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Why California Cities Are Becoming Unlivable – Article by Andrew Berryhill

Why California Cities Are Becoming Unlivable – Article by Andrew Berryhill

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Andrew Berryhill
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California has the highest poverty rate in the U.S. and is rated dead last in quality of life.

In July, the mayor of San Francisco frankly stated that poverty in the city is so bad, that “there is more feces on the sidewalks than I’ve ever seen.” And it’s not just her – the local NBC investigative unit found a “dangerous mix of drug needles, garbage, and feces throughout downtown San Francisco.”

While such conditions are thankfully not widespread, California still has the highest rate of poverty of any state when factoring in living costs and is rated dead last for quality of life. It’s no wonder that from 2007 to 2016, California lost a million residents on net to domestic migration.

This plight may appear counterintuitive since California’s economy is booming. If the state were an independent country, its economy would rank as the 5th largest in the world. However, a high GDP does not necessarily entail socioeconomic wellbeing.

So, what’s the main problem ailing California and creating such a high cost of living?

Housing Costs

How bad are housing costs? The median price of a home in California is over $600,000 (compared with $300,000 nationally) and a recent study found that:

“Across California, more than 4 in 10 households had unaffordable housing costs, exceeding 30 percent of household income, in 2015. More than 1 in 5 households statewide faced severe housing cost burdens, spending more than half of their income toward housing expenses.”

Housing costs are so high that in San Francisco and San Mateo counties the government considers a household of four making $105,350 as “low income”.

And it’s not just low and middle-income families that are suffering – even many “elite” technology workers can barely make ends meet. Lucrative six-figure salaries don’t go far when you live in the most expensive housing markets in America while also paying some of the highest taxes.

You can save money by living in the suburbs, but multi-hour commutes in soul-crushing traffic may await. Is such an arrangement worth it? Many have said “no” and moved to other states. While their new jobs elsewhere might pay less, other benefits more than make up for it.

But why is the housing situation in California so terrible?

It’s easy to simply say “supply and demand” – so many people have moved to cities that housing construction can’t keep up, causing real estate prices and rents to skyrocket.

However, this invites an important question: why can’t residential developers build fast enough?

Regulations

Regulations play an especially large role in the San Francisco Bay Area, which shockingly includes 15 of the 30 cities with the highest rents in the country. One article explains these struggles well:

For new housing developments in San Francisco, there’s a preliminary review, which takes six months.

Then there are also chances for your neighbors to appeal your permit on either an entitlement or environmental basis. The city also requires extensive public notice of proposed projects even if they already meet neighborhood plans, which have taken several years of deliberation to produce. Neighbors can appeal your project for something as insignificant as the shade of paint. . .

If those fail, neighborhood groups can also file a CEQA or environmental lawsuit under California state law, challenging the environment impact of the project. . .

Then if that fails, opponents can put a development directly on a citywide ballot with enough signatures. . . That’s what happened with the controversial 8 Washington luxury condo project last November even though it had already gone through eight years of deliberation.

These barriers add unpredictable costs and years of delays for every developer, which are ultimately passed onto buyers and renters. It also means that developers have problems attracting capital financing in weaker economic years because of the political uncertainty around getting a project passed.”

Why aren’t politicians working to fix this? Self-preservation. Here’s the unfortunate reality:

“The reason the San Francisco city government won’t fix things that seem obvious . . . is because it fears a backlash from the hundreds of neighborhood associations that blanket the city and can reliably turn people out to the polls.”

Community Sentiment

This cultural opposition to development is not a modern phenomenon:

“San Francisco’s orientation towards growth control has 50 years of history behind it and more than 80 percent of the city’s housing stock is either owner-occupied or rent controlled. The city’s height limits, its rent control and its formidable permitting process are all products of tenant, environmental and preservationist movements that have arisen and fallen over decades.”

Development proposals have been shot down for reasons ranging from burrowing owl protection to complaints that the size of new residential buildings will block sunshine and thereby “devalue human life”.

The power of this “Not In My Back Yard” (NIMBY) movement has been considerable, but counter-movements are growing. When one homeowner recently complained in a Berkeley city council meeting that a proposed residential building would block sunshine for her zucchini garden, one young woman angrily responded: “You’re talking about zucchinis? Really? Because I’m struggling to pay rent.” Young workers facing unaffordable rents are increasingly fed up with petty opposition to more affordable housing.

However, Californian cities still seem more preoccupied with banning straws, cocktail swords, scooters, delivery robots, and workplace cafeterias.Even when politicians try to help, they frequently ignore the root causes of the issue. For example, California Representative Kamala Harris recently proposed a bill called the “Rent Relief Act” that would provide a tax credit for people spending over 30 percent of their income on rent.

Harris’ proposal only addresses symptoms of an underlying disease and would almost certainly be counterproductive. It doesn’t encourage more housing construction, which is the only real solution.

Until sweeping housing reform to enable residential development is passed at the state and local levels, Californians will keep fleeing to Texas, Nevada, and Arizona. I don’t blame them.

Andrew Berryhill is an Alcuin Fellow at Intellectual Takeout and a rising senior at Hillsdale College majoring in economics. Andrew has interned on Capitol Hill and was a research fellow for Hillsdale’s economics department. In his spare time, he enjoys practicing the violin and playing golf.

This post (“Why California Cities Are Becoming Unlivable“) was originally published on Intellectual Takeout by Andrew Berryhill.

Secede and Decentralize: An Open Letter to Clinton Supporters – Article by Justin Murray

Secede and Decentralize: An Open Letter to Clinton Supporters – Article by Justin Murray

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The New Renaissance HatJustin Murray
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Dear Clinton Voters:

I know this election has been painful for you. Many feel betrayed and even believe yourselves no longer living in the country you thought you were. Reflect on that pain and frustration for a moment. Now recognize how you feel now is how an equally large, possibly larger, number felt for the past eight years. Those who are of a liberty bent feel it all the time, no matter who ends up in office. Reflect on it, feel it, understand it, own it.

Before you get the wrong idea, this is not my attempt at rubbing in your face the loss of your candidate or an endorsement of President-elect Donald Trump. If anything, I share your pain and frustration, just for an entirely different reason. What you’re feeling, this hopelessness, this feeling that you’re no longer represented, this feeling that people other than you are now able to dictate your way of life, this is all a result of the massive expansion of the Federal government. Elections have long ceased being voting for someone you think represents the lifestyle you want to live and are, in practice, an exercise on determining whether or not you get to impose your preferred lifestyle on someone else.

This is the nature of elections, especially the “first past the post” method utilized in the United States. This system is, by its nature, one where one group of people enjoys the ability to effectively dictate to those who did not win how they will be living their lives over the next term period. The effect of this on voter frustration, which manifests as cultural divisiveness, only gets magnified the more powerful that government becomes. A weak federal government would produce little divisiveness because there is little to be divided over. A strong Federal government would produce significant divisiveness since there is much to be divided over. It also goes to say that an absolute government would create absolute division while the absence of government would not produce a division because there isn’t any risk of having your life dictated by distant populations. When we add in factors of geographic distance and cultural diversity, we end up with a horrible mud-slinging process where people actively dislike both candidates and the electorate openly attacks one another over the political process, completing the division process. These issues won’t go away with vague calls of being civil, coming together or getting along. One group or another will always feel put out and ignored since those in office only truly represent those that got them elected.

However, you need not despair. The liberty movement has the answers you seek to not only distance yourself from future risk of being dictated to by distant populations and political heartache but also be able to more quickly and nimbly get policies and lifestyles you prefer without having to fight someone else for it.

Option 1: Demand Your Representatives Shut Down DC

Nothing Obama signed into law or created through regulatory diktat had to be done at the national level. Not the Affordable Care Act. Not raising minimum wages. Not identifying tax rates. Not regulatory agencies. Not even food stamps and various other welfare programs. None of it has to be done in Washington DC. All of it can be done at your State level and even locally. To prove a point, Colorado had an opportunity to form the nation’s first European-style single-payer health care system. Had that referendum passed, residents of Colorado could have been able to copy the Canadian model of medical care delivery. And it would have been entirely legal and done so without having to collect the opinions of 320 million people or impose it on residents of other States that would not have wanted it.

However, as noted in the linked article, the referendum was opposed on grounds that it could not be sufficiently paid for. This is not because of the common argument that the entire nation needs to be tapped to afford it. Colorado is wealthier than the national average, so Colorado would realistically end up having to pay residents of other States if such a scheme went national. So why is this law fiscally impossible in today’s environment? It is mainly because the Federal government is already taking all those resources for itself.

On average, the Federal government consumes 50 percent of all the taxes paid in this country. This means that, if the average holds for Colorado, and the State is likely further disadvantaged because of the higher income bracket, residents are sending $1 in taxes to the federal government for every $1 in taxes that are collected from them that go to the State or Local governments. In other words, Colorado residents have no say in how half their tax resources are used. Worse, Colorado residents would likely do a better job administering the exact same programs and do so for less because most Federal programs do little more than return the money back to equivalent State agencies. This means your State is having to cover the overhead of 2.7 million Federal employees whose sole purpose is to take money from your State then give it back again with orders on how to spend it.

