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What will happen to people with low incomes if minimum wage is done away with?

in Ask Dr. Ruwart, Economic Liberty, Economics, Liberator Online by Mary Ruwart Comments are off

What will happen to people with low incomes if minimum wage is done away with?

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Question:

If you take away minimum wages, businesses can pay whatever small amount they want and keep the rest for profit. What about those who will only make $3.00 per hour?

wage

Answer:

If businesses can pay what they want, why do 90-95 percent of today’s workers in the U.S. make more than the minimum wage? The answer: supply and demand applies to employees as well as products. If a business doesn’t pay a person what he or she is worth, they go to a new employer or start their own business. In a libertarian society, with its expanding economy, such moves will be much easier than they are today.

Minimum wage laws actually destroy entry-level positions for the unskilled. Black economist Walter Williams believes that the minimum wage laws are the single most important factor in keeping young blacks out of the job market. The next time Congress considers raising the minimum wage, look in your newspaper for an estimate of the number of jobs that will be lost – potential training jobs for the disadvantaged.

New York’s ‘Worker Protection’ Laws Will Only Hurt Workers

in Business and Economy, Economic Liberty, Liberator Online, News You Can Use by Alice Salles Comments are off

New York’s ‘Worker Protection’ Laws Will Only Hurt Workers

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Politicians cannot create value, and neither can governments. Still, voters are often the first ones to admit they chose a particular candidate because he or she promised to “create jobs.” With both conservative-leaning and progressive-leaning Americans making the case for government-sponsored programs that create more jobs, it’s easy to ignore the role of basic economics. After all, knowing economics in depth means that you understand that you cannot create jobs out of thin air. What you can create instead is value, and the only way to do so is by having government get out of the way completely.

Workers

In an environment where individuals are free to start businesses by basing their decisions on the demands of consumers, jobs are created out of a real necessity. By responding to an actual market need, employers then offer potential employees the opportunity to trade their labor for wages, which in turn will help them better their standard of living. As Robert Fellner wrote for the Mises Institute, “wages spring directly from, and are proportional to, the degree in which a job creates wealth by helping to satisfy an unmet need.” Or in other words, wages are the product of the wealth creation process triggered by a service or product created to meet the market’s demands.

When government attempts to “create jobs” and stipulate wages artificially by passing minimum wage laws, they are neither creating these positions out of a real necessity to meet a market demand nor raising standards of living by creating value. Instead, government-sponsored job creation is often the result of taxpayer-backed projects, which are in turn managed by central planners with little to no knowledge of market demands. And by increasing restrictions on the productive sector of the economy with minimum wage laws or other restrictive policies, the government takes the businessman’s freedom to give low-skilled individuals a chance at being employed, learning a trade and perhaps going on to take jobs in the future that offer higher wages.

 The new law also stipulates that workers may not work without breaks of at least 11 hours between shifts.

Needless to say, this new law will only hurt workers who are often the first to take on extra shifts and are willing to cover for colleagues due to an abrupt schedule change — not the employer. These individuals will be forced to take on extra side gigs to make ends meet instead of simply working more hours for their current employers.

If anti-poverty advocates were honest about helping those in need, they wouldn’t demand government do “something” about creating new jobs or raising wages artificially. Instead, they would look at the only viable way of actually helping the greatest number of people possible: the free market.

California Kicks the Corpse of Free Association in Airbnb Investigation

in Economic Liberty, Issues, Liberator Online by Erik Andresen Comments are off

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California has decided you must allow anyone into your home, at least if you rent it on a short term basis. Department of Fair Employment and Housing had filed a complaint against Airbnb over alleged incidents of hosts discriminating against users on the basis of race. Airbnb has agreed to let DFEH conduct “testing,” similar to testing applied to landlords.

AirbnbThe problem DFEH is looking to solve: it seems some Airbnb hosts reject users based on their race. It reminds me of dating site OKCupid’s “discovery” that race plays heavily into how users select prospective matches.

That’s the trouble with freedom; sometimes people use it in ways we don’t like. Sometimes the results are unpleasant. But libertarianism isn’t about making perfect people. That’s what Progressivism wants to do: remake mankind. Libertarians see the world as it is, and we endeavor to act – messy as it can be – in harmony with human nature, not against it. Our goal is maximum happiness and prosperity for all but without the threat of force from the state.

