Tag: news

Submitted by Greg Morin via the Ludwig von Mises Institute,

Of the various flavors of government interventionism in our lives, the minimum wage is perhaps the most welcomed. It appeals not only to our innate sense of “fairness” but also to our self-interest. Its allure may erroneously lead us to the conclusion that because “it is popular,” ergo “it is right.”

The more astute proponents of the minimum wage, however, immediately point to the obvious; namely, that an extreme minimum wage ($1,000 per hour) would be unequivocally detrimental. However, the proponents quickly turn to dismissing this fear by asserting that, empirically, no such job loss occurs when the minimum wage is slowly raised. This is akin to arguing that although fire can boil water, a small fire won’t heat it up. The support for this assertion is the oft-cited 1994 study by Card and Krueger showing a positive correlation between an increased minimum wage and employment in New Jersey. Many others have thoroughly debunked this study and it is significant that the original authors eventually retracted their claims.

Youth and Entry-Level Unemployment

The problem with such “studies” that purport to demonstrate only positive and no negative effects from a rising minimum wage is that it is quite easy to count individuals whose pay went up. What is more challenging, if not impossible, is to count the people that would have been hired but were not. Likewise, offsetting reductions in non-monetary compensation will not show up in a monetarily-focused analysis.

However, empirical economic data is not entirely useless. Such data is more suited to qualitative rather than quantitative predictions (who is affected rather than how much they are affected). For example, basic economics predicts that a minimum wage will necessarily increase unemployment among those with the least experience. Indeed, if we look at the empirical evidence we see exactly that. Looking at the data from the Bureau of Labor Statistics we find that the unemployment rate (June 2013) among 16-19 year olds is 24 percent and among 20-24 year olds it is 14 percent. These values far exceed the unemployment rate (6 percent) of those workers with sufficient experience and skills to make them largely immune to minimum wage pay scales, namely 25-54 year olds. People whose productive value is less than the minimum wage are de facto unemployable. They are denied the opportunity to gain experience and skills, and their exclusion from the job market is a net loss to society.

The minimum wage is just another weapon in the arsenal of the misguided progressive trying to “help” the poor. Their mistake in wielding this weapon is in presuming all workers are similarly situated; i.e., that the vast majority of hourly employees earn minimum wage and that they are uniformly composed of heads of households. In fact the opposite is true. Only 2.1 percent of hourly employees earn minimum wage and of that number over half (55 percent) are 16-24 years old.

How Welfare Brings Down the Asking Wage

So, we know that a sizable number of minimum-wage earners are not in need of a wage that can support a household. But what of the minimum-wage earners who are? We are told repeatedly that minimum wage is not a living wage, so why are not more minimum wage earners simply starving to death? In reality workers earn two wages: one from their employer and one from the state. For example, someone making the current full-time minimum wage earns $15,000 per year, but they are also eligible for additional government benefits that bring their total remuneration to approximately $35,000 per year if they are childless, or up to $52,000 year if they have children. In fact, earning more does not necessarily help one wean himself off this state sponsored support. As wages rise assistance can often decline so precipitously that even earning $1 more can mean a loss of thousands of dollars in aid. This creates a disincentive for the worker to improve and earn more; the perverse incentive here is that we are rewarding the very thing we are trying to eliminate (low wages). These wage subsidies serve only to pervert the normal incentives present in an exchange between employer and employee. Both the employer and the employee are aware of the subsidies, so each is willing to offer less and accept less rather than demand more and offer more.

At first blush one might conclude the employer is making out like a bandit. But there is no free lunch — the subsidies have to come from somewhere. Taxes fund these subsidies. So the employer is not necessarily paying less if its taxes fund the very subsidies its employees are receiving. In fact many employers pay more on net. All employers pay taxes, but only some receive the benefit of subsidized wages. This is a net redistribution from one class of company to another. In essence we are forcing high wage companies to pay low wage companies to keep their wages low.

The Minimum Wage Reduces Worker Productivity

So considering that it is established that minimum wage laws and other forms of wage subsidization are detrimental to the stated goal of improving conditions for those regarded as poor, we must address the question perennially proffered by those who believe one’s salvation can only come via the state: “If not the minimum wage, what then can increase wages?” To answer this question we must understand there are only two possible routes to improving our wages/standard of living. The first method is the unethical route of using force (government) to extract what we want.

