about to plunge into the deep ravine below that it had been built by a truly representative sample of the population, and was therefore a monument to social justice.
Suppose that, instead of Science needs women, other slogans based upon exactly the same logic hung over the arrivals hall: Heavyweight boxing needs Malays, for example, Football needs dwarf goalkeepers, Quantity surveying needs bisexuals, Lavatory cleaning needs left-handers: the absurdity of the argument would be immediately apparent. In fact the categorization both of human activities and humans themselves being almost infinite, the obsession with demographic representation as the most important criterion of fairness or social justice is virtually without end. The search for social fairness in this sense can lead only to perpetual conflict, much as the imposition of parliamentary democracy has done in countries in which it is not an organic outgrowth of their history, and as a true parliamentary regime in the European Union would very soon do.
Theodore Dalrymple, “A Miasma of Untruth”, Taki’s Magazine, 2014-06-29.
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May 5, 2015
Interesting jobs for foreigners in China
I’ve had a few friends over the years who seemed to somehow be able to spend extended time in China. This article may explain how at least a few of them funded their stays:
In 2010, Mitch Moxley wrote a story for The Atlantic entitled “Rent a White Guy,” relating the story of his trip to Dongying where he pretended to be the representative of a non-existent California-based company that was allegedly building a factory in the city. His Canadian friend Ernie, hired to play the role of director, delivered a speech before a large crowd in which he “boasted about the company’s long list of international clients.” After the speech, “confetti blasted over the stage, fireworks popped […] and Ernie posed for a photo with the mayor.” The article has nothing to say about the extent of the scam. Were Mitch Moxley and his friend Ernie giving a boost to a local company or were the attendees being asked to invest in a company that didn’t exist?
A 2010 CNN report cited one ad posted on The Beijinger by a company called “Rent A Foreigner.” The story describes one foreigner who had police knock on his door one day, “after a financial company he worked at for a couple of months in Xi’an […] allegedly swindled millions of yuan out of clients.”
It’s commonplace in China to see expats paid exorbitant fees as dancers, singers, musicians, or models, often regardless of talent. I have seen unattractive models, dancers who couldn’t dance, and singers who couldn’t sing. One of my friends was once paid handsomely to play bass at a live concert. The thing was, he didn’t know how to play bass — so they left his instrument unplugged and he plucked at the strings as if he had some clue as to what he was doing. Several of the musicians were also pantomiming to a prerecorded track, but the track had no bass, so my friend was pretending to play a part that didn’t exist. No one in the crowd seemed to notice though, and he was paid more than twice what the Chinese band members, who were actually rather talented musicians, earned.
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April 29, 2015
A simple, four-step plan to assist African-Americans
At Coyote Blog, Warren Meyer lays out his simple but effective plan to help African-Americans:
- Legalize drugs. This would reduce the rents that attract the poor into dealing, would keep people out of jail, and reduce a lot of violent crime associated with narcotics traffic that kills investment and business creation in black neighborhoods. It would also reduce the main excuse for petty harassment by police that falls disproportionately on young black men. No its not a good thing to have people addicted to strong narcotics but it is worse to be putting them in jail and having them shooting at each other.
- Bring real accountability to police forces. When I see stories of folks absurdly abused by police forces, I can almost always guess the race of the victim in advance. I used to be a law-and-order Conservative that blindly trusted police statements about every encounter. The advent of cell-phone video has proven this to be supremely naive.
- Eliminate the minimum wage (compromise: eliminate the minimum wage before 25). Originally passed for racist reasons, it still (if unintentionally) keeps young blacks from entering the work force. Dropping out of high school does not hurt employment because kids learn job skills in high school (they don’t); it hurts because finishing high school is a marker of responsibility and other desirable job traits. Kids who drop out can overcome this, but only if they get a job where they can demonstrate these traits. No one is going to take that chance at $10 or $15 an hour**
- Voucherize education. It’s not the middle class that is primarily the victim of awful public schools, it is poor blacks. Middle and upper class parents have the political pull to get accountability. It is no coincidence the best public schools are generally in middle and upper class neighborhoods. Programs such as the one in DC that used to allow urban poor to escape failing schools need to be promoted.
You could argue that decriminalizing drugs is somehow wrong … but if you’re looking at the harm inflicted by drug abuse and comparing it to the harm to African-American communities in particular, you would have to admit that it’s significantly worse with drug prohibition than it would be under a legal drug-use scenario. Reforming the police? Check what kinds of stuff show up in my Militarization-tagged posts — if that doesn’t convince you, you can’t be convinced.