Many libertarians have hailed the disruption that the “sharing economy” has unleashed on tired and over-regulated business, from taxis to hotels.  But we should not be surprised that those established industries and bureaucrats are fighting back however they can. And in this instance, they have found a chink in the armor; the sharing economy may not survive it. Airbnb and similar services are troubling for regulators and elected officials (beyond protecting established industries and maintaining tax revenue).  Peer-to-peer dealings, especially those involving your car and your home, are prone to reveal individuals’ personal preferences.

Then the mask slips – regulators like to regulate “business” – putting the boot to someone who wants to rent their spare room for extra cash looks too heavy-handed (and it is). A government official would never say that we must allow every stranger who knocks on our doors must be allowed in. But that is exactly what DFEH is saying the moment you and that stranger exchange cash.

Libertarians favor free association and dissociation. Private deals between two individuals are no business of the state. But California doesn’t see it that way; bureaucrats want to decide for you who you may let into your home.

 

Why Do People Obsessed With Science Ignore Economic Science?

in Economic Liberty, Liberator Online, News You Can Use by Alice Salles Comments are off

Why Do People Obsessed With Science Ignore Economic Science?

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It’s an interesting paradox often left unexplored by the media, but we seldom find someone who’s both passionate about climate change science and economic science.

Science Economist and professor Robert P. Murphy explored this at length in a recent column, using the April 22nd “March for Science” to demonstrate how little people know — or care to know — about economics.

Despite being supportive of the scientific method, Murphy aptly explained, the environmental activists taking to the streets to demand governments “do something” about the issue also used the event that gathered thousands of people across the country to show President Donald Trump they do not agree with his proposed budget cuts.

Claiming Republicans are “climate change deniers” who often ignore the “consensus” on global warming among the scientific community, these same science-loving advocates ignore the “consensus” on economic science. Instead of being consistent, they call for government intervention to bring an end to man-made climate change, Murphy correctly points out.

But as a Senior Economist with the Institute for Energy Research specializing in climate change, Murphy knows better.

A belief held by many economic science deniers includes the idea that a “bare minimum to cap global warming at 2 degrees Celsius” is imperative. However, if you consult the last United Nations Intergovernmental Panel on Climate Change (IPCC) report, you won’t find anything that justifies that limit, Murphy wrote.

Furthermore, Murphy contends, “the IPCC’s own estimate of the economic cost of compliance with the policy goal [of limiting warming to 2°C] was greater than the estimate of the climate change damages from ‘doing nothing.’” Meaning that forcing governments to go along with this arbitrary cap would cost nations more, causing more damage than if government officials were simply sitting on their hands.

Still, Murphy continued, critics charged at him after he pointed their inconsistencies out, suggesting that the IPCC had used economic models that weren’t sufficient and adding they may have understated the risk posed by climate change. But by ignoring Murphy’s observations, climate change advocates who criticized his comments have also completely ignored the scientific process, putting their own beliefs before sound evidence.

Instead of relying on research and evidence-based results, Murphy concludes that the “refusal to follow the science” might be “more widespread” among environmental activist than one might suspect.

So what are these marchers doing when they take it to the streets to fight for the planet? Are they parading their “awareness” across the country out of a strange urge to appear “woke?” Or are they simply so oblivious of what science truly is that their lack of enthusiasm for the hard work that goes along with it shows, making them seem like the unsophisticated privileged kids they truly are?

We might never know.

 

 

Bay Area Restaurants Suffering due to Local Minimum Wage Laws

in Economic Liberty, Economics, Liberator Online, News You Can Use by Alice Salles Comments are off

Bay Area Restaurants Suffering due to Local Minimum Wage Laws

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Californians are proud of their politics. More often than not, they will claim they have set the standards, yielding “real change” across the country. But when policies embraced by Californian progressives backfire, don’t expect to see them apologizing to the rest of us.

In the Bay area, folks working in the restaurant business had one of their worst years yet in 2016. And it had nothing to do with the presidential election. Instead, it was a local wage policy that changed their realities, making it difficult for restaurant business to stay afloat or expand.

Oakland-CaliforniaRecently, a local favorite closed its doors while a new restaurant opened in the same area. Unfortunately, the second place was also forced to shut down. What both places have in common? The cost of doing business is too high.

