The Caveman Minimum Wage Argument

Here’s an original approach to debunking wage minima.

Imagine that in 10,000 BCE, when humanity was just beginning to learn how to farm crops, that the minimum wage was $15 an hour in today’s value numbers.

Would there be a human race today?

The surprising answer is yes, because whatever government that may have existed back then would not have had the resources to enforce a minimum wage.

How much resources does it consume to enforce a minimum wage? How much money is minimum wage enforcement erasing from the incomes of the earners of minimum wage, e.g. those with skills JUST high enough to make it over the employment high-jump?

“Minimum Wage, so stupid, even a caveman wouldn’t do it.”

How Obama Just Exacerbated Income Inequality With His Overtime Meshuga’as

In a fit of absolute genius the likes you wouldn’t see from a highly evolved muskrat, Obama today is forcing buyers of labor to pay more for that labor at any rate over 40 hours per week. He thinks this will mean that more workers will make more money. As in the total number of dollars spent on labor will rise because of this law.

What he doesn’t understand is that less workers will be making more money and the remainder will lose, because laws cannot magically increase the amount of money people are willing to spend on labor. Less people will make more money in order to equal out the total dollar amount spent. The others will either be cut to part time or fired.

What happens is we go from a situation of relative equality, where say:

100 people make $100 overtime, for a total overtime dollar amount of $10,000

To a situation of less equality where:

90 people make $111.11 overtime for a total dollar amount, again, of $10,000, and the other 10 people have zero.

Therefore, overtime legislation creates income inequality. 

Obama doesn’t think. Therefore he isn’t.

Senate Passes 9/11 Bill That Would Force Saudi Arabia to Dump $750B in Treasuries

Oh boy, another possible trigger to the collapse of the US bond market. Today, the Senate unanimously passed a bill that would expose the Saudi Arabian government to lawsuits by victims of the 9/11 attacks. Saudi Arabia has threatened to dump its $750B worth of US government bonds if this were to happen. That, well, sort of hints that the Saudi Arabian government is partly responsible for sponsoring 9/11, otherwise they wouldn’t care.

President Obama, whose first responsibility is protecting his own ability to borrow ad infinitum in the bond markets to fund his socialist paradise spending schemes, has threatened to veto the bill because he doesn’t want the Saudis to dump the bonds and send his borrowing costs through the roof with a $19 trillion debt hanging over his head.

So to hell with 9/11 victims and their families, he’s going to protect a muslim government responsible for more public beheadings than ISIS.

But here’s the interesting part. It looks like the Senate and House will successfully pass the bill over Obama’s veto. It was already passed unanimously, and nobody, no Republican or Democrat or whatever other silly label or letter they put after their names, wants to vote against this bill because everyone knows that it should pass. The politicians on Capitol Hill aren’t even aware that this could really crash the bond market. Here’s NYT:

Senator Chuck Schumer of New York, a Democrat and bill sponsor, said the legislation would help the families of the victims seek justice. “For the sake of the families, I want to make clear beyond the shadow of a doubt that every entity, including foreign states, will be held accountable if they are found to be sponsors of the heinous act of 9/11,” he said shortly before the bill passed.

“If the Saudis did not participate in this terrorism, they have nothing to fear about going to court,” the senator said. “If they did, they should be held accountable.”

Mr. Schumer also said he believed Democrats would override a veto from Mr. Obama.

He said he believed Saudi Arabia’s threat to pull its assets, a concern of the administration, was “hollow,” adding, “It will hurt them a lot more than it hurts us.”

Where Schumer is wrong is that it’s not a hollow threat. It’s not like the Saudis would have a choice. Once they become open to lawsuits, their treasuries become collateral and can easily be confiscated by US courts no problem. The Saudis would be forced to sell everything before that could happen. It’s not a threat, but a necessity.

Hey, if the tax spender in Congress want to really jack interest rates higher and bankrupt themselves, go for it. They need two thirds to override Obama’s veto, which will come. They already have unanimity, so two thirds doesn’t seem all that difficult. It’s not exactly an uphill battle.

