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The Minimum Wage: Are Economic Laws Valid in Australia?

November 21, 2013 in Economics

By Mises Updates

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 Guest Post: The Minimum Wage and Unemployment in Australia

 by Ben O’Neill

Are things really topsy-turvy down-under?  Since people in Australia are already walking upside down on the bottom of the Earth, do the laws of economics operate upside-down also?  Does the minimum wage in Australia lead to more employment, instead of less?

In light of recent debate over minimum wages, referring to the situation in Australia, one might be tempted to believe that the answer is yes.  Some commentators have argued, contrary to prevailing economic theory, that the minimum wage can actually increase employment, owing to additional “money in the pockets” of workers flowing on to greater spending in the economy, which in turn causes greater demand for goods and services, and more employment for workers.[1]  Some have attempted to bolster this argument by pointing to the high minimum wage and low unemployment rate in Australia as evidence that the policy either does not cause unemployment, or possibly even increases employment.[2]  If only other countries could be more like Australia, where the beer is cold, the women run around in bikinis, and the minimum wage and employment levels are both high!

Australia and the USA: a simple comparison

A simple comparison of the reported minimum wage rates and unemployment rates in Australia and the USA show that, prima facie, Australia has a higher minimum wage and lower unemployment.[3]  Even after conversion of the minimum wage into equivalent currencies, or equivalent purchasing power, the higher minimum wage in Australia still holds.[4]  This simple comparison tells the story of an Australian economy with greater employment and higher minimum wages than in the US.

However, as with many superficial comparisons of this kind, there is a lot more to the story that must be understood.  First of all, the rosy picture of employment in Australia ignores a great many statistical issues which take certain kinds of unemployment and underemployment out of the official figure.  Second, the minimum wage in Australia is exaggerated somewhat by the above figure, since its application to low-skilled groups is tempered substantially, using a sliding scale of rates that reduces the hallmark figure for the main groups affected by the policy.  Finally, there is the simple fact that basic comparisons of this kind do not get to the root of the causal effects of a policy like minimum wages — economic comparisons must …read more

Source: MISES INSTITUTE

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Judge Napolitano on Obamacare, the Courts, and Economics

November 21, 2013 in Economics

By Mises Updates

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Writing today at LRC, Mises Institute Distinguished Scholar Judge Napolitano notes:

The law was found constitutional by the Supreme Court only after the chief justice — who acknowledged in his opinion in the case that Congress lacks the authority to compel people to engage in interstate commerce by forcing them to purchase a good they don’t want — changed his mind on the ultimate outcome of the challenge. In order to save the law from imminent constitutional extinction, he created a novel legal theory, and he persuaded the four progressives on the court to join him.

They ruled that the punishment for the failure to obtain the level of health care coverage that the law requires is actually a tax. Then the court ruled that because Congress can constitutionally tax any event, it can tax nonevents (like the failure to purchase health insurance), and so the entire scheme is constitutional because it is really just a tax law.

The Supreme Court, lawyers sometimes say, is infallible because it is final; it is not final because it is infallible. I am a student of the court, and I revere it. It can change the laws of the land, but it can’t change the laws of economics. And so, when Obamacare ordered all insurance carriers in the land to cease offering health care plans that provide insurance coverage below the federally mandated minimum, they naturally began to cancel those plans. And when the new health care exchanges that Obamacare established failed to find coverage for those formerly insured by the substandard plans, those who had these plans and liked them suddenly were told that on Jan. 1, 2014, when Obamacare becomes effective, they will have no health insurance. The old insurance coverage will be illegal, and there is no new coverage for them.

One of the reasons many Americans had their policies canceled this month is the failure of those policies to conform to the new federal minimum requirements. At the heart and soul of Obamacare is the power of bureaucrats to tell everyone what coverage to have. At the core of Obamacare is the removal of individual choice from the decision to purchase health care coverage. The goal of Obamacare is high-end coverage for everyone — brought about by Soviet-style central planning, not in response to free market forces.

