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

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Sic em, Bears!

I just had a nice visit from Cindy Riemenschneider, who is Associate Dean for Research at Baylor University’s Hankamer School of Business. She came by my class for the purpose of presenting (in front of my students) a “Certificate of Exceptional Research” for my paper with Jim Hilliard and Martin Grace entitled “Adverse Selection in Reinsurance Markets” (cf. http://bit.ly/adverseselection). Thanks, Cindy!

2014-09-30 14.07.32

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Mr. Ginger

Here’s a shout-out to Mike Akel (director) and Felipe Adams (producer) for their web comedy series called “Mr. Ginger“.   To date, Season 1 consists of four episodes, and more episodes are in the works.  (Shameless self-plug alert – I appear briefly toward the end of episode 4 as someone whose job it is to help a student face his worst fear! :-))…

For the entire series to date, go to http://bit.ly/mrginger; this link provides a menu where you can select which of the four episodes that you would like to watch; you can also watch by simply clicking on the play button below.  I recommend watching all four episodes!

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Assorted Links (7/28/2014)

Here’s a list of articles that I have been reading and podcasts that I have been listening to lately:

Sam Altman on Start-ups, Venture Capital, and the Y Combinator


I listened to this very interesting and highly informative podcast during one of my daily walks in my hometown of Austin, TX. Basically this is a tutorial on how entrepreneurship and venture capital promote economic growth and innovation, and mostly make the world a better place…

100 Years Ago Today It Began: “Austria Has Chosen War”


“The good news is that 100 years later the world is a far more stable and peaceful place.”

Why Corporate Inversions Are All the Rage


This is the best explanation I’ve seen concerning the phenomenon of so-called corporate inversions…

Putin Restores a Cuban Beachhead


“In The Wall Street Journal, Americas columnist Mary Anastasia O’Grady writes that the Kremlin and the Castros are chummy again, and Moscow is offering military aid.”

The Danger of Too Loose, Too Long


“In The Wall Street Journal, Dallas Federal Reserve Bank President Richard Fisher writes that with an improving labor market and an uptick in inflation, the danger now is to wait too long to tighten.”

The Lingering, Hidden Costs of the Bank Bailout


“In The Wall Street Journal, Nobel laureate Vernon L. Smith asks why is growth so anemic? New economic activity has been discouraged. Here are some ways to change that.”

How we found the giant squid


“Humankind has been looking for the giant squid (Architeuthis) since we first started taking pictures underwater. But the elusive deep-sea predator could never be caught on film” (until now).

Yes to Coffee and Wine: Rewriting the Rules of Pregnancy


“Go ahead, have a glass of wine during pregnancy, writes Emily Oster.”

Math nerds are taking over Wall Street


“Elie Galam is a math geek turned finance wizard. Check out how he and other quants are taking over Wall Street.”

Freakonomics » Does Religion Make You Happy?


I listened to this podcast during one of my daily walks in my hometown of Austin, TX. It showcases research on the “economics of religion” by various economists and sociologists. I was particularly intrigued to learn about MIT economist Jonathan Gruber’s recently published research on this topic. Professor Gruber finds (among other things) that “[The religious are] more likely to have higher incomes, higher education, have more stable marriages, be less likely to be on welfare, essentially be more successful on any economic measure you want to use”. He also empirically documents (the somewhat counter-intuitive result) that religious giving and religious attendance are substitutes, not complements… (see http://www.nber.org/papers/w10374 for access to Gruber’s paper entitled “Pay or Pray? The Impact of Charitable Subsidies on Religious Attendance”…

Libertarian Charles Murray: The welfare state has denuded our civic culture


For my “bleeding heart” libertarian friends, I recommend Charles Murray’s book “In Our Hands: A Plan To Replace The Welfare State” (cf. http://amzn.to/1x66BGW)…

Progressives’ hot new poverty-fighting idea has just one basic problem: Science


“Look at the evidence, liberals!”

Reining in ObamaCare—and the President


“In The Wall Street Journal, Jonathan H. Adler and Michael F. Cannon write that Halbig v. Burwell is about determining whether the president, like an autocrat, can levy taxes on his own.”