By eliminating these programs wholesale on a national level and utilizing your existing State systems, you can avoid any disruptions in the programs and also enjoy a less expensive process. Instead of the Federal government collecting its pound of flesh, you will send it to your State capital. This not only allows you to continue the policies and even amend and adjust them more readily without having to convince up to 59 other Senators, hundreds of House representatives and a sitting president, along with an unknown and distant bureaucracy. All you need to do is ask your State representative, who is probably far more available to talk to than the senator you send to DC. With an added bonus, the people living the next State over aren’t going to feel threatened by your political philosophy because they are safe knowing that whatever system you decide to live under does not apply to them if they so choose not to.

Option 2: Secession

This is a more extreme process, but it is also just as valid and allows for more culturally compatible people to have a stronger option at self-determination. This strategy further removes the chances of having a central power structure usurping the wishes and desires of your more culturally compatible group by incompatible groups elsewhere. If one looks at the 2016 election map:

us_2016_election_map

We can find that, at minimum, save for a couple of orphans in the form of New Mexico, Denver, Minneapolis, and Chicago, the United States as it stands is perfectly set up for a secession movement to split the nation into at least three separate entities.

This would allow a greater level of freedom for residents of these three newly formed entities. Further, this split is more than possible from economic size. For the purposes of this exercise, I’ll name the three new nations Cascadia (Washington, Oregon, California, Nevada and let’s throw Hawaii in there), New England (all the blue colored States from Virginia through Maine), and the United States (everyone else). If the USA split into these three entities, here is how the top 20 nations by GDP would look:

us_3_countries

These new nations would rank second, fourth and sixth in world GDP and two of them, USA and Cascadia, are one decent year of growth away from jumping up a rank.

An additional benefit of secession is the ability to further harmonize the new nation with more desirable trade practices, immigration policy, foreign policy, military spending, court systems, and monetary policy. These decentralized entities even have the option of altering how the government itself works, such as dispensing with individual State identities, removing the Electoral College and applying a direct vote system or even converting into a European-style Parliamentary system. Secession allows for even greater self-determination missing in today’s system.

Or you could continue operating as-is and hope enough swing voters decide they want to go back to your philosophy so you can take your turn again imposing your lifestyle on someone else and taking the risk of playing backseat where you truly have no representation or real say in how you live.

In any case, the liberty movement can be a strong ally to allow you to avoid having to live through another Donald Trump term and forge your own destiny without all the strife and divisiveness that goes with a modern American election cycle.

Justin Murray received his MBA in 2014 from the University of St. Gallen in Switzerland.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

How Not To Waste Your Vote: A Mathematical Analysis – Article by Stephen Weese

How Not To Waste Your Vote: A Mathematical Analysis – Article by Stephen Weese

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The New Renaissance HatStephen Weese
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During this especially contested election, a lot of people are talking about people “wasting” or “throwing away” votes. However, many people who say this do not have a complete grasp of the full mathematical picture – or worse, they are only mentioning the part that supports their position. First let’s define what a “wasted” vote is.

Mathematical Definition of Wasted Votes

A wasted vote is a vote that provides no determination or effect on the final outcome of the election. According to Wikipedia: “Wasted votes are votes cast for losing candidates or votes cast for winning candidates in excess of the number required for victory. For example, in the UK general election of 2005, 52% of votes were cast for losing candidates and 18% were excess votes – a total of 70% wasted votes.”

There are two kinds of wasted votes that mathematically have no effect on the final election:

  1. Votes cast for candidates who did not win
  2. Excess votes cast for winning candidates

Clearly, neither of these kinds of votes statistically affect the election. However, many arguments only mention the first type without mentioning the second. Mathematically and logically, both categories are ineffectual votes.

First Past the Post

The value of your vote is what you give it. Should you spend it on a candidate you don’t believe in?The United States, along with several other nations, uses the First Past the Post (FPTP) or “winner take all” election. This method is defined as “the candidate who receives more votes than any other candidate wins.”

This is one of the reasons that many people mention wasted votes – our system creates that result. Sociologically speaking, the FPTP system tends to favor a two-party system. The French sociologist Maurice Duverger created “Duverger’s Law” which says just that.

The Electoral College

For U.S. Presidential elections, a state-by-state system is used called the Electoral College. Each state gets a proportional amount of electoral votes which are then used to find a majority for president. Interestingly, what happens in each separate state is a smaller FPTP election, followed by a counting of electoral votes.

The Electoral College is slightly different from a pure FPTP system because it requires an actual number threshold (currently 270 electoral votes) for a candidate to win instead of a simple majority of the votes.

We can sum things up as follows:

  1. States hold “winner take all” FPTP elections for electoral votes
  2. Electoral votes are counted
  3. The winner must have 270 electoral votes
  4. If there is no candidate that reaches it, the House of Representatives chooses the president

These distinctions are important, because they can change the math and the concept of the “wasted” vote phenomenon.

Wasted Votes in Presidential Elections

The general concept that is proposed by many is that you must always vote for a Republican or a Democrat because you must stop the worst candidate from winning. In a sense, you are voting a negative vote – against someone – rather than for a candidate of your choice. However, this actually depends on the scenario of the vote. Let’s look at some examples.

Bush vs. Gore: 2000

People voting out of fear of the worst candidate is a self-perpetuating cycle. Let’s examine a common example used in this discussion.

Following the extremely close 2000 U.S. presidential election, some supporters of Democratic candidate Al Gore believe that one reason he lost the election to Republican George W. Bush is because a portion of the electorate (2.7%) voted for Ralph Nader of the Green Party, and exit polls indicated that more of these voters would have preferred Gore (45%) to Bush (27%), with the rest not voting in Nader’s absence.

The argument for this case is even more pronounced because the election was ultimately decided on the basis of the election results in Florida where Bush prevailed over Gore by a margin of only 537 votes (0.009%), which was far exceeded by the number of votes, 97,488 (0.293%), that Nader received. (Wikipedia)

At first, this may look like a clear example of the need to vote for a major party. However, let’s break this situation down mathematically. In every single state election, Bush or Gore won. There were millions of mathematically wasted votes in this election of both types.

In California, Gore won by 1,293,774 votes. Mathematically speaking, there were over one million wasted votes for Gore in this state alone. None of these excess votes could have helped Gore, since he had already mathematically won the state. The California votes didn’t matter in Florida. In fact, the votes in Florida have much more relevance than any other state.

Conclusions: Sometimes a vote for a major party winner is wasted anyway. Sometimes everything will come down to one state. However, there is no way to predict in advance which votes will be this important. If the parties knew that Florida would have been the deal breaker, then they would have acted differently. However, we simply don’t know the future well enough to predict that.

We do know that battleground states are generally more important than “safe” states for each candidate, but it is hard to know exactly which state might matter. (There are plenty of scenarios you can research online about possibly electoral outcomes, I encourage you to do so.) This leads us into our next example.

Clinton vs. Trump 2016

Let’s do some math about the state of California and our current presidential election. The average RCP poll has Hillary Clinton ahead by 22.2 percent. The registered voters in California add up to 17.7 million. Not all of them will vote, but we can use the 2012 presidential election as a predictor, where 13.2 million people voted.

Out of those 13.2 million, according to current predictions, 52.6% will vote for Clinton. However, Clinton only needs about 31% to beat Trump. The other 21% of excess votes for Clinton will be wasted. This means that approximately 3 million votes for Clinton in California will be wasted. Now, this is only a mathematical model, but we have several reasons to believe in it.

  1. California has a history of being a heavily Democratic state
  2. Polls usually swing within a single digit margin of error
  3. 21% is quite a large margin of leeway

Even if the polling changes significantly, we are still looking at millions of wasted Clinton votes in California.

Now let’s throw Jill Stein into the math. As part of the Green Party, she is to the left politically of Hillary, so we will assume that votes for her will be taken from Clinton’s pool. (Though this isn’t always a true assumption, as we will see later.) Right now she is polling at around 4%, but we could even give her 5%. If you take away 5% from Hillary’s margin of 22.2%, that leaves a huge margin of 17.2%: still millions of votes. The takeaway from this: you can safely vote for Jill Stein in California without fear of changing the state election results. Therefore, it will not affect the national vote either.

Since we have the Electoral College, your votes will have no influence beyond the state to change other vote counts. Those who prefer Jill Stein can with a clear conscience vote for her, since it will make no difference mathematically. Later we will look at the ethics of voting as it relates to this math.

Mathematical Importance of a Single Vote

There are a few theories on voting power calculations; we will look at two of them here. John F. Banzhaf III created a probabilistic system for determining individual voting power in a block voting system, such as the Electoral College. According to his calculations, because of differences in each state, it gives different voters different amounts of “voting power.”

A computer science researcher at UNC ran the Banzhaf power numbers for the 1990 U.S. Presidential election and determined that the state of California had the voters with the highest power index: 3.3. This index is measured as a multiple of the weakest voting state, which was Montana (1.0 voting power).

