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Kamala Harris’s Misguided Plan to Close the Gender-Pay Gap

May 28, 2019 in Economics

By Ryan Bourne

Ryan Bourne

California senator Kamala Harris has unveiled a new plan to close the gender-pay gap.

Under Harris’s proposal, companies with 100 or more employees
would have to report pay differentials between men and women,
controlling for “differences in job titles, experience, and
performance.” If they could not show that men and women were paid
the same after factoring these controls in, they would be fined 1
percent of profits for every 1 percent gap in pay.

This “solution,” at one level, is curious. The statistic on
which widely reported claims of a “gender pay gap” are based – that
full-time female workers are paid only about 80
percent
of what full-time male workers make — doesn’t
account for job types, experience, or performance. In that sense,
Harris’s legislation recognizes that such metrics are meaningless
or, at least, too crude. But that means there’s also no reason to
think that beefing up “equal pay for equal work” legislation by
putting the presumption of compliance onto employers will close the
headline rate everyone discusses.

In short, Harris’s plan does not really target the “gender pay
gap” at all. It attempts to further stamp out gender pay
discrimination by “policing at the elbow.” That aim will have fewer
opponents. Yet the truth is, more factors than she accounts for
determine wages. Her legislation would create significant
compliance costs and avoidance strategies, lead to potential
surpluses and shortages of workers, and could even hurt women who
currently enjoy flexible working arrangements.

To see why, consider the Game of Thrones cast. Playing
each character really constitutes a different “job.” The company
producing the show could easily argue it has no pay gap at all
then, in a literal sense, even before collecting any information.
Yet suppose there were two extras running from Drogon in King’s
Landing in that penultimate episode – one male and one female -
with the same role, number of lines, screen time, and measurable
prior experience. There still might be good reasons why they could
command different pay rates.

The man, for example, may be of a certain height or look that is
in high supply among the pool of prospective extras. The woman
might perfectly reflect the needs of the show but have a lucrative
offer to appear in another show, requiring higher payment to
attract her. Quite simply, beyond “job titles, experience, and
performance,” supply and demand and other factors determine pay in
actual markets. Not accounting for them risks finding
discrimination where it doesn’t actually exist.

Indeed, it doesn’t make sense to think that work is of “equal
value” because you’ve controlled for observed performance factors.
It’s a …read more

Source: OP-EDS

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How Ambiguity on Brexit Is Hurting Britain’s Main Political Parties

May 28, 2019 in Economics

By Ryan Bourne

Ryan Bourne

A tumultuous few days in British politics ended over the weekend
with another political earthquake.

Nigel Farage’s new Brexit Party was declared victorious in the
country’s European Parliament elections, winning 31.6 percent of the vote and 29 of the 73 available
seats
. A concurrent revival of the overtly anti-Brexit Liberal
Democrats (20.3 percent) saw the two traditional parties —
Labour and the Conservatives — trailing in third and fifth
place, respectively.

Alongside Theresa May’s recent resignation as Conservative leader and prime
minister
, one might be tempted to conclude that an unexpected
political revolution is upon us. But the results were not novel.
They simply reflect Westminster’s main parties’ continuing
divisions from the 2016 referendum.

Leaving the European Union is now the central cleavage of U.K.
politics. Yet neither of the main parties has swung unequivocally
to represent either Leavers or Remainers. In making E.U. exit
conditional on a withdrawal deal passing Parliament (the
Conservative government) or not fully committing to a second
referendum to reverse Brexit (Labour), the old parties are getting
steamrollered by those with less ambiguous pro-Brexit or pro-Remain
positions.

Behind the headlines, the public is still split. Though it’s
dangerous to aggregate vote shares for multi-issue elections,
around 44 percent of voters backed parties wanting to deliver some
form of Brexit, while just over 40 percent supported parties
willing to abandon it (how Labour’s 14.1 percent vote share should
be considered is anybody’s guess, given the party’s unclear Brexit
position). The key insight from party results, though, is that
trying to straddle any sort of “middle-way” coalition is costly
electorally.