The second method, however, is what every rational person would be left with were there no state influence corrupting the incentives that drive their decision-making: improve or augment one’s skills so that they align with those skills currently in greater demand.

Self-improvement through education and/or work experience is the answer to the question: how do I earn more? Government sponsored interference in the market that results in fewer people gaining experience can only serve to frustrate one’s ability to engage in self-improvement. Elimination of the minimum wage is a necessary, although insufficient, first step to improving the economic value of the inexperienced or unskilled.

via Zero Hedge http://ift.tt/1eaIwYu Tyler Durden

With China increasingly in the news involving some new diplomatic or geopolitical escalation, a new territorial claim, the launch of a brand new aircraft carrier, or just general chatter of military tensions surrounding the aspirational reserve currency superpower, it is time for yet another update of the complete “military and security developments  involving the people’s republic of China”, courtesy of the annual report to Congress discussing precisely this issue.

The only Org Chart that matters:

 

China Sovereignty Claims:

 

Chinese Ground Forces:

 

Chinese ground force distribution map:

 

Chinese Navy:

 

Chinese Airforce:

 

Chinese airforce distribution map:

 

China Taiwan Strait and SRBM Coverage:

 

China Conventional Strike Capabilities:

 

Chinese Missile balance:

 

China Precision Strike capabilities:

 

Chinese ICBM reach capabilities:

 

The full report link – pdf.

via Zero Hedge http://ift.tt/Kuq3fi Tyler Durden

This is who we are pinning the hopes and dreams of Obamacare’s success on?

 

 

(h/t Sunday Funnies at The Burning Platform blog)

via Zero Hedge http://ift.tt/1allm3m Tyler Durden

This is who we are pinning the hopes and dreams of Obamacare’s success on?

 

 

(h/t Sunday Funnies at The Burning Platform blog)

via Zero Hedge http://ift.tt/1allm3m Tyler Durden

Submitted by Adam Taggart via Peak Prosperity,

 

via Zero Hedge http://ift.tt/1jiUC6f Tyler Durden

There is something morbidly gruesome and ironic in having the world’s wealthiest people, among them the presidents and central bank heads of the world’s most “advanced” nations, as well as the CEOs of the biggest corporations, sitting down in Davos – a place where the press passes alone cost thousands of dollars – and discussing global inequality: the same inequality that their policies and principles are responsible for. It is even more morbid when one considers that according to a recent Oxfam report, one that will be used in Davos itself, the disparity in wealth between the haves and the have nots has reached absolutely record proportions, surpassing any previous inequality gaps seen before and during the Great Depression.

Which brings us to the topic of wealth.

By now everyone is familiar with the popular wealth pyramid, which shows that “29 million, or 0.6% of those with any actual assets under their name, own $87.4 trillion, or 39.3% of all global assets.“

One can extend that rule of thumb to say that almost half of the world’s wealth is now owned by just one percent of the population, and seven out of ten people live in countries where economic inequality has increased in the last 30 years.

However, for the best visual of the disparity between the haves and the have nots we go to Oxfam once more, which just penned the soundbite of the day, and possibly, of the week for suddenly very bleeding-heart Davos:

That’s right: “the 85 richest people own the same wealth as the 3.5 billion poorest people” … aka half the world’s population.

Naturally this should come as no surprise: after all the past 5 years of this website have been, more than anything, a testament to the systematic theft, plunder and pillage of the global middle class by a small cabal of global financial oligarchs – those who have implicit control of the printing presses, who have the legal and legislative support of a few, actually make that all, corrupt and purchased politicians, who have merely made this wealth transfer from the poor, not so poor and modestly wealthy to the wealthiest, possible.

And not only possible, but the most rapid it has ever been in history.

The chart below from OxFam summarizes the unprecedented speed of wealth transfer going to the richest 1% courtesy of Bernanke et al’s theft-enabling, and Congress-approved policies.

