Latest news with #ThomasSowell
Fox News
14 hours ago
- Business
- Fox News
Politicians push job-killing minimum wage hikes while ignoring the devastating economic reality
Despite it being widely known by anyone who can think two steps ahead that price controls have negative consequences, politicians can't help but continue to promote price controls as policy. With Americans facing increased costs of living, there has been a return to calling for minimum wage hikes from democratic socialists like New York City Democratic mayoral candidate Zohran Mamdani, who wants to raise the minimum wage in the city to $30/hour, to Republican Sen. Josh Hawley, who is bafflingly pushing an increase in the federal minimum wage to $15/hour with additional increases indexed to inflation. If wages could be raised by mandate without negative consequences, why would we stop there? Why not make the minimum wage $100/hour, $100,000/hour or even a cool $1 million/hour? Because in real life, that's not the way things work. The minimum wage has always been an evil policy, rooted in racism. It was passed as legislation precisely to exclude unskilled workers, particularly immigrants, minorities and women, from the workforce. It has the same effect today. But the financially illiterate don't seem to understand basic economics. The minimum wage is not an average wage, median wage, maximum wage or even an expected wage. It is quite literally a floor (although, as economist Thomas Sowell has pointed out, the real minimum wage is zero). As reported by the U.S. Bureau of Labor Statistics ("BLS") via FRED, only 1% of workers report being paid at or below the federal minimum wage, and that data is "based solely on the hourly wage they report (which does not include overtime pay, tips or commissions)." The minimum wage is heavily slanted toward teens and workers entering the workforce with few skills. As the BLS noted, "Minimum wage workers tend to be young. Although workers under age 25 represented one-fifth of hourly paid workers, they accounted for 43% of those paid the federal minimum wage or less." While minimum wage directly impacts a small number of individuals, its effects ripple throughout the economy at large. If teens and unskilled workers have a guaranteed wage floor, those with skills and experience will want to be compensated even more. That increases both wages and taxes paid for a business throughout their labor force, as well as that of all their suppliers, adding substantially to operating costs and reducing what may already be slim operating margins. The businesses will either have to make less money or pass on costs to consumers – or both. This makes products and services more expensive and, in many cases, will put businesses out of business across the economy as every company now competes in a market where nonskilled workers have a high fixed cost set by government. Sometimes, businesses will also reduce product sizes or service offerings – shrinkflation, as we saw under the last administration – but one way or another, that increase in labor cost flows through the economy and impacts what you are able to get for your dollars. It's notable that small business owners, who often work well in excess of 40 hours of week and risk their own capital, don't get a guaranteed wage, but politicians are happy to make entrepreneurial efforts more risky and costly. The minimum wage, particularly the federal proposals, don't take into account different economic costs by region or geographic area, either. Just because bad policy exists doesn't mean that we should keep doubling down on it. Pay should be negotiated between parties based on value and demand for skills and services. An economy cannot function without being able to get people into the workforce and trained. We need to keep jobs where people can enter the workforce, learn skills and, if desired, move on in their career paths. At a time when AI is threatening jobs, and technology is replacing workers, enacting legislation that incentivizes fewer jobs and makes it more costly and difficult to run a business is patently insane. Wages will naturally shift with the market for labor, as we have seen in recent years. Politicians who are trying to "help" will once again find that intentions do not equate to outcomes, and their policies only make the cost-of-living issues worse. If they want to help in a way that drives positive outcomes, make it cheaper and easier to do business by removing costly regulatory barriers and red tape. That is the path to a flourishing economy and better cost of living, not mandated wages.
