Steam Catapult - Launching Innovation

I'm a big fan of market forces and much leaner gov. The only policy that I want to hear about is the one that annhilates two or more other policies when it comes to "intelligent gov design" of our economy.

Not sure I see the connection between immigration and our growing financial woes. We need outside global competition on all levels to shake up our irrational sense of lifestyle value. The money we earn was over valued, which means a sharp correction will occur. Its not if but when.

"We need outside global competition on all levels to shake up our irrational sense of lifestyle value."

What is "irrational sense of lifestyle value" a euphemism for?

And why do we "need" for it to be "shook up"?

Could you please translate your corporate-ese into plain English?

Sure thing.

"irrational sense of lifestyle value"
Some folks believe they're entitled to a fantastic lifestyle because of where they're born, not because of what they earn or do.

Take for example a job that can be done locally or remotely (this is also true internal to the US).

People that live here earn 10 dollars per hour for that task (close to minimum wage example).
But that same task can be done several other places in the world for only 1 dollar per hour.
The value we attribute to that task is over it's global value. Thus the business that pays 10 dollars per hour is essentially over paying for the task and losing to global competitors. In a free market driven by price competition, this business will eventually fall to rivals.

Any sense of entitlement will be corrected to global concepts of value. Perhaps the only way to avoid this is to encourage absolute isolationist doctrines. I'm fairly certain we're incapable of sustaining our way of living without global trade (oil, manufacturing, etc). Even if we could, an isolationist doctrine would lead to a correction in lifestyles to the outside world.

"People that live here earn 10 dollars per hour for that task (close to minimum wage example).
But that same task can be done several other places in the world for only 1 dollar per hour.
The value we attribute to that task is over it's global value. "

Well I'm sure glad I we don't live in a country where wages are on par with a third world sinkhole. Aren't you? A Reductio ad Absurdum seems apt here. I don't see why we "need" to bring wages down to the levels that exist in India, Laos, Africa, etc., or why such a terrible demise should be actively encouraged. (No wonder capitalists get a bad rep.) Who would be able to afford expensive Apple products then? At some point you kill the goose that lays the golden egg. We made out just fine before the advent of 3rd world sweatshops in countries that don't play by the same rules wrt human rights.

"Thus the business that pays 10 dollars per hour is essentially over paying for the task and losing to global competitors. In a free market driven by price competition, this business will eventually fall to rivals."

These "global competitors" you speak of are really just other western companies, not 3rd world companies. Countries that have large populations of "$1 an hour workers" typically don't have the kind of human capital to compete with Western companies (India perhaps being the notable exception), and 3rd world countries by definition don't offer the political/economic safety for these companies to house their assets. The red meat for all of these companies is the 1st world consumer in his safe little 1st world country. Take away the 1st world consumer's discretionary income, and you have no one to buy your gadgets. There should be some simple rules for companies: if you want to take advantage of our legal framework, and sell to our people, then you need to hire a good portion of your workforce here too. (by "here", a coalition of like-minded countries would do) Is it really a sense of entitlement to demand this? Sounds like a fair exchange to me. Can you name one product that won't exist without ultralow wages?

It seems to me that many multinationals want to have their cake and eat it too - low wages AND the profit margins that selling to 1st world consumers brings, not to mention the poltical stability of incorporating in 1st world countries, all without asking where that political and economic stability comes from. If everyone hops on the low wage train, then consumption will be greatly decreased, since consumers have to get their money from somewhere. Then, when people are out of good work, they'll vote in the most anti-business politicians you can imagine, since it was the business people who decided to ditch them to fund their lavish salaries and stock options.

" I'm fairly certain we're incapable of sustaining our way of living without global trade"

Well, it sounds like in Mark Essel's world, we would absolutely not sustain our way of living. We'd all be working like slaves for the global fair wage. God damn that sense of entitlement. How dare we think we have a better country than third worlders for having the good sense to make (relatively) fair laws and enforce them. The fruits of such efforts much be redistributed to all the rest until everyone is equal! Good luck selling your web apps to those properly compensated third worlders.

Unskilled immigration has some effect on fiscal woes because these immigrants
tend to be net recipients of government resources, as I've mentioned before. But
in my response to Mr. Miller I was referring more to its effect on our
employment and education situation.


