Schools: Wage hike would affect thousands (New York state)

By Todd Clausen of the Rochester Democrat and Chronicle. Excerpts:

"School taxes would go up significantly and force many districts to present budgets exceeding the so-called property tax cap if state lawmakers approve a minimum wage increase to $15 an hour, according to leaders of various Monroe County school districts.

Such a measure — pushed heavily by Gov. Andrew Cuomo as part of the state budget negotiations — would increase the minimum wage through several incremental steps upstate by July 2021, and much more quickly downstate.

"What (Cuomo) doesn't understand is the domino effect of this type of decision," said Kimberle Ward, superintendent at Gates Chili Central School District. "Quite frankly, we can't go there. We would not be able to afford that and it would be a terrible burden on our taxpayers.""

"The measure has been widely criticized because of fears of job cuts and price increases in the private sector. It has drawn opposition from farmers, business groups, nonprofits and Republicans in the state Senate vowing to block the increase in the state Legislature.

School districts are concerned about how increased labor costs might force them to cut programs, jobs or both. School leaders started studying the issue after the $15 an hour wage was approved last year for fast food workers of large chain restaurants.

Ward said without a corresponding state aid increase to cover higher labor costs — which has not been publicly proposed in the Legislature — school districts would be forced to make tough program cuts while presenting budgets to voters above the state-imposed property tax cap.

Budgets with spending increases above the cap, which is 0.12 percent for schools this upcoming fiscal year, must receive at least a 60 percent approval rate from voters. Homeowners in school districts and municipalities under the tax cap are eligible for tax rebate checks, with about 2 million New Yorkers having received checks ranging from $200 to $800 in recent months."

""We get that the impact wouldn't come all at once, but you are still talking about incremental increases for all those different units in order to account for the possibility for that," said Sherry Johnson, executive director of the Monroe County School Boards Association. "I think schools are pretty lean already and I think this is going to be an added issue. You've got to let us make the right decisions on the local level, and basically our hands are tied right now.""

"Key Findings

• Monroe County school districts fear a tough road ahead if the minimum wage is increased to $15 an hour for all workers in New York state.

• Bringing everyone up to $15 an hour would affect roughly 6,050 school workers at a cost of nearly $24.8 million, according to the Monroe County School Boards Association and information supplied by Monroe No. 1 BOCES.

• Greece Central School District said it would cost roughly $3.8 million to bring 800 workers to $15 an hour. An additional 310 workers making slightly more than $15 now may also see a pay hike.

• Almost 290 people would be affected at the Pittsford Central School District, where the cost increase has been estimated at $582,000.

• Clerical, custodial and food service workers, teacher aides, bus drivers and others would receive a bump in pay, according to school districts."

Mandatory inspections do not reduce highway fatalities or injuries

See The Politician and the Mechanic are Still Conspiring to Rip Me Off by Alex Tabarrok Marginal Revolution.

"Mark Gibson writing in the Washington Post:

Virginia has a personal vehicle safety program overseen by the state police that cannot be shown to enhance public safety. The people who perform inspections are often the same people who fix any identified deficiencies. By contrast, neighboring Maryland requires only that a safety inspection take place upon transfer of ownership. That’s a reasonable consumer protection. The District does not require safety inspections.
A government program that requires the purchase of a good or service in return for a nonexistent public benefit is illiberal and anti-consumer. Two-thirds of states see no need to impose the burden of annual personal vehicle safety inspections on their citizens; Virginia should end its inspection requirement.

Tyler and I have been writing Marginal Revolution for 13 years now and one of the disadvantages is that you learn how little has changed. I first wrote about this absurd government program in 2003:

Virginia requires yearly “safety” inspections of automobiles. Yesterday, it was my turn – it cost me $15 bucks and an hour of my time. What a pain. Merrell, Poitras and Sutter estimate that nationally inspection programs cost in excess of a billion dollars a year (I think this is a serious underestimate – see below). What do we get for our time and effort? Not much. MPS find that mandatory inspections do not reduce highway fatalities or injuries. Not surprising really since there are already good incentives to maintain one’s car and accidents are most often caused by factors, primarily driver behaviour, that are not inspected. (By the way, yes there is an externality but if self-interest alone causes you to replace a broken headlight then on the margin the externality is irrelevant – economists often forget this point.)
MPS arrive at the billion plus figure by summing inspection fees and travel time. But the major cost of the inspection system, in my opinion, is unnecessary repairs. Mechanics have an incentive to indicate a car needs repairs and it is difficult to know when they are speaking the truth. This problem is bad enough when you have brought your car to the mechanic voluntarily – at least then you know the car has a problem. But the potential for opportunistic behaviour is worse when you are required to take your car in for inspection and if you don’t follow the mechanic’s advice you fail. The mechanics know they have you over a barrel and act accordingly.

About the only thing that has changed is that now I spell behavior differently."

Conspicuous consumption is not a product of market capitalism, but a mark of civilization

See The Long History of Retail Therapy, a review of the book Empire of Things by Frank Trentmann in the WSJ. The review is by Edward Rothstein. Excerpts:

"You think that frenzied acquisition is uniquely characteristic of modernity and Western capitalism? Think again: Mr. Trentmann begins the first chapter citing a 60-year-old chronicler in 1808 bemoaning how rapidly the world around him has changed. Wealthy men parade around displaying fancy pocket watches. Ordinary citizens follow frivolous fashions and keep animals as trendy pets. But this chronicler, Mr. Trentmann tells us, “was not writing from Paris or London but from Yangzhou” in China. In this case, the fancy pets were chickens from Canton and rats from “the West.”

What about, then, the issue of “conspicuous consumption” defined in 1899 by Thorstein Veblen? Isn’t it characteristic of modern consumerism? Not at all, Mr. Trentmann says. One Chinese observer in the 1570s complained about the “young dandies” who thought “silk gauze isn’t good enough and lust for Suzhou embroideries” seeking the “look of the moment.” In 15th-century Florence, the competitive display of luxury goods was so extravagant that the Dominican friar and preacher Girolamo Savonarola reacted with his notorious “bonfire of the vanities,” sending musical instruments, books and tapestries up in flames—thereby illustrating an alternative form of consumption. In Venice during the next century, the senate passed rules against luxurious display: One 1512 law said that no more than six forks and six spoons could be given as wedding presents and banned gilded mirrors; a 1562 law limited the desserts permitted at banquets. In fact, Mr. Trentmann notes, the imposition of sumptuary laws regulating consumption accompanied the growth of material possibility throughout Europe."

"Pre-imperial Africa, he points out, was hardly a “traditional” society untouched by materialism. During the 18th century, imports in West Africa rose 10-fold. Each African region developed particular tastes in fashion and cloth. The end of the slave trade in 1807 led to the expansion of African exports of native products like palm oil and gum. “Africans,” Mr. Trentmann writes, “did not need imperial masters to teach them how to become consumers.”"

"On one side are “progressive and social democratic critics who attack the juggernaut of shopping, advertising, branding and easy credit for turning active, virtuous citizens into passive, bored consumers.” On the other are “champions of consumption, first and foremost classical liberals who cherish freedom of choice as the bedrock of democracy and prosperity.”"

"The progressive worldview, he notes, has a long and mixed pedigree. Plato described how luxuries would lead to the moral and physical dissolution of a city. Avarice was “the root of all evil,” according to the Christian apostle Paul. Dante sent usurers to hell’s seventh circle, pushed down into burning sand by the stuffed moneybags they carry.

In the modern period, Mr. Trentmann finds similar ideas in the Romanticism of Rousseau, who believed “the desire for things turned free men into slaves.” A century later, he suggests, Marx and others went much further, arguing that capitalism and modern industry had changed the ways in which people relate to objects; things had become defined solely by their economic value. Other meanings and significance were cloaked by this “modern fetishism.” The result, according to this view, has been “disenchantment, inequality and conflict” and a raging consumer culture caused by the manipulation of material desire."

"Mr. Trentmann accepts little of this, certainly not the idea that objects were transformed into fetishistic economic artifacts during the late 19th and early 20th centuries, when they in fact became weighted with broader significance: Think only of the labors of collectors and the development of museums. And while Galbraith’s view, which “has informed critics of ‘consumerism’ pretty steadily to this day,” included some acute observations, Mr. Trentmann argues that much of his analysis was simply wrong. Americans were saving more, not less, during the postwar years: In 1957 the personal savings rate was a phenomenal 10%. Moreover, public spending rose with affluence and did not decline the way Galbraith’s model might have suggested."