A newer method of measuring voting power was created by a research team from Columbia University using a more empirical (based on existing data) and less randomized model. They concluded that the smaller states had more mathematical voting power due to the fact that they received 2 votes minimum as a starting point. This model tends to generate smaller multipliers for voting power but more accurately matches empirical data from past elections.

Using these power ratings as a guide, we can estimate an estimated maximum voting power for each vote. We will be making some assumptions for this calculation.

  1. The minimum voting power multiplier is 1
  2. The highest multiplier from both models will be used as a maximum

Starting numbers

In the United States there are currently 218,959,000 eligible voters with 146,311,000 actual registered voters. In the 2012 Presidential election, 126,144,000 people actually voted. This is our voting pool.

Each vote, legally speaking, has the same weight. So if we start from that assumption, taking into account a probable amount of voters (126 million), the power of your vote is:

1
_____

126 million

This is: 0.0000000079 or 0.00000079%. That is the weight of your vote mathematically. Now we can multiply it by the highest power index to show the highest potential of your vote. Our California historical data from 1990 shows a 3.3 index, but to be conservative we will raise it to 4. So now the power is: 0.00000317%

Using probabilistic equations and analysis, this is the result. This is how powerful your vote is in the U.S. Presidential election is if you end up in the most heavily weighted state.

Addressing Weighted Vote Fallacies

As we have seen, many people argue that we should not “waste” votes, yet many millions of votes for the winner are wasted every year. It is difficult to predict whether a vote will end up in either wasted category. We’ve also seen past and possible scenarios where voting third party or major party can have no influence on the final election.

Fallacy 1: Treating Single Voters as One Block

A false assumption that people make about voting is treating a single vote as a block. For instance, let’s use our current election again as an example.

Someone insists that if you do not vote for Hillary, then you are helping Trump to be elected. (The reverse of this can also apply here.) You claim that you wish to vote for Gary Johnson, the Libertarian candidate. You’re then told that the current national poll with all parties shows that Johnson is polling at 7%, which is less than the difference between Clinton (39%) and Trump (40%). Therefore, you must vote for Clinton to make up that difference.

There are several problems with this proposal. It does not take each state into consideration. It assumes all Gary Johnson supporters have Clinton as their second choice. And it treats your single vote as the entire 7%.

As we have seen, the current picture in California shows that Clinton has a huge margin. If this voter lived in California, a vote for Gary Johnson would not help Trump and also would not hurt Hillary, even if the entire 7% voted for Johnson. Anyone who says it is your duty to vote negative in this scenario does not know the math of this state.

This also assumes that all Johnson votes would choose Hillary as the second choice, but given that Libertarians take some platform elements from both the Left and the Right, this assumption would be highly unlikely. The same would go for Trump.

When people look at the 7% and tell you that you must vote a certain way, it is assuming you will somehow influence the entire 7%. However, we have seen that you are just one voter, and that your voting power is a very tiny number by itself. You cannot be entirely responsible for a candidate winning or losing with your single vote. In theory, it’s mathematically possible for one vote to decide an election, but given there are an exponential number of possible scenarios with millions of voters (imagine raising a few million to an exponent), it’s astronomically unlikely, especially if you live in a non-battleground state.

It’s also astronomically unlikely that all 7% (8,820,000 people) would vote for who they polled for. Even if you gave each voter a 99% chance of voting for who they polled for, the chance that all of them would vote the way they polled is (0.99) to the power of 8,820,000, which is less than 0.000000000000000000000000000000000000000000000000001%

Individuals are not entire blocks of voters, and it’s problematic to treat them as such.

Fallacy 2: Third Party Votes Have No Value

If enough people vote their conscience and vote for what they believe in, things can change.On the surface, this might appear to be true. A third party candidate for President has never won an election. We also have Duverger’s law that states our FPTP favors two party systems. However, it is mathematically possible for a third party to win, and there are also other measurable gains for voting for a third party.

Part of this fallacy is the “winner take all” perspective. In other words, if you don’t win the presidency, you’ve wasted your time.

However, there are many benefits of voting third party, even for president. It makes a political statement to the majority parties. It helps local politicians of that party in elections. It can help change platforms to include third-party elements. And it provides recognition for the party among voters as a viable alternative.

Third party candidates can and have won local and state elections in the past. This is a fact.

In 1968, George Wallace ran as a third party option for President. He received nine million votes and 45 electoral votes. Though he did not expect to win the popular vote, one of his aims was to force the House of Representatives to choose the President by denying either candidate the 270 electoral votes needed to win – and he nearly succeeded. Since our system is not a true First Past the Post, but a hybrid, this kind of situation is possible. In fact, calculations have been done showing that Gary Johnson could in fact force that situation this year. It is very unlikely, but it is possible.

Regardless of his loss, the impact of the Wallace campaign was substantial. He was able to affect the dialogue and events of that election significantly. (This is meant in no way as an endorsement of George Wallace’s political positions.) If his supporters had mostly voted for a majority party, his impact would have been less significant.

In most scenarios given by the “wasted” vote crowd, all of the votes that are considered are ones from the current voting electorate. Yet we have seen from figures previously mentioned that over 50 million eligible voters are not registered. Even among registered voters, almost 20 million didn’t vote in the last election. These potential votes are never placed into the scenario.

The simple truth is, there are millions of uninterested voters out there, yet candidates are not inspiring them to vote. If candidate X or Y were truly worthy of votes, would not some of these voters decide to register? And another question, would it be easier to get a third party voter to choose a majority candidate, or a non-voter? These are not mathematical questions, but they are logical. The fact is, with this many votes at stake, if these non-voters could be encouraged to register, they would undoubtedly change the election as they make up one-third of total eligible voters.

Ethics and Math

It has been demonstrated that the potential individual power of a vote is mathematically very small. It also has been shown that wasted votes can be cast for the winner of an election as well as the losers, as well as demonstrating that it is sometimes hard to predict exactly which vote will be wasted. Given this information, where do we derive the value of a vote?

It’s hard to get it purely from the math or practicality. In fact, it would seem our single vote is of very little import at all. Therefore, we must find meaning and value for our votes outside of the math.

Certainly, the Founders never envisioned an endless cycle of US citizens voting for the “lesser of two evils.”Certainly, the Founders never envisioned an endless cycle of United States citizens voting for the “lesser of two evils,” as the argument is often presented. The idea was for free and open elections where the people’s voice would be heard. It was simple: the candidate who best represented your interests earned your vote.

Your vote is, therefore, an expression of yourself and your beliefs. Your vote has power as a statement. People voting out of fear of the worst candidate is a self-perpetuating cycle. If no one ever has the courage to vote outside of the two main parties, it will never be broken. However, if enough people vote and it shows in the total election count, it will give cause for us to reconsider and embolden even more to vote outside of the two parties.

Yes, our current electoral system has some serious mathematical flaws. It simply does not encourage people to vote for their conscience – but we have seen that things are not as bad as we would be led to believe by some. The true value of a vote is in the people.

The Value of Your Vote

The value of your vote is what you give it. Should you spend it on a candidate you don’t believe in? Should it be an exercise in fear? It’s up to you. It is my hope that these mathematical calculations will bring you freedom from the idea that only majority party votes matter. A vote is a statement, a vote is personal, a vote is an expression of your citizenship in this country. If enough people vote their conscience and vote for what they believe in, things can change.

If you are already a staunch supporter of a major party, then you should vote that way. This paper is not against the major parties at all – but rather against the concept that votes somehow “belong” to only Democrats or Republicans. Votes belong to the voter. There has never been a more important time to vote your conscience.

Stephen_WeeseStephen Weese

Stephen Weese has an undergraduate degree in Computer Science from George Mason University, and a Masters in Computer Information Technology from Regis University. Stephen teaches college Math and Computer courses. He is also a speaker, a film and voice actor, and a nutrition coach.

This article was originally published on FEE.org. Read the original article.

Dissent Under Socialism – Article by Sanford Ikeda

Dissent Under Socialism – Article by Sanford Ikeda

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The New Renaissance Hat
Sanford Ikeda
August 26, 2014
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The Daily Mail reports that “France’s Socialist government provoked outrage … by becoming the first in the world to ban protests against Israeli action in Palestine.” The socialist interior minister justified the ban by citing the potential for violent clashes in Paris between opposing groups, which he deemed a “threat to public order.”

My object here is not to comment on any aspect of the conflict in the Middle East or on this ban, which may or may not be justified. What caught my eye in the story is the following quote:

Sylvie Perrot, another pro-Palestine activist from Paris, said: “Fascist states stop people demonstrating against wars—it is beyond belief that French Socialists are following their example.”

Au contraire! 

If you understand the nature of socialism, it’s quite believable.

Collectivism and dissent

Let me begin by defining “collectivism” as any economic system in which the State controls the principal means of production. Collectivism requires central planning of some kind over the resources the State controls. The particular brand of collectivism we’re talking about depends on the aims of the controllers. 

