Signals v Causes: Poverty

From the Introduction of the William Easterly’s book, The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor:
:

The technical problems of the poor (and the absence of technical solutions for those problems) are a symptom of poverty, not a cause of poverty. This book argues that the cause of poverty is the absence of political and economic rights, the absence of a free political and economic system that would find the technical solutions to the poor’s problems. The dictator whom the experts expect will accomplish the technical fixes to the technical problems is not the solution; he is the problem.

Think of technical problems as problems like not having medicine, food or the internet and technical solutions as providing medicine, food and the internet.

I’m looking forward to reading the rest of the book. I heard about it from this EconTalk episode with William Easterly and that discussion is worth a listen.

A nutrition group learns what I learned nearly 3 years ago

The Washington Post reported that the School Nutrition Association “has done an about face” on the First Lady’s school nutrition program because children throw away too much of the healthy stuff, wasting lots of money.

I learned this three years ago when McDonald’s offered a healthier Happy Meal.

Sebelius

When I saw the alert that Kathleen Sebelius is going to resign her post as Secretary of Health and Human Services, the classic Warren Buffett quote came to mind:

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

The business of attempting to solve problems caused by government intervention with more government intervention is a business with bad economics.

Minimum wage doesn’t have much effect on those making less than minimum wage

Some economists believe increases in the minimum wage will have ‘little or no effect on employment.’

That’s possible. People who aren’t productive enough to make minimum wage will still be able to find sub-minimum wage work and those people won’t show up in unemployment statistics since they are not looking for a job.

Some sub-minimum wage jobs are legal. If you are self-employed, you don’t have to make minimum wage. A buddy of mine once owned a used car lot. While he was a staunch advocate of a minimum wage, his sales people were ‘self-employed’, so he wouldn’t have to pay them the minimum wage if they didn’t sell cars.

Also, unpaid internships and grad students often make less than minimum wage.

Some sub-minimum wage jobs aren’t legal. Many drugs are illegal, but somehow they are readily available everywhere.

So, in other words, while economists use the argument that a minimum wage hike will have ‘little or no effect on employment,’ they don’t come right out and that’s because those who ignore it already will continue to do so, as drugs will continue to be sold.

Enhanced by Zemanta

Parasites, yep

From Charles Krauthammer’s column, Obamacare’s War on Jobs:

In the traditional opportunity society, government provides the tools — education, training and various incentives — to achieve the dignity of work and its promise of self-improvement and social mobility. In the new opportunity society, you are given the opportunity for idleness while living parasitically off everyone else.

Reagan had a similar radio address once. A vampire once demonstrated his wisdom by recognizing he was a parasite and it didn’t make much sense killing his host. And Lady Thatcher once pinpointed the problem with parasites that don’t realize they are parasites. They eventually kill the host and die (though she didn’t quite say it like that).

Unemployment ending?

Well, not quite. According to the news, 1.3 million will be losing unemployment checks as the extended unemployment benefits come to an end.

Note the extension was from 26 weeks (~6 months) to 99 weeks (~2 years) at one point and, if I’m reading the article correctly, 73 weeks (~1 year and 3 months). All of those periods seem long for something that is meant to be a temporary stop-gap.

One lady who will stop getting unemployment checks interviewed on one TV news spot that I watched said she was going to have to start spending more time looking for a job and less time on school. Isn’t looking for a job a condition of receiving unemployment? Don’t be to harsh, but unemployment isn’t meant to be a ‘take time off from work so you can go to school’ program.

Another news spot said that unemployment benefits help the economy because recipients spend the money. It didn’t say where that money came from. (Answer: A taxpayer, either now or in the future, who could have also used that money to ‘help the economy’).

Another lady who will stop receiving unemployment checks was asked what she thought about Congress going on break without extending ‘her’ benefits. She said something like (paraphrased from memory), My benefits shouldn’t be dependent on the whim of other people like that. Apparently, not realizing that her receiving the benefit was dependent on exactly that whim.

Of course, none of the folks who will not be receiving unemployment checks any longer took the time to thank their fellow taxpayers for helping them out. How rude.

More good stuff from Cochrane on health care

I recommend reading John Cochrane’s op-ed in today’s Wall Street Journal, What to do when Obamacare unravels. It’s a great follow-up to my health care reforms.

Here are a couple quotes from Cochrane’s piece that addresses some common concerns over non-government medicine.

What about the homeless guy who has a heart attack? Yes, there must be private and government-provided charity care for the very poor. What if people don’t get enough checkups? Send them vouchers. To solve these problems we do not need a federal takeover of health care and insurance for you, me, and every American.

And (emphasis mine)…

No other country has a free health market, you may object. The rest of the world is closer to single payer, and spends less.

Sure. We can have a single government-run airline too. We can ban FedEx and UPS, and have a single-payer post office. We can have government-run telephones and TV. Thirty years ago every other country had all of these, and worthies said that markets couldn’t work for travel, package delivery, the “natural monopoly” of telephones and TV. Until we tried it. That the rest of the world spends less just shows how dysfunctional our current system is, not how a free market would work.