"a good deal of thinking about consumption requires re-examination. Did consumer culture really encourage passivity and an abandonment of craft and skill? How to explain, then, that men spent roughly twice as much time on domestic chores and repairs in 1945 as 1900? A large amount of spending went toward home craftsmanship and new skills. But isn’t it true that an addiction to credit is a distinctive problem of our time? Only if you ignore that in England in 1700 every second head of a household left behind unpaid debts at death. In 1925, Liverpool had 1,380 registered moneylenders. What about religion? Isn’t growing secularism a direct result of expanding consumption? Not really, Mr. Trentmann says: Eastern and Central Europe today are “not only richer in things than under Communism,” but there are “more Christian believers.” Religion, he writes, “is saturated with things.”

Is capitalism necessarily amoral? Not at all: In Mr. Trentmann’s view it has been long accompanied by efforts “to moralize the economy”—to purchase selectively or set up a boycott to encourage a particular outcome. The most recent manifestation of this impulse is “ethnical consumerism,” like the fair-trade movement, its products “assuring consumers that distant producers in the developing world receive a fair deal for their sweat and toil.”"

What's so Great about Free Trade? Lots

By David Henderson of EconLog.

"In a post yesterday, my former UCLA graduate student colleague David Glasner asks "What's so Great about Free Trade?"

It's a long, well-written piece and I can't completely summarize it in a few sentences, but here goes. David argues that the usual way we show that free trade is good for a country (as opposed to the world, which he does not address) is by showing that the gains to domestic gainers, consumers, outweigh the losses to the domestic losers. David challenges the idea that this is a good way. He focuses on a subset of domestic losers, namely workers who lose their jobs. He argues that consumption is just not that important to most people compared to having a job. He hastens to add that he is not making a case for protectionism, but, rather, arguing that we economists have failed to confront the way non-economists typically think about trade. He says that there are some professional economists who are exceptions, that is, who do talk to the public in ways that show a connection with the concerns of the public, but he doesn't name any of them.

One slice of his argument:

What people do is a far more important determinant of their overall estimation of how well-off they are than what they consume. When you meet someone, you are likely, if you are at all interested in finding out about the person, to ask him or her about what he or she does, not about what he or she consumes. Most of the waking hours of an adult person are spent in work-related activities. If people are miserable in their jobs, their estimation of their well-being is likely to be low and if they are happy or fulfilled or challenged in their jobs, their estimation of their well-being is likely to be high. And maybe I'm clueless, but I find it hard to believe that what makes people happy or unhappy with their lives depends in a really significant way on how much they consume. It seems to me that what matters to most people is the nature of their relationships with their family and friends and the people they work with, and whether they get satisfaction from their jobs or from a sense that they are accomplishing or are on their way to accomplish some important life goals. Compared to the satisfaction derived from their close personal relationships and from a sense of personal accomplishment, levels of consumption don't seem to matter all that much. (italics in original)

What is one to say?

 A few things.

First, the argument that David Glasner makes applies to any change that causes people to lose jobs. Think of the introduction of the car. That spelled the end of many jobs for blacksmiths and buggy whip makers. Would David say "I find it hard to believe that what makes people happy or unhappy with their lives depends in a really significant way on whether they have access to a car?" I don't know, but I think, for his argument about free trade to make sense, he would have to say that.

Second, in the very next sentence after the two I quoted above, David contradicts himself. He writes:

Moreover, insofar as people depend on being employed in order to finance their routine consumption purchases, they know that being employed is a necessary condition for maintaining their current standard of living.

But if peoples' happiness doesn't depend much on how much they consume, why worry? 

They could just cut their consumption.