Some of the findings by Oxfam:

Given the scale of rising wealth concentrations, opportunity capture and unequal political representation are a serious and worrying trend. For instance:

• The bottom half of the world’s population owns the same as the richest 85 people in the world.
• Almost half of the world’s wealth is now owned by just one percent of the population.
• The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.
• Seven out of ten people live in countries where economic inequality has increased in the last 30 years.
• The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
• In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

Oxfam’s conclusions should be perfectly known in advance by anyone who has been following said systematic wealth plunder over the years:

Some economic inequality is essential to drive growth and progress, rewarding those with talent, hard earned skills, and the ambition to innovate and take entrepreneurial risks. However, the extreme levels of wealth concentration occurring today threaten to exclude hundreds of millions of people from realizing the benefits of their talents and hard work.

 

Extreme economic inequality is damaging and worrying for many reasons: it is morally questionable; it can have negative impacts on economic growth and poverty reduction; and it can multiply social problems. It compounds other inequalities, such as those between women and men. In many countries, extreme economic inequality is worrying because of the pernicious impact that wealth concentrations can have on equal political representation. When wealth captures government policymaking, the rules bend to favor the rich, often to the detriment of everyone else. The consequences include the erosion of democratic governance, the pulling apart of social cohesion, and the vanishing of equal opportunities for all. Unless bold political solutions are instituted to curb the influence of wealth on politics, governments will work for the interests of the rich, while economic and political inequalities continue to rise. As US Supreme Court Justice Louis Brandeis famously said, ‘We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.’

 

Oxfam is concerned that, left unchecked, the effects are potentially immutable, and will lead to ‘opportunity capture’ – in which the lowest tax rates, the best education, and the best healthcare are claimed by the children of the rich. This creates dynamic and mutually reinforcing cycles of advantage that are transmitted across generations.

It is this threat of a global revolution that suddenly has the panties of all the Davos participants in a bunch: because regardless of the amounts of cholesterol consumed over the past 5 years of epic wealth transfer, we are confident all of these individuals recall well what happened in France in 1789.

This also means that these unbelievably wealthy men and women will suddenly sit down and fight to undo all the legalized theft they have engaged in since the Lehman collapse, and instead fight for the common man…. The same common man, who would be shot on sight if seen walking through one of Davos’ marble halls without credentials, by the specially trained army of guards protecting the world’s if not best, then certainly wealthiest.

And just who are these kind-hearted Robin Hoods, who will gladly take from themselves and give to the poor? Here, courtesy of RanSquawk, is a very partial list of the people the world’s poor should pray to tonight (and every other night):

President and Prime Ministers from the G20 countries who will address the Meeting include:

• Tony Abbot, PM of Australia and 2014 Chair of the G20
• Shinzo Abe, PM of Japan
• David Cameron, PM of the UK
• Enrico Letta, PM of Italy

Some of the leading public figures who will be participating in the 2014 Annual Meeting are:

• Mark J. Carney, Governor of the Bank of England
• Mario Draghi, President, European Central Bank
• Haruhiko Kuroda, Bank of Japan
• Thomas J.  Jordan, Swiss National Bank
• Angel Gurría, Secretary-General, Organisation for Economic Co-operation and Development (OECD)
• Jim Yong Kim, President, The World Bank, Washington DC
• Christine Lagarde, Managing Director, International Monetary Fund (IMF)
• Ban Ki-moon, Secretary-General, United Nations, New York
• Jacob J. Lew, US Secretary of the Treasury
• Olli Rehn, Vice-President, Economic and Monetary Affairs, European Commission
• Hassan Rouhani, President of the Islamic Republic of Iran
• Shimon Peres, President of Israel

Some of the leading business figures who will be participating in the 2014 Annual Meeting are:

• Lloyd Blankfein  – Goldman Sachs
• Douglas Flint – HSBC Holdings
• Antony Jenkins – Barclays
• Laurence Fink – BlackRock
• Christophe de Margerie – Total
• Bob Dudley – BP
• Klaus Kleinfeld – Alcoa
• Doug McMillon – Wal – Mart
• Marissa Mayer – Yahoo
• Joe Kaeser – Siemens
• Lakshmi Mittal – ArcelorMittal
• Sir Martin Sorrel – WPP
• Paul Bulxke – Nestle

Our advice to the disenfranchised and the poor around the globe hoping that any of the people listed above will do much if anything to help their plight: it will get worse… before it gets much worse.

via Zero Hedge http://ift.tt/1kRszMY Tyler Durden