According to a local radio station, rents are helping to drive restaurant business out of the region and into the East Bay. But employees are also feeling the rent blues, moving away from the Bay area and finding it harder to keep a job due to the distance. On top of all that, food prices have also risen, while California’s new minimum wage law begins to claim its first victims.

In the case of the Bay area, the minimum wage jumped from $9 per hour to $12.25 in 2015, due to a recent Oakland wage law. In 2016, the minimum wage rose even higher, to $12.55, leaving restaurants scrambling to keep the same number of employees while struggling to stay in business.

As a result, restaurant owners are either closing or reinventing their businesses, turning full service restaurants into casual eateries. Local reporters who discussed the matter with these business owners all agree: when everything is expensive, whether it’s keeping employees to buying ingredients, the cost of doing business becomes too high. Now that we’re in 2017, local restaurants will be forced to pay $12.86 per hour to their minimum wage employees. In San Francisco, the minimum wage will increase to $14 this year. As restaurants struggle to keep up with payroll demands while paying the bills, they look at local politics and find themselves choosing between sticking with their communities or leaving. To stay, they must slash the number of employees or close their doors. With fewer employees — either because commute is unreasonable or because the minimum wage is bringing these businesses down — the industry’s future seems bleak.

While there’s still a vibrant and competitive environment for restaurants in the region, the cost of living and doing business locally is forcing people to think twice about their choices. Instead of staying put, they often prefer to walk away. And over time, this problem will yield even worse outcomes, producing fewer jobs in the region, which will eventually translate into poor economic growth.

Not being able to take risks, these entrepreneurs who decide to stay must downsize their businesses, and those who were employed are now, once again, struggling to find a job.

As locals begin to live the unintended consequences of minimum wage laws, they also learn about economics.

Arizona Business Pushing for More Prohibition Gets a Taste of Free Market Consequences

in Business and Economy, Economic Liberty, Economics, Liberator Online, News You Can Use by Alice Salles Comments are off

Arizona Business Pushing for More Prohibition Gets a Taste of Free Market Consequences

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In The Economics of Prohibition, Austrian economist Mark Thorton explains that the “search for privilege and personal gain through the political process” embraced by major corporations and their lobbying minions are responsible for “any net losses to society produced by government policies.” Adding that, throughout history, we are able to see countless examples of prohibitionist policies being enacted due to this marriage of convenience.

boycottAs information is more readily available due to the widespread growth of the Internet, we now live in an era in which people are often made aware of how companies use their political influence to push for certain policies.

In Phoenix, a company whose political activities have been associated with marijuana prohibition is getting a taste of how the free market deals with unwanted subjects.

According to The Phoenix New Times, a Discount Tire Company is facing a growing boycott movement after its billionaire owner made a $1 million donation to help defeat the ballot initiative crafted with the goal of legalizing marijuana in the Grand Canyon state.

The boycott was first launched by local immigrant-rights groups following the company’s decision to hang a “Re-Elect Sheriff Joe Arpaio” sign in their windows. More recently, however, the company donated money to defeat marijuana legalization in the state, and the boycott movement grew.

The reaction did not come as a surprise, considering that the pro-legalization sentiment in Arizona is growing strong.

Prop 205, the initiative Discount Tires has invested money against, would legalize the use of cannabis for adults who are 21 or older. Individuals would be allowed to possess up to an ounce of the product. If Prop 205 wins, weed sales would also be legalized, and individuals would be allowed to grow the plant for personal use.

Possession of more than an ounce up to 2.5 ounces would be considered a non-arrestable civil offense. Nevertheless, the individual caught with more than one ounce of weed would have to pay a fine.

Despite the restrictions proposed by Prop 205, the law would help locals, offering a solution to an aspect of the drug war that continues to put countless of non-violent young men and women in jail.

In addition to Discount Tires’ donation, other groups have invested heavily in the campaign against the pro-marijuana legalization initiative.

Some of the groups behind the effort include the Arizona Chamber of Commerce, Insys Therapeutics, a synthetic THC-maker, Larry Van Tuyl, whose family’s string of car dealerships was sold to Warren Buffett in 2014, Bennett Dorrance, a local resident who’s the heir to the Campbell Soup fortune, Tucson real estate mogul Donald R. Diamond, Foster Friess of Wyoming, who’s known as a “Republican mega-donor,” Empire Southwest LLC, which sells, rents, and services machinery and power generation equipment to contractors, and the Arizona Republican Party.