Third, the argument I make when I teach about free trade, which is in every class I'm currently teaching, is not that there are not losers and is not that the losers' loss from a particular introduction of free trade or a particular new low-cost import is small. The loss can be big. People could be employed for a number of years at wages as much as 20% lower than they were making. I point that out. But I also add that whereas they are losers from that particular trade, they are gainers from the price cuts on the thousands of other goods that they have more cheaply because of free trade. Over, say, 10 years, I point out, the number of net losers from free trade is a small percent, probably under 5 percent, of the number of gainers from free trade and the gainers also include tens of millions of other low-income Americans (ignoring the 100 million or so huge gainers in China.) I don't know if this would satisfy David Glasner because he would probably say, "So what if people can get clothing, shoes, paper clips, and gasoline more cheaply because of free trade? Our happiness doesn't depend much on those things." But it does seem to satisfy most of my students, who come into the class with many of the same ideas that David, in his post, attributes to non-economists."

President Obama Promotes Myth of Excellent Health Care and Education in Cuba

By Hans Bader of CEI.

"In his recent remarks in Cuba, President Obama offered glowing praise to institutions in that communist country that did not deserve it. The president called Cuba’s “system of education” an “extraordinary resource” that “values every boy and every girl.”

But there’s nothing “extraordinary” about Cuba’s educational system. Children are taught by poorly paid teachers in dilapidated schools. Cuba has made less educational progress than most Latin American countries over the last 60 years. According to UNESCO, Cuba had about the same literacy rate as Costa Rica and Chile in 1950 (close to 80 percent). And it has almost the same literacy rate as they do today (close to 100 percent).

Meanwhile, Latin American countries that were largely illiterate in 1950—such as Peru, Brazil, El Salvador, and the Dominican Republic—are largely literate today, closing much of the gap with Cuba. El Salvador had a less than 40 percent literacy rate in 1950, but has an 88 percent literacy rate today. Brazil and Peru had a less than 50 percent literacy rate in 1950, but today, Peru has a 94.5 percent literacy rate, and Brazil a 92.6 percent literacy rate. The Dominican Republic’s rate rose from a little over 40 percent to 91.8 percent. While Cuba made substantial progress in reducing illiteracy in Castro’s first years in power, its educational system has stagnated since, even as much of Latin America improved. Educational attainment is particularly lackluster among Afro-Cubans, judging from a recent New York Times story.

President Obama also promoted the myth of excellent Cuban health care, saying, ”The United States recognizes progress that Cuba has made as a nation, its enormous achievements in education and in health care.”

In reality, Cuba has made less progress in health care and life expectancy than most of Latin America in recent years, due to its decrepit health care system. “Hospitals in the island’s capital are literally falling apart.” Sometimes, patients ”have to bring everything with them, because the hospital provides nothing. Pillows, sheets, medicine: everything.”

Cuba lost the big edge in life expectancy it once enjoyed due to communism. It led virtually all countries in Latin America in life expectancy in 1959, before a communist regime took power in Cuba. But by 2012, Chileans and Costa Ricans lived slightly longer than Cubans. Back in 1960, Chileans had a life span seven years shorter than Cubans, and Costa Ricans lived more than two years less than Cubans on average. In 1960, Mexicans lived seven years shorter than Cubans; by 2012, the gap had shrunk to just two years.

As the progressive economist Brad DeLong admits (he calls it “hideously depressing”):

Cuba in 1957--was a developed country. Cuba in 1957 had lower infant mortality than France, Belgium, West Germany, Israel, Japan, Austria, Italy, Spain, and Portugal. Cuba in 1957 had doctors and nurses: as many doctors and nurses per capita as the Netherlands, and more than Britain or Finland. Cuba in 1957 had as many vehicles per capita as Uruguay, Italy, or Portugal. Cuba in 1957 had 45 TVs per 1000 people--fifth highest in the world. . . Today? Today the UN puts Cuba’s HDI [Human Development indicators] in the range of . . . . Mexico. (And Carmelo Mesa-Lago thinks the UN’s calculations are seriously flawed: that Cuba’s right HDI peers today are places like China, Tunisia, Iran, and South Africa.) Thus I don’t understand lefties who talk about the achievements of the Cuban Revolution: “...to have better health care, housing, education.”"

Do European Labor Laws Lead to Terrorism?

Minimum Wages Disemploy and Disaffect Young Immigrants

By Alex Tabarrok, writing at FEE.

