I hate to admit this, but I think economics is boring. I understand the basics, but after that I get lost. Yet economics and economic policy have a lot to do with how successful all of us are and how successful the country is. Right now America is not in good economic shape, and economic policies have a lot to do with that fact.
Fox News posted an article on Friday by Peter Morici entitled, “Why I can’t be both an economist and a liberal.” Mr. Morici goes into detail about the effects of some of the economic policies coming out of the Obama Administration.
The article cites an example of the consequences of one Administration policy:
The Congressional Budget Office estimates raising the federal minimum wage to $10.10 an hour, as President Obama proposes, would eliminate 500,000 to 1,000,000 jobs. Businesses will be forced to raise prices, lose customers and lay off employees. Fast food restaurants will begin to use more machines and we’ll see something similar to automated checkout devices at drug stores and supermarkets.
Past increases in the federal minimum wage did not have large impacts on employment, because those were in line with inflation, and businesses adopted strategies expecting such periodic adjustments. The minimum wage was last reset in 2009 and we knew that raising it one dollar to $8.25 to preserve purchasing power would not cost many jobs.
Jumping it up to $10.10 an hour, however, would fundamentally redefine the tradeoffs businesses face regarding unskilled labor and automation. The workers left standing would have more spending power but overall, increasing unemployment by at least 500,000 would take a bite out of GDP and growth from an already anemic economic recovery.
Meanwhile, the Democrats criticize the Republicans for not being willing to raise the minimum raise. Common sense and cause and effect are not mentioned.
The article also mentions the idea that if America would cut its CO2 emissions to curb global warming, China would follow suit.
The article points out:
Liberals argue that by setting a good example the United States can bring China along.
Nonsense! American diplomats have not been able to get Beijing to respond on its undervalued currency or protectionism generally, abandon the use of force to settle territorial disputes in the China seas, or anything else the Chinese Communist Party sees as impairing economic growth or its quest to wrest leadership from the United States on global economic and security issues.
It’s time for those in leadership in America to begin putting the good of the country above the good of their political party or worse, the desire to stay in power. We have created a political class–something never intended by the founders of this country. It is time to limit terms of Senators and Representatives and return to government by the people. A Congressional term should not be a ticket to lifelong wealth.