The Conservatives’ collapse was the most dramatic, plummeting to
a pathetic 9.1 percent vote share and losing 15 of the 19 E.U.
Parliament seats won in 2014.

The reason is obvious. The Tories’ polling numbers collapsed in early March when it
became clear they wouldn’t deliver Brexit on time, having failed to
obtain parliamentary approval for the E.U. withdrawal treaty that
the government had negotiated.

May concluded that leaving without a deal on the scheduled March
29 deadline would be so disastrous that delaying exit until October
was preferable. Her hope was to win over more members of Parliament
in the interim.

That decision backfired spectacularly. Ex-UKIP leader Farage
reentered politics bemoaning Conservative betrayal. With vocal
Brexiteers in her party seething, May pivoted to seek Labour votes
to get her unpopular treaty through Parliament. Her concessions to
win them over hemorrhaged 42 Conservative MPs, who publicly switched to
oppose her deal
. She eventually realized what most had known
for months: There was no route to her delivering Brexit.

These results will therefore embolden Conservatives who believe
the …read more

Source: OP-EDS

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Questionable Alliances: Why America Needs to Reexamine Its International Relationships

May 28, 2019 in Economics

By Doug Bandow

Doug Bandow

Modern circumstances continue to bear out the prescience of
America’s founders. Especially George Washington’s
warning against “entangling alliances.”

In contrast, U.S. policymakers today treat military allies like
Facebook friends, the more the merrier, something to brag about.
However, most of Washington’s existing alliances are harmful,
expensive commitments with little relevance to American security.
Indeed, a couple are strikingly dangerous, even risking conflict
with nuclear armed powers. A good place to start with an
“America First” foreign policy would be to turn allies
into friends, cooperating when in both nations’ interests but
no longer treating foreign governments as defense dependents.

Early America used its relative geographic isolation to avoid
“entangling alliances.” The colonies relied on
France’s aid to defeat Great Britain, but that reflected the
exigencies of war. Paris was not particularly interested in
empowering the new democratic republic once peace negotiations
began. And the value of the French connection to America as a
permanent alliance plummeted when Paris was taken over by brutal
revolutionaries; the relationship cratered when Napoleon Bonaparte
gained control and engaged in a “quasi-war” against
American shipping.

It was a century before Washington joined another alliance. And
in World War I, America technically fought as an
“associated” rather than allied power. Woodrow Wilson,
who with a touch of megalomania desired to reorder the globe,
imagined that quasi-independence would enable him to pose as the
representative of mankind.

Most of Washington’s
existing alliances are harmful, expensive commitments with little
relevance to American security.

The United States had nothing significant at stake in the
conflict between the competing imperial powers. Washington should
have left the participants to settle their imperial slugfest on
their own.

Under those circumstances, a divided, exhausted Europe might
have ended the war early, preserving the monarchies and avoiding
Nazism, fascism, and communism. Instead, America’s
intervention turned a possible compromise peace into a one-sided
allied victory, loosing multiple totalitarian furies.
Wilson’s fabled “14 Points” largely disappeared
as participants at the Versailles conference fought over
territorial plunder. The result unfortunately planted the seeds for
the next conflict. France’s Marshal Ferdinand Foch observed:
This is not a peace. It is an armistice for twenty years.

Arguments that the United States should have remained involved
in Europe—presumably with multiple military garrisons, like
after World War II—made no sense. With Germany disarmed, the
victorious Europeans possessed the means to enforce Versailles. But
they lacked the will, which America could not instill. While the
French and Belgians wanted their respective pounds of flesh, Great
Britain came to believe that conciliation offered a better response
than repression. Either a ruthless Carthaginian peace or genuine
accommodation might have worked, but not the inconsistent
compromise course chosen.

In fighting World War II, Washington sensibly …read more

Source: OP-EDS