Tuesday, April 21, 2015

Economics 101

It constantly amazes me how liberals (or progressives, or whatever else you want to call those fools who don't have a clue as to how the real world works) consistently ignore basic economics.

These Blue States Have Tried the Elizabeth Warren Model. Their Residents Are Fleeing.
Massachusetts Sen. Elizabeth Warren recently appeared on one of the late night talk shows, beating the class warfare drum and arguing for billions of dollars in new social programs paid for with higher taxes on millionaires and billionaires. In recent years, though, blue states such as California, Illinois, Delaware, Connecticut, Hawaii, Maryland and Minnesota adopted this very strategy, and they raised taxes on their wealthy residents. How did it work out? Almost all of these states lag behind the national average in growth of jobs and incomes.

So, if income redistribution policies are the solution to shrinking the gap between rich and poor, why do they fail so miserably in the states?

The blue states that try to lift up the poor with high taxes, high welfare benefits, high minimum wages and other Robin Hood policies tend to be the places where the rich end up the richest and the poor the poorest.

California is the prototypical example. It has the highest tax rates of any state. It has very generous welfare benefits. Many of its cities have a high minimum wage. But day after day, the middle class keeps leaving. The wealthy areas such as San Francisco and the Silicon Valley boom. Yet the state has nearly the highest poverty rate in the nation. The Golden State, alas, has become the inequality state.

So much for liberal policies creating a workers paradise.

The 19 states with minimum wages above the $7.25 per hour federal minimum do not have lower income inequality. States with a super minimum wage—such as Connecticut ($9.15), California ($9.00), New York ($8.75), and Vermont ($9.15)—have significantly wider gaps between rich and poor than states without a super minimum wage.
Anyone with a basic understanding of economics realizes that labor has value - but that value is determined by the market, not by the government. If the government imposes an artificial value on labor, businesses will seek the most efficient means of minimizing labor costs.

Hint to the libs/progs: machines don't require minimum wages or other government mandated benefits.

The ‘Fight for $15’ Suffers A Setback As McDonald’s Flirts With Automation
By the third quarter of next year, McDonald’s plans to introduce new technology in some markets “to make it easier for customers to order and pay for food digitally...

Robots will replace fast-food workers
As protesters across the country call for the fast-food chains to raise their wages, a number of companies have begun experimenting with new technology that could significantly reduce the number of restaurant workers in the years to come.

Panera Bread is the latest chain to introduce automated service, announcing in April that it plans to bring self-service ordering kiosks as well as a mobile ordering option to all its locations within the next three years. The news follows moves from Chili's and Applebee's to place tablets on their tables, allowing diners to order and pay without interacting with human wait staff at all.

In a widely cited paper released last year, University of Oxford researchers estimated that there is a 92% chance that fast-food preparation and serving will be automated in the coming decades.
My first 'real' job - not counting my paper route or a lawn mowing service - was as a 16-year-old fry cook at a fast food restaurent in Alamo Heights, Texas (not a chain, but a single establishment owned by a guy who should have known better than to hire teen-agers).

Anyway, the owner did his best to minimize labor costs. His efforts had unintended consequences, one of which was our tendency to make huge triple-stacked burgers and incredibly rich shakes, not only for ourselves but for our buddies. He would have been better off paying more in order to get more responsible employees.

Fast forward to 2015. Rather than pay fast food workers a rate much higher than their labor is worth (not denigrating the workers, but rather being realistic concerning the value of their labor), employers are beginning to invest in lower cost automation.

What's next - the government setting a minimum wage for robots...?


Bag Blog said...

I love the self-check-outs at Wal-Mart - so much better than dealing with the workers.

Randy said...

Unfortunately those fleeing the blue states seem to be coming here.

Well Seasoned Fool said...

A company I once reped for, ATK Engines, moved 98% of their operation from SoCal to Grande Prairie, TX. Despite the costs associated with moving, they saved $800,000 the first year.

Jeff said...

I worked at an independent fast food joint when I was 15 or so. You are spot on.

CenTexTim said...

BB - and it costs Wal-Mart a lot less.

Randy - I don't mind it too much, as long as they're the type who want to get jobs, not handouts.

WSF - And the people running the company saved a bundle themselves, because TX doesn't have a state income tax.

Jeff - it was fun while it lasted...