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Minimum Wage Business Realities
Why do some employers favor a raise in the minimum wage? Profit per employee plays a major role.
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Costco is doing what Amazon just did, trying to play an ignorant public to help make the market more hostile for their own competitors.
Costco would love for the minimum wage to go up to a point that’s higher than the average starting pay of their competitors but below the starting pay at Costco. It has zero impact on Costco’s business model but will severely hurt the bottom line of others, like Walmart or Target.
Costco plays this off as if they are trying to help the people, in reality, they are aiming to hurt or even shutdown their competition, and they want to do this not through better business models but through legislation that comes from misguided economical theory based solely on emotions.
Amazon did the same thing when it lobbied for an internet sales tax. Many people thought that, “Oh, it must be a legitimate tax if the biggest online retailer is lobbying for it!”. What these people didn’t realize is that Amazon is building local warehouses and would now have to pay local and state sales tax and they wanted the government to levy an Internet Sales Tax so that they could ensure that their competition, who don’t have local warehouses, would have to pay taxes just like Amazon.
No one is better at playing politics than the CEOs of giant corporations. Always remember that and take what they say with a cargo container of salt.
Gov. Rick Perry has long proclaimed Texas as a state favorable to business and has limited environmental protections and regulatory rules. Just how favorable is evident in the news that West Fertilizer Co. had only $1 million in insurance after an explosion that killed 15 people and injured 200 — and caused an estimated $100 million in damages. The insurance lobby has long opposed mandatory insurance laws and this case may be an example of the public cost of that success.
Texas is not unique in allowing companies to maintain minimal insurance coverage. The question is now who will pay for the damage if the company is insolvent. The state and county has already paid millions in recovery costs and are unlikely to accept responsibility. United States Fire Insurance Co. says that it will only extend $1 million for the damage under its policy.
The company maintained this ridiculously low level of insurance despite the fact that it housed extremely dangerous chemicals on its property. West Fertilizer reportedly had 270 tons of ammonium nitrate on site as of the end of last year. Texas Insurance Commissioner Eleanor Kitzman issued a statement insisting that her role is to “assess and quantify risk; we regulate the insurers that help consumers and businesses insure their risk.” Apparently they do not regulate well in the case of a company with a huge amount of potentially explosive material.
Lawyers note that if you want to drive a truck on the interstate, you need $750,000 in coverage, but this plant was allowed to maintain just $250,000 more.
The article below notes that a local resident insured her 5-acre property for $1 million because it had a stock tank on it.
In this case, Texas was great for business, just lousy for citizens.
Source: Dallas News
Yes, allowing businesses to decide just how much coverage they should get is good for business.
But not getting proper insurance coverage is bad for business, but that’s the businesses mistake.
This plant will never reopen and be able to operate again. Even if they recovered or had enough funds to rebuild the plant, they’d still be stuck under millions of dollars worth of liability suits as well as millions of dollars of lawyer fees. They’re going to be paying out their own pockets and that’s due to their mistake of not getting proper coverage.
Besides, just how much insurance do you think this plant was going to buy or how much was the state going to force them to buy? You think they’d have enough insurance to cover $100 million in damages? Do you know what such a policy would cost? Chances are this business wouldn’t even exist if it had to have $100 million in coverage. Unless Rick Perry was some sort of oracle, I think it’s safe to say that no regulator could have foreseen just how much insurance would be needed at this plant.
But the same principle applies to the residents. If you live near such a plant and we all know how explosive fertilizer can be, why would you not take the proper responsibility and get proper insurance to cover your own personal property?
One must always take a vigilant stance when it comes to their own property and personal safety. You can’t rely on others to look out for your best interest and you certainly can’t depend on government to provide the proper blanket legislation to cover you and everyone else.
Take responsibility, be a diligent member of society. If most everyone did that, we wouldn’t have such irresponsible issues in society.
The Truth about Savings and Consumption
We regularly hear how important consumer spending is for the economy. The story goes like this: the more consumers spend, the more money circulates in the economy, which stimulates healthy job growth and profits. If people could be encouraged to go out and spend a little more of their paycheck, we’d all be better off.
Keynes went as far as to say that individuals saving their money may actually be hurting the economy, as saving reduces “aggregate demand” and therefore company revenue. Sounds troubling, doesn’t it?
Fear not. You aren’t actually hurting anyone by filling up your piggy bank. In fact, savings help the economy, as they make lending to productive entrepreneurs possible. The consumption that we enjoy is only made possible by prior production.
And that production is only made possible by savings.
For more resources about the economics of saving versus consuming, visit http://www.fee.org/the_freeman/detail/savings-fuel-for-an-economic-engine#axzz2SdcFUHti
Buying a Ferrari isn’t progress. Buying a better Ferrari is progress.
(via learnliberty)
Cotton Wars - NPR’s Planet Money
Did you know that the US Cotton industry gets the US taxpayers to subsidies all of their cotton so that their prices can stay competitive with the global market price?
But that’s not enough because Brazil sued the US Cotton Industry and won. So the US Cotton Industry lobbied the Obama Administration and Clinton’s State Department and got them to pay the Brazilian Cotton Industry a $150 million dollars a year in subsidies so Brazil will look the other way.
Doesn’t make sense? It shouldn’t, yet this is how the US agriculture industry works when it has to run on subsidies.
Brazil now waits, smartly, while they collect our money. I assume they are just waiting for our government to go bust so they can go on growing cheap, coveted cotton and lead the industry.