In theory, “socialism” aims to unite people around the world regardless of nationality toward a common internationalist goal, while in theory “fascism” aims to unite people of a particular nation toward a common nationalist goal. The ends differ but all forms of collectivism use the same means: State control (de facto or de jure) over the means of production. Given their common collectivist roots, then, it shouldn’t be surprising that fascism and socialism employ similar policies.

Even more than that, however, F. A. Hayek points out, in The Road to Serfdom:  

That socialism so long as it remains theoretical is internationalist, while as soon as it is put into practice … it becomes violently nationalist, is one of the reasons why “liberal socialism” as most people in the Western world imagine it is purely theoretical, while the practice of socialism is everywhere totalitarian.

I would recommend the chapters in The Road to Serfdom where Hayek explains why this is the case (especially “Individualism and Collectivism,” “Planning and Democracy,” “Planning and the Rule of Law,” and “The Socialist Roots of Naziism”), but here are two important points in that explanation.

First, to the degree that the State undertakes central planning of the resources it controls, it can’t allow any person to interfere with or oppose the plan. Or, as Hayek puts it, “If the state is precisely to foresee the incidence of its actions, it means that it can leave those affected no choice.”

Second, the more resources the State controls, the wider the scope and more detailed its planning necessarily becomes so that delay in any part of the system becomes intolerable. There is little room for unresponsiveness, let alone dissent. Hayek again:

If people are to support the common effort without hesitation, they must be convinced that not only the end aimed at but also the means chosen are the right ones. The official creed, to which adherence must be enforced, will therefore comprise all the views about facts on which the plan is based. Public criticism or even expressions of doubt must be suppressed because they tend to weaken public support. [emphasis added]

My point is that even if genuine socialism of some kind did exist in France (or anywhere else), the government there could not allow spontaneous political demonstrations, for the reasons Hayek outlines in The Road to Serfdom. Collective political ends must trump individual expression. 

That a socialist government would ban political demonstrations should then come as no surprise.

The problem is central planning 

Friends of mine have objected that these arguments are misplaced because genuine socialism doesn’t exist in France, and that political parties who brand themselves “socialist” aren’t really socialist at all, at least in the sense defined here. 

But Hayek’s point is that intolerance for dissent grows with the scope of central planning. Thus, the principle also applies in the case of a mixed economy, such as the United States, with more limited central planning. To the extent that the U.S. government tries to pursue collectivist ends—say, during times of war—the greater the pressure on public officials to quell open displays of protest.

Moreover, the more things the central government plans for, the less freedom—of expression, assembly, association—there can be. If the State controls all means of production and all resources are placed in the hands of the authorities, then in effect all forms of expression—in politics, science, religion, art—are political and any form of dissent from the official creed is intolerable and must be forbidden. That would lead, and has led, to the death of free inquiry, because dissent, rebellion, and radical criticism are essential to the growth of knowledge.

One of the political virtues of private property is that it establishes a sphere of autonomy in which we are safe from the threat of physical violence. In that sphere of autonomy, we can say or not say, or do or not do, anything we like, so long as we don’t initiate physical violence against others. Private property is the garage where we can form a band or invent the personal computer or paint protest signs. As private property disappears, not only do our economic liberties disappear, but so too do our political liberties.

What is not forbidden …

Indeed, taken to its logical conclusion, under pure collectivism no freedom at all would remain, and not only the freedom to peacefully assemble in protest against government activities. In a completely collectivist system, it’s not a stretch to say that what isn’t forbidden would in fact be mandatory.

From California, which at least for now is a ways off from pure collectivism, comes an even-nuttier though still-scary scenario:

A Southern California couple received a letter from Glendora city officials threatening to fine them $500 if they don’t get their sun-scorched brown lawn green again, reports AP. Which Laura Whitney and Michael Korte would gladly do, except for one thing: They could also be fined $500 if they water their lawn too much; they’re currently only watering twice a week.

Thus, what is mandatory may also be forbidden. Don’t forget, 1984 was 30 years ago.

Sanford Ikeda is an associate professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism.
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This article was originally published by The Foundation for Economic Education.
History of the 1848-1853 California Gold Rush (2003) – Essay by G. Stolyarov II

History of the 1848-1853 California Gold Rush (2003) – Essay by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
July 20, 2014
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Note from the Author: This essay was originally written in 2003 and published in six parts on Associated Content (subsequently, Yahoo! Voices) in 2007.  The essay earned over 43,500 page views on Associated Content/Yahoo! Voices, and I seek to preserve it as a valuable resource for readers, subsequent to the imminent closure of Yahoo! Voices. Therefore, this essay is being published directly on The Rational Argumentator for the first time.  ***
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~ G. Stolyarov II, July 20, 2014
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Background History of the California Gold Rush

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The real story of the California Gold Rush has to be traced back to the Mexican War, which was fought from 1846 to 1848. The war started out as a dispute over Texas. However, under the Treaty of Guadalupe Hidalgo, America ended up not only with Texas, but also Nevada, Utah, Arizona and California.

During this time period, the country was expanding and its transportation improving. Once gold was discovered in California, waves of fortune-seekers, also known as 49ers (because they came during 1849), came from all over the world to California, thus drastically impacting both the economy and social life of California, which in turn impacted the rest of the nation. Even though few of the 49ers actually made a fortune from mining gold, many found other ways to earn a living, especially once the gold became scarce and xenophobia emerged. Nonetheless the incredible number and diversity of people who came to California seeking an easy fortune influenced Californian and American life.

John Sutter, on whose lands the gold discovery had occurred, moved to California from Switzerland in 1830 and obtained a property charter from the Mexican government. During this time, he established a fort at New Helvetia, at the junction of the American and Sacramento rivers. He strove to build an agricultural empire, but the gold discovery was the beginning of the downfall of his dream. Along with James Marshall, Sutter located gold at his mill in 1848.

It may seem odd that James Marshall and John Sutter were quite displeased upon testing the gold and confirming its identity. But Sutter was barely interested in profits to be made from the discovery; his original plan was to establish an agricultural powerhouse, and he stuck to it. He was afraid, however, that if news of the discovery leaked, his workers would abandon him and try to make a profit of their own from the gold fields. He also feared the competition over land and resources that would ensue if a massive rush of immigrants came to California to seek gold. Thus, he and Marshall agreed to keep the discovery secret until the mill’s completion, so that Sutter would retain the manpower necessary for the job.

Stories circulated the countryside within weeks. However, they were all too often dismissed as wild rumors, until they caught the ears of a new and ambitious Mormon immigrant, Samuel Brannan. Brannan immediately sensed immense riches in store from the potential gold boom, and keenly bought most of the picks, pans, and shovels in California at extremely low prices. Then, after he established a colossal stockpile, he ran through the streets of San Francisco, holding up gold, and shouting “Gold, gold in the American River!” He provided enough empirical evidence to be believed and trigger a massive inflow of immigrants as the news spread east. In just the next nine weeks, by selling mining equipment at prices far higher than his costs, he made $36,000.

Gold Seekers’ Journey Westward During the 1849 California Gold Rush

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The journey westward during the 1849 California Gold Rush was an arduous ordeal for many. As news of the 1848 discovery at Sutter’s Mill spread, people all over the United States were allured by the prospect of gold, but the pathways from the population centers of the East Coast to California were few and arduous. Two essential choices for forty-niners, the first wave of Gold Rush immigration in 1849 were an overland journey across the 2000 mile stretch of yet unsettled land in between, or a sea route around Cape Horn in South America.

The sea route, preferred by gold seekers from the Eastern states, would often take about six months. It was not a pleasant journey, either. Seasickness and spoilage of food and water were omnipresent.

Some time later, a third route was thought up, though not any less perilous than the other two. Migrants sailed as far south as Panama, disembarked, then made 3-day trip by mule and canoe across land to the Pacific side, where they boarded another ship. Tropical diseases in that part of the world were devastating. Malaria and cholera claimed many lives. Lieutenant Ulysses S. Grant, when journeying to California in 1852, wrote that a third of his regiment was killed or incapacitated by these afflictions. To add to the problems, ships to ferry the immigrants up to San Francisco were rare, and the travelers would often end up being stranded in Panama for months.

Over land, a favorite route of immigrants from the Central states was the Oregon-California Trail, a well-worn path carved out several years earlier by fur trappers. This overland road much shorter than the sea route, but not faster. Its travelers would go for six months by covered wagon through desolate landscapes with scarce supplies of water. The Native Americans along the way, whom many xenophobic settlers initially feared, actually turned out to be helpful, providing supplies, information, and guides. The occasional entrepreneur in the area would also capitalize on the scarcity of water by selling it at prices as high as $100 per drink. Supply and demand worked even in the desert.

Because travelers reached California successfully did not imply that their journey was over. Gold was further inland near Placerville, far from the port of San Francisco where the ships docked. Some travelers were also repulsed upon reaching San Francisco by the sight of numerous bars, gambling places, and saloons, all sites of licentious life that had been taboo in the East. Additionally, many immigrants explored the Sacramento River and its delta for new gold sites to mine.