From the perspective of the central planners who concocted Obamacare, minimum insurance coverage is the sine qua …read more

Source: MISES INSTITUTE

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Sen. Paul Appears on CNN to Discuss Nuclear Option- November 21, 2013

November 21, 2013 in Politics & Elections

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Source: RAND PAUL

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Harry Reid’s Nuclear Hypocrisy

November 21, 2013 in Economics

By Roger Pilon

Roger Pilon

Harry Reid is set to “go nuclear.” He wants to end the filibuster as it applies to appellate court nominations — not by a two-thirds vote of the Senate, as Senate rules require, but by a simple majority. And given the short memories now in evidence, he may just succeed.

On Monday, for the third time in less than a month, Senate Republicans filibustered an Obama nominee to the Court of Appeals for the D.C. Circuit. That’s the court that’s checked the president more than once, as when it said he couldn’t make “recess appointments” when the Senate wasn’t in recess. So in a Tuesday closed-door lunch, Reid moved closer to ending the practice, and it’s reported he picked up crucial support from California Democratic senators Dianne Feinstein and Barbara Boxer along with Judiciary Committee chairman Patrick Leahy among others.

Harry Reid wants to end the filibuster as it applies to appellate court nominations.”

The hypocrisy here should not go unnoticed. Although the filibuster for legislation has a long history, prior to 2003 it was seldom used to block executive-branch nominations — and appellate-court nominees in particular. In fact, Democrats themselves began using it this way in the 108th Congress, after they lost the Senatein the 2002 midterm elections. Here’s the backstory.

Start with Bush v. Gore, the Supreme Court’s December 2000 decision that effectively decided the presidential outcome, creating a firestorm among Democrats, especially among the legal professoriate. On January 13, 2001, for example, 554 professors from 120 law schools took out a full-page ad in the New York Times condemning the Court’s majority for having acted not as judges but as “political proponents for candidate Bush.” And at a Democratic retreat a month later Yale’s Bruce Ackerman urged members not to confirm a single Bush nominee for the Supreme Court until after the 2004 elections.

Democrats got their break in May when Vermont senator James Jeffords left the Republican party. That switched control of the Senate to the Democrats, who immediately turned their attention to the eleven appellate court nominees then before the Senate Judiciary Committee, two of them Democrats — a gesture from Bush. Those two were immediately confirmed. The rest would not even get hearings. Instead, Democrats began calling for “litmus tests” — explicit demands that nominees state their views on everything from abortion to affirmative action to Congress’s unquestioned power to regulate anything and everything.

But …read more

Source: OP-EDS

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Bush-Obama-Fed Great Stagnation: Worse than ObamaCare

November 21, 2013 in Economics

By John P. Cochran

Daniel Henninger in “Worse Than ObamaCare” shows the impact of regime uncertainty without mentioning it as he explains why “Obama’s biggest failure is that he hobbled the U.S. economy.” Robert Higgs and others have made this argument since shortly after the “stimulus” passed.

…read more

Source: MISES INSTITUTE

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Introducing News & Then

November 21, 2013 in History

November 21, 2013 9:44 a.m.

It seems like every week there’s a new article about the negative effects of Internet culture on American society. We’re cautioned that the Internet is making us more isolated, more divided, and less empathetic; or that Twitter and Facebook are eroding our already limited collective attention span and capacity for sustained, nuanced discussion. Some have even questioned whether the Internet may ultimately spell the end of “deep reading.”

Our latest American Experience project, News & Then, takes a more optimistic view: that digital media can be a powerful tool for connection and engagement, and can deepen our understanding of the world we live in and the historic struggles that have shaped it.

As someone who trained as a historian, I’m a big fan of encouraging close reading and rich, complex conversations. There’s no question that in some ways, the rise of online social networks has reinforced what was already a sound bite-oriented media culture. I can understand the concerns many feel about the health of public discourse and community in a world where “breaking news” today is old hat tomorrow.

