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A man worthy of study, reflection, and celebration.
Dr. Milton Friedman was perhaps the most influential economist of the 20th Century, and the impact of his ideas will extend far into the future. To honor the man, January 29th is declared as Milton Friedman Day β a celebration of the economist's positive impact on American life and business, and the spread of the benefits of free markets to nations around the globe. Milton Friedman Day will include a host of activities, including a "Day of National Debate" at universities across the country, a live online discussion on The Economist's Free Exchange blog, and the premiere of the PBS special, "The Power of Choice: The Life and Ideas of Milton Friedman" (check local listings), among other events.
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The new House Speaker seems to understand that a higher minimum wage is bad for business, but that won't stop the new congressional majority from inflicting it on the country.
The House last week whooped through an increase in the minimum wage to $7.25, by a vote of 315-116. But, lo, included as part of this boon to the working man was a loophole: The new, higher wage floor applied to all of these United States and its territories -- save for the Pacific outpost of American Samoa. In the immortal words of Congressman Patrick McHenry (R., N.C.), "There's something fishy going on here." It turns out that American Samoa has a big fish and tuna canning industry, specifically operations run by StarKist and Chicken of the Sea. Both companies are headquartered in California, and StarKist's parent is located in none other than Ms. Pelosi's own San Francisco district.
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The coming French elections appear to pit a Socialist against a pro-free-market interventionist, whatever that is. (Sub. req'd.)
"I'm a free-market proponent," Mr. Sarkozy said in a recent television appearance. "But I believe in the state acting as a strategist."
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Pearlstein puts forward a two-step plan to...well, we're not really sure what. Step 1: Raise the minimum wage. And Step 2: Sic the IRS on small business owners.
It's also worth noting that, according to the Internal Revenue Service, small-business owners, sole proprietors and the self-employed are, as a group, the biggest tax cheats in America, responsible for $153 billion of the estimated $345 billion tax gap in 2001. What these folks deserve are more frequent visits from IRS auditors, not more tax breaks.
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The President lays out a good road forward, albeit extremely general, for continued economic growth and addressing the massive entitlement liabilities that loom. The new Congress gives lip service to being on the same page, policy-wise, but the Social Security debate in 2005 wasn't exactly reassuring.
It is also a fact that our tax cuts have fueled robust economic growth and record revenues. Because revenues have grown and we've done a better job of holding the line on domestic spending, we met our goal of cutting the deficit in half three years ahead of schedule. By continuing these policies, we can balance the federal budget by 2012 while funding our priorities and making the tax cuts permanent. In early February, I will submit a budget that does exactly that. The bottom line is tax relief and spending restraint are good for the American worker, good for the American taxpayer, and good for the federal budget. Now is not the time to raise taxes on the American people. By balancing the budget through pro-growth economic policies and spending restraint, we are better positioned to tackle the longer term fiscal challenge facing our country: reforming entitlements--Social Security, Medicare and Medicaid--so future generations can benefit from these vital programs without bankrupting our country.
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No bad at all, eh?
In 2006, a slowly improving job market finally grew strong enough to bring solid pay increases to most workers. Thanks to falling oil prices, meanwhile, inflation plummeted. As a result, the real average wage of rank-and-file workers β a group that makes up about 80 percent of the work force β has risen more than 2 percent over the last year. That pace has been reached only one other time in the last three decades, at the peak of the great 1990s boom.
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As Mallaby writes, we prize technological innovators but not financial innovators, though their contributions to society are no less equivalent. Also, a few good points on the SEC's bizarre rules to "protect" investors from hedge funds.
In their ceaseless search for profits, hedge funds have sought out inefficiencies on the financial frontier. After Hurricane Katrina, some traditional insurers recoiled from covering offshore structures, a classic example of overreaction to a bad event. Hedge funds hired academic climatologists, crunched the numbers and made a tidy profit by underwriting storm risk. Equally, hedge funds loom large in the trading of new financial instruments. They have experimented in the markets for wine, art, special loans to rock stars -- and even in the contracts of Brazilian soccer stars.
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Terrible news. The big airlines lumber from bankruptcy to bankruptcy as their smaller, more nimble rivals are eating them for breakfast. Think of the parallels between Big Steel and new steel. The alternative to blocking mergers is probably big subsidies--sometimes disguised as favorable regulations, such as under the pensions bill earlier this year. Let the big airlines do what they can to boost profits. If not, taxpayers will be on the hook sooner or later. And who's to say that travelers will lose out due to mergers? Raise prices, and profits, on routes, and small carriers will jump in to drive both back down. But improve efficiency through tighter management and efficiencies--two of the major reasons for mergers--and consumers will benefit.