Key Figures in the California Gold Rush: John Sutter, Richard Barnes Mason, William T. Sherman, and Ulysses S. Grant

***

The 1849 California Gold Rush was a magnet for ambitious personalities: individuals who would later rise to extraordinary heights in American politics, military, and economic life. The Gold Rush ruined the great landowner John Sutter but served as a testing ground for Richard Barnes Mason, Ulysses S. Grant, and William T. Sherman.

John Sutter was, as he had predicted, economically destroyed by the inpouring of gold seekers into California. His ambitions for an expansive enterprise were ruined by the desertion of his laborers and by squatters overrunning his lands after the discovery of gold. Sutter never extensively attempted to benefit from the Gold Rush, except for one half-hearted expedition which he abandoned almost upon arriving at the gold fields. His losses were never officially compensated.

Another key person in Gold Rush history was Colonel, later General, Richard Barnes Mason, who served as the fifth military governor of California from 1847 to 1849. Governors were changed with extreme rapidity during that time period, but Mason served on his post the longest. He was an astute observer who toured the gold fields with his assistant, Lieutenant William Tecumseh Sherman, and reported to Washington first-hand observations of the social and economic conditions in the state. His writings are an excellent primary source for understanding the Gold Rush phenomenon.

Sherman, the Sherman who would become an infamous Civil War general, wrote down his observations in his memoirs. Quite unexpectedly, he became a banker for Lucas, Turner & Co. in September of 1853, and oversaw construction of “Sherman’s Bank,” a building so durable and finely engineered that it still stands in California today.

The California Gold Rush seemed to be a magnet for future great generals. Ulysses Grant, upon arriving in California, also wrote detailed notes for his memoirs. His own experiences however, were not to be as glorious as his later life. Grant struck a deal with his troops to start a potato growing business, which failed miserably.

Grant’s financial failure happened because hundreds of other entrepreneurs got the same idea at the same time. So many potatoes were grown that season that everybody had enough for themselves, and no one wanted to buy any. So Grant and his troops ended up eating a lot of what they grew and letting the rest rot away. As for Grant himself, put simply, he had a drinking problem, which would notoriously feature in his later life. In 1853, he was discharged from his regiment and sent home, though he conveniently omits this fact from his accounts.

Economic and Cultural Leaders During the 1849 California Gold Rush

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A number of America’s future economic and cultural leaders began their rise to prominence during the 1849 California Gold Rush. Among them were such individuals as Mark Twain, Sam Brannan, Levi Strauss, Phillip Armour, John Studebaker, Henry Wells, and William Fargo.

The Gold Rush was the proving ground for Samuel Clemens, the future Mark Twain. He came to California as an absolute unknown and took a job at the San Francisco Call, one of the two newspapers in the city at the time. He distinguished himself before the world in a rather unorthodox manner, writing a story about a local frog-jumping contest.

As for Sam Brannan, the great businessman who first spread news of gold’s discovery in California, he became the richest man in California without once mining the gold himself. He outmaneuvered the market many times through his publicity skills and adept purchases, eventually owning much of downtown San Francisco and even printing his own currency. Brannan was also disgusted with some of the racist, nativist miners’ oppression of foreigners and new arrivals in the state. He often broke up ethnic clashes and defended the rights of immigrants against the typically racist-slanted legislature. Why did Brannan care about the plight of working immigrants? The simplest answer is that foreigners were a large portion of his customer base, and the more miners were in the business, the more Brannan would profit. The market, and its most skilled representatives, are blind to irrational prejudices of race and nationality.

Levi Strauss, the future inventor of blue jeans, was known during the Gold Rush as a dry goods salesman and tent maker. In 1853, he made what he called “canvas pants” out of tent fabric especially for miners. These gained widespread popularity and earned Strauss a fortune.

Another great businessman who got started during the Gold Rush was Phillip Armour, who came to Placerville, California and opened a meat market there. Later, he moved back to Indiana with his profits and founded the gargantuan Armour Meat Packing Company.

Moreover, John Studebaker, a wagon manufacturer, established a firm in California to provide transportation to Oregon pioneers. It would expand to become a major car producer during the first half of the twentieth century.

Finally, Henry Wells and William Fargo offered a stable, honest banking, transportation, and mail delivery system to miners, something that the uncertainty-faced miners desperately needed. Their venture would also soon expand to a nationwide level.

California’s Colossal Economic Growth During the 1849 Gold Rush

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The economy of California grew at a phenomenal rate during the days of the 1849 Gold Rush. Much of this growth was made possible by the laissez-faire economic policies of Governor Richard Barnes Mason.

Prices rose dramatically as more people found gold and gold became widely circulated on the market. Seeing that customers would afford it, merchants raised their fees on all sorts of commodities, from real estate to food to transportation. A miner in California may have made about six to ten times as much as his eastern counterpart, but he also had to pay about that many times more for his upkeep.

The following concrete illustration of this trend is useful: a plot of San Francisco real estate that cost $16 in 1847, sold for $45,000 just 18 months later. Imagine investing in real estate during that time period.

The city of San Francisco grew from an isolated village to a thriving city in the five or so years of the Gold Rush. Its population rose from 1000 in 1848 to 35000 in 1850. This contributed dramatically to California’s admission to the Union as a state in 1850. 30 new houses and 2 new murders came about every day. Theaters and newspapers were built and prospered, and eventually only London would have more newspapers than San Francisco. Wages rose with the general standard of living, and great economic expansion and demand for jobs made employment readily available.

The California agricultural boom was another significant economic result of the Gold Rush. Many of the forty-niners and later immigrants contributed to the growing demand for food. Initially, this was satisfied by imports from merchants as far away as Chile or as nearby as Oregon. However, gradually the capacity was developed to grow the food in California itself. Machines were imported into the country to equip an efficient farming industry, and eventually wheat was exported from California to other parts of the U.S.

This phenomenal economic growth was made possible by Governor Richard Barnes Mason’s laissez-faire approach to the economy. Mason recalled of his administration: “I resolved not to interfere, but permit all to work freely, unless broils and crimes should call for interference.”

During the military period, when California’s future within the United States was still uncertain, as it was not yet a state, and governments changed with great frequency, no political factions could emerge to attempt to regulate and restrict the economy. The courts were based on the Anglo-Saxon model, which stressed property rights and the rights of the accused, though occasional acts of “vigilante justice” did occur. The government was highly limited and mainly acted as a second line of defense against crime. People fended for themselves mostly, and did surprisingly well. Unlike the cities, in the mining camps, crime rates were extremely low, lower than even in the relatively peaceful Eastern cities, mainly because almost every miner owned a gun. The principle of “more guns, less crime” was clearly demonstrated there.

Immigration to California During the 1849 Gold Rush

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The Gold Rush resulted in massive foreign immigration to California from virtually every area of Europe, Asia, and the Pacific. At first, immigrants were accepted by almost everyone, as land, gold, and other resources were plentiful. As those resources became less abundant, however, a minority of white racists played on miners’ fears of foreign competition and came to dominate the legislature, setting up barriers to foreign immigrants. While some immigrants left, many others persisted, and set the stage for the vast cultural diversity seen in California today.

During the 1849 Gold Rush, California’s government was tolerant toward all immigrants under the laissez-faire military administration of Richard Barnes Mason. But as soon as the civilian legislature came along in 1850, a minority of racist white miners, who feared competition with foreign immigrants, influenced the government to abandon laissez-faire and institute the Foreign Miners Tax.

This $20 monthly fee from every foreign miner was intended to “protect” American miners from foreign competition. It was a disaster and was repealed a year later, as many foreign miners quit their careers and crowded the cities, jobless and penniless. Some did not give up and spread into other fields of business, having thus defended their individual rights against the bigoted government.

Mexicans had comprised much of California’s population before the Mexican War. The war unseated them from a dominant social position and many came to the mines, seeking to regain lost wealth and status. Tensions between Mexican miners and racist/nativist interests escalated into the 1850s. An example would be the attempt by racist miners, supported by politicians from the East, to drive Mexicans out of the Calaveras and Tuolumne counties where the Mexican miners had claimed land.

The Chinese migrants to California would shape the state extensively. Once again, the Chinese encountered animosity from racist miners and the legislature. Nevertheless, their industry and persistence enabled them to find jobs as cooks, cigar makers, restaurateurs, vegetable farmers, fortune tellers, and merchants, found temples, gambling halls, theaters, and laundries, and become key contributors to the agricultural boom. Many of them planted crops or built levees.

Women and African Americans also found a new home and opportunities in Gold Rush California. In both conventional and unconventional economic roles, they defied constricting Eastern stereotypes and met with great financial success. As for African-Americans, though many came as slaves, they bought freedom with gold and those already free used gold to free families, fight discrimination and start newspapers, schools, and churches. Upon its admission to the Union, so many were free and economically active that slavery was prohibited in the state.