The minimum wage is one of those issues that seems beneficial to the poor, because it means they get a higher wage on the job than they might get otherwise — what isn’t seen is that this limits the number of jobs that a poor person may have access to. Our education system is not adequately equipping people for the working world, and the more we expect the schools to teach, the less they can teach in the way of life-skills. A bad school can negatively impact someone’s entire working life. In education especially, one size does not fit all. Having more varied educational offerings makes it much more likely that children will be able to get the kind of education they need to succeed in life.
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March 25, 2015
The juggling act of mothers in the workforce
In The Federalist, Nichole Russell agrees that it is nearly impossible to “have it all” (a real career and a family) … at the same time, anyway:
The conversation about mothers in the workforce seems to be at once continuous and clamoring. Rarely does a working mother nail the problem and solution without sounding too whiny or too arrogant. Yet a recent commentary in Forbes comes as close to any as I have seen recently, complete with some eyebrow-raising admissions. If more men and women — parents and CEOs — viewed this exhausting issue with such clarity, perhaps we could finally work towards a solution.
In the piece, succinctly titled, “Female Company President: I’m sorry to all the mothers I worked with,” Katharine Zaleski recounts how, while employed in high-powered editorial positions at The Washington Post and The Huffington Post, she regularly scoffed at the work ethic of other women just because they were mothers, either mentally or by failing to support the decisions they made related to work and family.
She reveals this penitent anecdote: “I secretly rolled my eyes at a mother who couldn’t make it to last minute drinks with me and my team. I questioned her ‘commitment’ even though she arrived two hours earlier to work than me and my hungover colleagues the next day.”
What’s just as surprising as her admission that she evaluated a mother’s work-related achievements on a different scale than she did other employees is the equally important truth that the workforce isn’t just a tough place for moms because of their male bosses. “For mothers in the workplace, it’s death by a thousand cuts – and sometimes it’s other women holding the knives. I didn’t realize this – or how horrible I’d been – until five years later, when I gave birth to a daughter of my own.”
Zaleski goes on to discuss how she lamented her status as a new mom and employee only briefly before she determined to find a solution, both for her daughter so she wouldn’t feel “trapped” and other moms facing the same struggle. She wound up co-founding a startup called PowertoFly that matches women in technical positions they can do from home.
While many conservatives and liberals alike might call this an abandonment of the feminist theory, I think it actually expresses the heart of feminism — not radical left-wing feminism, but one of the few Oprah gems I agree with: “You can have it all, just not at the same time.”
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March 24, 2015
Tim Worstall on the economic emancipation of women
In his Forbes column last week, Tim Worstall made the point that perhaps the biggest economic story of the last century has been the economic emancipation of women:
There’s an interesting little rumpus going on over the new book by Robert Putnam on the class divide in American lifestyles. Put very simply, the middle and upper classes seem to take marriage and child rearing seriously and the poor have a more, umm, chaotic approach. Looking at the various think pieces that have been done on this book I find myself astonished by the way that the most important salient and relevant fact is simply not being mentioned. Marriage is many things but among them is that it is an economic contract. And the terms of that contract have changed: thus it’s not even remotely surprising that behaviour has changed too.
[…]
Which brings me to that headline: that the economic emancipation of women is the most important single fact of the past century. That past really was a different place. We can argue if we want to about whether that economic emancipation is complete (the famous womens’ 77 cents to mens’ dollar, or is it a motherhood pay gap and so on) but let’s leave that for another time. What is obviously and glaringly true is that women are much freer economically than they were a century ago. Wages for women back then were distinctly lower than they were for men. And no, this wasn’t particularly discrimination: some large part of what most people were hired for was physical muscle. Men have more of this so they got paid more. There were also strong social norms: I’m not quite sure of pre-WWI America but in my native UK the only respectable jobs for an adult woman (ie, something that the bourgeois would be happy to see their daughters go into) were nursing or teaching. And as a result of this paucity of choice the wages were low in both professions (there’s a strong truth to the point that the rising wages of both teachers and nurses in recent decades are the result of their being free to work in other sectors these days).
The result of both of these things was that the wages of a female worker were not, except at the most basic, basic, level, sufficient to raise a child let alone support a family. I’m not saying that being a single parent these days is easy but it is at least possible as tens of millions of people are showing us.
Which brings us to marriage: yes, this is many things. Love, sex, companionship and so on. But it is also an economic contract (the only proof we need of this is to read some divorce settlements)
and marriage always has been an economic contract. Pretty much since humans arrived as a species it has been necessary to have two parents around in order for a child to have a reasonable chance of survival to an age where it would have its own children. This was true of hunter gatherer societies, of agricultural ones, of industrial ones, feudal and so on. It really is only in this past century, more so in the past 50 years, that it’s been possible for one person to both earn a living and raise a child or children. Yes, obviously people did do so as a result of having to do so but it wasn’t something that anyone did by choice simply because of the penury that resulted from their doing so. And yes, all of this is much more true of women than men.
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