March 28, 2015

Most of Benefits of Minimum Wage Increases Do Not Go to the Poor



(p. A11) A higher minimum wage raises wages of low-wage workers, and even though most evidence points to job losses from higher minimum wages, the evidence doesn't point to widespread employment declines. Thus, consistent with a recent Congressional Budget Office report, many more low-wage workers will get a raise than will lose their jobs. But that argument is about low-wage workers, not low-income families. Minimum wages are ineffective at helping poor families because such a small share of the benefits flow to them.

One might think that low-wage workers and low-income families are the same. But data from the U.S. Census Bureau show that there is only a weak relationship between being a low-wage worker and being poor, for three reasons.

First, many low-wage workers are in higher-income families--workers who are not the primary breadwinners and often contribute a small share of their family's income. Second, some workers in poor families earn higher wages but don't work enough hours. And third, about half of poor families have no workers, in which case a higher minimum wage does no good. This is simple descriptive evidence and is not disputed by economists.

A historical perspective is instructive. Assembling Census Bureau data over nearly seven decades, Richard Burkhauser and Joseph Sabia have shown that in 1939, just after the federal minimum wage was established, 85% of low-wage workers (those earning less than one-half the private-sector wage) were in poor families. Such a high percentage implies that, in that year, the new minimum wage targeted poor families well. However, as the public safety net expanded, family structure changed and more people in families began working, this percentage fell sharply over time--to around 17% by the early 2000s.

In contrast, as of the early 2000s 34% of low-wage workers were in families that were far from poor, with incomes more than three times the poverty line. In other words, for every poor minimum-wage worker who might directly benefit from the minimum wage, two workers in families with incomes more than three times the poverty line would benefit.



For the full commentary, see:

DAVID NEUMARK. "Who Really Gets the Minimum Wage; Obama's $10.10 target would steer only 18% of the benefits to poor families; 29% would go to families with incomes three times the poverty level." The New York Times (Mon., July 7, 2014): A11.

(Note: the online version of the commentary has the date July 6, 2014.)


For more of Neumark on minimum wages, see:

Neumark, David, and William L. Wascher. Minimum Wages. Cambridge, MA: The MIT Press, 2008.






March 27, 2015

Recovery Slows When Start-Ups Are Taxed to Pay for Bailouts of Failed Firms




Vernon Smith, whose views are quoted below, won the Nobel Prize in economics in 2002.



(p. A11) The rescue of incumbent investors in the government bailout of the largest U.S. banks in the autumn of 2008 has been widely viewed as unfair, as indeed it was in applying different rules to different players. . . .


. . .


The rescue, . . . , had a hidden cost for the economy that is difficult to quantify but can be crippling. New economic activity is hobbled if it is not freed from the burden of sharing its return with investors who bore risks that failed. The demand for new economic activity is enlarged when its return does not have to be shared with former claimants protected from the consequences of their risk-taking. This is the function of bankruptcy in an economic system organized on loss as well as profit principles of motivation.


. . .


Growth in both employment and output depends vitally on new and young companies. Unfortunately, U.S. firms face exceptionally high corporate income-tax rates, the highest in the developed world at 35%, which hobbles growth and investment. Now the Obama administration is going after firms that reincorporate overseas for tax purposes. Last week Treasury Secretary Jack Lew wrote a letter to the chairman of the House Ways and Means Committee urging Congress to "enact legislation immediately . . . to shut down this abuse of our tax system."

This is precisely the opposite of what U.S. policy makers should be doing. To encourage investment, the U.S. needs to lower its corporate rates by at least 10 percentage points and reduce the incentive to escape the out-of-line and unreasonably high corporate tax rate. Ideally, since young firms generally reinvest their profits in production and jobs, such taxes should fall only on business income after it is paid out to individuals. As long as business income is being reinvested it is growing new income for all.

There are no quick fixes. What we can do is reduce bureaucratic and tax barriers to the emergence and growth of new economic enterprises, which hold the keys to a real economic recovery.



For the full commentary, see:

VERNON L. SMITH. "The Lingering, Hidden Costs of the Bank Bailout; Why is growth so anemic? New economic activity has been discouraged. Here are some ways to change that." The Wall Street Journal (Thurs., July 24, 2014): A11.

(Note: last ellipsis in original, other ellipses added.)

(Note: the online version of the commentary has the date July 23, 2014.)






March 26, 2015

"If You Want to Find Something New, Look for Something New!"



(p. D8) Yves Chauvin, who shared the 2005 Nobel Prize in Chemistry for deciphering a "green chemistry" reaction now used to make pharmaceuticals and plastics more efficiently while generating less hazardous waste, died on Tuesday [January 27, 2015] in Tours, France.