As long as the boycotts are peaceful, the effort is a perfect example of how free individuals are able to show their preferences in a freer market setting, letting service providers know where they stand and thus, forcing company owners to cater to their clientele in a way they deem acceptable if they are willing to survive their competition.

Taiwan Streets: a Case of Free Markets in Action

in Economic Liberty, Economics, Liberator Online, News You Can Use by Alice Salles Comments are off

Taiwan Streets: a Case of Free Markets in Action

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In Liberalism: In the Classical Tradition, Ludwig von Mises explains that classical liberalism “was the first political movement that aimed at promoting the welfare of all, not that of special groups.”

TaiwanIn an article for the Foundation for Economic Education, Professor Peter St. Onge, a long-time Taiwan resident, discusses a real world example of free markets working to promote the welfare of all members of a community.

In “Taiwan’s Social Safety Net Is the Street Market,” St. Onge reviews some of the most striking traits of the streets of Taiwan and the state’s loose regulations, giving us a better idea of what Mises wrote nearly 90 years ago.

According to Onge, libertarians and free market apologists are “often ridiculed” when they claim that free enterprise is the best substitute for the welfare state. They are often called naïve for suggesting that fully capable individuals would have a better shot at making a living if they were given freedom instead of government dependence.

In Taiwan, Onge writes, the welfare state is “tiny,” and the regulations aren’t as restrictive when compared to the United States or Europe. The few regulations the state has in place are also lightly enforced.

With the gaps created by government’s hands-off approach in the island of Taiwan, commerce exploded. The result? “Near-zero homelessness.”

The obvious effect of less restrictive regulations is the growth of business, which makes local streets bright with store signs, consumers, and shop keepers. But brick-and-mortar stores are not the only ones benefiting from this freedom. According to Onge, the island hosts a number of pop-up businesses that take over the streets, employing “mainly low-skill labor.” These businesses give the poor and the unskilled the chances that the state’s handouts can’t.

To illustrate his point, Onge writes that, every morning at 5 am, farmers bring their produce to a street close to the university where he works. Using folding tables, they place their products along the street undisturbed. As the diverse sets of customers arrive, the street is filled with color and sound. Some of the customers include the elderly, who aren’t healthy enough to drive to a large store, mothers with small children, and fathers getting ready to cook breakfast. At 7 am, farmers pack up and leave the spots, opening up the space to breakfast pop-ups like noodle shops, sandwich places, and joints offering full English breakfast.

Past noon, these spaces are freed again, giving the night crew time to set up different types of restaurants and stores.

At night, Onge reports, you can buy anything in that street. From fried chicken to kids’ toys. Customers can be seen enjoying the creative madness until 3 in the morning. Just a couple of hours before farmers are ready to unload their produce once again.

This “small river of entrepreneurial income” helps low-skilled workers find jobs, even if temporarily, while also bringing consumers what they want, conveniently.

Instead of crony capitalism, these streets are filled with old-fashioned free markets, allowing competitive enterprise to shape commerce, not government-backed favoritism.

The result is happier customers, more jobs, more safety, and cheaper products.

Why Rhetoric Should be Celebrated

in First Amendment, Liberator Online, Libertarianism, News You Can Use, Philosophy by Alice Salles Comments are off

Why Rhetoric Should be Celebrated

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We often hear that persuasion is an obstacle to freedom. “Rhetoric,” they say, is why we’re in such trouble. After all, voters would make better decisions if they had been better educated about the issues facing the nation.

To Deirdre McCloskey, the celebrated Professor of Economics at the University of Illinois at Chicago, people who scapegoat persuasion are misguided.

PersuasionIn a video for the Learn Liberty series, McCloskey argues that while many people with different points of view on politics all agree that free speech is “sacred,” few agree that persuasion is just as important, if not a feature of a free society.

“Rhetoric,” she tells the viewer, “sounds like a bad word.” Media outlets are the first ones to accuse politicians and key figures of indulging in rhetoric, and never getting to the point. But McCloskey believes that this approach to persuasion is superficial, especially when considering the alternative.

She explains that, persuasion would be bad if the alternative to “sweet-talking” people into believing something or siding with someone wasn’t persuasion through force.