“Paying workers to dig holes with spoons and fill them back in with forks and calling that productivity.”
(via conza)
The brilliant Dr. Sowell. This ain’t rocket science.
I do love Thomas Sowell
And yet, we’re supposed to believe that free market economics isn’t a zero-sum game? {obnoxious laugh}
It’s fallacy to believe the economy is a zero-sum game. Thomas Sowell himself said:
The economy is not a zero-sum game where someone gains what others lose. The whole economy can lose when ill-considered policies gain political popularity and stifle economic growth.
Here is a better explanation from Freeman Online
What Adam Smith perceived, essentially, was first that “wealth” was not something static and given like gold, or, indeed, poker chips, but rather consisted of goods and services that could be created, and second that both parties to an economic exchange could improve their respective situations. This second perception is sharpened if we take seriously the truth ignored by those committing the fallacy of misplaced cost, namely, that the value of an economic good is not a mysterious quality somehow residing in the good but a relationship between an appraising mind and some object appraised.
If, in the absence of coercion, two individuals exchange goods or services, it can be only because each party to the exchange values, at least at the time of the exchange, what is obtained more than what is surrendered. Each anticipates enjoying a more valued situation by making the exchange than obtained before making the ex change. There are two winners, not one. This is a positive-sum, rather than a gem-sum game.
Erik Brynjolfsson: The key to growth? Race with the machines.
Are machines taking our jobs? Sure. While this scares some ignorant politicians, it’s actually a good thing. Automation doesn’t mean that we will become obsolete or that we won’t have new ways to make a living. We need to embrace automation, not fear it. The better the machines, the more productive and better off we are… if we choose to be.
Further reading: “The Curse of Machinery” by Henry Hazlitt.
People who like the gold standard, how do you feel about asteroid mining? What happens when we bring 100,000 tons of gold and silver back from a space rock? What if we just bring 1,000 tons? Does this ruin the scarcity argument?
Serious questions.
Ahahah I was JUST talking about this yesterday. It wouldn’t happen that they “just bring back 100,000 tons” of processed ore.
Suppose commercial asteroid mining DOES take off (lol) in the next few decades. How many companies and distinct crews do you think will actually be among the first wave of space prospectors? Honestly even today a space shuttle launch is still “a big deal” - the average citizen is still a little a mystified over what is perceived to be a relatively momentous occasion; space travel hasn’t become much of a way of life yet. Most of our launch-related action has to do with unmanned satellites, and even our manned crews still orbit the planet.
So my guess is that the first extraplanetary flights will also be lauded as a pretty big deal, especially if they’re done commercially (i.e., privately). I’d go so far as to say that the crews would even be seen as celebrities, having their fame in the media before the “fateful” journey to find new worlds (asteroids) ripe for the picking. The journey would take months, if not years, and don’t forget they’re still only strapped to an explosive propulsion system hurling them through space toward a destination of nothing but massive rocks - better hope they stick the landing!
I think you addressed it with the second point, “what if we just bring 1,000” tons? I think this would be the more likely scenario. The first (possibly only) commercial crew finally returns home safely and with cargo. I don’t think anyone is coming back with a massive heap of gold. But it could play out in so many different ways;
First we could see another ‘49 Gold Rush - the tiny specks of gold found in the initial cargo (even 100 tons) would be enough, I think, to provide incentive to the rest of the private space industry. Companies which previously manufacture launching rockets might consider expanding into the manned-flight sector (I am literally talking out of my ass because I why wouldn’t these industries be merged to begin with, I am just trying to illustrate a picture of industrial expansion, really). New companies would form up; seeing this gold - everyone would want a piece of what’s out there. You’d see it all over the media, stargazers and dreamy-eyed prospectors and entrepreneurs … everyone would want to go to the asteroid belt. The wealth coming back would trickle down immensely, as the booming space-faring industry would be competing to create the best, fastest, most efficient cargo and mining vessels. Leaps and bounds made in science and technology just to fuel the passion for gold.
Of course…the other thing which might happen: the Spanish Empire experienced similar circumstances when they visited the Americas. They were bringing back so much gold that they eventually destroyed their economy. It’s possible that we could see the same here. But as you already pointed out it’s definitely going to hinge on: how much and over how long. Bringing back the wealth won’t be a problem, creating wealth never is. But concentration of all that wealth invariably leads to economic disaster through devaluation. I’m excited though; I don’t think we’d see a Spanish collapse. I think the rise of the space-faring industry would create such an economic boom world-wide, that humanity would enter into a new Golden Age of wealth and prosperity. Like the industrial revolution with modern medicine times 100.
I think my overall point is that it’s stupid to think that gold is ultra-scarce or that it can’t be debased or is safe from supply inflation and value loss.
To address your other points, I think the main focus will be on bringing the rock into our orbit and leaving it there so it will be only a day or two away from Earth and smaller quantities would be mined and then that particular asteroid would be released once it’s been exhausted and we’ll wait for the next one.
Here’s a decent interview with Neil deGrasse Tyson and Peter Diamandis (X-Prize and http://www.planetaryresources.com/) on Asteroid mining. They discuss the science and even the economics of such endeavors.
Click: http://www.startalkradio.net/show/eureka-asteroid-mining/
Personally, I don’t care what our money is made, so long as it’s safe from debasement and functions as a global facilitator of trade.
