Category Archives: Politics

Free Inquiry on Campus

The “Free Inquiry on Campus: A Statement of Principles by a Collection of Middlebury College Professors” document, published in the “Aftermath at Middlebury” is well worth reading and pondering.

On March 2, 2017, roughly 100 of our 2500 students prevented a controversial visiting speaker, Dr. Charles Murray, from communicating with his audience on the campus of Middlebury College.  Afterwards, a group of unidentified assailants mobbed the speaker, and one of our faculty members was seriously injured.  In view of these unacceptable acts, we have produced this document stating core principles that seem to us unassailable in the context of higher education within a free society.
Print Friendly

On the importance of “viewpoint” diversity…

I am proud to be a member of the Heterodox Academy (see http://heterodoxacademy.org/). Heterodox Academy members are all professors who have endorsed the following statement:

“I believe that university life requires that people with diverse viewpoints and perspectives encounter each other in an environment where they feel free to speak up and challenge each other. I am concerned that many academic fields and universities currently lack sufficient viewpoint diversity—particularly political diversity. I will support viewpoint diversity in my academic field, my university, my department, and my classroom.”

Print Friendly

On Australia’s minimum wage policy

In today’s daily USPS junk mail delivery, I was deluged (as is everyone these days) by a pile of political flyers. One of the flyers in particular caught my eye – it was entitled “Common Sense MMXIV” (why the Roman numerals? But I digress).

One of the supposed “common sense” proposals listed on this flyer was to “…. enact, as Australia has, a $20/hr. minimum wage”. Since I was not aware that Australia had a $20/hr. minimum wage, I googled this topic and found that in fact Australia does not have a $20/hr. minimum wage (source: http://www.wageindicator.org/main/salary/minimum-wage/australia). What Australia does have is a 16.87AUD/hour minimum which translates (at the current exchange rate) into 14.84USD/hour (AUD and USD are acronyms respectively for “Australian Dollar” and “US Dollar”). Furthermore, there are all sorts of caveats that apply; for example, there’s a schedule of minimum wages (expressed as a percentage of the 16.87AUD/hour baseline) based upon the age of the worker:

<16 years: 36.8% AUD6.21 USD5.46
16 years: 47.3% AUD7.98 USD7.02
17 years: 57.8% AUD9.75 USD8.58
18 years: 68.3% AUD11.52 USD10.13
19 years: 82.5% AUD13.92 USD12.24
20 years: 97.7% AUD16.48 USD14.49

For more on the economics of the minimum wage, I recommend reading the attached article by David Neumark; Dr. Neumark is an economics professor and director of the Center for Economics and Public Policy at the University of California, Irvine.

Who Really Gets the Minimum Wage, by David Neumark.pdf

Print Friendly

The ’77 Cents on the Dollar’ Myth About Women’s Pay

The ’77 Cents on the Dollar’ Myth About Women’s Pay

In The Wall Street Journal, Mark J. Perry and Andrew G. Biggs write that once education, marital status and occupations are considered, the ‘gender wage gap’ all but disappears.

An important problem with the “equal pay” canard is its simplistic comparison of female versus male wages; as if the sole determinant of compensation were gender. We live in a multivariate world where all sorts of factors jointly determine outcomes.  Economists June and David O’Neill understand this and find, after controlling for various wage determinants such as education, experience, industry, occupation, time spent as an active labor force participant, risk, and so forth (see “The Declining Importance of Race and Gender in the Labor Market: The Role of Employment Discrimination Policies“), that labor market discrimination is unlikely to account for more than 5% but may not be present at all.

But then the “equal pay” canard really has nothing to do with economics. It has everything to do with identity politics. Identity politics is a long-time, proven formula for political success. You divide people into groups based upon ethnicity, gender, sexual preference, income, and so forth and then promise to deliver group-specific benefits at the expense of the rest of society. Politicians get away with this because the public at large is innumerate and not able (or lack incentives) to grasp even the basic statistical concepts and principles (such as the idea that there are multiple determinants of wages other than gender differences).