I often think, though, that dire warnings of the death of reading and empathy, thanks to the web, are simplistic and rather premature. On top of being a recovering academic (shoutout to my fellow grad school escapees), I’m also a big fan of online media — precisely because they make discussions and relationships possible that often couldn’t happen offline. Twitter allows you to strike up a conversation with almost anyone, and to find audiences not as easily reached through traditional media.

Some of the most thought-provoking, paradigm-shifting exchanges I’ve had in recent years have been conducted 140 characters at a time — like this spontaneous Twitter chat about global black identities, immigration, and the differences between being “Black” and being “African American.” The question is less whether social media or digital platforms are bad or good for an engaged public, but how to harness them to connect different communities and drive conversations that deepen and complicate our understandings of ourselves and the world we live in.

That’s why I’m so excited to be part of News & Then, a pilot project from WGBH that’s aimed at addressing this very question. News & Then is an interactive digital platform that brings video clips from American Experience, the very best of traditional media, together with social and new media …read more

Source: AMERICAN EXPERIENCE

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Sen. Paul Appears On the Record with Greta Van Susteren- November 20, 2013

November 21, 2013 in Politics & Elections

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Source: RAND PAUL

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Will Paul Ryan and GOP Budget Negotiators Snatch Defeat from Jaws of Victory?

November 21, 2013 in Economics

By Daniel J. Mitchell

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Daniel J. Mitchell

There’s a joke in Washington that Democrats are the evil party and Republicans are the stupid party. Except this joke isn’t very funny since a lot of bad policy occurs when gullible GOPers get lured into “bipartisan” deals that expand government.

Consider, for example, all the tax-hiking budget deals – such as the “read my lips” capitulation of the first President Bush — that enable more spending.

In an ideal world, policy makers would focus first on desperately needed entitlement reform. But we don’t live in that world.”

To be fair, sometimes Republicans are placed in a no-win situation. During the “fiscal cliff” discussions last year, Obama held the upper hand since he would get a huge automatic tax hike if nothing happened. So the final agreement, which resulted in a smaller tax increase, was actually better (or, to be more accurate, less worse) than I was expecting.

But in other cases, Republicans should prevail because they have the stronger hand. That’s the situation we’re in today with the automatic spending cuts known as sequestration.

The sequester, which resulted from the 2011 debt-limit fight, was an unambiguous defeat for Obamaand a significant victory for advocates of smaller government. And it was a defeat for all the lobbyists, special interests, and crony capitalists that get rich when there’s more money in Washington.

Though I don’t want to exaggerate. The “cuts” merely reduce the projected growth of federal spending.

But after years of unconstrained spending by both Bush and Obama, any fiscal restraint is a welcome development. Indeed, the sequester helps to explain why we’ve seen two consecutive years of lower spending in Washington for the first time since the 1950s.

No wonder Obama is desperate to cancel sequestration, even to the point of making himself a laughingstock to cartoonists.

But maybe Obama will have the last laugh because some Republicans are negotiating with Democrats to undo some of the benefits of sequestration. Here are some excerpts from a Politico report.

“…an agreement may not be so elusive after all. Hopes are growing that Ryan and Murray could reach a narrow deal to replace a portion of the automatic spending cuts known as sequestration, according to lawmakers and senior aides involved in the discussions. …On Tuesday, several key lawmakers and aides said there was about a 50-50 chance, if not better, that a small deal could be reached …read more

Source: OP-EDS

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How U.S. and UK Domestic and Foreign Banking Proposals Threaten Global Growth

November 21, 2013 in Economics

Since the 2007–08 financial crisis, global regulators have engaged in a lengthy struggle to reshape the international financial system to make it more resilient under stress. In a new paper, Louise C. Bennetts and Arthur S. Long evaluate two recent proposals, the “Foreign Banking Organization” proposal of the U.S. Board of Governors of the Federal Reserve System and the United Kingdom’s “ring-fencing” plan. Bennetts and Long conclude that both proposals threaten to increase financial instability and dampen economic growth.

…read more

Source: CATO HEADLINES