Supply and demand: adding more job seekers means more unemployment, all things
equal.


The children of unskilled immigrants tend to be bad students. Bad students make
bad schools. Hand-wringing about "fixing our schools" ignores this reality. It
also ignores the disconnect between our alleged "knowledge economy" future and
our importation of so many folks who are ill-suited for such an economy.




________________________________

With all the talk about the “set to expire” Bush tax cuts…

Has anyone else realized that all the media and politicians seem to think that any dollar that isn’t taken from you by the government is to be viewed as a tax cut?



Isn’t it nice of them to leave us something of the money we’ve earned?

"though at least they are less likely to advocate policies that would further hobble the economy."

Refusing to adjust the minimum wage?

Anyway, Republicans and Democrats seem to be in agreement on bailouts and immigration. That's my new rule of thumb - if there is an issue that the republican and democratic leadership both agree on, i.e. the coveted "bipartisan consensus", then it's probably a massively bad idea. Republicans are also a lot more likely to find some new country to invade (at least on a larger scale than the Dems), and subsidize competition from foreign companies through a religious dedication to unadulterated "free trade".

So as rudderless as the Dems have been, and nobody but the most dedicated partisan can deny they've been a big disappointment, they're not going to push me into the arms of the Republicans either. Going forward, I'll probably just sit out of the political process, and prepare the marshmellows to roast when country ignites.

Would you mind explicating your point on minimum wage?

"That's my new rule of thumb - if there is an issue that the republican and democratic leadership both agree on, i.e. the coveted "bipartisan consensus", then it's probably a massively bad idea."

Related to that, I heard a phrase quoted on the news Saturday from the President's weekly radio address: "the failed policies of the last 10 years". I thought that was remarkable. I understand rhetorically why it ended up in his speech -- the writers probably thought "of the previous administration" would sound too partisan -- but the phrase raises an obvious question of why President Obama decided to continue whatever failed policies of the previous administration a year and a half into his administration. Most likely, because -- as you note -- there has been a GOP-Dem elite consensus on most of the big bad policies (e.g., immigration, subsidizing mortgages for poor credit risks, etc.).

I don't blame you for not feeling any love for the current crop of Republicans. It's hard to get excited about voting for someone like John McCain. But on the mildly brighter side, it looks like there is some new blood coming into the GOP this primary season. Maybe those guys, if they win, can find common cause with some of the new blood the Dems got in '06 (most of whom were pretty conservative). It's hard to be optimistic though. We may need a more severe downturn before we get the more radical changes we need.

Quick addendum: by "new blood" I was not referring to J.D. Hayworth at all (who is challenging McCain). There's nothing new or impressive about him.

For 10 years starting in 1997 Republicans in Congress refused Democratic efforts to increase the minimum wage from a paltry 5.15 an hour (while raising their own salaries), hurting not only people actually earning minimum wage, but other hourly workers further up the pay ladder. Contrary to stereotypes, most minimum wage earners are not teenagers and they contribute significantly to the household budget. The last minimum wage increase before that was also stonewalled by Republicans despite a vast majority of Americans supporting the increase. Even now, the earning power of the minimum wage is far below what it was in the 1960s.

I think you will continue to be disappointed in the Republicans because they have always been the party of big Business with a capital B, not a party of people who speak for their constituents, except for red herring issues like gay marriage or other contrived outlets for frustration. Big Business is generally opposed to the Republican middle America because respectable wages eats into their profit margins. Every time I am heartened by a Republican speaking out for fiscal restraint (as the Dems did when they were out of power), they let me down when they follow it up by reiterating their support for subsidizing 3rd world sweat shops and undercutting American businesses via "free trade" and lecturing on the dangers of "protectionism"*, or they start banging the jingoistic imperial war drums while chanting "support the troops!" and eroding civil liberties in the name of fighting Terrorism. Narco-Terrorism, Domestic-Terrorism, Eco-Terrorism, Traffic-Terrorism..eventually it seems we'll all have a Terrorist or two in the family.

