Congressional leadership is corrupt

From Tyler Cowen.

"Using transaction-level data on US congressional stock trades, we find that lawmakers who later ascend to leadership positions perform similarly to matched peers beforehand but outperform them by 47 percentage points annually after ascension. Leaders’ superior performance arises through two mechanisms. The political influence channel is reflected in higher returns when their party controls the chamber, sales of stocks preceding regulatory actions, and purchase of stocks whose firms receiving more government contracts and favorable party support on bills. The corporate access channel is reflected in stock trades that predict subsequent corporate news and greater returns on donor-owned or home-state firms.

That is from a new NBER working paper by Shang-Jin Wei and Yifan Zhou.  Of course Alex T. has been on this issue for a long time now."

The Truth About Those ‘High Minimum Wage’ Countries

Headline wages in Finland and Australia exempt millions of workers, and the loopholes tell us a lot about labor market realities

By David Hebert of AIER.

"When debating raising minimum wages, proponents will often point to Australia and Finland as examples that contradict the warnings from (typically American) economists. On the surface, this seems like a fair point. After all, from our American perspective, things in Australia seem fine (other than the fact that even the trees are trying to kill you) and Finland has been romanticized as a triumph of progressive politics “done right.”  But before minimum wage proponents declare victory, we should read the fine print.

Looking beyond the simple story of “higher minimum wages” and into the underlying structures of these countries’ respective economies reveals a web of exemptions, alternative employment structures, and differing educational emphases. Mandated high minimum wages with built-in escape hatches and exemptions large enough to drive a truck through are not really “minimums.”

The Land of Oz

Australia loves to mention that they have one of the world’s highest minimum wages, at $24.95 per hour (the equivalent of about $16.16 in USD). This headline-grabbing figure only tells part of the story, however, as there are exemptions to this depending on an employee’s age, industry, and myriad other conditions.  Helpfully, the Australian government has put together a Pay and Conditions Tool to help figure this all out.  As a rough approximation, a person who is 17 years old can roughly count on a minimum wage equal to about 60 percent of the “adult” pay rate, giving them an effective minimum wage of $14.42 ($9.34 USD) and $17.04 on their 18th birthday ($11.04 USD).  

But what about workers with a disability?  The Department of Social Services will determine how much a disabled worker will be paid based on the nature of their disability. Under the Supported Wage System, “a special workplace arrangement can be made for employers to pay wages to a person with disability based on how productive they are in their job. Under [this system] an employee’s work capacity is assessed to find out their rate of pay… For example, someone with an assessed work capacity of 70 percent is entitled to 70 percent of the relevant pay rate in their award or registered agreement.” 

In other words, the Australian minimum wage that Americans have heard so much about only applies to people without disabilities who are at least 21 years old, and even then, only sometimes. But this still doesn’t scratch the surface of the employment situation in Australia. Most of the jobs where the minimum wage actually applies are in industries such as restaurant and retail, where the work is so highly standardized that there are no real, appreciable productivity gains year over year.  Are we really to believe that a 21-year-old waitress carries plates or restocks inventory 44 percent better than her 18-year-old counterpart? 

As a result of the age-based pay scale, Australian workers in these industries are laid off at a disproportionately higher rate as they approach their 21st birthday, though effects can be seen at every birthday up until the worker turns 21.

Employers defend this system with a simple story: young workers lack experience and are therefore less productive because they’re still learning. They need training, which costs money, and are consequently paid less to “pay for” the training they receive on the job.

It’s a nice story and one that comports with much of what Americans might experience, too. The truth is that many young workers in Australia have already completed pre-employment training, earning certificates and such, before they even start work. And in the sectors where the junior minimum wages are most common, the work is highly standardized, such that there isn’t much productivity gained between 18 and 21.

That said, there are legitimate programs where younger workers earn lower wages than their older counterparts.  Australia’s apprenticeship program is incredibly robust. A first-year electrician earns around 60 percent of the wages of a qualified tradesperson because they are genuinely learning and getting demonstrably better each year thanks to the supervision and training they receive from their more senior coworkers. Wages in these settings increase not because of age, but because competence grows, and by the time the worker has completed their training, they earn full rates and have a valuable qualification they can take with them elsewhere, not to mention an all-important line on their resume attesting to their productivity.

Finnish Wage Floors

Unlike America and Australia, Finland actually does not have a formal, statutory minimum wage.  Instead, they use collective bargaining agreements, which cover somewhere around 90 percent of workers. Like Australia, however, they also have exemptions for workers who are “training” or in “apprentice programs.” The difference is that in Finland, the training programs last for a specific amount of time irrespective of the employee’s birthday. They’re based on skill, not age.

Finland also boasts a remarkable vocational and education training program (VET) that “provides students with knowledge and skills necessary in further studies and promotes employment.”  According to their own figures, around half of the students who complete their basic education in Finland matriculate on to VET rather than “general upper secondary education.” In other words, at around the age of 16, roughly half of the students decide to go into vocational training rather than continue on to what Americans commonly refer to as “college.”