The Hindu
14-06-2025
- Business
- The Hindu
The bane of built-in obsolescence
From apps to gadgets, clothing to furniture, and kitchen utensils to cosmetics, all things are getting outdated faster than ever. A linear economy driven by consumerism makes almost everything useless after some time. We need to constantly upgrade our stuff to catch up with time. If we decide not to go with the flow, we are not only left out but also judged as not 'cool'. Corporations are making huge profits whereas the middle class is suffering a serious decline in savings rate due to this, probably. Things have lost intrinsic value. The only way we associate with our products is based on their extrinsic value. We dump them as soon as they are outdated and longevity is not even a virtue any more. High-end customers want exclusivity and low-end customers want features. Exclusivity is breached by the updated version of the product hitting the market even with nominal upgrades. Features are hampered by the way things are designed. The height of commodity fetishism is that some people are closer to the market than they are to the people around them. They say that change is the law of nature but this change is nominal and not real. I call it 'treadmill motion' when we run a lot but reach nowhere. Everything is changing yet nothing is changing. Humans have advanced so far yet the suffering remains intact. Poverty, health issues, social tensions, sorrow, still exist. We solve one problem and in the process, we create new ones. In the words of Thomas Sowell, 'Sometimes it seems as if there are more solutions than problems. On closer scrutiny, it turns out that many of today's problems are a result of yesterday's solutions.' Linear economy takes a toll on the environment in which we manufacture a product and discard it. Consumerism ensures that the manufactured product becomes waste soon. Therefore, a circular economy cannot be achieved until we put an end to consumerism. Sustainable Development Goal 12 talks about responsible consumption and production, which requires waste management and waste reduction as well. The European Union has come up with policies to increase the longevity of the products within the ambit of the 'right to repair'. These measures include providing parts and servicing to the customers at reasonable prices even after the warranty period. India also needs to chalk out a National Action Plan for sustainable consumption and production just like many countries have done. This would help in reducing the overall ecological footprint. We need to adopt behavioural changes in our lifestyles. We must actively appreciate people who try to use a product for a longer period. Companies indulging in marketing strategies to promote mindless consumption need to introspect how they can build sustainable supply chains with a lesser ecological footprint. A lot of research must be conducted to achieve such product designs that last longer. Business models must adapt to the ways of providing maximum value to the stakeholders with minimum resources. The initiative starts with us not defining our lifestyles in terms of ephemeral products. We must learn to satisfy our wants with optimum resources at hand. This requires active engagement with the market trends and awareness about sustainability issues. Our consciousness will also lead to a larger change in the ways corporations and governments operate. emailtoaakashbajpai@
Irish Independent
10-06-2025
- Business
- Irish Independent
The Irish Independent's View: Government must wake up to state watchdog's spending warning
These are the words of American economic historian Thomas Sowell. It might seem as if our Government has gone to some lengths to prove him right on both counts in the eyes of the Fiscal Advisory Council (FAC). The state watchdog is concerned that spending is up almost 6pc already this year. 'At the current pace of growth, overruns of €2bn are likely,' the Fiscal Assessment Report says. The extravagance can once again be traced back to bumper corporation tax receipts. As we know, the incoming billions are the envy of many European leaders; and a source of considerable indignation to Donald Trump. The US president has made it plain that though he 'likes' us, we are causing him a world of pain when he sees what he regards as 'US tax dollars' flowing out of American coffers and into those of the Emerald Isle. He has warned he is 'coming for them' and we have no reason to doubt him. The FAC has been warning for the past few years that over-reliance on such golden windfalls could leave the State dangerously exposed when they come to an end, as they inevitably will. Today's warning is even more shrill. It notes that while phenomenal levels of excess corporation tax are keeping Ireland in surplus, 'without these revenues, there would be a substantial deficit, despite a strong economy'. The report acknowledges that while the tide of good fortune could persist for a while yet, it will turn, so depending on it is 'high risk'. It also notes how just three companies account for most of the excess corporation tax. A particular worry of the council is that the over-runs are not being acknowledged in new forecasts. Every blessing ignored becomes a curse Its chairperson, Seamus Coffey, even raised a concern about the 'plausibility' of the numbers being presented. He said it's hard to know precisely how overstretched government departments are, because monthly figures are not supplied. The projected figures for 2025 expenditure remain unchanged, even though it is likely to rise by €3.7bn. This, the report states, is 'simply not credible'. ADVERTISEMENT Philosopher Paulo Coelho said: 'Every blessing ignored becomes a curse.' Taking a rosy financial future for granted, which is written on such shifting sands, could come at extreme cost. Spending what we can afford really ought not be such a radical concept. There is a sword of Damocles over the world's economy thanks to Trump's tariffs. The potential for wider wars in the Middle East or Ukraine could also wreak global trade havoc. Relying on the comfort of things we have taken for granted tends to come with a rude awakening. How long can we continue to get away with pressing the snooze button on the FAC's alarm calls?