. . .


He confessed that he was not a brilliant student, even in chemistry. "I chose chemistry rather by chance," he wrote, "because I firmly believed (and still do) that you can become passionately involved in your work, whatever it is."

Mr. Chauvin graduated from the Lyon School of Industrial Chemistry in 1954. Military service and other circumstances prevented him from pursuing a doctoral degree, which he said he regretted. "I had no training in research as such and as a consequence I am in a sense self-taught," he wrote in his Nobel Prize lecture.

He worked in industry for a few years before quitting, frustrated by an inability to pursue new ideas. "My motto is more, 'If you want to find something new, look for something new!' " Mr. Chauvin wrote. "There is a certain amount of risk in this attitude, as even the slightest failure tends to be resounding, but you are so happy when you succeed that it is worth taking the risk."

He found the freedom to choose his research when he joined the French Petroleum Institute in 1960, and it led to his breakthrough on metathesis.

"Like all sciences, chemistry is marked by magic moments," Mr. Chauvin wrote. "For someone fortunate enough to live such a moment, it is an instant of intense emotion: an immense field of investigation suddenly opens up before you."



For the full obituary, see:

KENNETH CHANG. "Yves Chauvin, Chemist Sharing Nobel Prize, Dies at 84." The New York Times (Sat., JAN. 31, 2015): D8.

(Note: ellipsis, and bracketed date, added.)

(Note: the online version of the obituary has the date JAN. 30, 2015.)






March 25, 2015

Few Founding Fathers Toiled Harder Against Slavery than Hamilton



(p. 211) The magnitude of southern slavery was to have far-reaching repercussions in Hamilton's career. The most damning and hypocritical critiques of his allegedly aristocratic economic system emanated from the most aristocratic southern slaveholders, who deflected attention from their own nefarious deeds by posing as populist champions and assailing the northern financial and mercantile interests aligned with Hamilton. As will be seen, the national consensus that the slavery issue should be tabled to preserve the union meant that the southern plantation economy was effectively ruled off-limits to political discussion, while Hamilton's system, by default, underwent the most searching scrutiny.

Few, if any, other founding fathers opposed slavery more consistently or toiled (p. 212) harder to eradicate it than Hamilton--a fact that belies the historical stereotype that he cared only for the rich and privileged.


. . .


(p. 213) The issue surged to the fore with the peace treaty that ended the Revolution. At the prompting of Henry Laurens, article 7 placed a ban on the British "carrying away any Negroes or other property" after the war. This nebulous phrase was construed by slaveholders to mean that the British should return runaway slaves who had defected to the British lines or else pay compensation. The British, in turn, claimed that the former slaves had been freed when they crossed behind British lines. Conceding that Britain may have violated article 7 on technical grounds, Hamilton nevertheless refused to stand up for the slaveholders and invoked a higher moral authority:

In the interpretation of treaties, things odious or immoral are not to be presumed. The abandonment of negroes, who had been induced to quit their masters on the faith of official proclamations, promising them liberty, to fall again under the yoke of their masters and into slavery is as odious and immoral a thing as can be conceived. It is odious not only as it imposes an act of perfidy on one of the contracting parties, but as it tends to bring back to servitude men once made free.

This fierce defender of private property--this man for whom contracts were to be sacred covenants--expressly denied the sanctity of any agreement that stripped people of their freedom.



Source:

Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.

(Note: italics in original.)






March 24, 2015

The Underground Railroad Was No Myth



(p. C7) The first scholarly study of the Underground Railroad, published by Wilbur Siebert in 1898, named some 3,200 "agents," virtually all of them white men, who presided over an elaborate network of fixed routes, illustrated with maps that looked much like those of an ordinary railroad.

That view largely held among scholars until 1961, when the historian Larry Gara published "The Liberty Line," a slashing revisionist study that dismissed the Underground Railroad as a myth and argued that most fugitive slaves escaped at their own initiative, with little help from organized abolitionists. Scholarship on the topic all but dried up, as historians more generally emphasized the agency of African-Americans in claiming their own freedom.

But over the past 15 years, aided by newly digitized records of obscure abolitionist newspapers and local archives, scholars have constructed a new picture of the Underground Railroad as a collection of loosely interlocking local networks of activists, both black and white, that waxed and waned over time but nevertheless helped a significant number reach freedom.


. . .


In "Gateway to Freedom," Mr. Foner ties much of that work together, while uncovering the history of the eastern corridor's key gateway, New York City.

"This book is a capstone," said Matthew Pinsker, a historian at Dickinson College in Carlisle, Pa., who will be teaching it to K-12 educators at a workshop this summer. "The Underground Railroad was real, and Foner will help ordinary people understand that in a way that doesn't rely on fiction or quilt stories, but on actual documents and records."



