Thriller
July 10, 2009
Slaying The Other Goliath
July 10, 2009
Many observers in the run-up to the current financial crisis recognized that the American appetite for multiplying unnecessary necessities—like houses consumers bought but could not afford, and that developers built but could not sell—was creating a financial house of cards that could only spell trouble over the long run. But few predicted how devastating it would be when the cards came tumbling down. Part of the reason for both the scale of the crisis and the immensity of our surprise in the face of it is that the tools market watchers were using to measure and assess financial phenomena were inadequate.
Niall Ferguson has insightfully described our current predicament as the end of “planet finance.”1 By “planet finance” Ferguson means to draw attention to the fact that since roughly 1980 an elaborate virtual world, practically parallel to the one in which we live and work every day, evolved through inscrutable credit and investment mechanisms. “Credit default swaps” and “mortgage-backed securities”, once obscure expressions, have now become household terms, even if their exact nature remains mysterious. One need not be able to explain what they are to understand that financiers and investors were way off target in determining the values and risks of such instruments. The measures and the reality supposedly measured were out of sync.
Many policymakers have sensed the mismatch between reality and measurements of it at least to some degree, but they have preferred to focus their rhetorical fire on calls for enhanced regulation. In the words of French President Nicolas Sarkozy, the world needs a “better-regulated form of capitalism with a greater sense of morality and solidarity.” Just about every major world leader has uttered similar words, though most show their affection for morality and solidarity by haranguing greedy investors rather than either complicit or slumbering politicos and bureaucrats. Moral scolding alone, however, won’t restore confidence in capitalism. As policymakers embark on a new adventure to bring greater regulatory clarity to the markets, they need to remember that success rests in large part on their ability to understand economic reality, and that succeeding in this regard is as much art as it is science. They will eventually have to face an enduring truth: Most of our economic measures are flawed.
Debates have raged throughout the media about the difference between the financial sector and the “real economy” during this crisis. One thing both have in common is that they are always more complex than the tools we use to measure and understand them. This is perhaps most evident when we consider a key factor that links the real economy and planet finance: consumption.
No normal person wants to be known as a defender of consumerism, but economists are usually more than happy to defend consumption. Consumption is largely how we understand progress: We measure payment for goods and services as a way to understand whether our national life is improving. We call this measurement Gross Domestic Product…
‘We Misread The Situation’
July 10, 2009
WSJ.
If New Yorkers fantasize that doing business here in Los Angeles would be less of a headache, forget about it. This city is fast becoming a job-killing machine. It’s no accident the unemployment rate is a frightening 11.4% and climbing.
I never could have imagined that, after living here for more than three decades, I would be filing a lawsuit against my beloved Los Angeles and making plans for my company, Creators Syndicate, to move elsewhere.
But we have no choice. The city’s bureaucrats rival Stalin’s apparatchiks in issuing decrees, rescinding them, and then punishing citizens for having followed them in the first place.
Democrat Crew Team
July 10, 2009
California
July 10, 2009
Enhancement Pills
July 10, 2009
The 99, who personify the 99 attributes of Allah, are a creation of Teshkeel Comics in Kuwait, and will soon be appearing in a new mini-series collaborating with Justice League characters from DC comics.
The Kuwaiti comics, which sell about one million copies a year, are already popular in the Middle East with an animated film already commissioned. The first of several 99-based theme parks has already opened in Kuwait.
None of the characters pray or read the Koran, as they are meant to have equal appeal to children of all faiths. They do not wear disguises and unlike their DC counterparts, they are not outsiders with secret identities. They tend to be ordinary people who develop superhuman abilities after coming into contact with mystical gems.
Minimum-wage folly
July 10, 2009
AS IF the recession hasn’t been rough enough on those near the bottom of the economic food chain, fresh bad news is on the way. Beginning July 24, the federal government will be making it more difficult for employers to hire low-skilled and unskilled American workers. Thanks to an ill-advised law enacted with bipartisan support in 2007, the cost of providing an entry-level job to individuals with few skills or minimal experience will be going up by more than 10 percent. Those who cannot find a job paying at least $7.25 an hour will not be permitted to work.
Welcome to the latest chapter of America’s minimum-wage folly.
This will mark the third time in recent years that Washington has forced up the cost of employing low-skilled workers. Last July the minimum hourly wage was increased from $5.85 to $6.55; the July before that, from $5.15 to $5.85. By the end of this month, in other words, the lowest rung on the employment ladder will be nearly 41 percent higher than it was just two years ago. Needless to say, that will put it beyond the reach of many marginal workers, leaving them without work.
Those who press for a higher minimum wage often claim that making entry-level jobs more expensive won’t reduce the number of entry-level jobs. Were the government to compel a 41 percent increase in the price of gasoline or movie tickets or steel, every rational observer would expect a drop in the demand for gasoline, movie tickets, or steel. Yet when it comes to the minimum wage, politicians and journalists somehow persuade themselves that making workers more expensive won’t reduce the demand for workers. Senator Edward Kennedy, for example, blithely asserts: “History clearly shows that raising the minimum wage has not had any negative impact on jobs.’’ Activist Holly Sklar, campaigning for a $10 minimum wage, likewise insists that “raising the minimum wage does not increase unemployment in good times or bad.’’
But that’s exactly what it does. Artificial price floors – mandatory minimum prices set higher than what the market will bear – generate surpluses. Minimum-wage laws are no exception. The price floor imposed by the government on the supply of low-skilled labor results in a labor surplus, which is just another way of saying higher unemployment. How much higher? Economists Joseph Sabia of American University and Richard Burkhauser of Cornell estimate that the minimum-wage hikes of the past two years will wipe out more than 390,000 jobs. According to David Neumark of the University of California at Irvine, an expert on labor force economics, the minimum-wage jump scheduled for this month “will lead to the loss of an additional 300,000 jobs among teens and young adults.’’
It is bad enough that Congress and the president would deliberately price so many workers out of the market. What is worse is that they claim to be helping the poor when they do so. As a presidential candidate, Barack Obama backed a minimum wage of $9.50 an hour because, his website explained, he “believes that people who work full time should not live in poverty.’’ But if helping the poor is the goal, making it harder for them to get that crucial first job is not the way to achieve it.
Politicians cannot cure poverty by raising the cost of entry-level employment any more than they can do so by waving a magic wand. If aiding the needy were as easy as setting a compulsory minimum wage, why not set it at $20 an hour – or better yet, $120 an hour – and really help them out?
The laws of supply and demand are not optional. They weren’t enacted by Congress and Congress can’t override them. Of course a higher minimum wage may benefit some low-skilled workers. But there are innumerable others whom it harms: Those who lose their jobs or can’t get hired in the first place because the higher rate is more than their labor is worth. Those whose employers compensate for the wage increase by cutting employees’ hours. Those whose jobs are outsourced to a market with lower labor costs.
Minimum-wage laws don’t make low- and unskilled Americans more productive, more experienced, or more desirable. They merely make them more expensive – and more likely, therefore, to be unemployed.
What A Character!
July 10, 2009