Obama’s Law Professor: ‘I Wouldn’t Bet’ on Obamacare Surviving Next Legal Challenge


“President Obama’s old Harvard Law professor, Laurence Tribe, said that he “wouldn’t bet the family farm” on Obamacare’s surviving the legal challenges to an IRS rule about who is eligible for subsidies that are currently working their way through the federal courts.”

US military enlistment rates by state: A Texas-sized difference


“An 18-24 year-old from Florida or Texas who enlists in the US military has more than double the chance of bumping into a fellow Southerner in uniform than a resident from Massachusetts, Connecticut, or New York does with a Northeast compatriot.”

New York law thinks a burrito is a sandwich


“New York’s “sandwich tax” might be the greatest fraud every played on New Yorkers if you don’t count the ones that involve rent or drugs.”

Hamas’s Civilian Death Strategy


“In The Wall Street Journal, Thane Rosenbaum argues that Gazans shelter terrorists and their weapons in their homes, right beside sofas and dirty diapers.”

Why a federal court just ruled Obamacare subsidies are illegal in 36 states


“This little-known lawsuit is Obamacare’s biggest threat.”

Heading Off the Entitlement Meltdown


“Demography is destiny: The retirement of 77 million baby boomers is not a theoretical projection.”

Four Years of Dodd-Frank Damage


“In The Wall Street Journal, Peter Wallison writes that the financial law has restricted credit and let regulators create even more too-big-to-fail companies.”

Income Inequality Is Not Rising Globally. It’s Falling.


“Though the income gap has widened in many individual nations, it has been shrinking globally for most of the last 20 years.”

Uber Upstarts: Technological Progress and Its Discontents


“The battle between new smartphone-enabled ‘transportation network companies’ and legacy taxicabs largely mirrors the age-old war over productivity, a war that only ever has one outcome.”

Microsoft lays off 18,000 with ridiculous letter


“I have never been laid off, but I would assume that the process begins with an apology of sorts. “I’m sorry.” “Do you have a moment?” or “Can we talk?” are probably good first steps….”

Jury Awards $23.6 Billion in Florida Smoking Case


“A jury in Florida awarded a staggering $23 billion judgment against R. J. Reynolds, the country’s second-largest tobacco company, for causing the death of a smoker who died of lung cancer.”

Doctors get due dates wrong 96.6% of the time


“Your baby is most likely to be born one week before your due date.”


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Assorted Links (7/15/2014)

Here’s a list of articles that I have been reading lately:

This poll proves that millennials have totally incoherent political views


“73% of Millennials say “people should be allowed to keep what they produce, even if there are others with greater needs”…”

New research shows Facebook may be hazardous to your marriage


“Facebook is no stranger to bad press.”

Why the new jihadists in Iraq and Syria see al Qaeda as too passive


“A new generation of Islamist extremists battle-hardened in Iraq and Syria sees the old guard of al Qaeda as too passive.”

10 Fun Facts About the Millennial Generation


“Reason-Rupe has a new survey and report out on millennials—find it here. Here are a few highlights…”

Do Markets Work for Bees?


“What and what not to do about Colony Collapse disorder…”

You mean I’d have to PAY for that??


“……..Millennial support for large government flips if high taxes are required.”

Why Piketty’s Wealth Data Are Worthless


“In the Wall Street Journal, Alan Reynolds write that private retirement plans rose to $12.4 trillion in 2012 from $875 billion in 1984. None of it is reported on tax returns.”

Texas Admissions Brawl


Our local “controversy” at UT-Austin has now made the pages of the editorial section of the Wall Street Journal

Remembering Louis Zamperini


Mr. Zamperini was a truly amazing person. RIP, Mr. Zamperini!

Get Bosses Out of Health Insurance Altogether


“The Supreme Court’s decision last week in Burwell v. Hobby Lobby has pushed all the buttons that could be expected…”

A Sexual Revolution for Young Evangelicals? No.


Interesting review of recent work by Mark Regnerus…

Confessions of a Computer Modeler


“In the Wall Street Journal, Robert Caprara writes that any model, including those predicting climate doom, can be tweaked to yield a desired result.”



“Rivalry and harmony at the olympics of choirs, beginning on July 9th in Riga, Latvia.”

What is the rationale behind standard paper sizes like A4 and A3?