Because we are humans, McCloskey adds, we depend on language. But if we cannot use language, there is another way of persuading people into taking a particular stance: Violence. If I have a gun in hands while telling you to believe in economics and stop arguing with me if you want to stay alive, you will most certainly choose to agree with me, just so you may avoid getting shot in the head. But if there aren’t any guns involved, all we can do to make our point stick is to try to persuade folks by selling our idea the best way we can.

“In a society of free choice, free ideas, free consumption,” McCloskey adds, “you have persuasion as the only alternative to violence.”

Henry David Thoreau once said that “thaw, with her gentle persuasion is more powerful than Thor, with his hammer.” The late, prolific author Gore Vidal once said that advertising is the only art form ever invented in the United States of America. To McCloskey, “a free society is an advertising society,” after all, a free society is where people debate and persuade, rather than threaten others into going along with their ideas. Americans should be proud of this very American tradition.

Instead of demonizing rhetoric by complaining that propaganda alone is the root of our problems, McCloskey seems to argue, we should celebrate the “speaking, rather than violent, society,” and take part in the activity, rather than decry it as the root of all evil.

The Sharing Economy is Challenging Labor Laws, Are Lawmakers Paying Attention?

in Business and Economy, Economic Liberty, Economics, Liberator Online, News You Can Use by Alice Salles Comments are off

The Sharing Economy is Challenging Labor Laws, Are Lawmakers Paying Attention?

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Ride-sharing apps are revolutionizing how people across the country commute. But with the growth in popularity, companies like Lyft and Uber become easy targets for regulators and lawmakers, mostly because laws already in place protect industries that are already losing their appeal due to competition.

Last month, Lyft settled a class-action lawsuit brought by its California drivers. With the settlement, Lyft upheld the freedom of drivers locally by avoiding to classify them as employees. By allowing participating motorists to remain as contractors, Lyft gave drivers the flexibility to control when, where, and for long they work through the platform.

Lyft To many, this was a step in the right direction. But to Christopher Koopman, a research fellow with the Project for the Study of American Capitalism at the Mercatus Center, this victory is not enough.

In an article for The Hill, Koopman says the settlement fails to resolve other issues tied to worker classification laws.

Since sharing economy apps like Uber and Lyft do not easily fit within current state and federal labor laws, Koopman explained, “challenges [to] the status quo of government regulation” will continue to present a legal headache to company executives—and drivers.

In places like New York City, Uber and Lyft stood up to taxi regulations. By doing so, sharing economy apps helped to boost transportation choices for low-income households. At the federal level, Koopman explained, Uber and Lyft are now challenging an 80-year-old law known as Fair Labor Standards Act of 1938, which defines what an employee is. According to Koopman, the Department of Labor’s own interpretations of the 80-year-old law do nothing to clarify the issue, making the lives of individuals relying on Lyft and Uber to pay their bills much more complicated in the long-term.

If this issue is not fixed at both federal and state levels, Koopman says, Uber and Lyft will continue to battle lawsuit after lawsuit. And leaving the decision to the courts, Koopman stated, is “far from ideal.”

As labor laws remain unchallenged by lawmakers, Koopman warns that the sharing economy is not the only one that will suffer.

Using IRS data, Koopman found that the growth in non-employment working arrangements “predates the advent of the sharing economy.” In 2010, the Government Accountability Office estimated, at least 40 percent of workers in America operated under “alternative arrangements.” If their choice had been questioned legally, they would have lost their arrangements, therefore making it hard for folks to make ends meet.

To loosen the restrictions by changing legal definitions could prove beneficial to workers across the country, so why rely on the courts? If that’s the case, Koopman warns, juries, or “ordinary folks simply working with square pegs and round holes” will be tasked with the duty of choosing who should be classified as employees.

Will they choose solutions that boost freedom instead of giving government even more power?

Is American Entrepreneurship Dead?

in Economic Liberty, Economics, Liberator Online, News You Can Use by Alice Salles Comments are off

Is American Entrepreneurship Dead?

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Promises of a better future post the 2008-2009 recession injected new confidence in the American economy. With the President Barack Obama administration’s push to use public money to stimulate the economy back to recovery, many believed that a full comeback was in order.

But years after the implementation of the stimulus plan, corporate debt continues to increase due to the federal reserve’s meddling, and the participation rate in the labor force continues to fall.