For the full review, see:

JENNIFER SCHUESSLER. "Words From the Past Illuminate a Station on the Way to Freedom." The New York Times (Thurs., JAN. 15, 2015): C1 & C7.

(Note: ellipsis added.)

(Note: the online version of the review has the date JAN. 14, 2015.)


The book under review is:

Foner, Eric. Gateway to Freedom: The Hidden History of the Underground Railroad. New York: W. W. Norton & Company, 2015.






March 23, 2015

How Air Conditioning Can Improve Metabolism



(p. 14) Sleep is essential for good health, as we all know. But a new study hints that there may be an easy but unrealized way to augment its virtues: lower the thermostat. Cooler bedrooms could subtly transform a person's stores of brown fat -- what has lately come to be thought of as "good fat" -- and consequently alter energy expenditure and metabolic health, even into daylight hours.


. . .


"These were all healthy young men to start with," . . . [senior author Francesco S. Celi] says, "but just by sleeping in a colder room, they gained metabolic advantages" that could, over time, he says, lessen their risk for diabetes and other metabolic problems. The men also burned a few more calories throughout the day when their bedroom was chillier (although not enough to result in weight loss after four weeks).


. . .


The message of these findings, Celi says, is that you can almost effortlessly tweak your metabolic health by turning down the bedroom thermostat a few degrees. His own bedroom is moderately chilled, as is his office -- which has an added benefit: It "keeps meetings short."



For the full story, see:

GRETCHEN REYNOLDS. "Let's Cool It in the Bedroom." The New York Times Magazine (Sun., JULY 20, 2014): 14.

(Note: ellipses added.)

(Note: the online version of the story has the date JULY 17, 2014.)


The academic paper discussed above, is:

Lee, Paul, Sheila Smith, Joyce Linderman, Amber B. Courville, Robert J. Brychta, William Dieckmann, Charlotte D. Werner, Kong Y. Chen, and Francesco S. Celi. "Temperature-Acclimated Brown Adipose Tissue Modulates Insulin Sensitivity in Humans." Diabetes 63, no. 11 (Nov. 2014): 3686-98.






March 22, 2015

Castro to Writers and Artists: "Against the Revolution, No Rights at All"



(p. A13) Ricardo Porro, an architect who gave lyrical expression to a hopeful young Cuban revolution in the early 1960s before he himself fell victim to its ideological hardening, died on Thursday [December 25, 2014] in Paris, where he had spent nearly half a century in exile.


. . .


Mr. Porro's two schools have voluptuous brick domes and vaults, built by hand in the Catalan style reminiscent of Antoni Gaudí, that are almost bodily in their gentle embrace. Supporting them, and contrasting with their soft curves, are angular columns and buttresses that speak of the shattering force of revolution.


. . .


Before the schools were completed, however, artistic expression was stifled as Cuba moved into the Soviet orbit. Mr. Castro had famously answered his own rhetorical question in 1961 about the rights of writers and artists: "Within the revolution, everything. Against the revolution, no rights at all."

Almost overnight, the art schools' distinctive style was officially anathema. "You realize that you've been accused of something," Mr. Porro recalled in "Unfinished Spaces," a 2011 documentary directed by Alysa Nahmias and Benjamin Murray. "And then you realize that you have been judged. And then you realize you are guilty. And nobody tells you."



For the full obituary, see:

DAVID W. DUNLAP. "Ricardo Porro, 89, Exiled Cuban Architect." The New York Times (Tues., DEC. 30, 2014): A13.

(Note: ellipses, and bracketed date, are added.)

(Note: the online version of the obituary has the date DEC. 29, 2014, and has the title "Ricardo Porro, Exiled Cuban Architect, Dies at 89.")






March 21, 2015

Cornwalis Betrayed the Slaves Who Had Helped Him




(p.161) Dug in on high ground, Cornwallis had been throwing up earthwork redoubts since early August, employing thousands of slaves who had defected to the British lines in expectation of earning their freedom.


. . .


(p. 164) Cornwallis had grown so desperate that he infected blacks with smallpox and forced them to wander toward enemy lines in an attempt to sicken the opposing forces.



Source:

Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.






March 20, 2015

Moral Progress Accelerated in the 18th Century



(p. A11) For hundreds of years, people flocked to public hangings as a form of entertainment. Onlookers crowded into town squares and brought their families, reveling in the carnival atmosphere. Today most people are sickened at the idea of merriment at an execution. (Many are disturbed that executions take place at all.) We recoil from other once-common practices, too: slavery, the mistreatment of children, animal cruelty. Such shifts in attitude or belief surely constitute a form of moral progress and suggest, for once, that civilization is advancing and not receding.