I have often wondered about this very issue since I interact regularly with non-US academic colleagues who share these “weird” A4 PDF files (which measure 8.27 x 11.69 inches) with me. Thanks to quora.com, this all makes sense now…

Chart and economic fact of the day: Texas has added one million jobs since 2007 vs. only 24,900…


Preventing economists’ capture


Are we saving too much for retirement?


Google’s Larry Page: “I Think the Government’s Likely to Collapse Under Its Own Weight.”


“The co-founders on how regulation “increases without bounds” and why Google stays away from health care.”


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Assorted Links (7/6/2014)

Here’s a list of articles that I have been reading and videos that I have been viewing lately:

An Unfolding Fiscal Disaster


“The ACA’s partisan origins have left lawmakers with vastly reduced incentives to achieve the budgetary savings required to make its finances work.”

A Company Liberals Could Love


“The entire conflict between religious liberty and cultural liberalism has created an interesting situation in our politics: The political left is expending a remarkable amount of energy trying to fine, vilify and bring to heel organizations — charities, hospitals, schools and mission-infused businesses — whose commitments they might under other circumstances extol.”

Religious groups prep for Hobby Lobby repeat


“The Supreme Court’s Hobby Lobby decision is just days old, but a group of religious schools and institutions is preparing for Part Two.”

The summer’s most unread book is…


“A simple index drawn from e-books shows which best sellers are going unread (we’re looking at you, Piketty).”

Independence in 1776; Dependence in 2014


“The rise in the size and scope of federal subsidies means that Americans are steadily losing their independence.”

Hail to the Chef: Which Presidents Do Americans Want to Grill With?


“If you were having a barbecue for Independence Day, which recent president would you want to help you out on the grill?…”

The great (and growing) global impact of the Declaration of Independence


“No American document has had a bigger global impact than the Declaration of Independence.”

New York City’s Affordable Housing Bonanza for the Rich


“Housing subsidies go to families making up to $193K.”

Why is it so difficult to teach people to manage money?


“Almost everyone supports teaching students to manage money. If only it worked.”

Muscle Shoals (2013)


Jan and I watched this movie recently.  In a little bit under two hours, you will come away with a basic grasp of the last 50 years of popular music history…

Obama’s Disappointing Year at the Supreme Court

“From recess appointments to warrantless cellphone searches to Obamacare, the White House lost big this term at SCOTUS.”

Richest 1% taxed too much: NJ Gov. Chris Christie


“The tax code relies too much on the wealthiest Americans and needs to be revamped, says N.J. Gov. Christie.”

Childhood Vaccines Safe, Says Pediatricians


“The latest in-depth review of immunizations shows that they aren’t linked to higher risk of autism or cancer.”

A few things the Hobby Lobby ruling won’t do


“The courts aren’t going to be passing judgment on the wisdom of different religious teachings. And access to blood transfusions will be affected by this decision even less than access to contraception will be.”

Map: Watch America’s air get cleaner over the past decade


“It’s not just your imagination — America’s air really has been getting cleaner over the past decade.”

Hobby Lobby: Government Can’t Violate Religious Liberties Willy-Nilly

“The Hobby Lobby decision has nothing to do with big business, freedom to use contraceptives, or preferencing religious liberty above everything else.”

Hansen on Risk, Ambiguity, and Measurement


I listened to this EconTalk podcast recently on my daily morning walk. Other than being awesome because 1) the interviewee is a 2013 economics Nobel Laureate, and 2) the topics discussed (risk, ambiguity, and measurement) are important throughout the life, physical, and social sciences, I also enjoyed learning about the following quote (attributed to the 19th century physicist Lord Kelvin): “When you can measure what you are speaking about, and express it in numbers, you know something about it.”

Obamacare’s Contraception Mandate


“That phrase or variants of it will appear in a lot of coverage today. It’s misleading for two reasons. Hobby Lobby doesn’t object to providing contraception; it objects to contraceptives that may act as abortifacients.”

SCOTUS sides with Hobby Lobby on contraception mandate


“The Supreme Court ruled 5-4 in Burwell v. Hobby Lobby that for-profit employers with religious objections can opt out of providing contraception coverage under Obamacare.”


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Assorted Links (6/30/2014)

Here’s a list of articles that I have been reading and videos I have been viewing lately:

Jason Gay identifies the treatment for converting soccer haters ahead of Tuesday’s U.S.-Belgium Match


“Jason Gay has discovered the cure for ‘Irrational Soccer Crankiness'”

The real war on women 


Quoting from this article, “Policies put into place by liberals and conservatives alike have discouraged women’s labor force participation, and no one is talking about it.”

