Greg Krehbiel
Massachusetts, smaller government, the minimum wage and other silly nation-wide standards
by Greg Krehbiel on 21 January 2010
A few comments on recent events.
+ It seems hard to believe, but the nation may have Massachusetts to thank for stopping the health care bill. Maybe now Congress can go back and do what they should have done from the start, which is to create a bill from the middle, not from the extreme left.
We can also hope that this spells the end of a climate change bill and other expensive disasters from the left.
+ According to this article, a recent Washington Post poll found that a substantial majority would rather have smaller government with fewer services than a larger government with more services.
I think that’s great, except that I don’t believe it for a minute, because as soon as government starts to cut services people will cry and wail. And the government, knowing that, will game the system by proposing to cut popular and necessary programs (police and such). Then when the people scream and holler, they’ll say, “Oh well, I guess we can’t really cut anything after all.”
+ I have always thought that the minimum wage hurts workers more than it helps them, and apparently it has done substantial harm to workers in American Samoa.
Leaving aside Samoa for a minute, and even if you grant the wisdom of a minimum wage (which I do not), the idea of setting a national standard doesn’t make any sense at all. The notion that the minimum wage in New York City should be the same as the minimum wage in Addison, Alabama, is just plain dumb.
Congress frequently sets nation-wide ceilings or floors for some benefit or tax, but a family of four making $X in San Francisco is in a completely different situation from a family of four making $X in Detroit.
I would much rather have a flat tax, even if it meant I had to pay more in taxes. Stopping the social nannying and busybodying from Washington would be worth it.
But it wouldn’t last. Even in the ridiculously unlikely event that we would ever have a flat tax, they would use it as an opportunity to raise taxes, and then once it’s in place they would start tinkering with it all over again and pretty soon it would be a mess like we have now.
2010-01-21 » Greg Krehbiel
21 January 2010 @ 1:01 pm
Today at work I am working on a 104-page book titled: “… and the dream shall never die. A Tribute to Edward Kennedy And His Fight for Health Care Justice.” Isn’t it ironic that it may be his very seat that kills universal health care? A health care do-over is also likely to hurt book sales.
On smaller government: I may need John to help me get his quote right: “People are in favor of smaller government until they realize it will mean smaller government.”
On minimum wage: I agree there should be no national minimum wage. Like almost everything else, it’s a state matter. Samoa would have anticipated the consequences and set the minimum wage at something that the tuna industry would accept.
On flat tax: Two forces are against this. 1) The tax industry. A ridiculous portion of the economy relies on a complicated tax system: lawyers, accountants, preparers, IRS workers. 2) It is the primary means for an administration to reward and punish as well as influence individual behavior.
21 January 2010 @ 1:22 pm
Yeah, that was my quote. People want smaller government when they’re upset about their taxes, feel the government is intruding on their lives, etc., but when faced with a reduction in services, they get upset.
21 January 2010 @ 2:39 pm
The way to understand the minimum wage is not through economics – after all, it doesn’t make economic sense – it is through politics. Who does the minimum wage really help? It helps the white union middle class. The Democrats core constituents.
The fact that it does so at the expense of the poor minority lower class is beside the point – especially since they dont vote much.
Duke University’s Michael Munger said it best when he wrote, “We should just call it the “Legislation To Increase the Salaries of Middle Class White Union Workers Who Contribute Big Bucks to Ted Kennedy.” Then, at least we would be honest about who is benefitting.”
21 January 2010 @ 9:43 pm
I’m done with the idiocracy. But this site has some interesting poll results, if they are to believed.
FWIW, I predict a repeat of the mistakes that fed the Great Depression: a too-feeble stimulus, chickening out over idiotic worries about deficits, and a plunge into a deep, deep abyss.
And we will forever be the only industrialized country in the world that has no reasonable health care plan, spends way too much on lousy results, and uses stone-age measurement systems that make absolutely no sense at all.
But as it happens, I have other things to worry about. Shit floats, especially in politics and business, and there is nothing I can do about it. I’m going to listen to Jethro Tull, brew beer, and make plans to bug out when it becomes intolerable.
“I don’t want to work, I just want to bang on the drum all day…”
22 January 2010 @ 10:46 am
The argument that the stimulus package was too small baffles me. I know Krugman has made that argument from the beginning (along with other Keynsians), but the federal government will have spent over $700 billion on stimulus programs by the time it’s all said and done. That is $200 billion more than China’s stimulus program, which everyone has raved as a great success. Not only that, the stimulus money will continue to flow for another year!!
So what am I missing? What needs to be added, and how much should it have been?
22 January 2010 @ 10:59 am
Sorry Greg, that was your quote. No need to give John any undeserved credit.
22 January 2010 @ 11:16 am
There are some things you know intuitively and some things you have to measure and calculate. The appropriate size of the stimulus is the latter, and I don’t pretend to know all the math involved, or how spending here relates to spending there, etc.
But where to spend the stimulus seems more of an intuitive thing. There are some measurements, to be sure. Some people have studied what types of government spending are more likely to yield jobs, increased commerce, etc. But in the mad rush to pass something, what really happened was all the giddy Democrats just pulled out their favorite pork projects and tossed it all in.
Nevertheless, it seems intuitively obvious to me that some types of spending — like roads, airports, railroad tracks, expanded internet access, police in crime-infested neighborhoods, and education — have a clear and direct influence on the economy.
If the economists say we had to spend the money (which we didn’t have!), at least they could have spent it on this sort of thing.
22 January 2010 @ 11:21 am
What happened to the shovel-ready projects?
I think some states just used the money to meet budget shortfalls so they wouldn’t have make cuts or raise taxes. I guess that counts as “jobs saved.” Government jobs.
22 January 2010 @ 12:15 pm
Shovel-ready meant “delayed until 2010 because that’s an election year”. A lot more stimulus will be spent this year than last, even though the economics behind it would have you spend it as quickly as possible.
22 January 2010 @ 12:18 pm
If they’ve got “shovel-ready” stuff to go this year, I say go for it — no matter what silly political reason they had for delaying it. The unemployment rate is pretty bad.
22 January 2010 @ 12:51 pm
Greg, I agree that the items on your list yield jobs, but those were exactly the types of projects that President Obama said the stimulus would go towards.
I’m still missing the connection as to how the stimulus the Democrats passed last year is inadequate if that money was designated for those types of projects. If the states took federal money and appropriated it to different uses, that seems like a different problem than the size of the stimulus.
22 January 2010 @ 12:56 pm
Obama may have said the stimulus went towards that sort of thing, but did it really?
22 January 2010 @ 2:54 pm
I have no clue, but if the stimulus was supposed to go to projects that we agree can increase employment, then I fail to see why the Keynsians like Krugman are arguing it was too small. What is their criteria for size other than always screaming, “Spend more!”
And if the stimulus didn’t get spent like it was supposed to, why should we trust the government with a second stimulus plan to not spend like it’s supposed to?
22 January 2010 @ 5:20 pm
I heard a Keynesian economist on NPR when the stimulus was being debated who came up with numbers for how large it should be and why. It was based on the dip in the economy projected.
His problem was not only that it was too small, but it was spread out over too long a period. I don’t recall his numbers, but I think it was around 40% too small and it was being spread out over a period of 2-3 times too long.