. . .


Mr. Shermer defines moral progress as an "increase in the survival and flourishing of sentient beings," which he illustrates with graphs and charts that reveal, among other things, a decline in war-related deaths, the expansion of the food supply, the reduction in major epidemics, the growth of world GDP and the spread of democracy.

Humanitarian achievements in the West, Mr. Shermer notes, began in earnest [in] the 18th century. Yet the ability to reason ethically is not a product of the Enlightenment. A moral instinct seems to be present at birth: Even infants possess innate intuitions about fairness and reciprocity, as Mr. Shermer explains. All societies punish free riders. The Golden Rule and Babylon's Code of Hammurabi (advocating proportionate punishment) predate the ancient Greeks. So why did we need an Enlightenment to jump-start our moral progress?



For the full review, see:

SALLY SATEL. "BOOKSHELF; Getting Better All the Time; Crowds once flocked to watch executions. Now we recoil at the idea. What causes such transformations of ethical standards?" The Wall Street Journal (Tues., Jan. 20, 2015): A11.

(Note: ellipsis, and bracketed word, added.)

(Note: the online version of the review has the date Jan. 19, 2015.)


The book under review is:

Shermer, Michael. The Moral Arc: How Science and Reason Lead Humanity toward Truth, Justice, and Freedom. New York: Henry Holt and Co., 2015.






March 19, 2015

Over-Regulation Could Stifle Drones' Potential to Revolutionize Our Lives



(p. A15) In the early days of the automobile, Vermont enacted a law requiring someone to walk one-eighth of a mile in front of every car and wave a red flag to warn pedestrians. Iowa directed all motorists to call ahead to warn each town on their route that they were coming. Some jurisdictions set speed limits so low that drivers who obeyed them risked having their engines stall.

Those laws seem humorously quaint, but if they had been widely adopted and enforced, the automobile revolution might have been shut down and its manifold benefits denied to millions. Today over-regulation could stifle the development of drones, which have the potential to revolutionize many parts of the economy and our everyday lives.

To cite a few examples: Amazon hopes to launch Prime Air, which would use drones to deliver packages in less than 30 minutes after an order is placed. Texas Equusearch, which organizes missing-person recovery efforts, can replace the labor of 100 volunteers with one drone. Clayco Inc., a construction firm, intends to use drones for aerial imaging of construction projects--replacing either helicopters, which burn fossil fuels and can be dangerous to those below, or construction workers, who risk serious injury through falls when they must climb to reach high, hard-to-reach places to take photos.



For the full commentary, see:

JOSEPH R. PALMORE and CHRISTOPHER J. CARR. "Overregulated Drones Struggle for Take-Off; The FAA has been slow and stuck in the past--precisely what the technology is not." The Wall Street Journal (Mon., Feb. 23, 2015): A15.

(Note: the online version of the commentary has the date Feb. 22, 2015,)









Eight Most Recent Comments:



Aaron said:

Interested to see how not only did Hamilton gain a vote, but also how Jefferson lost one.



Dave Megan said:

Merging of companies is always better when they have a better goal. It will give better service for the public.



Ed Rector said:

The 'quickened pace of production' of the early Reagan years was directly attributable to RR's massive deficit spending. The national debt almost tripled under the watch of St. Ronnie. BO will have to work overtime to even approach this record of accomplishment.



Aaron said:

The last two paragraphs comport perfectly with what Paul Tough describes in a book you posted on a few months ago, "How Children Succeed." Tough advocates that a stable, loving relationship between kids and their parents, especially in the first few years of life, produces self-assured and less anxious adults due to brain formation or chemical reactions that take place in a baby's brain (simplified summary). As always, appreciate the posts, especially the Paul Tough book.



Rev. Pfloyd said:

Hans' "The Best Stats You've Ever Seen" Ted Talk is my favorite Ted Talk ever, which is a pretty big statement when you share company with talks like Sir Ken Robinson's education talk and Steven Pinker's Human Nature and the Blank Slate" talk.



Rev. Pfloyd said:

Voting with your feet. And of course now people are fleeing France to move across the water to England for the same reason. It's truly a global world; soaking the rich really isn't an option anymore.



otacon said:

The media tends to be a willing participant in fanning the flames of racism. Check CNN or the Drudge Report. Every day there is at least one racially charged story. Every day. It has become a tool for news outlets to get clicks but ultimately is a disservice to pretty much everyone.



otacon said:

This is very dangerous and this doctor is acting completely irresponsibly. Are these students supposed to take Adderall for their entire lives or just until they pass American History class? Why not prescribe steroids for under performing children in sports?





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