European minimum wage and unemployment facts

This certainly doesn't prove anything, but it's one more data point to add to our opinions on the minimum wage. I still don't understand why progressives don't mostly prefer wage subsidies (i.e. the EITC) over the minimum wage:

Regarding the minimum wage, here is some data for Western Europe: 

There are nine countries with a minimum wage (Belgium, Netherlands, Britain, Ireland, France, Spain, Portugal, Greece, Luxembourg).  Their unemployment rates range from 5.9% in Luxembourg to 27.6% in Greece.  The median country is France with 11.1% unemployment. 

There are nine countries with no minimum wage (Iceland, Norway, Sweden, Finland, Denmark, Austria, Germany, Italy, Switzerland.)  Five of the nine have a lower unemployment rate than Luxembourg, the best of the other group.  The median country is Iceland, with a 5.5% unemployment rate.

-- link

The benefits of outsourcing

Although economists virtually all agree that free trade is good, it is still something people are often very suspicious of. For instance, you hear people all the time saying our economy has suffered due to off-shoring/outsourcing, especially when it's for products that foreign governments are unfairly subsidizing.

I just started reading Free To Choose by Milton Friedman, and it has the clearest explanation I've read for why these things are (counter-intuitively) good for us. This was written decades ago but fits perfectly with the widespread concerns about cheap, subsidized Chinese labor/products and off-shoring of related jobs today:

  Another fallacy seldom contradicted is that exports are good, imports bad. The truth is very different. We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports...
  It is simply not true that high-wage American workers are, as a group, threatened by "unfair" competition from low-wage foreign workers. Of course, particular workers may be harmed if a new or improved product is developed abroad, or if foreign producers become able to produce such products more cheaply. But that is no different from the effect on a particular group of workers of other American firms' developing new or improved products or discovering how to produce at lower costs. That is simply market competition in practice, the major source of the high standard of life of the American worker. If we want to benefit from a vital, dynamic, innovative economic system, we must accept the need for mobility and adjustment. It may be desirable to ease these adjustments, and we have adopted many arrangements, such as unemployment insurance, to do so... In any event, whatever we do should be evenhanded with respect to foreign and domestic trade...
  Another source of "unfair competition" is said to be subsidies by foreign governments to their producers that enable them to sell in the United States below cost. Suppose a foreign government gives such subsidies, as no doubt some do. Who is hurt and who benefits? To pay for the subsidies the foreign government must tax its citizens. They are the ones who pay for the subsidies. U.S. consumers benefit. They get cheap TV sets or automobiles or whatever it is that is subsidized. Should we complain about such a program of reverse foreign aid? Was it noble of the United States to send goods and services as gifts to other countries in the form of Marshall Plan aid or, later, foreign aid, but ignoble for foreign countries to send us gifts in the indirect form of goods and services sold to us below cost? The citizens of the foreign government might well complain. They must suffer a lower standard of living for the benefit of American consumers and of some of their fellow citizens who own or work in the industries that are subsidized. No doubt, if such subsidies are introduced suddenly or erratically, that will adversely affect owners and workers in U.S. industries producing the same products. However, that is one of the ordinary risks of doing business... As already noted, any measures to ease the adjustment to sudden changes should be applied evenhandedly to domestic and foreign trade.
  In any event, disturbances are likely to be temporary. Suppose that, for whatever reason, Japan decided to subsidize steel very heavily. If no additional tariffs or quotas were imposed, imports of steel into the United States would go up sharply. That would drive down the price of steel in the United States and force steel producers to cut their output, causing unemployment in the steel industry. On the other hand, products made of steel could be purchased more cheaply. Buyers of such products would have extra money to spend on other things. The demand for other items would go up, as would employment in enterprises producing those items. Of course, it would take time to absorb the now unemployed steelworkers. However, to balance that effect, workers in other industries who had been unemployed would find jobs available. There need be no net loss of employment, and there would be a gain in output because workers no longer needed to produce steel would be available to produce something else.

How to tell who you should ignore about politics: govt shutdown edition

Politics is important. What our government does (or doesn't) do can have a huge impact on the well-being of its citizens and the world. So ideally, people would think through the issues rationally, try to learn more, consciously work on identifying/eliminating their misunderstandings/biases, and be interested in discussing their differences of opinion with other educated/rational people in hopes that one or more sides can learn something.

But then there's reality. Sure, people have the capacity to think objectively and skeptically, but on some topics people prefer to think tribally. You just pick a side, usually your "home team" (whatever your parents and/or peers think), and then view everything as a simple good-versus-evil struggle where, of course, your team is always right and the others are always wrong. And of course, you'll want to post stuff on Facebook that displays your team/tribe loyalty... whether or not it's factual or logically consistent is not really important.

If you do hope to learn from the opinions/knowledge of others, the time you devote to that is a limited resource, so you have to choose wisely how to spend it. An important rule of thumb would be to ignore those purely tribalistic people. Which leads me to the shutdown...

