Know-nuttin’ economics

MEXICO’S PRESIDENT-ELECT, a leftist who’s best known by his initials AMLO, takes office in December, but he’s been talking a lot since winning the presidency by a landslide in July.

Leftists are known for their big talk. Just within the last week, he’s promised “free” healthcare like the Canucks and much of Europe have, he says. We have our own Latino Bernie Sanders.

AMLO also has promised to greatly reduce or eliminate federal inspections; for instance, checking to see if gas stations are stiffing  the customers. It’s better to just “trust the people” to do the right thing, i.e. gas station owners.

Instead of making presidential decisions, which was what he was elected to do, he talks a lot about “letting the people decide,” i.e. plebiscites on all manner of issues, a very costly method of decision-making, of course.

It’s also an easy out if things go sour. Wasn’t my doing. The people decided!

He’s also vowed to clamp down on a federal consumer protection agency known as PROFECO. It’s hard to grasp his thought processes on that one.

He’s real big on “trusting the people.” He’s promising to raise the minimum wage too, of course. A couple of our relatives here on the mountaintop run a humble hotel, and they were big AMLO supporters. However, their enthusiasm has waned on learning they may have to pay their few employees higher salaries.

Oh, dear.

Is a high minimum wage a good thing? Everyone likes a fatter paycheck.

In the United States, the Democrat Party pushes a higher minimum wage, and the Republicans usually oppose it, making them look like the black hats. But who are really the black hats? Who is right, Democrats or Republicans?

For an excellent, easy-to-read take on raising the minimum wage, its unforeseen consequences, and lots of other economic issues, I highly recommend Economics in One Lesson by Henry Hazlitt.

One of Hazlitt’s primary points is that when government mandates something, downstream effects should be investigated, not just the immediate result. This isn’t done as often as it should be, certainly not with minimum-wage hikes.

Now let’s turn to the video, which was made in the seething leftist hotbed of Seattle. How are “liberal” business owners reacting to the idea of a $15 minimum wage? Not too well, it seems, and that pastes a grin on my face.

The Social Justice Warriors in front of them walked around to their rears, morphed into Poetic Justice and bit ’em in their arses!

31 thoughts on “Know-nuttin’ economics

  1. Ahh, yes, this is where the economics law of supply and demand converges with Newton’s 3rd law of motion to wreak havoc on all the socialist do-gooders in our society!

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  2. Re-reading it (on Audible) now and it’s understandable enough for most anyone. Also read in a calm and serene voice that can put one to sleep. But one can replay from the last word one remembers to catch up and get ahead.

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  3. Leftists are always wanting to solve problems and uplift the downtrodden. Unfortunately, they always want to do it with some else’s money. They think there is an unending pool of rich people who need to pay their fair share. We are pretty much out of rich folks to plunder. Yes, there is a lot of wealth out there, but now it is mostly in the Middle East and Far East. That money is way beyond our ability to tax.

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    1. Señor Gill: The pipe dreams of today’s Democrat Party work no better than the nincompoopery of Marx and Castro. In a way, the Democrats have carried it to another level. Now it’s not just equal pay for everyone, but HIGH equal pay for everyone. Nutty.

      And they remain clueless about this. Sad. Tragic even.

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  4. They do this in Denmark, that is ensure a high minimum wage. As a result, restaurants are very expensive, and people don’t eat out much.

    We could certainly do the same thing in the USA, but a lot of restaurants would have to fold before a new equilibrium could be established. And that begs the question of what all those newly unemployed restaurant workers would do for money.

    And restaurants are something of a best case for high minimum wages. Meals need to be prepared to order and on site. No offshoring or outsourcing nor inventorying production is possible. So effects from distant competitors is null.

    In any business dealing with goods tradeable over long distances, such a mandatory wage hike would be a death sentence.

    The real answer is tough: terrific public education for all, and a government that encourages entrepreneurship.

    Sadly, you can’t just wave a pen and make that happen.

    Saludos,

    Kim G
    Lake Almanor, CA
    Where you might just be able to scrape by on minimum wage in the next town over. Maybe.