Yahoo
12-05-2025
- Business
- Yahoo
Trade-offs and solutions for judicial officers
Indiana legislators both added and eliminated courts in the recent legislative session. (Getty Images) We are living in interesting times. Maybe you've noticed. And I'm not just talking about the vehicles in the Statehouse parking lot, or the hot history takes on social media. Hopefully, you've also detected the great reshuffling of priorities taking place right before our eyes. Less money from the federal government and pervasive economic uncertainty are wreaking havoc on the state budget. Property tax relief is putting pressure on local governments to find new revenue or reduce services. And Medicaid growth is forcing smokers to pay more for their already expensive habit. The shakeup has even come to a courtroom near you. Under the recently passed HEA 1144, some locales, notably the ever-expanding Hamilton County, will get new judicial officers. Others, like the demographically challenged Blackford County, will see theirs taken away. All this rebalancing shows policymakers engaged in the perennial contest between trade-offs and solutions. Thomas Sowell described the history of this contest in his classic A Conflict of Visions. According to Sowell, optimizing trade-offs is the mission of those who operate under what he terms the constrained vision of human nature, which sees us all irredeemably imperfect and lacking the capacity for solutions. The yin to this yang is Sowell's unconstrained vision, which sees humankind as perfectible and its challenges as ultimately solvable. Indiana lawmakers approve reduced court eliminations HEA 1144 shows the constrained view ascendant. Lawmakers like Rep. Chris Jeter and Sen. Liz Brown recognize it is unsustainable to continually add courts without examining the system in its entirety. We can't materialize judicial officers from thin air. So, when judges in overworked counties ask for more resources, it makes sense for lawmakers to find a way to pay for it. The simple trade-off is to cut underutilized courts. But the unconstrained vision should not be ignored. It is indisputably a world of finite resources. There is only so much time, so much money, and so much energy to go around. And yet, over tens of thousands of years, our species has demonstrated an uncanny ability to expand the realm of the possible. Lives have been lengthened, wealth has been created, and new sources of power have been tapped. In the fullness of time and imagination, there may be solutions after all. The judicial utilization problem perfectly illustrates a policy challenge that would benefit from both the constrained and unconstrained views. According to the 2024 Weighted Caseload Measures, the judiciary is operating at 102% capacity, meaning we collectively have almost exactly the right number of judges we need. It's just that some courts are overloaded while others are underused. The simple solution is to put the underused courts to work. I'm guessing the put-the-judges-to-work solution looks a lot better to most Hoosiers than the eliminate-the-judges-in-my-county trade-off. And fortunately, we have a model that will allow us to actively pursue the solution without settling for the trade-off. Historically, judges 'rode circuit,' traveling on horseback from town to town to hear cases. This allowed sparsely populated areas to pool their resources and create a justice system they couldn't otherwise afford in their small frontier communities. A vestige of this system survives in Indiana to this day: our smallest community, Ohio County, shares a circuit court with its much larger neighbor, Dearborn County. In our more urbanized society, the design problem is different, but the circuit court solution is still relevant. Today, it's not about pooling resources but about projecting resources where they're needed. Still, sharing what we have is the solution. The Supreme Court has already divided the state into 26 administrative districts. With small rule changes, the judges in these districts could be allowed to hear cases across county lines. No horses required. Instead, through the magic of Zoom and the miracle of electronic filing, our existing judicial officers can do the work in their existing chambers. In the end, Sowell's dichotomy is a brilliant way to think about the ongoing battle of ideas, but, as he admits, not everyone has chosen a side. So, it is odd that it has become something of a mantra to say that there are no solutions, only trade-offs. Let's wait before we carve that in stone. Certainly, we are constrained, but we are not stagnant. Most importantly, we are not doomed to false choices. For this reason, and with all due respect to Sowell, I prefer another classic work on trade-offs and solutions: Star Trek II: The Wrath of Khan. When confronted with a scenario designed to guarantee failure, Kirk famously changed the conditions of the test. Spock sacrificed himself for the benefit of his crew. They both rejected the no-win scenario. So should we. Judging from recent comments, legislators may be on the same page. In his remarks on final passage of HEA 1144, Rep. Jeter acknowledged that there would be an ongoing effort to get our judges 'in the right spots.' If that effort comes to fruition, and if lawmakers change the conditions to make that possible, they may be more unconstrained than they think. They may be ready to boldly seek out new solutions like those that worked before. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Wall Street Journal
11-05-2025
- Business
- Wall Street Journal
Why Bad Economics Thrives
Regarding 'Notable & Quotable: Thomas Sowell on Tariffs' (April 4): Thanks to the Journal for reprinting the thoughts of a national treasure. Here is another gem from his book 'Basic Economics' (2000): 'Another reason for public support for protectionism is that many economists do not bother to answer either the special interests or those who oppose free trade for ideological reasons. The arguments of both have essentially been refuted centuries ago and are now regarded within the economics profession as beneath contempt.' Thomas Murphy