 

Keynesianism Is A Mystical Religion That Believes Paying Taxes To Government Makes You Richer Because The Government Is Wise

I came across this post today at Mises.org by William Anderson, reposted at EPJ, about Tax Day. It’s important to read in its entirety, then I’ll explain how it relates to mystic religion.

—–

April 15 is here and we are required to do the following: tell the government our income and send much of it to Washington.

Austrian-school economists are likely to tell you this is a bad thing and that taxes and government spending lower our living standards. In other words, the more government we are required to finance, the poorer we will be. According to the Austrians, economies grow through capital investments reflecting time preferences of individuals. Furthermore, Austrians actually claim that individual savings lead to economic growth. The more we pay in taxes, the less money we have for capital investment and saving. In other words, the more taxes we pay, the less we have for the building blocks of economic growth.

However, disciples of John Maynard Keynes, like Paul Krugman and others, take a rather different view. For them, wealth is achieved by spending, which creates economic growth. When consumers don’t spend enough, government rescues the economy by upping its spending. Because of this, should government raise taxes, it actually stimulates the economy more than individuals can do through their own spending. We could allow people to spend their money as they see fit. But, it’s better to be on the safe side and tax as much of it as possible, instead.

The Keynesian “Balanced Budget Multiplier” makes it all possible. It is a version of 2 + 2 = 5. The tax-fueled magic is explained as follows:

  • All spending has a “multiplier” effect. Spending increases the incomes of others, who then spend their increased income, and the pattern continues indefinitely.
  • Individual savings, according to Keynesians, are “leakages” from the system, and if not offset by equal “injections” via government spending or increased exports, the “multiplier” then works in reverse, pulling the economy into recession.
  • Government tax increases, however, have two-fold positive net effects. First, government spends new tax revenues, which quickly multiplies and creates new jobs. Second, by reducing individual incomes, people must spend larger percentages of their incomes to uphold their present standard of living. (The famed Keynesian “multiplier” equals 1 over the savings rate, so the less we save, the greater the multiplier.)

The “logic” of the balanced-budget multiplier differs from the logic of taxation and spending in Denmark. There, individuals pay most of their income in taxes, but supposedly receive marvelous government services that are more valuable to them than what they would have purchased on their own had high tax rates not existed.

Instead, the “Balanced-Budget” multiplier creates wealth by destroying savings. Austrians obviously disagree, and the “reality gap” between Austrians and Keynesians is widened. Austrians emphasize savings, capital accumulation, market prices and market interest rates, profits, losses, with entrepreneurs making decisions in an uncertain climate under the umbrella of economic calculation.

Keynesians promise an easy way out. Just give money to the government, which will spend and spend, and the spending multiplies prosperity. Interestingly, modern intellectuals will tell you that Keynesianism is “real world,” while Austrian economics is “pie in the sky.”

On April 15, Keynesians will contribute to growing prosperity by sending more money to Washington. However, Austrians likely will have a different take.

——

So, we are supposed to believe, according to Keynesian economics, that being robbed means we are becoming wealthier. That government spending is somehow magical because when politicians spend the same money on their own stuff, such as killing people or giving billions to Israeli or Arab despots, it somehow creates prosperity, whereas when you spend that money on what you actually want, it makes you poorer.

So I’m in the middle now of Volume I of Murray Rothbard’s An Austrian Perspective on the History of Economic Thought. It’s such a well written book and so fantastically organized, it’s a pleasure to read. Rothbard writes like the Rambam in terms of organization, though Rothbard is more verbose. It is impossible to be more succinct than Maimonides, unless you’re Rashi, but Rambam was clearer than Rashi most of the time. Maybe I’m the first one to make that comparison.