Democrats passed a law that Republicans don't like. After not being able to stop it through the accepted means of passing/altering/repealing a law, many Republicans in Congress have decided to shut down the government until they get their way. The details of what "shutdown" means can be read here.

It isn't too often that something happens like this where the right answer is so obvious. This is a terrible, dysfunctional way to run a government. Even if you support the goal of the Republican politicians here, this is such an obviously bad way to do it. If this works, won't this tactic be much more likely to get used again? Should the Democrats think they should shut down the government to get their way the next time Republicans regain a majority and pass a law that they don't like? Regardless of what you think about "Obamacare", there can't be any negotiation on these grounds for the same reason we shouldn't negotiate with terrorists or pay ransoms even when the immediate result of that action seems positive. Giving any legitimacy to that tactic would create long-term consequences worse than the perceived benefits of its first use.

I've seen many people post stuff on Facebook about whether certain national parks/monuments should be closed. And I do think there's room for debate there. The National Park Service has a policy of only having things open if they have sufficient security to monitor them, which they now do not. Maybe that policy should be changed or applied in a more case-by-case basis rather than as a blanket policy. But what's amazing is that many people are presenting this as the outrageous story of the government shutdown and don't have anything to say about the shutdown itself. Really???? What justification could there possibly be for that other than looking for any excuse to criticize Obama and trying as hard as possible to ignore obvious flaws within your "tribe"?

It's mind-boggling, but it's also a win-win situation. They and like-minded people on their "team" get to have their warm, fuzzy (apparently mind-numbing) feeling of tribal unity. And for anyone else this serves as a useful advertisement that states "there is no reason to listen to anything I ever have to say about politics".

Corporations aren't people, so why tax them?

"Corporations are not people" has been a popular rallying cry over the last few years. One of the contexts in which it is often used is to support raising taxes on them. That's what the hecklers in this infamous Romney video seem to be saying. People apparently get upset when a corporation pays less taxes than them.. but really, if they are not people, then why compare them to yourself in this way? Why even tax them at all?

Think of a rock band. Let's say they have a singer/guitarist that makes a lot of money, a drummer and bassist who make a decent amount of money, and some techs that make a little bit of money. We already tax all of those people based on the amount they make. Nobody claims that we should additionally tax "the band", because it would still be the people who pay the tax, maybe with some of it being covered through raising the price of their product. Clearly, a "band tax" would just uselessly increase the complexity of our tax code - if we need to raise taxes it would be better to just raise them on the people directly.

Now, how is a corporation any different in this regard?

Why Children Should Walk To School

Nothing has transformed childhood as much as the risk of kidnapping by strangers, a textbook case in the psychology of fear. Since 1979, when six-year-old Etan Patz disappeared on his way to a school bus stop in lower Manhattan, kidnapped children have riveted the nation's attention, thanks to interest groups that are dedicated to sowing panic among the nation's parents...

Childhood has never been the same. American parents will not let their children out of their sight. Children are chauffeured, chaperoned, and tethered with cell phones, which, far from reducing parents' anxiety, only sends them into a tizzy if a child doesn't answer on first ring. Making friends in the playground has given way to mother-arranged playdates, a phrase that didn't exist before the 1980s. Forty years ago two-thirds of children walked or biked to school; today 10 percent do. A generation ago 70 percent of children played outside; today the rate is down to 30 percent. In 2008 the nine-year-old son of the journalist Lenore Skenazy begged her to let him go home by himself on the New York subway. She agreed, and he made it home without incident. When she wrote about the vignette in a New York Sun column, she found herself at the center of a media frenzy in which she was dubbed "America's Worst Mom." In response she started a movement - Free-Range Children - and proposed National Take Our Children to the Park and Leave Them There Day, intended to get children to learn to play by themselves without constant adult supervision.

Skenazy is not, in fact, America's worst mom. She simply did what no politician, policeman, parent, or producer ever did: she looked up the facts. The overwhelming majority of milk-carton children were not lured into vans by sex perverts, child traffickers, or ransom artists, but were teenagers who ran away from home, or children taken by a divorced parent who was embittered by an unfavorable custody ruling. The annual number of abductions by strangers has ranged from 200 to 300 in the 1990s to about 100 today, around half of whom are murdered. With 50 million children in the United States, that works out to an annual homicide rate of one in a million. That's about a twentieth of the risk of drowning and a fortieth of the risk of a fatal car accident. The writer Warwick Cairns calculated that if you wanted your child to be kidnapped and held overnight by a stranger, you'd have to leave the child outside and unattended for 750,000 years.

...When 300 million people change their lives to reduce a risk to 50 people, they will probably do more harm than good, because of the unforeseen consequences of their adjustments on the vastly more than 50 people who are affected by them. More than twice as many children are hit by cars driven by parents taking their children to school as by other kinds of traffic, so when more parents drive their children to school to prevent them from getting killed by kidnappers, more children get killed.

