Get Sean Hackbarth's new economics quotes.
The U.S. experienced faster productivity growth in the not-too-distant past. If we could return to the productivity growth rates experienced in the late 1990s, the U.S. economy would likely see better outcomes overall. As a nation, we need to think about what kinds of public policies are needed to encourage higher productivity growth—and, in turn, higher real GDP growth—over the next five to 10 years. The above considerations suggest the following might help: encouraging investment in new technologies, improving the diffusion of technology, investing in human capital so that workers’ skillsets match what the economy needs, and investing in public capital that has productive uses for the private sector.
In other cases, a worker may shirk so that the boss doesn’t discover how talented she is. Revealing one’s full level of talent sometimes just allows the boss to extract more effort.
In other words, the new liberty and dignity for commoners was a sociological event, not a psychological one. It originated in a changing conversation in the society, not in psychological self-monitoring by the individual. People in Holland and then England (and now China and India) didn't suddenly start alertly attending to profit. They suddenly started admiring such alertness and stopped calling it sinful greed.
The dominant lesson of the Great Depression and the Great Recession is that when government overspends, overtaxes and over-regulates, economic freedom is suppressed and economic growth vanishes. When growth fades, it takes the American dream with it. Give America back its economic system of freedom and opportunity, and the ensuing growth will bring back the American dream.
If Buc-ee’s can afford to pay gas-station attendants $17 an hour, then why can’t we mandate a $15-an-hour federal minimum wage? Put another way: If it’s a good idea for one specific business in one specific market at one specific time, why not everywhere? You get the same thing with Walmart vs. Costco: They’re superficially similar businesses, so how come the mean meanies in Arkansas can’t pay like the nice, nice men from Washington State do? The answer, of course, is that every situation is different, and every business is a social-science experiment, trying out different approaches to solving social problems, which is what entrepreneurs and successful firms actually do. If it weren’t for the self-interest of big, nasty corporations, it wouldn’t be a question of clean bathrooms vs. less clean ones: You’d be out there on the side of the road watering Mrs. Johnson’s beloved bluebonnets.
Take comfort in this: most Bernie Sanders Millennials didn't know what they were voting for. Test Millennials yourself. Ask them, “What Wisconsin businesses would you like the government to own?” They may be confused because they have been taught that Socialism is good, but not what Socialism is. A credible conversation points out that Socialism replaces individual liberty and choice with government decision- making. Historically, Socialism has failed and is currently causing humanitarian crises in places like Venezuela, Brazil, and Greece. The Millennials are the most diverse generation our country has ever seen. If we can educate them on what Socialism is, then the rejection of this growing Uber-riding, micro-brew drinking, choice-loving group of consumers will be “swiping left” at Socialism's one-size-fits all policies.
With its integration of machines and people from multiple nations, the scene suggested a more complicated and fluid production story than the popular tales of diabolical Chinese or soulless robots out to displace hard-working Americans. The us-versus-them world of Donald Trump doesn’t have room for a Henderson Sewing attachment to a Japanese-made Juki sewing machine installed in a Mexican factory.
Most prescriptions for boosting growth involve macroeconomic policy: increased government spending, for instance, or lower interest rates.
Is this the fault of the general public for misunderstanding? I think it’s economists’ fault for not explaining. Economics is a social science, and it practitioners tend to live in their little silos, proudly ignoring the outside world. But beyond those silos, real policy decisions are getting made that will affect the lives of millions of agents … er, human beings. As jargon creates a greater and greater disconnect between what economists really believe and what the public thinks they believe, the chances grow that the discipline will suffer a Humpty-Dumpty-like fall in prestige and influence.
One’s ability to demand goods and services from others derives from the income produced by one’s own acts of production. Wealth is created by production not by consumption. My ability to demand food, clothing, and shelter derives from the productivity of my labor or my nonlabor assets. The higher (lower) that productivity, the higher (lower) is my power to demand.
Most Americans enjoy the fruits of international trade and globalization every day: driving to work in vehicles containing at least some foreign content, relying on smart phones assembled abroad from parts made in multiple countries (including the United States), having more to save or spend because retailers pass on cost savings made possible by their access to thousands of foreign producers, designing and selling products that would never have been commercially viable without access to the cost efficiencies afforded by transnational production and supply chains, enjoying fresh imported produce that was once unavailable out of season, depositing bigger paychecks on account of their employers’ growing sales to customers abroad, and enjoying salaries and benefits provided by employers that happen to be foreign-owned companies.
Unfortunately, liberals such as Van Hollen, Levin and their ilk fail to realize that inversions are only a symptom of an economic problem rather than the problem itself. The underlying cause of inversions is twofold: U.S. corporate taxes are too high and too complicated.
It doesn’t cause businesses to cut jobs immediately. Instead, it prevents future jobs from being created. It’s costly to close a store (or factory or warehouse). So once one has been built, companies will often do their best to deal with higher wage costs by adjusting business hours, automating some operations, cutting back on employee training, or postponing future planned improvements. Hiring more staff gets put on the backburner. The real effect is in the jobs not created, a number that is often difficult, or impossible to capture. Which is what makes this Walmart example so valuable—it presents a clear example of jobs that won’t be created.
Profits are what drive employment, not the other way around. Profits let business owners and investors know what consumers want, and provide an incentive to produce more of it—often creating or protecting jobs in the process. And if you like government services and non-profit organizations, you should also like profits, since without them there would be far less to tax or donate. Emphasizing profits over jobs is not popular, but ultimately it’s the value that businesses create, not the number of workers they hire, that generates economic prosperity.
Millions of Americans work at jobs that pay less than $15 an hour, and do so for a variety of reasons. While certainly everyone would like to earn more money, it is doubtful that anyone would want his or her job eliminated because the rate of pay offends the sensibilities of political activists.