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    1. Denmark and Norway have a lot of income from the North Sea oil fields. When that dries up, they will have to face an entitled population that expects a lot of social welfare benefits that the state cannot any longer provide.

      That is the same situation that Saudi Arabia finds itself in now. As they need more revenue, they pump more, and the price of the product sinks.

      They chose to shake down a lot of their wealthy people, but that is only a stopgap solution.

      The house of Saud is on its way out.

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      1. Norway, yes. Denmark, no. Also note that Denmark is a very capitalist country with a high level of social benefits and high taxes to pay for them. That’s what Danes want, and that’s what their government gives them. Unlike the U.S., they can’t borrow endlessly, though they do borrow.

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    1. Ricardo: As I never weary of repeating: It’s important to remember that, by definition, half the population is below average in IQ. And for those who vote Democrat, the percentage is higher. Sad.

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  5. Having employed a lot of entry-level people in my past businesses, I can just see the next progression that government will then mandate having to keep underperforming and inept people on the payroll.

    At that high of a minimum, there will be less rewards for performance and ultimately there will be one cookie cutter employee wearing the same drab uniform occupying the same position with the end result being private company employees all acting and performing like U.S. postal service employees.

    No one ever looks at the unintended consequences of their decisions.

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  6. Hazlitt is certainly correct that when the Government mandates something, the downstream effects should be carefully considered. It’s equally true that when the Government chooses not to mandate something, the downstream effects should be carefully considered.

    Regarding the video, I’m not impressed that reporters were able to find restaurant owners who were unhappy about wage hikes. But I think the downstream effects of stagnating income for labor (since about 1970) are starting to make themselves clear.

    That said, AMLO’s idea about trusting gas station owners et al sounds dubious. I’d go with trust but verify. If the government doesn’t verify, then everyone else has to. That sounds inefficient, to say the least.

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  7. I see Finland is ending its Universal Basic Income plan. The government pays people just for being alive. I guess it didn’t work. Who would get up and go to the job if they still can get free money from the government?

    Pretty soon we will all be millionaires, just like in Venezuela.

    I see that column of Central Americans on their way to the land of the free stuff is now in Mexico. President Trump says he will close the border with Mexico when and if they get there.

    Beware, six or seven thousand angry and hungry individuals are headed your way. You the wealthy must pay your fair share.

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  8. President Trump says he will close the border and put the army along it.
    Someone is financing and planning these massive movements of people.
    Things like this don’t just happen.

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  9. I live in one of the most regulated countries on earth. Federal agencies churn out thousands of new ones each year. These are effectively laws, yet they are formulated by bureaucrats who are not elected by the people.

    The result of many (most) of these regulations is “the law of unintended consequences.” Mandate an increase in minimum wage. Unintended consequence? Replace workers with kiosks and eliminate jobs. Want safer trucking of most of the goods in the U.S.? Mandate electronic recorders in trucks to limit drivers to fewer hours behind the wheel. Unintended consequences? Said trucks going faster to try and beat the time limit, leading to higher accident rates. Higher prices for all goods to follow, because the industry is already in need of an additional 60,000 trucks and drivers to keep pace.

    Not all regulations are bad, of course. But there should always be an “if we mandate ‘A’ then the results might be ‘B, C, and D.”

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    1. Ray: You are quite right, of course. Many, likely most, Americans do not realize the quantity of regulations they live under. Trump is making an effort to reduce this problem and has made progress. Enough? Who knows? Sad.

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  10. Just wanted to add one detail to your statement about Canucks having free healthcare. Officially we do, but try getting a family doctor. Impossible. They are retiring and not being replaced. We have clinics now. If you find out you need an operation you might have to wait a year and a half for some. Not ideal.

    Beautiful weather here in the Yucatan albeit hot. Better than the flooding taking place in Oaxaca and Colima.

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    1. Brent: I often read such reports on the “free” Canadian system. There is no “free” in this world, and government almost invariably does things poorly in time. Not always, but too often. And now we’ve got our president-elect in Mexico saying he intends to install a “free” system like Canada’s. Lord save us from do-gooders.

      Yep, we’re getting lots of rain due to two storms out in the Pacific. With luck, it will soon end. Here at the tail end of the rainy season, we are sick unto death of rain.

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