Anyway, Rothbard writes about the history of a town in Germany where a guy named Bockelson decided Jesus wanted everything collectivized and to each according to his need etc. Sound familiar? And that everyone was going to be forcibly converted to his brand of Christianity called something or other. Anabaptism maybe? I don’t care enough to double check.

He ended up getting sieged along with his followers while everyone was starving because the division of labor broke down, as it always does in forced communism. Rothbard writes the following about Bockelson, towards the end, after he had already declared himself king and everyone was starving to death.

It is not surprising that the deluded masses of Munster began to grumble at being forced to live in abject poverty while the king and his courtiers lived in extreme luxury on the proceeds of their confiscated belongings. And so Bockelson had to beam them some propaganda to explain the new system. The explanation was this: it was all right for Bockelson to live in pomp and luxury because he was already completely dead to the world and the flesh. Since he was dead to the world, in a deep sense his luxury didn’t count. In the style of every guru who has ever lived in luxury among his credulous followers, he explained that for him material objects had no value. How such ‘logic’ can ever fool anyone passes understanding.

And then I realized, the Keynesian nonsense ‘logic’ that giving your money to politicians and bureaucrats makes you richer, is the same exact thing. All western society has been indoctrinated into a religion that essentially preaches the government as King Bockelson. Bockelson can live in luxury while the his people starve because Bockelson is beyond the flesh.

And Washington can live in luxury while its subjects are forced to pay the taxes that Washington consumes, because giving Washington money makes the people richer, since Washington is beyond the flesh. Spending makes you richer. Savings makes you poorer. The more money politicians have, the better off everyone is. The richer Bockelson is, the better off his people are.

It’s the same religion. Keynesianism and insane early protestant Christian messianic communism.

Deep Praxeological Thoughts by Rafi Farber

I’m not exactly Jack Handey, but I’ll give this a try. It’s ironic, because I used to be a humor writer and now I’m taking a humor icon and turning it somber and serious. Life happens.

In hard sciences nobody has the audacity to try to change the laws of nature. They are what they are, and scientists attempt to use the laws of nature to navigate towards specific goals. The more they find out about the laws of nature, the more they can use them to construct outcomes. This is the long form description of “technology”.

It’s what physicists do, it’s what chemists do, it’s what (some) ecologists and psychologists do, but it’s not what most economists do. Notice that the more macro you get, the more politics interferes. There are almost no political physicists. Not to say there aren’t physicists who have political opinions, but almost none of them allow politics to infect their scientific thinking. There are no politics as to where a rocket will go when fueled with x at y trajectory. Same with chemistry, one level macro above physics. Biology you start having political biologists somewhat when it comes to the “gender pay gap” and whatever other nonsense explained by “biology”, but there’s not so much. Biology is macro-chemistry.

When you get to ecology/psychology, which are both macro-biology, you start getting political. Climatologists and other soothsayers are surveyed by the government about what laws should be passed for carbon footprints and whatnot. Psychologists often advocate government interference for a bunch of stuff. Those reading this who believe in global climate warming change should know that my carbon footprint is astronomically small for my economic position (which is not high, but I live quite beneath my means), so don’t give me any crap please. I’d bet it’s smaller than most climate global change warming activists.

By the time you get to economics, which is macro-psychology and macro-ecology, almost everything is political. Economists do not respect the immutable laws of economics. They attempt to change them. Supply and demand no longer apply when they can be changed by politics. Minimum wage doesn’t unemploy those whose labor is not worth minimum wage. Increasing the quantity of money does not decrease purchasing power. Supply and demand doesn’t apply all the time. Free markets don’t always work, like gravity always works. Etc. But supply and demand actually do, always, work, which means minimum wage causes unemployment, the end. But this is ignored by most “economists”.

The humbling thing about economics is that its laws cannot ever be changed. And people desperately want to change lives by force. It is the drive for power. Someone figures out the laws of motion and can create a rocket. By the time you get to economics, you are dealing with free will of human beings, which has a divine quality to it. If the laws of physics and biology are immutable, so are the laws of economics. Everything is one system.

