Readers of this page will know that constitutionalism is very near and dear to our hearts. Both Harry and I are products of George Mason University, an institution made famous by the pioneering work of Nobel Laureate James Buchanan on the political economy of constitutions. Buchanan’s life-long career might be described as an intellectual defense of James Madison’s project, that is, a defense of constitutionalism. With two vacancies on the Supreme Court, now seems an appropriate time to muse over some Constitutional issues. Stand by for a number of posts on the subject.
Bush’s proposal to throw money on New Orleans raises a bunch of initial comments and questions:
1. This will cost the average taxpayer (those who actually pay taxes) about $2,000 each. Harry to W: Yes, it is taxpayers who will foot this bill, not “government.”
2. Because of 1. I wonder how much private giving will be crowded out? Are you going to give generously knowing that you the taxpayer will be coerced into sending an average of $2,000 for “government” help? I’d like to know.
3. New Orleans residents will receive an average of roughly $100,000 each of government spending. Wouldn’t it be better to give them some direct financial aid and let them decide how to use it to rebuild their lives?
4. Shouldn’t local citizens, businesses and government determine their own risks and benefits for rebuilding? Why is it our responsibility to totally rebuild a below-sea-level city in a hurricane zone? They rolled the dice and lost; now the rest of us pay up.
5. Economic freedom, not big government, is what works. Bush was already moving us quickly in the opposite direction by his unprecedented spending binge. That being said, I wonder what kind of sea change this may cause in political loyalties? Those of us (and there are many) who are enthusiastic about the joys of liberty are not going away.
Kudos to Winthrop Quigley for his ABQ Journal article (subscription) about price “gouging.” I often complain about the economic ignorance of journalists, so now I am delighted to see one get it right. Well worth reading the whole thing.
“While price gouging makes a great sound bite, it has virtually no economic meaning. As with most attempts to control prices, however well intentioned they might be, most economists will tell you pricing laws do little except create shortages.”
Quoting economists Walter Williams and Thomas Sowell, Quigley even gives us good insight into the misunderstood and under appreciatied roll of price as a coordinating mechanism: “if the legislature decides what the price of gasoline should be, two things will happen. Gasoline will flow out of the state to people willing to pay the market price, and the only people who get gasoline in New Mexico will be those who happen to be at the pumps before the fuel runs out.”
As far as political opportunism goes, Quigley points out that prominent federal and state politicians on both sides of the aisle are calling for investigations and possible control of the so-called “gouging.”
SUPPLY AND DEMAND
“When Jill puts her house on the market for $450,000 — triple what she paid 10 years ago, but the going price in her neighborhood today — the politicos understand that the 200 percent markup is the result of supply and demand in the real estate market. Senators don’t call press conferences to denounce Jill as a profiteer. Attorneys general don’t threaten to prosecute her. Governors don’t compare her to looters.
“But when Joe’s service station ups the price of gasoline by $1 a gallon, the political world freaks out. Never mind that a Category 4 hurricane has devastated oil production throughout the Gulf Coast, depleting the nation’s already strained refining capacity by 2 million barrels a day and driving up the price Joe’s wholesaler is now charging *him*. For some reason, politicians forget everything they learned in Economics 101, and rush to savage Joe for ‘gouging’ his customers.”
– Boston Globe columnist Jeff Jacoby
Hat tip to Chuck Muth.
My mission in life is to keep pointing out that bigger, more intrusive government is counter productive. Those who think big government will improve our lives are wishful thinkers. For example, here is my very first blog. Or, here is the first research work I did for RGF.
Now empirical evidence of the counter productive effects of big government (North America or worldwide) is available at your fingertips. Thus my challenge to the wishful thinkers: tell me again how you are going to make things better when you have not done so throughout history????? How is it that you think government bureaucrats and politicians can make decisions about people’s lives better than the people themselves???? I really want to know.
The Albuquerque business community has mobilized to oppose the “living wage” measure that would impose a $7.50 an hour minimum wage. So far, their main argument against it is the bothersome clause that would give access to businesses to “inform employees of their rights.”
Clearly this is a bad feature of the ballot initiative, but is it the right one to stress in a campaign against the measure? I don’t believe it is.
The “access” clause is rightly opposed by business, but I doubt whether the the voting public cares much one way or the other.
Anti-minimum wage advocates should, in my opinion, stress the traditional economic arguments: It costs jobs, raises costs, and forces buwiness to move away.
The images and stories coming out of New Orleans are just awful. It is nearly impossible to scroll through the pictures without tearing up (of course, I sometimes tear up watching Puppy Chow commercials).
Anyway, the politicians will be pledging lots of taxpayer money and accepting accolades for their generosity. If you want to one-up the politicos and be generous with your own money, Glenn Reynolds offers a list of good charities. You might also try this guide to “wise giving,” or this charity navigator.
You’ve probably noticed tha little yellow box on the home page of this website. It’s a quote from Henry Hazlitt that cites his “economics in one lesson” principle: The art of econmics is to look past the primary effect of some action to all of the good and bad effects that follow. This certainly applies to the “living wage” proposal that would set the miniumum wage in Albuquerque to $7.50 an hour, to be adjusted upward with the cosumer price index.
Here’s the chain of effects past the first one of raising the legal minimum: Those workers not worth $7.50 get fired. Cost of doing business in Albuquerque rises. Firms either raise prices or move out of town. Tax base declines. Taxe rates increase. Higher tax rates capitalized into the price of commercial and residential real estate, both of which decline.
So much more than (supposedly) just raising someone’s wages.