Print Friendly

Should the Minimum Wage Be Raised? Economists Weigh In

The Wall Street Journal’s Real Time Economics blog recently posted an article entitled “Should the Minimum Wage Be Raised? Economists Weigh In” @ http://on.wsj.com/1kYgJj6.

I am most convinced by the recent (July 2013) survey article entitled “Revisiting the Minimum Wage-Employment Debate: Throwing Out the Baby with the Bathwater?” (available from http://bit.ly/1dNSMao) which documents that minimum wages pose a tradeoff of higher wages for some against job losses for others.   I am particularly fond of the following quote from that article: “We revisit the minimum wage-employment debate, which is as old as the Department of Labor” (historical note: the US Department of Labor was founded March 4, 1913 :-))
Print Friendly

77 cents on the dollar

The key problem with the “77 cents on the dollar statistic” cited in President Obama’s SOTU speech is that it is based upon a naive comparison of average earnings for females compared with males. There are a number of other wage determinants (e.g., differences in occupations, positions, education, job tenure, hours worked, etc.) which must also be taken into consideration.  AEI scholar Christine Sommers notes (in the Daily Beast article linked below): “When all.. relevant factors are taken into consideration, the wage gap narrows to about five cents. And no one knows if the five cents is a result of discrimination or some other subtle, hard-to-measure difference between male and female workers.”

www.thedailybeast.com
“It’s the bogus statistic that won’t die—and president deployed it during the State of the Union—but women do not make 77 cents to every dollar a man earns.”
Print Friendly

On the role of health insurance as an “enabling technology” that facilitates risky behaviors…

ACA Ad

The vast majority of the ads shown on the www.doyougotinsurance.com website promote health insurance as an “enabling technology” that facilitates various risky behaviors; e.g., uncelibate sex, binge drinking, bungee jumping, white water rafting, etc. These ads are (condescendingly and stereotypically) targeting millenials whose overpriced premiums are needed in order to cross-subsidize premium costs for older, sicker people. It turns out that the financing model underlying the so-called Affordable Care Act (ACA) critically depends upon such cross-subsidies in order for ACA to be financially sustainable. Without these cross-subsidies, the more likely outcome for ACA is what Cutler and Zeckhauser (1998; cf. http://dx.doi.org/10.2202%2F1558-9544.1056) refer to as an “adverse selection death spiral” (see also AEI Resident Fellow Scott Gottleib’s Forbes piece on this very same topic @ http://is.gd/jnh04G).

Since the ACA is designed to vastly expand Medicaid and offer subsidies to households with incomes up to 400% of the federal poverty level, then somebody has to pay for it. And if the plan works as it is supposed to, young middle class workers will have to enroll in droves to pay for overpriced insurance. However, based upon the early returns from enrollment at the Federal and state websites, this does not appear likely. Thus the aggressive ads designed to convince otherwise reticent millennials to sign up for overpriced insurance.  Apparently health insurance can be “fun” because it makes it possible to not have to fully internalize the costs of risky behaviors.  This would be the Peltzman effect on steroids

The aforementioned website (doyougotinsurance.com) is “…a project of the Thanks Obamacare campaign, created by the Colorado Consumer Health Initiative and ProgressNow Colorado Education to educate everyone about the benefits of the Affordable Care Act.”

 

Print Friendly

Today’s page 1 Wall Street Journal story…

This (an article entitled “Software, Design Defects Cripple Health-Care Website“) is THE page 1 story in today’s issue of the Wall Street Journal. It provides a fascinating case study which corroborates historian John Steele Gordon’s essay from May 2009 entitled “Why Government Can’t Run a Business” (available from http://on.wsj.com/BZpZW); in that essay, Gordon notes (among other things) that “Politicians need headlines. Executives need profits.”

Software, Design Defects Cripple Health-Care Website

online.wsj.com

The federal government acknowledged for the first time Sunday it needed to fix design and software problems that have kept customers from applying online for health-care coverage.

Print Friendly