And that is the difficulty of being a real economist. You cannot use your knowledge to tinker with the system, without betraying the knowledge you have learned. Once you try to tinker through politics, you start playing God with human lives without their consent. With biology you can tinker with human lives, but only with their consent. With economics, suddenly it’s OK to tinker with the entire human population with impunity? No. It is not.

This is why economics, real economics, is the most important subject in the world to learn, understand. The smartest people in the world think they can interfere with good results. They are all, 100%, absolutely wrong. Only the Austrian School understands this.

 

 

Israel State Supreme Court Kills Leviathan Gas Field

Here’s what I understand. There’s a giant gas field in the Mediterranean. Yitzchak Tshuva found it. The State claims to “own” the Mediterranean Sea because, why the bleep not? It may as well own Alpha Centauri. Leftists want the state to take an enormous chunk of the profits via incredibly high taxes and give it out to people who they want to buy votes from so they can keep stealing from people who actually do work, like Yitzchak Tshuva.

Netanyahu, who does understand a tiny little bit about economics (not much, but a tiny tiny bit) elected to override the enormous taxes so Tshuva can actually develop the field and improve the quality of life for people who use electricity. He gets the profits in return for lowering our cost of living a little bit.

But today, the Supreme Court (May Their Holy Name Be Blessed Forever And Ever Amen Gag) struck down the tax exemption, as I expected they would, because it is “Unconstitutional” even though Israel has no bleeping constitution, meaning no limits on government, not even theoretically.

I sincerely hope that Yitzchak Tshuva does this to the Leviathan field that he discovered…

…and deal these wonderful Godly Judges who I love because saying bad things about them is illegal and punishable under “incitement” laws, some Atlas Shrugged inspired justice.

Without hurting anyone. Just burn the gas. Amen. Love the judges.

What if Government Reported Bad Earnings and Investors Could Dump the Stock?

It’s earnings season on Wall Street. Companies report how much money they made and lost and every nook and cranny of the business, and then traders trade the stock and prices change. Sometimes dividends have to be cut or people laid off or pay raises frozen or capital equipment sold in order to stay liquid. And the stock price will always reflect the reality at any given moment.

If government reported earnings it would be negative every quarter. The combined earnings of a company over its history is its retained earnings. The United States Government has retained earnings of negative $19,000,000,000,000. Its equity would be below zero. Its stock would have no value.

But government cutting expenses? HA! All the whiners will whine. Sequestration! Sounds so violent! The whole economy will collapse! The bureaucrats will all be unemployed and we’ll all be doomed! Cutting government spending is immoral! The last time there were any serious cuts was after War War II. Since then there have been no cuts. Government is never cut until it collapses. Like a cancer that can’t stop growing, eventually it kills its host, thereby killing itself. The rest of the body stays in equilibrium with itself. Cells live, cells die, conditions change, body adapts, growth and shrinkage keeps it in balance.

Cancer keeps growing until everything dies. So does government. Cells don’t die. They keep multiplying.

The “economists” who say the economy depends on government spending? Whose money do they think the government is spending? Do they think that once the government spends money, that money becomes infinite? Are we in some jack and the beanstalk fairytale here? Is government money an everlasting gobstopper? Is it manna from heaven? Why are all resources finite but people have to think about whether government resources are finite?

The “economists” who say that consumption comes before production, how do you respond to such nonsense?

Shares in the US Government would have a market value of zero. The only thing that gives government, any government, any value at all is its ability to borrow, tax, and inflate. Once it cannot borrow or inflate, due to a debt default (which ends your ability to borrow) and hyperinflation (which ends your ability to inflate), it will only be able to tax. At that point, the people will not be confused by economic myths like the economy depends on government spending. They will know the spending comes from them, their work, because borrowing and inflation will be impossible. They they will understand that the economy depends not on government spending, but on their efficient use of their own money and resources.

People only believe economic myths when the costs of those myths are hidden through borrowing or inflation.