The Dems on the other hand are nothing but the collective aggrievement party. It's getting really tiring, someone needs to tell those aging hippies it's not the 60s anymore. They have nothing new to offer. Right now they want us all to be very, very concerned with the allegedly horrible plight of gays in the military while masking the truth that they have not kept their campaign promises and have only continued the same policies we had beforehand. I thought we were going to be scaling down on "Bush's war" in the Middle East but my brother is being sent to Afganistan next year. Looks like this is going to be "Obama's war" too, Osama is still at large, and the Taliban is essentially back in power so it was all for nothing.

*How did we ever have any businesses at all before we found 3rd world children to exploit?

My position on the minimum wage is probably orthogonal to yours and Paul's. Paul's position is the Milton Friedman-esque conventional wisdom. Friedman's argument was that higher minimum wage increases unemployment among the unskilled (whether teens or adults), because it prices their labor beyond what it's worth. This can be addressed, though, by the government subsidizing part of the unskilled workers' wages.

I agree with you about the impact of unskilled immigration, of course. More generally, in a tight labor market, a minimum wage is probably irrelevant. I remember in early 2000, before the bubble popped, local fast food restaurants were advertising starting wages well above the then-current minimum wage. But if you continually flood the labor market with imported workers, you lower wages and increase unemployment.

Regarding Republicans being the party of big business, it's more accurate to say that's true of both parties. Republicans are also the party of small businesses that employ illegal aliens.

There are individuals in both parties who are legitimate fiscal conservatives, but neither of the two major parties has taken budget deficits seriously since 1992, when Perot forced them to. The main fiscal difference between the parties is that Democrats favor higher income taxes on the working rich. That's about it. If Dems were remotely serious about the budget (in addition to stopping spending like drunken sailors,) they would let all of Bush's tax cuts expire. Instead, they just want to let the ones on the highest income earners expire. The budget surpluses during Clinton's second term were an artifact of the bubble -- even the Clinton Administration's own projections hadn't foreseen them.

Afghanistan is already Obama's war. Ann Coulter overstated the case in a recent column of hers (hyperbole is her shtick), but this was pretty close to the mark:

Obama hasn't ramped up the war in Afghanistan based on a careful calculation of America's strategic objectives. He did it because he was trapped by his own rhetorical game of bashing the Iraq war while pretending to be a hawk on Afghanistan.

At this point, Afghanistan is every bit as much Obama's war as Vietnam was Lyndon Johnson's war. True, President Kennedy was the first to send troops to Vietnam. We had 16,000 troops in Vietnam when JFK was assassinated. Within four years, LBJ had sent 400,000 troops there.

In the entire seven-year course of the Afghanistan war under Bush, from October 2001 to January 2009, 625 American soldiers were killed. In 18 short months, Obama has nearly doubled that number to 1,124 Americans killed.

I hope your brother stays safe over there.

Friedman's argument was that higher minimum wage increases unemployment among the unskilled (whether teens or adults), because it prices their labor beyond what it's worth.

I hear North Korea has 100% employment. The problem with focusing on the employment rate only is that it's also the quality of employment that matters. A high employment rate deosn't mean squat if you are making only 2 bucks an hour, even if that is "what the labor is worth". There's a point where enforcing truly too-high wages really hurts, of course -see the results of Union strongarm tactics-but that doesn't mean having no minimum wage is a good thing either. I often get the feeling that economic libertarians are as deluded as Communists because both theories assume that people don't form cartels to screw each other over.

Thanks for the well wishes. It was somewhat of a family controversy when he signed up. Hopefully he won't end up regretting it.

The latest statistics on 16 - 24 year-old unemployment seems to suggest that the increased mimimum wage has resulted in FEWER jobs for this relatively unskilled group.

More likely its illegal immigration, since the earning power of the minimum wage was higher in the sixties with lower teenage unemployment. Also, most minimum wage earners aren't teenagers. Nowadays you can't find a single lawn care service around here that isn't absolutely stacked with "Mexicans". (Turns out that a lot of "mexicans" are really central americans)

Illegal immigrants do seem to work a lot harder at those sorts of jobs than modern teenagers, I will give them that. They can be very enthusiastic weed-pullers and are very polite.

Err, by Central American, I mean from Ecuador, Panama, etc.