Airline mergers are already on the political radar screen. Concerned about rising fares and the potential for reduced air service to small communities, Representative James L. Oberstar, Democrat of Minnesota, the next chairman of the House Committee on Commerce and Transportation, said yesterday that the Justice Department should block any major airline merger. If it does not, Mr. Oberstar said, he would call hearings before his committee to consider action to block such mergers (three steps are necessary to approve an airline deal: the Transportation Department must determine that a merger is financially viable, the Federal Aviation Administration must approve a certificate of safety, and the Justice Department must determine that there are no antitrust issues).
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Wages and benefits paid to American workers rose in the July-September period at the fastest pace in more than two years. The Labor Department reported that its employment cost index was up 1% in the third quarter, compared with a 0.9% rise in the April-June period. It was the biggest quarterly increase since a similar 1% rise in the second quarter of 2004. The increase, which was above the 0.9% rise that economists had been expecting, was led by a jump in the cost of employee benefits such as health insurance and pensions. Benefit costs rose 1.1%, up from a 0.8% gain in the second quarter. Wages and salaries were up 0.9%, matching the increase in the second quarter. Private sector workers saw their compensation costs go up 0.9% while state and local government workers saw an increase of 1.4%, which analysts attributed to the tight labor market and revenue gains for state and local governments.
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The economy is producing good jobs, reports the AP.
Apartment rents and demand are soaring nationwide as the economy produces good jobs and people who might have bought homes a year ago settle for apartments while they wait for housing prices to tumble.
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These are the concessions the New York Times's David Leonhardt feels the need to make so that he can argue that a higher minimum wage is hardly so bad.
The worries about Social Security may sound silly now, given that it did pass that summer and went on to become one of the most popular government programs in American history. But on the narrow charge that they were making--that Social Security would destroy jobs--the critics at The New York Times and on Capitol Hill were, in fact, correct. Besides taking money out of the pockets of workers that otherwise might have been spent, the new payroll taxes raised the cost of employing workers, and when the cost of something goes up, demand for it usually goes down. The Social Security Act of 1935, as the historian Edward Berkowitz has noted, laid the groundwork for the "Roosevelt recession" of 1937 and 1938. Social Security is hardly the only job-killing program enacted in the last century. If the country cared only about creating jobs -- rather than, say, lifting living standards -- it would also be wise to get rid of Medicare and the payroll taxes that come with it. Workplace safety rules, with their costly requirements that workers not be injured on the job, should go, too.
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Treason?! Hilarious.
Wal-Mart is akin to McDonald's. It is apotheosis of everything wrong with America. Entering the maw of a Wal-Mart is creepy. Any normal person over the age of 40 viscerally feels, as the cornucopia of junk and tatterdemalion illegal immigrants who shop there deluge his eyes, that something is horribly wrong beneath the garish consumerism and materialism. Well, something is wrong. The company knows no loyalty... Wal-Mart is subsidizing the destruction of America. Libertarians and so-called conservatives support the endeavor. Some of us dare call that treason.
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To understand how subjective poverty in America is, one need only recognize the fact that most rich people from a century ago would be considered poor by today?s standards, and today?s poor would be considered rich by the standards of 1900. In 1900, 2 percent of homes had electricity, and 1 out of 10 homes had flush toilets. Today, pretty much all of them do. In other words, the tangible goods that defined wealth have been democratized. Absurdly, according to the official measurements used by the federal government, fewer people lived in poverty in 1973 than today. But in 1973, most poor people didn?t have a car. Today, almost 75 percent of those officially in poverty have a motor vehicle. Today?s poor households, according to statistician Nicholas Eberstadt, are more likely to have telephones and televisions than non-poor families were in 1970. In the 1970s, undernourishment still factored into poverty. Today, obesity is a far bigger problem.
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What a puzzle! Obviously, the Times reporter has not read his own section's columns lately.
"I don't know of another election cycle in which the economy was so good, yet the election prospects for the incumbent party looked so bad," said Frank Luntz, a Republican strategist. "If something goes wrong, Republicans are to blame. If something goes right, Republicans don't get credit."
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Yet the benefits of the snow blower, namely more free time and less health risk, are largely missing from the government's attempts to determine Americans' economic well-being. The same goes for dozens of other inventions, be they air-conditioners, cellphones or medical devices. The reasons are a little technical -- they involve the measurement of inflation -- but they're important to understand, because the implications are so large.
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