-- from The Better Angels of Our Nature

Europe: Conservative or Liberal?

Many Americans seem to assume that European countries are all far more liberal than us in every way. When one person claims that another person wants to make us "more like Europe", they are usually accusing them of being an extreme leftist. However...

• Relative to our QE and stimulus, most of Europe has responded to the recession with tighter money and fiscal austerity.
• Our taxes are more progressive than of any European country. In fact, most European countries actually have regressive taxation.
• European countries, on average, have lower corporate tax rates.
• Immigration laws are stricter in Europe.
• Germany has no minimum wage.
• The Netherlands and Switzerland have no capital gains tax.
• Sweden has partially privatized their public retirement system, along the lines of what Bush tried to do.
• Sweden also provides school vouchers to fund education.
• Firefighting and ambulance services in most of Denmark is provided by a private company.
• Poland is pro-life.
• In Switzerland, all health insurance is via private insurance companies (like Paul Ryan's plan to turn Medicare into "vouchers").
• There's not as much of a separation of church and state in many European countries. In fact, the Norwegian constitution states that their Evangelical-Lutheran church is "Norway's people's church, and is supported by the State". The government funds the church and church administrators are part of the government.

My point is not that Europe is actually conservative. It's just that reality is more complicated that we like to pretend.

Immigration & Crime

On facebook lately, I've frequently seen posted articles about crimes committed by illegal immigrants, with the implication that this is a reason not to pass immigration reform. The line of reasoning isn't spelled out, but I assume it's something like this:

1. Immigrants (or just illegal immigrants?) are more likely to commit crimes.
2. Stricter immigration laws would prevent more immigrants from entering America.
3. Therefore, in the interests of reducing crime, we should have strict immigration laws.

First, is it true that immigrants are more likely to commit crimes? For legal immigrants, we know the answer is no, simply by counting the number of immigrants and their incarceration rate relative to native-born Americans (link). Also, there is a consistent correlation between crime and cities that get the largest waves of immigrants - crime decreases with more immigration compared to cities with less immigration (link).

Most of the examples people use of immigrants whose crime rates are perceived to be extremely high are Mexicans, so what about them? In general, crime rates among Mexican-Americans are similar to those of white Americans, and what I found surprising was that among Mexican-Americans, those who immigrate here are less likely to commit crimes than those who were born here (link).

What about specifically illegal immigrants? We can't really be sure of that simply because we can't be sure how many illegal immigrants are here in the first place. Estimates range from 7-20 million, so even if we knew exactly how many illegal immigrants committed crimes, the crimes rates could vary a whole lot depending on what the real number of illegal immigrants is. For clues, we can simply look at the crime rates for immigrants in general that I mentioned above, since illegal immigrants would count toward those totals. But in some southern states, there is some evidence that crime from illegal immigrants is higher than average, such as this estimate from the Arizona Department Of Corrections. If that's true, why would that be? It can't be due to the culture or "nature" of latino people who come here, or else we would see the exact opposite of the crime trends among different generations of Mexican-American immigrants that I linked earlier. The most likely explanation would be the drug trade, which drives a lot of the illegal crossings on our southern border.

Now, if that is true, does it justify tighter immigration laws? I don't understand how it would. If we have an increase in crime due to our drug policy that suggests we should do something about... our drug policy. We also had an increase in organized crime among Italian-Americans during the Prohibition because of the black market for alcohol. It would be silly to suggest the solution should have been to get rid of Italians.

Also consider that there are other factors that correlate more definitively and strongly with crime rates. Crime rates are higher among impoverished African Americans. They are also higher among southerners, regardless of race and social status, than they are among northerners. Not being married is also correlated with higher crime rates, as is alcohol consumption. But the most relevant indicator of one's likelihood to commit crimes is whether they are a young male. So if we're going to discriminate against a group of people simply because their crime rates are higher than those outside that group, young males takes the cake.

So... should we update our immigration laws to simply not accept young men but accept anyone else? Or should our government discriminate against American-born young males and closely track their activity for a certain age range? Should northern states pass a law preventing/limiting southerners from visiting or moving there? Those hypothetical laws follow the logic against immigration-due-to-crime much better than anti-immigration laws do. Remember that tight immigration laws are a huge Big Government infringement on liberty and the free market. Telling people where they can go/work and employers who they can hire based on something as arbitrary as the location of their birth has a far bigger impact on people's freedom than background checks and other gun regulations that much of the anti-immigration advocates decried as tyranny.

And on top of all of this, the proposed immigration reform bill in Congress puts more money into border patrol, uses things like e-verify to keep businesses from hiring illegal immigrants, and makes it easier to immigrate here legally. Those things would be expected to reduce illegal immigration, right?