Clearly insurance is an enabling technology; without insurance many if not most large-scale commercial activities would grind to a halt. In a Business Week article entitled “The Unexpected Threat to Super Bowl XLIX“, Wharton professors Howard Kunreuther and Erwann Michel-Kerjan point out that that if Congress decides not to renew the Terrorism Risk Insurance Act (TRIA) (set to expire on Dec. 31), there is a chance that the Super Bowl might not be played. Will Warren Buffet step in as an insurer of last resort if TRIA is not reauthorized? Also, Gordon Woo raises some excellent points about possible private sector alternatives to TRIA in his blog posting entitled “RMS and the FIFA World Cup: Insuring Against Terrorism“.
Category Archives: Public Policy
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.
On Australia's minimum wage policy
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 |
Delivery Drones…
Here’s a video presentation about so-called “delivery drones” from the publishers of the Wall Street Journal. I was aware of Amazon’s work in this area, and am not surprised that Google is also working on this, but Domino’s Pizza? Really?
This week’s Initiative on Global Markets (IGM) Economic Experts Panel statements
This week’s IGM Economic Experts Panel statements:
- Employers that discriminate in hiring will be at a competitive disadvantage, if their customers do not care about their mix of employees, compared with firms that do not discriminate.
- Rising market wages are an important reason — over and above any changes in medical technology, social norms or preferences — why family sizes have fallen over the past century in rich countries.
See http://bit.ly/Trzm4k for poll results!
House of Debt
House of Debt – http://bit.ly/1rulBgN
This 1 hour long video (@ http://bit.ly/1rulBgN) featuring Amir Sufi (who is the Chicago Board of Trade Professor of Finance at the University of Chicago Booth School of Business) was recorded last Monday evening as part of the Myron Scholes Global Markets Forum at Chicago Booth. Here’s a description of his talk:
“The Great American Recession resulted in the loss of eight million jobs between 2007 and 2009. More than four million homes were lost to foreclosures. Is it a coincidence that the United States witnessed a dramatic rise in household debt in the years before the recession—that the total amount of debt for American households doubled between 2000 and 2007 to $14 trillion? Definitely not. Armed with clear and powerful evidence, Professor Sufi will discuss his forthcoming book, House of Debt, and how it reveals the Great Recession and Great Depression, as well as the current economic malaise in Europe, were caused by a large run-up in household debt followed by a significantly large drop in household spending.”
The Economist: Essay on the history of finance in five crises
From The Economist:
“This week we publish an essay on the history of finance in five crises. They have a common theme: in each case the state increased the subsidies and guarantees it gave to finance—and helped set up the next crisis. Our cover leader points out that this is happening again. An American can now blindly put $250,000 in a bank, knowing his deposit is insured by the state. Finance, we say, should be treated more like other industries.”
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).
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).
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.
See also http://bit.ly/1fe97Ha and http://www.econlib.org/library/Enc/MinimumWages.html for context.
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 :-))