Entrepreneur

As the current administration claims falling unemployment rates prove the stimulus worked, it’s easy to see why so many believe that things are “back to normal.”

But according to Yonathan Amselem, an asset protection attorney in Washington, D.C., things are far from “normal.”

In an article published by the Mises Institute, Amselem explains that after a market crash, the unemployment rate eventually drops, naturally. He also reminds us that the Obama administration took over after the market crash. And that the so-called “recovery” may have just been a sign of a process that would have happened with or without the stimulus.

He also argues that a review of the type of industries that have been growing since the stimulus plan was put into action prove that the creation of jobs alone has nothing to do with economic recovery.

“We are pumping out an army of waiters, social workers, and associate professors with worthless six-figure degrees they have no hope of paying off in this life or the next,” Amselem argued. Instead of “high value, goods-producing workers,” America is producing workers who do not rely on innovation.

Individuals, Amselem argues, are not being encouraged to start businesses. Instead, they seem to believe that they are perfectly capable of turning “a six-year sociology degree into a job that doesn’t involve bringing people mimosas for brunch.”

But the workforce is not to blame for this shift in leading industries.

Instead, Amselen argues that the lack of incentives tied to entrepreneurship is forcing countless Americans to keep their dreams and aspirations locked away. As businesses now fail at a greater rate than they start, free market advocates like Amselen remind us that people are discouraged to try out on their own.

To the D.C. attorney, America’s structure of production has been disrupted by the political class in a dramatic way, making workers less competitive and forcing the entire nation to carry a very heavy debt burden while keeping the entrepreneurial spirit stuck under a mountain of bureaucracy.

As free market advocates continue to make the case against overwhelming regulations, urging the public to look at government intervention as a means to hinder economic development, media outlets and influencers often accuse them of being against the poor.

But economic growth can only be accomplished when competition and freedom are reinstated. Being against the poor means being pro-government intervention in the economy, which forces those with pauper means to resort to the black market for their needs.

What Happens When Demand Increases?

in Conversations With My Boys, Economic Liberty, Liberator Online by The Libertarian Homeschooler Comments are off

What Happens When Demand Increases?

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How will I explain the phenomenon of rising prices after a disaster to my seven-year-old son? I’ll say something like this.

You know there was a big storm in the Northeast. We saw it on television. There was flooding, there was a big fire, trees were down, and now there’s no electricity in a lot of places. It’s pretty miserable.

Supply And Demand Analysis Concept

People want clean water, food, and gasoline. They want to be able to clear away the trees that fell and they want to be able to run their generators if they’re without power. Normally, they could get these things, but because of the storm not only do they need more, but it’s hard for these things to get in. The normal supply lines are cut. So they want more and there’s less than usual around.

We’ve talked about scarcity before. It’s when there is a limited amount of the things we want. Right now, the things that they want are scarce. Demand has increased.

We’ve also talked about what happens when demand increases. When demand increases, prices go up. Prices just tell us how much of this thing is available. It’s information. Like when there’s a bad drought, the price of tomatoes goes up because there are fewer tomatoes to sell. The opposite is also true. When there is a lot of something, the price goes down. If I have a tomato farm and I have twice as many tomatoes one really good year, the price of tomatoes will go down. You can tell how much of something there is by its price.

This is the situation in the Northeast right now. Demand for gas, clean water, generators, and things like that has increased. What happens to prices when demand increases? Right. Prices go up.

You’ve seen this happen in daddy’s ebay business. When he’s down to the last ten of an item, he hikes up the price. It’s still available if someone really wants it, but those last ten are really really valuable. When he gets more in stock, he lowers the price again.

Remember how your brother asked you what you would do if you only had one cup of water each day? You said you’d drink that water. And if you only had two cups, you would use the second cup for keeping clean. And if you had three cups you would use the third cup for growing plants. And if you had four cups you might use the fourth cup for playing in the sprinkler or something. You understand when things are scarce, you use them differently. You economize. They are more valuable when there is less. Everyone understands that.