While Finnish students are enrolled in the VET, they can work for pay at the agreed-upon rates covered by the collective bargaining agreement through formal apprenticeship programs.  According to the European Centre for the Development of Vocational Training, about 26 percent of VET students are enrolled in such a program. The remaining 74 percent, however, are either in the classroom or are engaged in “training agreements,” some of which allow the student to be unpaid while being formally employed. Others are informal, handshake agreements “under the table” whereby the student is not an employee and thus receives no wages.

Thus, what Finland has is a high, collectively agreed-upon wage floor. But they do this by pushing most of the vocational training into the (unpaid) education system. The high wage floor exists, but workers don’t get to stand on it until they’ve completed their training, formal and sanctioned or otherwise.

Reforms in America

The next time someone tells you about Finland’s wonderful labor market or Australia’s high minimum wage (or any other country, for that matter), ask about the fine print. When you look at these issues more closely, the surface-level claims of minimum wage proponents simply do not hold water.

Still, as the US continues to wrestle with reforms to our education system, we can learn from these countries’ experiences. Finland in particular, with its curricular focus on career preparation instead of rote memorization of obscure knowledge (when was the last time any of you, dear readers, used your knowledge of trigonometry?), provides an important example where lessons for reform can be learned.  

We should carefully guard against the headline-grabbing claim that Australia and Finland have high minimum wages. We should especially reject the idea that this somehow proves that raising the minimum wage does not always lead to trade-offs."

Chicago Is the Latest Example of How Public School Spending Doesn't Prioritize Students

Misused pandemic funds, luxury travel, and declining achievement reveal a crisis of priorities—one only school choice can fix.

By Gregory Lyakhov of Reason.

"Public school districts have a responsibility to educate students, safeguard taxpayer money, and provide families with opportunities for success. However, Chicago Public Schools (CPS) has become a national example of how a school system collapses under mismanagement, political patronage, and an absence of accountability.

A report from the Chicago Board of Education's Office of Inspector General uncovered $23.6 million in misused spending—specifically, spending on lavish and often unapproved travel: $1,000-a-night hotel rooms, airport limos, luxury suites, and "professional development" trips that doubled as vacations. One teacher stretched a four-day seminar into a weeklong Hawaiian resort stay costing $4,700.

A principal booked a Las Vegas Strip suite for an anniversary celebration and extended the trip without authorization. In another incident, 24 employees from one school spent $50,000 to attend a Las Vegas conference. More than $142,000 was spent on overseas trips to South Africa, Finland, Estonia, and Egypt—complete with hot-air balloon rides and game-park safaris.

The abuses skyrocketed further when federal pandemic funds loosened district budgets. Of the $23.6 million, $14.5 million was spent in 2023 and 2024 alone. These dollars were intended to address severe learning loss after the Chicago Teachers Union forced schools to remain closed for 78 weeks during the pandemic. Instead of supporting students' academic recovery, millions became a travel fund.

That level of waste is why students like me need school choice. When a district spends public money this irresponsibly while failing to educate its students, families deserve the freedom to go elsewhere.

Meanwhile, only two in five CPS students read at grade level, and barely one in four meets math expectations. In some neighborhoods, proficiency falls into the single digits. Nearly 45 percent of students—and more than half of high schoolers—are chronically absent. These figures reflect a district that has walked away from its obligation to prepare young people for the workforce, higher education, and civic life.

Chronic absenteeism and low achievement correlate closely with higher rates of youth crime. Chicago's public-safety challenges cannot be separated from the fact that tens of thousands of teenagers are disconnected from school. No city with these levels of absenteeism and academic collapse can expect improvements in long-term safety.

This pattern of misused funds and misplaced priorities is not limited to Chicago. New York lawmakers continue to steer resources away from academics and toward politically acceptable initiatives. 

In New York's 2025 "People's Budget," Democrats—including Mayor-elect Zohran Mamdani, who was serving in the Assembly at the time—proposed an $8 million initiative to "increase teacher diversity" through new recruitment and training programs. Yet New York City's teaching workforce is already about 42 percent black, nearly double the city's black population share of roughly 22 percent.

The same budget allocates $250,000 for "racial and cultural inclusivity" initiatives, $3 million for an Adirondack exhibit on African American history, and over $350,000 for statewide conventions for "underrepresented" educators.

Meanwhile, NYC public schools serve 154,000 homeless students, and nearly half of the students statewide cannot meet basic reading benchmarks. New York spends more than $39,000 per pupil—the highest amount in the country—yet academic outcomes continue to fall.

If the problem were money, New York would be leading the nation. But this is a crisis of priorities.

Charter schools offer a proven alternative that disrupts the cycle of low achievement and disengagement. Unlike traditional public schools, charter schools provide students with 30 percent to 50 percent more instructional time. This extra time correlates directly with stronger academic performance and higher rates of student engagement.

A study found that entering a North Carolina charter school in ninth grade was associated with a roughly 30 percent reduction in a student's likelihood of committing a crime compared with students in traditional public schools. Research from Milwaukee's voucher program found that students in choice programs were significantly less likely to commit crimes as young adults.

