Monthly Archives: December 2013

Iraqi Police Hero

Here is a touching story you might have missed in the mainstream media.  Iraqi policeman Ayyub Khalaf shielded bystanders by tackling a suicide bomber.  Khalaf, 34, leaves a widow and two young children.  God bless him.

GoodGuyHasM16The bomber’s target was Shia pilgrims making their way to Karbala for a religious observance.  To an outsider, this inter Islam violence is just incomprehensible, like Catholics killing Protestants – not that any kind of terrorism makes sense.

Such terrorist acts are particularly despicable and unjustifiable, all the more so since practising religious duties is revered in all various faiths. – UN Statement

Public reaction shows that ordinary Iraqis are sick of al-Qaeda fighting its war in their country.  They’re calling Khalaf a martyr.  Attention jihadis – a real martyr is someone who dies protecting the helpless.  The other lot are just murderers.


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No Minimum Wage for Robots

The Economist is here, calling for a rise in America’s national minimum wage.  This is pretty heroic for a newspaper aimed at economists.  The fact that minimum wage laws create unemployment is well established in theory and practice.  They also drive inflation, and not in that friendly Keynesian way.

The Economist’s argument is, since labor markets are not perfectly elastic, employers may be holding wages below their equilibrium.  They simultaneously argue that, where labor markets are flexible, a minimum wage might not hurt employment too badly.  All of the research is from Europe.


Unions are the obvious free market solution.  If wages are indeed suppressed, then unions will be able to organize the workers.  If not, then we must admit this is the equilibrium wage – and turn policy attention toward our failed educational system.


Another point to consider is that labor competes with capital, and there is no minimum wage for capital.  Ordinarily, companies confront a nonzero hurdle rate for investment.  Ironically, as the Fed pursues ZIRP and QE in hopes of stimulating employment, they also make it cheaper for firms to replace workers with automation.


Jeremiah has written sympathetically about humans working for the minimum wage.  If we really want to help these people, we must make the fiscal adjustments to provide them with direct cash assistance – not foist an unfunded mandate onto employers.  Such measures should be undertaken by the states, according to the situation in each state, not a distant and unaccountable central government.

See also:  On Public Spending

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The Redneck Channel

RobertsonMost of the editorials we read were admirably evenhanded about Phil Robertson’s remarks in GQ.  His detractors acknowledge Mr. Robertson’s right to express an opinion, and supporters acknowledge the network’s right to cut his TV show.  An example is Charles Blow’s piece in the New York Times.

The Times editorial uses facts to rebut Robertson’s ideas about racial discrimination.  It is an excellent example of why freedom of speech is so important.  Robertson also made insensitive remarks about gays.  Regular readers know Jeremiah’s position on both issues – and the salutary effect of dialogue.

I disapprove of what you say, but I will defend to the death your right to say it.

Rather than writing, “Phil Robertson is a racist maniac that must be stopped,” Mr. Blow gently corrects the misconceptions.  This is an editorial that might actually change someone’s opinion.

We also read plenty of culture war stuff, about boycotting this or that, web content being taken down, and censorship on Facebook.  Many people prefer to stifle views they don’t like, and punish those who express them.

Is it better for a Phil Robertson to freely spew his views so that we can freely address the real feelings of hatred and fear that afflict some fraction of our population?

Taking offense is one thing.  Intimidation is another.  There is evidence that organs of the central state – like Facebook, Google, and the IRS – engage in censorship and intimidation.  A repressive government is not interested in dialogue.

The quote above is from the Times comments section.  No, not Voltaire – the other one.  It is vitally important to have people express these views, so that we can challenge them.  The impulse to stifle has no place in a free society.

See also:  End the IRS

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Filed under Civil Rights, Media

It’s Kevyn Or Nothing

Kevyn OrrCNN has a misleading editorial on the Detroit bankruptcy.  Jeremiah’s bullshit alarm went off when Kevyn Orr, pictured here, was described as “unelected.”  That’s a cheap shot.  Bankruptcy managers are, of necessity, appointed.  So are federal judges.

The author, Ross Eisenberry, suggests that bankruptcy is Mr. Orr’s scheme to cheat Detroit’s pensioners and put Wall Street bankers at the head of the payments queue.  He forgets that Chapter 9 is called “protection” for a reason.

Bankruptcy allows the city to restructure its obligations in an orderly manner, rather than face lawsuits from multiple creditors.  As Natalie Cohen puts it, bankruptcy gives the city breathing room.

It was only a matter of time before one creditor filed a suit that would force the city to protect itself.

If you want a grownup analysis of who gets what in bankruptcy, read Ms. Cohen.  It’s a little more complicated than “screw pensioners, pay bankers.”  The city needs protection from all of its creditors, and all of them are going to take losses – even the bankers.

It is heartbreaking to see Detroit’s retirees deprived of their pensions.  They were robbed, and the authorities should track down the culprits.  Indeed, the FBI has already indicted a few of them.  That’s better justice than the easy answers proposed by Mr. Eisenberry.

