Thursday, April 13, 2006

Democratic Politics

Recent news reports show a sharp drop in President Bush's popularity to record lows. Taken by itself, this could be reason to celebrate. However, when I took the time to look at the numbers I find reason for concern.

I find that people who hate Bush, hate him for the wrong reasons. Torture, rendition, imprisonment without trial, secret orders suspending the Constitution, a political ideology that supports dictatorship in principle, and manipulating the American public into a costly war do not count for much of a reason to hate Bush. Those who hate Bush for these reasons hated him already. Bush's big public relations problems have been the Dubai Ports deal and the high price of gasoline.

Bad Reasons to Hate Bush

The Dubai Ports Deal: One of the reasons Bush is in trouble because he did not exhibit the requisite level of blind anti-Arab bigotry that the American public demands. There was only one reason for the flare of public hostility to the Dubai ports deal -- the people who wanted to run the ports were Arab.

Gas/Oil Prices: Americans want Bush to do something about the high price of gasoline. Summer is coming, vacations are near, and the price of gasoline might be $3.00 per gallon. Yet, if he "does something" about the high price of gasoline, this will only spur consumption, spur global warming, and dry up investment capital that has become available to companies promoting alternative fuels.

Even the threat of government action to reduce prices will damage the business case for alternative energy. As the possibility of government interference to make "cheap oil" increases, the risk of investing in alternative energy also increases, which means less investment and more global warming.

The Democrats, then, will ultimately seek re-election by promising to do more to contribute to global warming than the Republicans.

There is no doubt that Democratic political leaders are conducting polls to determine what the people want to hear. Those polls are telling the Democrats to focus their energy on harvesting anti-Arab sentiment and to promise the people cheep gas. Democrats would be wasting their time talking about torture, rendition, imprisonment without trial, secret orders suspending the Constitution, an ideology that says the President has the power to declare a national emergency and make himself dictator, and starting a war by lying to the American people.

The Minimum Wage

Already, Democrats are planning what to do if they should gain control of one or both houses of Congress in 2006. One of the policies moving up their political ladder is an increase in the minimum wage.

Raising the minimum wage sounds like a great idea. All we have to do is to mandate that companies pay a little more each hour and we will have instant prosperity.

If raising the minimum wage is so effective, perhaps we should raise the minimum wage to $100,000 per hour and we can all retire by the end of the month.

It would not work. Economic research and economic theory both tell us that, when you raise minimum wage, you help a few minimum-wage workers at the cost of throwing others into unemployment.

(1) Some companies barely making a profit today will go out of business.

(2) Some companies, faced with higher wage rates, will cut back on hours and benefits.

(3) Some companies will raise prices to pay for the costs -- meaning that those who manage to get the higher wage will get higher prices to go along with it.

(4) Some people who would have otherwise stayed out of the labor market in order to raise their children, pursue a dream, retire, or stay in school will find the job market more tempting, increasing the labor force, and forcing out the lower-skilled, low-end workers.

In short, raising the minimum wage will harm the people it is supposed to help.

Think of it this way. Assume that the government established a minimum price for a car of $10,000. What would happen to the cars that people are now buying for less than $10,000? Will they ALL now sell for $10,000? Or would a large number of them instead end up going to the automobile unemployment line?

Consider the body of literature that can be found on this list. I know that the list was compiled by a Republican-control house committee. However, that does not change the fact that this is peer-reviewed research, and that the body of research not supporting these results is quite small.

When conservatives decide to ignore the large bulk of research that contradicts their position on abstinence-only sex education, and latch onto a few pieces of research that support their position, liberals call it ‘cherry picking,’ sneer, and cast insults.

What should we treat liberals who ignore the large bulk of research that contradicts their position on abstinence-only sex education, and latch onto a few pieces of research that support their position?

At this point, at least one liberal will think that I am arguing for leaving these people at the mercy of the free market. That would not be true. I can give arguments for all sorts of government assistance, and I would argue for taxing the rich to pay for it. I simply think that the effort should go into programs that work, and not programs that make the situation worse.

The Ideal Political Candidate

My ideal political candidate would say something like this.

"I promise that I will never, ever hire people to rewrite scientific papers to conform to administration policy. Instead, I will hire people to rewrite administration policy to conform to the best scientific research available.

"If that research ends up supporting the position of people on the other side of the political isle, I will do the right thing and support the policy that the experts tell me is wisest, rather than put party loyalty above my political responsibility and do what the party wants.

"In determining what is the best scientific research available, I will look for the research that has the respect of people who are experts in that field.

"Finally, the position of 'expert in the field' is not be for sale -- going to the representative of whatever industry or special-interest group that happens to make the highest campaign contributions."

Yes, I recognize that this is a fantasy -- something that has no chance of happening in the real world. Such a candidate has zero chance of getting elected. However, in an ethics blog, it somehow seems appropriate to talk about ideals from time to time, just to remind ourselves how things could be.

6 comments:

Hume's Ghost said...

My ideal candidate would have some familiarity with the history of democracy and the founding prinicples of the nation, and would be write his own speeches.

Oz said...

The old "tax the rich" slogan, eh? It's always easy to be generous with other people's money. When I was a kid my mother would send me on errands and I would put the change in the donation cans by the register (without her telling me to). It was easy. Of course, you didn't see me doing that nearly as often when I bought candy for myself.

Alonzo Fyfe said...

Oz

Yes, it is easy to be generous with another person's money. But it is also right.

The analogy I use is this:

Imagine a rich person who has gone to great expense to build a mansion in the middle of the desert. He has trucked in tons of water that he uses for lavish swimming pools and passions. He is an excentric man who only wants to be left alone, so he has no way to communicate with the outside world.

A passenger plane crashes in the nearby desert. They come to his gated oasis asking for water. He refuses. He is content to sit on his porch and watch them die.

I argue for taking the water -- enough to give to the airplane passengers until help can arrive.

By "enough", I mean enough to keep them in good health, which is more than what is needed to keep them alive.

Yes, it is easy to be generous with somebody else's water. But it also happens to be the right thing to do.

otherguy said...

Labor has been shown to have very inelastic demand. The minimum wage would need to be increased very significantly to have even a modest effect on the labor market.

Making modest increases to minimum wage to keep it in line with being able to make a living is the right thing to do.

thayne said...

Otherguy --

Could you provide a reference to support this? I'm not arguing with you, I just would like to read something in support of what you claim.

Alonzo Fyfe said...

Otherguy

I am sorry, but your response leaves open a number of questions.

(1) You did not cite any evidence. So, I must ask whether you researched this and understand the research, or is it something that you heard and you decided to accept because you want to believe that it is true? Almost all people who make this claim typically draw this information specifically from the work of Card and Krueger. I am suspicious of non-economists who say that Card and Krueger must be right when they have not been able to convince the bulk of professional economists. This sounds to me to be particularly symptomatic of somebody accepting something as true because they want to believe it -- that is, of cherry-picking the intelligence to fit the preferred policy.

(2) Not all minimum wage workers face the same demand curve. Children from middle-income white households and people seeking part-time work to supplement their regular income face less elasticity than low-income minority workers. So, this is a plan for driving low-income minority workers deeper into poweverty so that middle-income households can make more money.

(3) Higher wages bring more of these middle-income white children and people seeking to supplement their income into the job market, replacing low-income minority workers.

(4) A higher minimum wage must weigh the fact that those who gain have an increase in pay, while those who lose have lost their livelihood - everything - including the increased opportunity for promotions and pay raises that come from having entered the job market.