"In Belgium, high unemployment and crime-ridden Muslim ghettos have fomented radicalism, but as Jeff Jacoby writes:

Muslims in the United States ... have had no problem acclimating to mainstream norms. In a detailed 2011 survey, the Pew Research Center found that Muslim Americans are “highly assimilated into American society and ... largely content with their lives.”
More than 80 percent of US Muslims expressed satisfaction with life in America, and 63 percent said they felt no conflict “between being a devout Muslim and living in a modern society.”
The rates at which they participate in various everyday American activities — from following local sports teams to watching entertainment TV — are similar to those of the American public generally. Half of all Muslim immigrants display the US flag at home, in the office, or on their car.

Jacoby, however, doesn’t explain why these differences exist. One reason is the greater flexibility of American labor markets compared to those in Europe.

Institutions that make it more difficult to hire and fire workers or adjust wages can increase unemployment and reduce employment, especially among immigrant youth. Firms will be less willing to hire if it is very costly to fire. As Tyler and I put it in Modern Principles, how many people will want to go on a date if every date requires a marriage?

The hiring hurdle is especially burdensome for immigrants given the additional real or perceived uncertainty from hiring immigrants. One of the few ways that immigrants can compete in these situations is by offering to work for lower wages. But if that route is blocked by minimum wages, or requirements that every worker receive significant non-wage benefits, unemployment and non-employment among immigrants will be high — generating disaffection, especially among the young.

Huber, for example, (see also Angrist and Kugler) finds:

Countries with more centralized wage bargaining, stricter product market regulation and countries with a higher union density, have worse labour market outcomes for their immigrants relative to natives even after controlling for compositional effects.

The problem of labor market rigidity is especially acute in Belgium, where the differences between native and immigrant unemployment, employment and wages are among the highest in the OECD. Language difficulties and skills are one reason, but labor market rigidity is another, as this OECD report makes clear:

Belgian labour market settings are generally unfavourable to the employment outcomes of low-skilled workers. Reduced employment rates stem from high labour costs, which deter demand for low-productivity workers…
Furthermore, labour market segmentation and rigidity weigh on the wages and progression prospects of outsiders. With immigrants over-represented among low-wage, vulnerable workers, labour market settings likely hurt the foreign-born disproportionately. ...
Minimum wages can create a barrier to employment of low-skilled immigrants, especially for youth. As a proportion of the median wage, the Belgian statutory minimum wage is on the high side in international comparison and sectoral agreements generally provide for even higher minima. This helps to prevent in-work poverty … but risks pricing low-skilled workers out of the labour market (Neumark and Wascher, 2006).
Groups with further real or perceived productivity handicaps, such as youth or immigrants, will be among the most affected.
In 2012, the overall unemployment rate in Belgium was 7.6% (15-64 age group), rising to 19.8% for those in the labour force aged under 25, and, among these, reaching 29.3% and 27.9% for immigrants and their native-born offspring, respectively.

Immigration can benefit both immigrants and natives but achieving those benefits requires the appropriate institutions especially open and flexible labor markets."

Why Green Energy Means No Energy

By Alex Epstein, writing in Fortune.

"Here are some basic facts about energy and human well-being.

• There are 7 billion people in the world who need cheap, plentiful, reliable energy to flourish.
• Some three billion have virtually no energy by our standards. Over a billion have no electricity whatsoever.
• In the history of energy technology, only three methods of energy have proven able to produce cheap, plentiful, reliable energy on any significant scale. These are hydrocarbon (fossil fuel), nuclear and hydroelectric power—with hydrocarbon being the most scalable and versatile (e.g., it provides virtually all our liquid transportation fuel).
• Two of those methods—nuclear and hydro—are not carbon-based and therefore are the obvious choices to champion to the extent you are concerned with reducing CO2 emissions.
• The biggest opponent by far of both of these technologies is the green movement—the movement that claims to care the most deeply about reducing CO2 emissions.
• That movement keeps insisting, against all evidence, that their anti-fossil, anti-nuclear, anti-hydro stance is not a problem because solar and wind, unreliable, parasitical sources of energy that increase costs wherever they are significantly deployed, will somehow save the day.

Why does the green movement oppose every practical form of energy?