Sources Used

Chevez, Ken. Part Three: State’s Latinos Lost in the Rush. 1/18/98. Sacramento Bee. October 2003 <http://www.calgoldrush.com/part3/03mexicans.html>

Discovery Of Gold By John A. Sutter. 2003. Virtual Museum Of The City Of San Fransisco. October 2003 <http://www.sfmuseum.org/hist2/gold.html>

Discovery Of Gold Report Of Colonell Mason. 2003. Virtual Museum Of The City Of San Fransisco. October 2003 < http://www.sfmuseum.net/hist6/masonrpt.html>

Gen. William Tecumseh Sherman. 2003. Virtual Museum Of The City Of San Fransisco. October 2003 <http://www.sfmuseum.net/bio/sherman.html>

Gold Fever Discovery. 1998. Oakland Museum of California. October 2003
<http://www.museumca.org/goldrush/fever05.html>

Gold Fever Entertainment. 1998. Oakland Museum of California. October 2003
<http://www.museumca.org/goldrush/fever18.html>

Gold Rush And Anti-Chinese Race Hatred. 2003. Virtual Museum Of The City Of San Fransisco. October 2003 <http://www.sfmuseum.net/hist6/chinhate.html>

Gold Rush: Gold Country. 2003. Idaho State University.
October 2003 <http://www.isu.edu/~trinmich/goldcountry.html>

Hoge, Patrick. Part Three: Justice Wasn’t Pretty- But It Was Quick. 1/18/98. Sacramento Bee. October 2003 <http://www.calgoldrush.com/part3/03justice.html>

Lieutenant Ulysses S. Grant And The Gold Rush. 2003. Virtual Museum Of The City Of San Fransisco. October 2003 < http://www.sfmuseum.net/hist6/shermgold.html>

Magagnini, Steven. Part Three: Chinese Transformed
Gold Mountain. 1/18/98. Sacramento Bee. October 2003
<http://www.calgoldrush.com/part3/03asians.html>

Magagnini, Steven. Part Three: Fortune Smiled on Many Black Miners. 1/18/98. Sacramento Bee. October 2003 <http://www.calgoldrush.com/part3/03blacks.html>

Magagnini, Steven. Part Three: Indian’s Misfortune Was Stamped In Gold. 1/18/98. Sacramento Bee. October 2003 <http://www.calgoldrush.com/part3/03native.html>

Perkins, Kathryn Doré. Part Three: ‘Real Women’ Who Defied Stereotype. 1/18/98. Sacramento Bee. October 2003 <http://www.calgoldrush.com/part3/03women.html>

The Gold Rush: Collision Of Cultures. 2003. PBS. October 2003 <http://www.pbs.org/goldrush/collision.html>

The Gold Rush: Journey. 2003. PBS. October 2003 <http://www.pbs.org/goldrush/journey.html>

William T. Sherman And The Gold Rush. 2003. Virtual Museum Of The City Of San Fransisco. October 2003 <http://www.sfmuseum.net/hist6/shermgold.html>

America: Gone West. Cooke, Alistair. BBC/Time-Life Television, 1973.

French Cartoon. 2003. Oakland Museum of California. October 2003 <http://www.museumca.org/goldrush/curriculum/4g/42103011.html>

Slogans or Science? – Article by Sanford Ikeda

Slogans or Science? – Article by Sanford Ikeda

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The New Renaissance Hat
Sanford Ikeda
May 20, 2014
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The debate over raising the legal minimum wage (LMW) to $10 an hour has people on both sides saying things they should know better than to say. For example, a friend recently posted the following meme (which isn’t the worst I’ve seen) on Facebook:

One year ago this week, San Jose decided to raise its minimum wage to $10/hour.

Any jobs disappear?

The number of minimum wage jobs has grown.

Any businesses collapse?

The number of businesses has grown.

Any questions?

Yes, several, but I’ll get to those in a bit.

Memes like these are just as silly and misleading as the simplistic arguments they’re probably attacking. In fact, the economic analysis of significantly raising the minimum wage says that, other things equal, it will reduce employment below the level where it would otherwise have been. It doesn’t say that that employment will fall absolutely or businesses will collapse.

A little thinking can go a long way

Have a look at this chart published in the Wall Street Journal. At first, it seems to support the simplistic slogans. But it’s important to compare similar periods, such as March–November 2012 (before the increase was passed) versus March–November 2013, (just after it went into effect). The LMW increase wasn’t a surprise, so in the months before it was passed, businesses would have been preparing for it, shaking things up. Comparing those two periods, which makes the strongest case for the meme’s assertions, the total percentage increase in employment (the area under the red line) looks pretty close, going just by my eyeballs and a calculator. In fact, the post-hike increase might actually be smaller, but you’d need more data to be sure. So if you compare similar periods, the rate of employment growth seems not to have been affected very much by the hike. So is the meme right?

According to that same chart and other sources, hiring in the rest of California and the country, where for the most part there was no dramatic increase in the LMW, was also on the rise at pretty much the same time. Why? Apparently, the growth rate of the U.S. economy jumped in 2012, especially in California. So the demand for inputs, including labor, probably also increased. I’m certainly not saying this correlation is conclusive, but you could infer that while hiring in San Jose was rising, it wasn’t rising as fast as it might have otherwise, given the generally improving economy.

That’s a more ambiguous result, and of course harder to flit into a meme.

You are stupid and evil and a liar!

Those strongly in favor of raising the LMW cast opponents as Republican apologists for big business. Take this post from DailyKos, which apparently is the source of the above meme. The author writes, “Empirically, there’s no clear negative effect that can be discerned. The concerns of Teahadists like Paul Ryan and Marco Rubio is [sic] rather unfounded in academic literature and in international assessments of natural experiments.”

Now, the overwhelming conclusion of years of economic research on the effects of a minimum wage on employment is that it tends to increase, not lower, unemployment. As this article from Forbes summarizes, “In a comprehensive, 182-page summary of the research on this subject from the last two decades, economists David Neumark (UC-Irvine) and William Wascher (Federal Reserve Board) determined that 85 percent of the best research points to a loss of jobs following a minimum wage increase.”

So, saying there is “no clear negative effect” is an outrageously ignorant claim. And there’s not one mention of the economic evidence that significantly raising the LMW will hurt the very people you wish to help: the relatively poor. But why address solid scientific research when there’s sloppy sloganeering by politicos to shoot down?

Attacking easy targets is understandable if you want to vilify your opponents or win an easy one for the cause. In that case, you take the dumbest statement by your rival as the basis of your attack. Such is the way of politics. In intellectual discourse, however, you may win the battle but you’ll lose the war. That is, if your goal is to learn from fruitful intellectual discussion, you must engage your opponent’s best arguments, not her weakest ones.

Let me use a counterexample. The sloganeering approach to attacking those who oppose raising the LMW is the equivalent of someone saying: “Well, this past winter was one of the coldest on record in the Midwest. So much then for global warming!” That may be “evidence” in a mud-slinging contest, but it’s not science.

What’s the theory?

While weather is complex and unpredictable, economic systems are even more so. Does that mean there are no principles of economics? Of course not. In fact, it’s because of such complexity that we need whatever help economic theory can offer to organize our thinking. And it doesn’t get any more basic than this: The demand curve for goods slopes downward.

That is, other things equal, the costlier something is, the less of it you’ll want to buy.

Note that the caveat—other things equal—is as important as the inverse relation between price and quantity demanded. That’s why my earlier back-of-the-envelope analysis had to be conditional on more data. Unfortunately, those data are often very hard to get. Does that mean we abandon the theory? Well, that would be like letting go of the rope you’re hanging on to for dear life because you’re afraid it might break.

So what exactly is the theory behind the idea that raising the LMW will increase hiring low-wage workers and boost business? If raising wages will actually increase employment and output, then why not also mandate a rise in interest rates, rents, electricity rates, oil prices, or the price of any of the other myriad factors of production that businesses ordinarily have to pay for? I would hope that this idea would give even the meme promoters pause.

As far as I know, the only situation in which forcing people to pay a higher wage rate will increase employment is when there is a dominant employer and there are barriers to competition. Economists term this “monopsony,” a situation that might occur in a so-called “factory town.” There, the dominant employer (of labor, capital, land, or whatever) can lower what she pays for inputs below the revenue that an additional unit of input earns the company. I would love to hear that argument and challenge it, because it’s the strongest one that standard economics can offer in favor of coercing businesses to raise wages. But so far I’ve not come across it, let alone any discussion of the economic literature on monopsony in the labor market, most of which questions its relevance. Some almost random examples are here and here.

Margins of analysis

Finally, economics teaches us that we can adjust to a particular change in different ways. In a thoughtful article on the effect of the LMW increase in San Jose that all sides of the debate should read, we get the following anecdote:

For his San Jose stores to make the same profit as before the wage increase, the same combo meal would be $6.75. “That would chase off a large percentage of my customers,” Mr. DeMayo said. He hasn’t laid off San Jose workers but has reduced their hours, along with some maintenance such as the drive-through lane’s daily hosing, and may close two unprofitable stores.

Employers can adjust to higher costs in one area by cutting back on spending in others. That might mean less unemployment than otherwise, but it doesn’t mean that raising the LMW has no negative employment effect at all. It means that the effects are harder to see. There’s that darn “other things being equal” again!