Anyway, back to the storm. Let’s say daddy sold things that would be important in an emergency. He has a store that sells gas, water, ice, and flashlights. He knows that as a storm approaches the demand for these things will increase and that perhaps his supply line will be severed for many days. He won’t be able to get more for a while. He will have a limited supply–like when you only have three cups of water. When demand increases, he’s going to raise prices. People won’t be able to buy as much. They’ll have to think about how they use what they buy. This keeps things on the shelves longer and when someone desperately needs a thing, it is more likely to be there for them. That’s really important during an emergency. It can even save people’s lives. Now, some people would say that it’s mean of daddy to raise prices when demand increases. But that’s not true. He’s simply letting people know that it’s time to economize. They need to think hard about how they want to use things. He’s just passing along information. And there’s good reason for him to do it. He’ll make more money if he’s doing the right thing. It also makes it worth his while to go to the store and keep it open for the one guy who really, really needs something. When the prices go up, he’s not going to sell as much, but he still has to be there. If he keeps his prices low, he’ll sell out and close his store.

So, what we know is that when demand increases, prices go up. When demand decreases, prices go down. Those are just laws. Like inertia. We just have to know that they’re laws and that they’re always in effect. We shouldn’t be surprised by them.

Some people try to suspend law and make it so store owners can’t increase their prices as demand increases. That’s really bad. It doesn’t work and it leads to more shortages because people won’t economize on their use of the scarce goods and services. If they aren’t properly priced, the consumer doesn’t know how valuable it is. They might buy the last flashlight to entertain their children in the dark when a guy two blocks over needed that flashlight to find something really important–like maybe the gas shut off–in the night. When things cost more or when we have less of a thing we really think about how we use it. If the prices don’t give us that information, that causes more problems in an already bad situation.

State of The Union Address: What this Administration Got Wrong About Obamacare

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State of The Union Address: What this Administration Got Wrong About Obamacare

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During President Barack Obama’s final State of the Union address, this administration’s signature healthcare law was seldom brought up. As a matter of fact, little time was dedicated to healthcare overall. But the few references to the Affordable Care Act (ACA) have been mostly ignored, suggesting that little to no attention is dedicated to healthcare law as the media focuses on the 2016 presidential election.

But to Brian Blase, Senior Research Fellow with the Spending and Budget Initiative at the Mercatus Center at George Mason University, the administration’s claims deserve a second look.

In an article for Forbes, Blase looks at how the current programs are performing. With the hopes of helping Americans have a better understanding of ACA and its consequences, the scholar analyses the administration’s claims and reports on his findings.

cooperative

According to the current administration, ACA was designed to fill “the gaps in employer-based care so that when you lose a job, or you go back to school, or you strike out and launch that new business, you’ll still have coverage.” To Blase, however, things aren’t that simple.

If the administration had made the portability of coverage a main priority, the law would not have to be as complex as it is.

Blase also argues that portability as a main goal would have prompted a piece of legislation that would have attracted considerable bipartisan support. Why? Because most healthcare experts on the right and center have always advocated for increased portability, urging lawmakers to severe the ties between insurance and employment.

To Blase, the primary purpose of ACA couldn’t be to keep Americans covered through the several changes they experience if the law standardizes health insurance and ups the requirements concerning coverage levels. By implementing a complicated tax and subsidy system to support ACA, the Obama administration forced consumers to fall prey to distorting price controls that make insurance coverage actually less affordable.

If the administration’s main goal with ACA was to keep people covered no matter what, the law wouldn’t also have been written in a way that increases gross premiums so radically, making low-income earners less likely to get good coverage.

While Blase spent a good deal of time focusing on this particular claim, another subject also caught his eye.

During the address, president Obama claimed that ACA has helped businesses to create jobs, not eliminate them. To Blase, this particular claim is troubling mostly because it’s not necessarily wrong. It’s misleading instead.

Claiming jobs were created because of the enaction of ACA is not a fact, since job growth naturally increased after the deep economic recession the country had just been recovering from when ACA became the law of the land. During the recession, millions of people were kicked out of their jobs, but as confidence grew, more jobs were inevitably created. That’s just a natural consequence of the labor market dynamics and is not at all connected to the enactment of ACA.

If the current administration is, indeed, concerned with how its healthcare programs are performing, Blase suggests, its review of ACA would lead to its repeal. Why? Because ACA is actually a negative pull on the economy.

According to the Congressional Budget Office, ACA will actually shrink the labor market in America. If the congressional projection is correct, two million full-time jobs will be lost due to ACA alone.