Is Work Killing You? In China, Workers Die at Their Desks


“Chinese banking regulator Li Jianhua literally worked himself to death. After 26 years of “always putting the cause of the party and the people” first, his employer said this month, the 48-year-old official died rushing to finish a report before the sun came up.”

Facebook prompts outrage with experiment on users


“A social-network furor has erupted over news that Facebook Inc., in 2012, conducted a massive psychological experiment on nearly 700,000 unwitting users.”

It Took Studying 25,782,500 Kids To Begin To Undo The Damage Caused By 1 Doctor


“Here’s the deadly results when people say things about science without actually looking at science.” The infamous (retracted) Lancet article by Wakefield et al. is available online at http://www.thelancet.com/journals/lancet/article/PIIS0140-6736%2897%2911096-0/fulltext.

The digital degree


Here’s what The Economist has to say about the “value proposition” of traditional universities: “Traditional universities have a few trump cards. As well as teaching, examining and certification, college education creates social capital. Students learn how to debate, present themselves, make contacts and roll joints. How can a digital college experience deliver all of that?”

Wealth by degrees


“IS A university degree a good investment? Many potential students are asking the question, especially in countries where the price of a degree is rising, as a result of falling government subsidies.”

Creative destruction


“HIGHER education is one of the great successes of the welfare state. What was once the privilege of a few has become a middle-class entitlement, thanks mainly to government support.”

Case of Uncreative Destruction


“In The Wall Street Journal, Bari Weiss talks with two entrepreneurs who wanted to help the U.S. Postal Service digitize mail. Some local postmasters liked it. Washington didn’t.”

Iraq’s Brittle Nationhood


“Does it still make sense to think of Iraq as a country?”

One of these cat videos will be named best of the year. Which one should it be?


Check out the nominees for the Golden Kitty Award.  In my opinion, it’s a close call between “Jedi Kittens Strike Back” (@ https://www.youtube.com/watch?feature=player_embedded&v=4Z3r9X8OahA) and “8 Signs of Addiction” (@ https://www.youtube.com/watch?feature=player_embedded&v=2-vyTE35EL0)…

Obama Goes Too Far for Even Supreme Court Liberals


“… just the latest in a series of unanimous rebukes by the court of the administration’s legal positions.”

The Health Benefits of Beer


“Although most runners agree that beer is not exactly a “health food,” there’s good news for those of us who like to imbibe. Downing a few cold ones as you’re heading out the door for a run is obviously not the best choice, but beer–in moderation–can be a perfectly acceptable option for after a run or on non-training days.”

The IPO is dying. Marc Andreessen explains why.


“Netscape cofounder and venture capitalist Marc Andreessen says the decline of the initial public offering is bad for ordinary investors. He also critiques economist Thomas Piketty.”

Top CIA and military officials warn US drones could create endless war


“The US executive branch has yet to engage in a serious cost-benefit analysis of targeted UAV strikes as a routine counterterrorism tool.”

Four Reasons NOT to Raise the Minimum Wage


“The debate over minimum wage continues to rage across the country. But, would raising the minimum wage actually harm the very people it is purportedly designed to help?”

Supreme Court: abortion clinic ‘buffer-zones’ violate the First Amendment


“Restricted access to sidewalks near abortion clinics, the court ruled, violates the first Amendment”

Charles Krauthammer – Government by Fiat


“The Supreme Court this week admonished the Environmental Protection Agency for overreaching in regulating greenhouse gases.”

After crisis, risk officers multiply, gain more clout at banks


“Risk officers are gaining power and multiplying in number across the U.S. banking industry.”

How dads improve their kids’ lives, according to science


“Paul Raeburn’s new book, Do Fathers Matter?, is a comprehensive review of studies on the role of fathers.”

The optimal number of immigrants


University of Chicago economist John Cochrane’s answer: “Two billion, two million, fifty-two thousand and thirty-five (2,002,052,035). Seriously.”

Supreme Court strikes down Obama recess appointments


“The decision gives the Senate broad power to thwart future recess appointments, but did not go as far as some conservatives hoped to undercut the president’s ability to fill vacant executive branch posts and judicial slots.”