Slogans and memes are no substitute for science, or even clear thinking.

Sanford Ikeda is an associate professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism.
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This article was originally published by The Foundation for Economic Education.
Free Your Talent and the Rest Will Follow – Article by Orly Lobel

Free Your Talent and the Rest Will Follow – Article by Orly Lobel

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The New Renaissance Hat
Orly Lobel
October 17, 2013
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Imagine two great cities. Both are blessed with world-class universities, high-tech companies, and a concentration of highly educated professionals. Which will grow faster? Which will become the envy and aspiration for industrial hubs all around the world?

Such was the reality for two emerging regions in the 1970s: California’s Silicon Valley and the high-tech hub of Massachusetts Route 128. Each region benefited from established cities (San Francisco and Boston), strong nearby universities (University of California-Berkeley/Stanford and Harvard/MIT), and large pools of talented people.

We’ve all heard about Silicon Valley, but not so much Route 128. Despite their similarities, and despite the Bostonian hub having three times more jobs than Silicon Valley in the 1970s, Silicon Valley eventually overtook Route 128 in number of start-ups, number of jobs, salaries per capita, and invention rates.

The distinguishing factor for Silicon Valley was an economic environment of openness and mobility. For more than a century, dating back to 1872, California has banned post-employment restrictions. The California Business and Professions Code voids every contract that restrains someone from engaging in a lawful profession, trade, or business. This means that unlike most other states, California’s policy favors open competition and the right to move from job to job without constraint. California courts have repeatedly explained that this ban is about freeing up talent, allowing skilled people to move among ventures for the overall gain of California’s economy.

The data confirm this intuition: Silicon Valley is legendary for the success of employees leaving stable jobs to work out of their garages, starting new ventures that make them millionaires overnight. Stories are abundant of entire teams leaving a large corporation to start a competitive firm. Despite these risks, California employers don’t run away. On the contrary, they seek out the Valley as a prime location to do business. Despite not having the ability to require non-compete clauses from their employees, California companies compete lucratively on a global scale. These businesses think of the talent wars as a repeat game and find other ways to retain the talent they need most.

In fact, the competitive talent policy is also supported by a market spirit of openness and collaboration. Even when restrictions are legally possible—for example, in trade secret disputes—Silicon Valley firms frequently choose to look the other way. Sociologist Annalee Saxenian, who studied the industrial cultures of both Silicon Valley and Route 128 in Massachusetts, found that while Boston’s Route 128 developed a culture of secrecy, hierarchy, and a conservative attitude that feared exchanges and viewed every new company as a threat, Silicon Valley developed an opposing ethos of fluidity and networked collaborations. These exchanges of the Valley gave it an edge over the autarkic environment that developed on the East Coast. In Massachusetts, firms are more likely to be vertically integrated—or to have internalized most production functions—and employee movement among firms occurs less frequently.

New research considering these different attitudes and policy approaches toward the talent wars supports California’s modus operandi.

A recent study by the Federal Reserve and the National Bureau of Economic Research examined job mobility in the nation’s top 20 metropolitan areas and found that high-tech communities throughout California—not only Silicon Valley—have greater job mobility than equivalent communities in other states. Network mapping of connections between inventors also reveals that Silicon Valley has rapidly developed denser inventor networks than other high-tech hubs have.

Researching over two million inventors and almost three million patents over three decades, a 2007 Harvard Business School study by Lee Fleming and Keon Frenken observes a dramatic aggregation of the Silicon Valley regional networks at the beginning of the 1990s. Comparing Boston to Northern California, the study finds that Silicon Valley mushroomed into a giant inventor network and a dense superstructure of connectivity, as small isolated networks came together. By the new century, almost half of all inventors in the area were part of the super-network. By contrast, the transition in Boston occurred much later and much less dramatically.

Michigan provides a natural experiment for understanding the consequences of constraining talent mobility. Until the mid-1980s, Michigan, like California, had banned non-competes. In 1985, as part of an overarching antitrust reform, Michigan began allowing non-competes, like most other states. Several new studies led by MIT Sloan professor Matt Marx look at the effects of this change on the Michigan talent pool. The studies find that not only did mobility drop, but that also once non-competes became prevalent, the region experienced a continuous brain drain: Its star inventors became more likely to move elsewhere, mainly to California. In other words, California gained twice: once from its intra-regional mobility supported by a strong policy that favors such flows, and once from its comparative advantage over regions that suppress mobility.

A virtuous cycle can be put into motion geographically where talent mobility supports professional networks, which in turn enhance regional innovation. Firms can learn to love these environments of high risk and even higher gain. Rather than thinking of every employee who leaves the company as a threat and an enemy, smart companies are beginning to think of their former employees as assets, just as universities wish for the success of their alumni. Companies like Microsoft and Capital One have established networks of alumni. They showcase their former employees’ achievements and practicing rehiring of their best talent, hoping that at least some of those who leave will soon realize that the grass is not always greener elsewhere.

Most importantly, motivation and performance are triggered by commitment and positive incentives to stay, rather than threats and legal restrictions against leaving. In behavioral research I’ve conducted with my co-author On Amir, we find that restrictions over mobility can suppress performance and cause people to feel less committed to the task. Cognitive controls over skill, knowledge, and ideas are worse than controls over other forms of intellectual property because they prevent people from using their creative capacities, they don’t just prevent firms from using inventions that are already out there. So instead of requiring non-competes or threatening litigation over intellectual property, California companies use rewards systems, creating the kind of corporate cultures where employees want to work and do well. Again, a double victory.

Unsurprisingly, when Forbes recently looked at the most inventive cities in the country for 2013 using OECD data, the two top cities were in California: bio-tech haven San Diego, and the legendary home of Silicon Valley, San Francisco. Boston, still vibrant and highly innovative despite its most restrictive attitudes, came in third. Competition is the lifeblood of any economy, and fierce competition over people is the essence of the knowledge economy.

Orly Lobel is the Don Weckstein Professor of Law at the University of San Diego and founding faculty member of the Center for Intellectual Property and Markets. Her latest book is Talent Wants to be Free: Why We Should Learn to Love Leaks, Raids, and Free-Riding (Yale University Press, September 2013).

This article was originally published by The Foundation for Economic Education.
US Gone to Pot, but Not Completely – Article by Mark Thornton

US Gone to Pot, but Not Completely – Article by Mark Thornton

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The New Renaissance Hat
Mark Thornton
November 12, 2012
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The only good thing about the 2012 campaign — other than its being over — is that much progress was made on marijuana policy. Marijuana was legalized in two states, Colorado and Washington. Medical-marijuana legislation passed in Massachusetts. Marijuana was decriminalized is several major cities in Michigan and Burlington, Vermont, passed a resolution that marijuana should be legalized. The only defeats were that legalization failed to pass in Oregon and medical marijuana was defeated in Arkansas.

This is a stunning turnaround from the 2010 campaign when Prop 19 in California failed to pass despite high expectations. I explained in detail why Prop 19 failed here. It was an unfortunately common story of Baptists, i.e., people who oppose it, and bootleggers, i.e., people who profit from black-market sales, who stopped the legalization effort.

With regards to the legalization victories in Colorado and Washington, Tom Angell, Director of LEAP (Law Enforcement Against Prohibition) called the election a “historic night for drug-law reformers.” Paul Armentano, the deputy director of NORML (National Organization for the Reform of Marijuana Laws), called the Colorado and Washington victories “game changers,” noting that “both measures provide adult cannabis consumers with unprecedented legal protections.” He noted that “until now, no state in modern history has classified cannabis itself as a legal product that may be lawfully possessed and consumed by adults.” Writing for the Marijuana Policy Project, Robert Capecchi called Colorado and Washington “historic victories,” saying that they “represent the first bricks to be knocked out of the marijuana prohibition wall.”

Following is a list of all marijuana measures on the 2012 ballot as provided by LEAP:

Colorado Marijuana legalization Passed
Washington Marijuana legalization Passed
Oregon Marijuana legalization Failed
Massachusetts Medical marijuana Passed
Arkansas Medical marijuana Failed
Detroit, MI Decriminalization of adult marijuana possession Passed
Flint, MI Decriminalization of adult marijuana possession Passed
Ypsilanti, MI Marijuana to be lowest law enforcement priority Passed
Grand Rapids, MI Decriminalization of adult marijuana possession Passed
Kalamazoo, MI Three medical-marijuana dispensaries permitted in city Passed
Burlington, VT Recommendation that marijuana should be legalized Passed
Montana Referendum restricting medical marijuana Likely to pass

Some readers might not be fired up at the prospects of legalization, decriminalization, and medical marijuana, but the benefits are higher than you might think. First of all, the economic crisis is a great opportunity to get this type of reform passed. There are several economic dimensions at work here. The most obvious thing that comes to mind is that legalized marijuana might be a source of tax revenues and possibly excise taxes and license fees. It would also be a source of jobs, although the net gain in jobs and incomes is probably initially small.