There is only one answer that can explain this. Greens oppose every practical form of energy not out of love for the non-existent virtues of solar and wind energy, but because they believe practical energy is inherently immoral.

It’s in their philosophical DNA.

To “be green” means to minimize our impact on nature. In the green philosophy, the standard of value, the metric by which we measure good and bad is human nonimpact—does an action make our environment more or less altered by humans?

If we take that idea seriously, then practical energy is not a good thing.

Energy is “the capacity to do work,” that is, the capacity to alter the placement of matter in nature from where it is to where we want it to be—to impact it. The fundamental use of energy is to power the machines that transform our environment to meet our needs.
Sources: CDIAC; Maddison Project; World Bank

If an unaltered, untransformed environment is our standard of value, then nothing could be worse than cheap, plentiful, reliable energy. A consistent advocate of green energy therefore would oppose fossil fuels under any circumstances—if they created no waste, including no CO2, if they were even cheaper, if they would last practically forever, if there were no resource-depletion concerns.

Could this really be true? Yes, in fact history proved it true in the late 1980s.

For many decades, the ultimate energy fantasy has been what’s called nuclear fusion. Conventional nuclear power is called nuclear fission, which unleashes power through the decay of heavy atoms such as uranium. Nuclear fusion unleashes far more power through fusion of two light atoms, hydrogen for example. Fusion is what the sun uses for energy. But all human attempts at fusion so far have been inefficient—they take in more energy than they produce. But if it could be made to work, it would be the cheapest, cleanest, most plentiful energy source ever created. It would be like the problem-free fossil fuels I said the Green leaders would oppose.

In the late 1980s, some reports that fusion was close to commercial reality got quite a bit of press. Reporters interviewed some of the world’s environmental thought leaders to ask them what they thought of fusion—testing how they felt not about energy’s human-harming risks and wastes, but its pure transformative power. What did they say?


There are some quotes from a story in the Los Angeles Times called “Fear of Fusion: What if It Works?” Leading environmentalist Jeremy Rifkin: “It’s the worst thing that could happen to our planet.”

Paul Ehrlich: Developing fusion for human beings would be “like giving a machine gun to an idiot child.”

Amory Lovins was already on record as saying, “Complex technology of any sort is an assault on human dignity. It would be little short of disastrous for us to discover a source of clean, cheap, abundant energy, because of what we might do with it.”

He is talking here about something that, if it had worked, would have been able to empower every single individual on the globe and that undoubtedly would have given him a longer life through the increased scientific and technological progress a fusion-powered society would make. He’s talking about something that could take someone who had never had access to a lightbulb for more than an hour, and give him all the light he needed for the rest of his life.

That is what Amory Lovins regards as disastrous “because of what we might do with it.” Well, we’ve seen what we do with energy—we make our lives amazing. We go from physically helpless to physical supermen. We build skyscrapers and hospitals. We take vacations and go on honeymoons. We visit our families and tour the world. We relieve drought and vanquish disease. We transform the planet for the better.

Better—by a human standard of value.

But if your standard of value is unaltered nature, then Lovins is right to worry. With more energy, we have the ability to alter nature more, and we will do so—because transforming our environment, transforming nature, is our means of survival and flourishing.

To the anti-humanist, that’s precisely the problem. Have you ever heard mankind described as a cancer on the planet? Prince Philip, former head of the World Wildlife Fund, has said, “In the event that I am reincarnated, I would like to return as a deadly virus, in order to contribute something to solve overpopulation.” Biologist David M. Graber, in praising the theme of Bill McKibben’s book The End of Nature, said, “Until such time as Homo sapiens should decide to rejoin nature, some of us can only hope for the right virus to come along.”

This is the logical end of holding human nonimpact as your standard of value; the best way to achieve it is to do nothing at all, to not exist. Of course, few hold that standard of value consistently, and even these men do not depopulate the world of themselves. But we need to depopulate the world of their ideas.

Our goal should not be the impossible idea of a form of energy that doesn’t impact nature but the form of energy that most benefits human beings. We don’t want green energy we want life-enhancing, humanitarian energy.

Alex Epstein is founder of the Center for Industrial Progress and author of The Moral Case for Fossil Fuels. Click here to contact him."