School choice gives students in failing districts an exit ramp. Programs in Florida, Arizona, and North Carolina show that scholarship and charter systems can coexist with public schools and often improve them through competition.

Chicago's waste, New York's misplaced priorities, and the falling academic performance nationwide all point to the same conclusion: Families—not bureaucracies—should decide where and how children are educated."

Apartment rents drop further, with vacancies at record high

By Diana Olick of CNBC. 

• The national median rent for apartments fell 1% in November from October, and now stands at $1,367, according to Apartment List.
• The national multifamily vacancy rate was 7.2% in November, a record high.
• The historic surge in multifamily construction over the past few years is now pulling back, but a good supply of new units is still coming online at a time of much weaker demand.

 

The Billionaire Who Made California Unaffordable

For years, Tom Steyer has used his money to push awful policies on the state. Now, he wants to run it.

By Allysia Finley. Excerpts:

"He and his wealthy liberal friends are also in large part to blame. They’ve pushed destructive climate, tax and regulatory policies that have made the state uninhabitable for most businesses and for people who live paycheck to paycheck."

"In 2010 Mr. Steyer used his hedge-fund fortune . . . to bankroll opposition to a ballot measure (Prop. 23) that would have repealed the state’s climate law AB32, which established a cap-and-tax program and standards for low-carbon fuel and renewable electricity. Prop. 23 failed in no small part thanks to Mr. Steyer’s moneybags."

"Mr. Steyer now laments in his launch video that “we have the second highest electricity rates in the country.”"

"The state’s climate policies that he campaigned for drove energy prices into the stratosphere."

"California’s electricity rates are now about 80% higher than the national average, compared with 25% in 2010. Californians pay about $1.40 more for a gallon of gasoline than the national average, up from a $0.30 premium 15 years ago."

"the state has lost about 30,000 [manufacturing jobs] since 2010, while the U.S. has added roughly 1.2 million." 

 "In 2012 Mr. Steyer championed a ballot initiative that ensured that businesses that fled California could no longer hide from the Sacramento tax man. The referendum requires companies to pay the state’s 8.84% corporate tax based on their share of sales in the state. If 20% of a company’s sales come from California, it has to pay California tax on 20% of its profits."

"The state’s average weekly wages have increased 20.8% since January 2020, compared with 28.6% nationwide." 

Get the Government Out of the GLP-1 Market

Its involvement often leads to distortions and perverse incentives

Letter to The WSJ. 

"Dr. Gilberto de Lima Lopes Jr. is right that the market for medications is imperfect, but it is often government that is the culprit (“The Free Market Alone Won’t Cut GLP-1 Prices,” Letters, Nov. 21).

Oncology, his speciality, is the canonical example of government distortion. In Medicare, cancer medications are often reimbursed through the Part B program. Providers get a percentage of the sales price for administering each drug, so it’s hardly surprising that they tend to prefer expensive treatments. This incentive doesn’t exist in Medicare Advantage, where private plans are responsible for reimbursement and thus more likely to deliver cheaper alternatives.

Other, less-regulated disease areas show better market responses. While prices fall most dramatically with the entry of generics after patent expiration, competition among branded drugs can also push prices lower. We saw this occur for hepatitis C treatments. Meanwhile, we have never seen a market like the one that is developing for antiobesity medications. More than 124 drugs were in clinical trials last year. About 40 million Americans already have used an injectable GLP-1 for weight loss. A cheaper pill is expected soon.

The race for market share is leaving pharmacy benefit managers on the sidelines. Drug companies are discounting to customers purchasing directly, and they’ve made similar agreements with big retailers like Costco. The deal the Trump administration struck with Novo Nordisk and Eli Lilly to sell GLP-1s through a new direct-to-consumer platform, TrumpRx, will result in prices 74% lower than previous list prices.

Price transparency is crucial. Ironically, because insurers were reluctant to cover these high-demand drugs, patients demanded more transparency. This helped drive prices lower. USC Schaeffer research shows better access can provide social returns greater than the S&P 500’s performance this century.

These aren’t artificial or government-forced pricing decisions that harm innovation. On the contrary, suppliers are reacting to an unparalleled opportunity and consumers are profiting. That’s what happens in a competitive market.

Dana P. Goldman

University of Southern California" 

Boosting Demand Won’t Fix Affordability

Washington helps buyers. It should focus on producers.

By David Hebert. He is a senior research fellow with the American Institute for Economic Research. Excerpts:

"The law expanded insurance coverage to millions through subsidies and mandates, dramatically increasing demand for healthcare. However, the ACA did remarkably little to increase the supply."

"healthcare employment has grown at roughly 2% each year both before and after the ACA was passed."

"Freddie Mac estimated that in the fourth quarter of 2020 the U.S. was short 3.8 million housing units."

"The Brookings Institution used the same methodology and estimated the shortage in 2023 to be 4.9 million units."

"For healthcare, this means reforming licensing to increase the number of medical practitioners. It also means reducing the regulatory burdens that make opening clinics difficult."