Get Ready for the Soccermania Letdown


“In the Wall Street Journal, Gerald Eskenazi says hooray for the U.S. World Cup team. But let’s not get carried away with the ‘breakthrough’ talk.”

40 maps that explain World War I


“Why the war started, how the Allies won, and why the world has never been the same.”

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Assorted Links (6/26/2014)

Here’s a list of articles that I have been reading lately:

The Supreme Court’s huge new cellphone privacy ruling, explained


“The Supreme Court kept cops from looking at your phone. Here’s why that’s such a big deal.”

Senseless in Seattle: The Minimum-Wage Follies


“You don’t need a Ph.D. in economics to understand that economies are not static.”

Even America’s most liberal states imprison more people than nearly any other country in the world


“Even the most liberal state in America has a higher incarceration rate than most other countries around the world, according to a new analysis from the Prison Policy Initiative.”

This chart shows that violent deaths at US schools remain quite rare


“There’s been no clear upward trend since the 1990s.”

Why Iraq’s army crumbled


“On the face of it, the stunning success of the ISIS offensive in the past ten days defies understanding.”

Devaluing the Bolivarian revolution


“After months of opposition protests that it portrays as a “fascist coup”, the government of Nicolás Maduro has reason for grim satisfaction. Using crude, but selective, repression, Mr Maduro has fought the protesters to a state of exhaustion.”

Kim Strassel and the WSJ on the Lost IRS Emails


“Thank heavens that unlike some in the press, investigative columnist Kim Strassel and her colleagues at the WSJ have been willing to dig into the revelations of evidence destruction at the Internal Revenue Service.”

Tyranny of Experts


NYU economist William Easterly clearly and succinctly explains development economics…

3 academics think they’ve solved the HFT problem


“Mandating that stocks trade in set time intervals would negate some of the problems posed by high-frequency trading, according to an analysis.”

Inside the vast liberal conspiracy


“Picture this: millionaires and billionaires gathering under tight security in fancy hotels with powerful politicians and operatives to plot how their network of secret-money groups can engineer a permanent realignment of American politics.  Only, it’s not the Koch brothers. It’s the liberal Democracy Alliance.”

Obama’s Deficient Student Loan Plan


“But thinking that more federal aid will make college affordable is like believing that a dog can catch its tail if it goes faster.”

How To Marry The Right Girl: A Mathematical Solution


“Johannes Kepler, one of the world’s great mathematicians, decided to marry in 1611. He made a list of 11 women to interview, and he wanted, of course, to choose the best…”, so he invented optimal stopping theory, which is an important result used in a number of different fields, including applied probability, statistics, and decision theory.

Here are the states that small business owners love and hate


“Key factors evaluated include ease of hiring. ease of starting a business, regulations, licensing, tax code, and zoning.”

The High Cost of Cheap Health Insurance


“The Obama administration wants everyone to know how cheap insurance is under Obamacare.  But they don’t really want people to think about how expensive it is to keep it that way.”

The High Price of Obama Fatigue


“In The Wall Street Journal, Wonder Land columnist Dan Henninger writes that the IRS scandal isn’t Watergate. It’s worse than Watergate.”

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New MRU Course: Trade and Prosperity

I just received this email from Professor Don Boudreaux, who chairs the Department of Economics at George Mason University. It is a (free) course announcement – the title of the course is “Everyday Economics”. I highly recommend this course and plan to “sit” through it myself!

From: Don Boudreaux
Sent: Wednesday, June 25, 2014 4:04 PM
Subject: My New MRU Course: Trade and Prosperity

Dear Friends,

I’m excited to announce a new video series at Marginal Revolution University on Trade and Prosperity.

These videos are part of a new course, Everyday Economics, where instructors take a look at everyday scenarios to illustrate the role economics plays in our day-to-day lives.

In these videos on trade and prosperity, we’ll answer questions such as:

One of the key features of this course is that the viewer decides what we should cover next. Do you have questions about trade? Anything specific you’ve wondered about? Submit your ideas and vote on topics submitted by other viewers.

Also, keep an eye out for future Everyday Economics sections. Up next is Tyler Cowen’s section on the economics of food, to be released later this year.

See you in class,

Don Boudreaux

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A blog exploring the intersection of finance, economics, risk, public policy, & life in general