Hundreds of millions of dollars of plan assets were [diverted] to the annuity savings accounts of active employees outside of the defined-benefit pension plan.

The thieves turn out to be city trustees who robbed the pension fund.  Note that many were elected officials, unlike the “unelected” Kevyn Orr.  They’re the ones who brought in the Wall Street sharks, took bribes, and went on junkets to Hawaii.

Still, stiffing the bankers sounds like a good idea.  Why not do that, and make the pensioners whole?  The practical answer is that Detroit will need continued borrowing to stay afloat, and that gets harder with each default.  Rates for municipal bonds are already on the rise.

The moral answer is that there are pensioners on the other side, too – not some Wall Street bogeyman.  Municipal bonds are “widow and orphan” investments, because they’re tax exempt and (were) considered safe.  It’s a tough situation with no easy answers, and Kevyn Orr deserves a lot of credit.

The Eisenberry editorial is misleading and inflammatory.  He has even got racial and class war stuff in there.  We were so dismayed that we looked into this Economic Policy Institute that employs him.  Turns out, it’s an advocacy group for the unions.  See here.

The unions have a right to their opinion, and we would expect them to be advocating this line.  Dressing it up as an “editorial,” though, is dishonest.  At least one union, the AFL-CIO, is a party to the bankruptcy.  Eisenberry isn’t even a real economist.  He’s a lawyer.

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Filed under Economy

Bad Idea Roundup

If you followed along with the Booth economics quiz, you may have noticed they didn’t ask about the minimum wage.  That would have been a good fit with the theme – too good, in fact.

Economists know that minimum wage laws are bad for the economy, and create unemployment.  This is contrary to every decent, charitable impulse you might have, and economists would rather not talk about it.

minimum_wageTo a lefty economist like Paul Krugman, minimum wage proposals are kryptonite.  Keynes, his hero, was all about increasing employment through real wage cuts.  The diagram is from Zero Hedge.  The list of bad ideas is from Germany’s Social Democratic party.

  • National minimum wage
  • Lower retirement age
  • More welfare spending
  • Less infrastructure spending
  • Rent controls

The new agenda is opposed by German economists, employers, and even the Bundesbank.  It’s funny to see this happening in Germany.  Why?  Schadenfreude.  Now, if we could only send a copy to China.

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Opposing the President

Veteran actor and producer Robert Redford says in this interview that opposition to President Obama is due, in part, to racism.  Redford’s position is more nuanced than the soundbite suggests, unlike other celebrities who have compared America to apartheid South Africa.

I think what sits underneath it, unfortunately, is there’s probably some racism involved

Ben CarsonPictured here are some prominent people who oppose the president.  What do you see?  That’s right, none of them is from Hollywood.  We see a doctor, a CEO, and an economist.   Do Ben Carson, Herman Cain, and Thomas Sowell oppose the president because he’s black?  Probably not.

Let’s take a moment to define “opposing the president.”  Generally, this means opposing his policies.  Dr. Carson, for instance, is a staunch opponent of socialized medicine.  Republicans in Congress are expected to oppose the president’s policies with policies of their own.  That’s why they’re called “the opposition.”  It’s a contest of ideas.

SowellIn polls, “opposing the president” might mean giving him low approval ratings.  Pollsters struggle to distinguish policy from execution, which are different aspects of the president’s job.  The latter, by the way, is why it’s called the Executive Branch.  Policy is not the president’s main job.

So, why do Hollywood people persist in believing that opposition stems from racism?  Following Saint Francis, we must seek a reason more sympathetic than “they’re stupid.”  Imagine that you are a millionaire movie star living in California.  Ahhh.  Okay, snap out of it.

HermanCainIf you’re a Hollywood person, everyone you know strongly supports the president – on his left.  You don’t know a single Republican, and you can’t imagine what motivates them.  Hmmm.  It must be racism.

Rasmussen did a poll on this very issue.  They asked people if they thought that other people were racists.  LOL.  The sad truth is, there are some people who oppose the president only because of his race, while others blindly support him for the same reason.  Both groups are stupid.

See also:  Our First Black President

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Truth in Advertising

uofcThe Booth school has a fun roundup of policy issues, and how economists differ from the general public.  The nerds agree with Jeremiah on issues like school vouchers, stimulus spending, fuel tax, and the mortgage deduction.

Fiscal sustainability can be achieved without cutting Medicare and Medicaid, and without increasing taxes on households earning less than $250K. 

The one we want to call to your attention is, true or false – fiscal sustainability can be achieved without cutting Medicare and Medicaid, and without increasing taxes on households earning less than $250K.  This was exactly the budget compromise agreed between President Obama and the Congress last year – raise taxes on the rich, and keep the status quo.

Of 41 senior faculty economists, how many believe that’ll work?  Zero.  This is important because we have an election coming up next year, and another one in 2016.  If the candidate in your state says he can balance the books by raising taxes on someone else – he’s a liar.  The French had that election last year, and they chose the liar.  Don’t let’s make the same mistake.

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