A major benefit would be a reduction in the size of government. Marijuana prohibition results in hundreds of thousands of people being arrested, tying up police, jails, courts, and prisons. When the city of Philadelphia decided to make marijuana prohibition a low priority and treat it like public intoxication ($200 fine), they ended up saving $2 million in the first year.

One of the most important benefits of these measures is that they make for a more liberal society in the Misesian sense. Marijuana prohibition is public violence, prejudice, and partiality. Legalization and liberalism is private property and public tolerance. As Ludwig von Mises wrote,

The essential teaching of liberalism is that social cooperation and the division of labor can be achieved only in a system of private ownership of the means of production, i.e., within a market society, or capitalism. All the other principles of liberalism democracy, personal freedom of the individual, freedom of speech and of the press, religious tolerance, peace among the nations are consequences of this basic postulate. They can be realized only within a society based on private property. (Omnipotent Government, p. 48)

The key thing, economically speaking, is that more liberalism is good for business, jobs, and prosperity. Legalizing marijuana, along with things like same-sex-marriage laws, may be appalling to some people, but when companies are looking to get started or establishing new operations, those are some of the things that are looked at, just like taxes, schools, crime, etc. States that are competing for the best companies that offer the highest paying jobs are the same states that are liberalizing their policies.

Therefore, it should come to no surprise that a state like Washington legalized marijuana even though it does not have a history of marijuana-reform activism. Washington needs to compete with other states for computer programmers, engineers, and technicians for Washington-based firms like Boeing and Microsoft. Do not be surprised if what happened in Colorado and Washington spreads to other states in coming elections.

The most important aspect of the victories in Colorado and Washington is that the people of those states stood up and voiced their opposition to the federal government and its policy of marijuana prohibition. They are directing their state governments to no longer cooperate with the federal government. You can bet that federal officials will seek to intimidate local officials and businesses as they have done in California. They seek to use fear and violence to maintain their power.

However, demographically and ideologically, they are fighting a losing battle. Supporters of legalization are younger, smarter, better educated, and have above-average incomes. The leaders of the reform movement do not seem to view their efforts as “pro-marijuana,” but rather as anti-prohibition, and they realize that the benefits are in terms of health, public safety, and prosperity.

When my book The Economics of Prohibition was published 20 years ago, I was often asked my opinion if marijuana should be or would be legalized. My stock answer was that medical marijuana would start to be legalized in 10 years and that marijuana would start to be legalized in 20 years, probably during an economic crisis. My only prediction in print was that the reform process would begin around the turn of the century. The first reform was actually a medical-marijuana law passed in California in 1996.

Mark Thornton is a senior resident fellow at the Ludwig von Mises Institute in Auburn, Alabama, and is the book review editor for the Quarterly Journal of Austrian Economics. He is the author of The Economics of Prohibition, coauthor of Tariffs, Blockades, and Inflation: The Economics of the Civil War, and the editor of The Quotable Mises, The Bastiat Collection, and An Essay on Economic Theory. Send him mail. See Mark Thornton’s article archives.

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Copyright © 2012 by the Ludwig von Mises Institute. Permission to reprint in whole or in part is hereby granted, provided full credit is given.

“Occupy” Protesters Have Rights, Too – Article by G. Stolyarov II

“Occupy” Protesters Have Rights, Too – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
November 4, 2012
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I am generally skeptical of the “Occupy” movement and have expressed my ambivalence and criticisms here, here, and here in the past. However, for all of my disagreements and reservations, I will defend the rights of fellow human beings when they are infringed. And, without question, “Occupy” protesters have rights, too – rights that have been shamelessly violated in the brutal crackdowns on “Occupy” protests which occurred last year.

In response to my passing mention of the pepper-spraying incident at University of California Davis in November 2011 (for which the University has now offered to generously compensate the victims), Dr. Charles Steele wrote, “Mr. Stolyarov responds that he’s concerned about ‘Occupy’ protesters being pepper-sprayed at UC Davis.  I’m uncertain what this event has to do with the Romney v. Obama choice, but he and I have very different definitions of ‘peaceful.’  My definition of peaceful does not include forcibly blocking public thoroughfares and occupying public spaces so that others cannot exercise their legitimate rights to use them.  It’s shameful that taxpayer money is now going to these ‘victims.’”

First, the facts of the situation do not bear out the allegation that anyone’s ability to use the UC Davis facilities was substantially impeded. The protesters blocked a sidewalk; that is all. Surely, anyone who wished to get from one facility to another could have walked around.

Second, the protesters were students who were paying customers of the university. Even though the right to use public property is a somewhat nebulous area (since it is funded through the payments of large numbers of people with competing preferences), it is clearly the case that a paying user of property – especially one who pays the immensely generous sums that often constitute tuition these days – should have a considerable degree of prerogative, as long as the property is not damaged and remains usable to others. This whole incident is a glaring demonstration of the power asymmetry between universities and their students. What other institution (especially a privately owned and funded institution) would treat its customers in this way? Would any private country club be able to get away with pepper-spraying its donors who happened to be sitting on the sidewalk approaching a golf course (without being in the way of the game)?

It is clear that the protest was not intended to obstruct the everyday goings-on at the university. Rather, like the many special events that regularly occur at every university, it was intended to attract attention to an issue important to students – in this case, the protesters’ grievances, justified or not. There is no evidence that the protesters befouled the grass and sidewalk they occupied, or that they prevented other students and faculty from passing through on unrelated business.

Third, even if the protesters violated a formal rule of the university (which is itself unclear), proportionality was not followed in the response. To physically damage a person for breaking a prohibition whose violation physically hurt no one is clearly not a proportionate punishment. Nor was the attempt to evict the protesters through any kind of force justified with respect to this kind of petty violation (if it was one). Even if it could justifiably be said that the protesters were clearly, unambiguously in the wrong in occupying the sidewalk, they should not have been interfered with forcibly during their occupation. An appropriate remedy would have been to inform them of the nature of their violation and to present them with a subsequent punishment that did not involve bodily harm. Preferably, the punishment should have been related to any alleged harms. Examples could include sidewalk-cleaning duty, or fines that reflect the estimated “economic cost” of the obstruction (if there indeed was one).

But, even more importantly, I fail to see how a clear criterion can be established to delineate which “occupations” of the sidewalk would constitute violations of other people’s rights. With regard to genuine public thoroughfares (e.g., roads and railroads), the delineation can be clearly made with regard to whether the flow of vehicle traffic is obstructed. But, on a mere sidewalk, how long would one need to dally in order to be considered a violator? Would sitting for a mere minute suffice? What about standing for a minute? What about standing for five seconds? What about walking really slowly so that others have to walk around? What about walking really slowly because one has a disability? What about walking at a moderate pace when the culture of the university encourages most people to be ultra-rushed and adopt a rapid pace at all times? What if a person occupies the sidewalk for a much longer time period, but no one else is around to use it? Ultimately, no such arbitrary delineation can be made – and if none can be made, then we must err on the side of permissiveness. The ability for people to peacefully express themselves is too precious for anything less to be done in the attempt to preserve it.

Mr. Stolyarov Quoted in Heartlander Magazine Article on Hawaii’s Plastic-Bag Ban

Mr. Stolyarov Quoted in Heartlander Magazine Article on Hawaii’s Plastic-Bag Ban

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The New Renaissance Hat
G. Stolyarov II
July 4, 2012
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I have again been quoted in Heartlander Magazine, this time in “Aloha! Leave Your Plastic Grocery Bags at Home” by Kenneth Artz. I encourage you to read my comments there. Here are some of my further thoughts on this subject.

The recent banning of plastic bags in Los Angeles and Hawaii is a gross infringement on individual rights and free enterprise. Entirely harmless and consensual exchanges between stores and their customers are being prohibited, and in Los Angeles customers are being forced by the local government to pay for paper bags that stores would have preferred to give for free. This is a frightening infringement on consumer sovereignty, as it makes artificially scarce those goods which businesses would have preferred to make abundant and accessible for consumers’ benefit.

Freely available plastic and paper bags offer a superb convenience to consumers who may be making unplanned shopping trips – perhaps as a result of emergency needs.  Furthermore, store-provided bags are helpful even to consumers who have brought their own bags – just in case those consumers purchase more items than would fit into the bags they brought. The governments in Hawaii and Los Angeles are forcing such consumers to pay an extra fee because of their unforeseen, and sometimes very personal, needs. The ban and fee are hardest on the least economically advantaged consumers, for whom every penny counts. The inconvenience of the ban and the cumulative cost of the paper-bag fees can make the difference between financial sustainability and severe strain on personal and family budgets.

As my comments in the article make clear, the ban is also repugnant from the standpoint of morality and limited government. The only morally praiseworthy acts of environmental responsibility are those initiated and voluntarily sustained by private individuals and businesses.

This tax on convenience is an unacceptable exercise of arbitrary power. If a government can arrogate to itself the power to prevent mutually beneficial arrangements such as the free availability of plastic and paper bags – then what can it not do? What kinds of petty micromanagement are off limits to cities and counties? What room is left for creativity and innovation among individuals and businesses if the smallest things in life are subject to crippling prohibitions and controls?