Regulations Inhibit Growth, Time to Take The Negative Consequences Seriously

in Business and Economy, Economic Liberty, Liberator Online, News You Can Use by Alice Salles Comments are off

Regulations Inhibit Growth, Time to Take The Negative Consequences Seriously

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Regulations are good, some say. They keep evil elements from hurting consumers. But are regulations doing more harm than good?

By definition, regulations are laws that seek to produce pre-designed outcomes. The way they operate is by changing individuals’ behavior. As federal regulations grow, the number of restrictions on individual consumers and businesses also grow. Over time, the increased number of restrictions may completely close the paths to innovation. Who suffers? Both the consumer and the job seeker.

Regulations

According to a 2013 study, the American regulatory system is so crowded and chaotic that economic growth has slowed by about 2 percent per year between 1949 and 2005. While that doesn’t sound as bad as you might have expected, the real impact of the US regulatory system is hard to assess given the lack of a working process that helps to review regulations and weed out what’s obsolete and harmful. Without a system that helps us identify the issues with the regulations put in place, there’s no way to determine how bad these regulations really are.

While it’s hard to assess the cost of regulation now, earlier studies have at least been able to find that the American regulatory environment has been very bad for growth and very good in stifling innovation and keeping entrepreneurs from sprouting from sea to shining sea.

Despite several administrations’ efforts to modify or cut regulations that simply don’t work, all attempts were in vain.

In order to achieve success, future administrations should not take part in the same failed attempts. According to research carried out by the Mercatus Center, the US government should embrace a series of government reforms in order to remove obstacles to economic growth in America instead.

Based on the success of the Dutch Administrative Burden Reduction Programme and the Base Realignment and Closure Commission’s efforts, the Mercatus team concluded that the American government should begin by promoting an independent review of the regulatory system in place so the burden is assessed promptly and effectively.

But the key to success in this case is true independence.

An independent look into what’s stifling innovation must not be effected by crony influences, since once the influence of particular groups or stakeholders are taken into account, review teams will have a hard time assessing what works and doesn’t. Instead, those tasked with the chore of reviewing regulations should simply focus on how effective regulations have been since they were implemented.

While other steps should also be taken if the US government is serious about trimming the burden of regulations, guaranteed independence in the review process is the most important aspect of successful reforms. If future administrations are serious about growing the economy and helping America prosper, they should prioritize this type of reform. Why? Because removing roadblocks promote the growth of businesses, giving Americans the jobs they so desperately need to live their own version of the American dream.

Nurture and Protect New Libertarians

in Liberator Online by Michael Cloud Comments are off

(From the Persuasion PowerPoint section in Volume 19, No. 16 of the Liberator Online. Subscribe here!)

Successful martial arts schools nurture and protect their newest students. Their beginners.

They care for and help develop their beginners’ skills and discipline.

They protect them from far more experienced and skilled students.Nurture and Protect

Because if new, young students make progress, they will keep practicing and keep coming to the dojo.

And, if they are able to learn with, and train with, those with comparable skills and experience, they will become more and more confident — and they will stay with the program.

But if older students are allowed to bully and intimidate younger and weaker and less skilled students, the young students will drop out. And, if this happens often enough, over a long enough period… the number of students will stall and shrink. Finally, the school will close.

We have this same challenge in libertarian organizations.

We must nurture and protect our newest libertarians. Our beginners.

They will misapply libertarian ideas. They will say things that are not libertarian.

Because they have not read as many economics, history, and libertarian books as longtime experienced libertarians have read.

Because they haven’t been to two or four or more libertarian conferences — as more experienced libertarians have.

Because they haven’t discussed and debated the implications and applications of core libertarian concepts.

When they make mistakes — just like you and I did — we need to be caring teachers and mentors to them — while letting them learn and develop at their own pace.r,

They need our knowledge and guidance. We need their excitement about liberty — and hunger to learn more.

For the growth and development and progress of the movement for liberty.

* * * * * * * *
Unlocking More Secrets of Libertarian PersuasionMichael Cloud’s latest book Unlocking More Secrets of Libertarian Persuasion is available exclusively from the Advocates, along with his acclaimed earlier book Secrets of Libertarian Persuasion.In 2000, Michael was honored with the Thomas Paine Award as the Most Persuasive Libertarian Communicator in America.