The Constitutional Vanguard: Are Emily and Greg Really More Employable Than Lakisha and Jamal?

Or, for that matter, Cletus and Rufus?

Big Media has drilled into our heads that employers are racist. One way we “know” this to be true is by reviewing studies that send out resumes with distinctive black names, together with identical resumes with white-sounding names.

Source: The Constitutional Vanguard: Are Emily and Greg Really More Employable Than Lakisha and Jamal?

In the 1960’s, Blacks and Whites chose relatively similar first names for their children. Over a short period of time in the early 1970’s, that pattern changed dramatically with most Blacks (particularly those living in racially isolated neighborhoods) adopting increasingly distinctive names, but a subset of Blacks actually moving toward more assimilating names. The patterns in the data appear most consistent with a model in which the rise of the Black Power movement influenced how Blacks perceived their identities. Among Blacks born in the last two decades, names provide a strong signal of socio-economic status, which was not previously the case. We find, however, no negative causal impact of having a distinctively Black name on life outcomes. Although that result is seemingly in conflict with previous audit studies involving resumes, we argue that the two sets of findings can be reconciled.

Source: The Causes and Consequence of Distinctively Black Names

‘Hero Pay’ for Grocery Workers Is Terrible for Grocery Workers

“Hero pay” laws, which require big wage increases for grocery store workers during the COVID-19 pandemic, are sweeping the West Coast. Store closures, unemployment, and lawsuits have followed in their wake.

The first of these laws, passed in late January by the Long Beach, California, City Council, mandated that grocery workers at large stores get a $4-an-hour pay raise for the duration of the pandemic. By early February, Kroger announced it was shutting down two stores in Long Beach.

The locations had already been underperforming, the company said, but the new pay hike meant they were now unsustainable. It was the same story in Seattle and Los Angeles: In response to “hero pay” laws, Kroger said it would close three stores in each city.

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Even with record pandemic profits, grocery stores operate on very slim margins. Big, sudden increases in expenses have to be absorbed somewhere. Those stores with the least room to make up added costs are the most at risk of being shuttered.

Most supermarkets, of course, will survive, likely through a combination of price hikes, layoffs, and employee hour reductions. These consequences are a compressed version of what we’d expect from the much-discussed idea of raising the federal minimum wage to $15 an hour: pay raises for many workers, job losses for others, and higher prices and fewer options for consumers. Unlike with a minimum wage increase, however, the costs of “hero pay” laws are obvious, immediate, and visible to everyone.

Source: ‘Hero Pay’ for Grocery Workers Is Terrible for Grocery Workers

Add The Wall Street Journal To The People Who Can’t Do Basic Arithmetic

…Yet when the issue is replacing generation of electricity by fossil fuels with generation by “renewables,” it seems that the need to believe that the renewables will work and be cost effective is so powerful that all efforts to do the arithmetic get banished. I last considered this issue in a post last week titled “California’s Zero Carbon Plans: Can Anybody Here Do Basic Arithmetic?” The answer for the California government electricity planners was a resounding “NO.” Today, the Wall Street Journal joins the math-challenged club with a front page story headlined “Batteries Challenge Natural Gas As America’s No. 1 Power Source.” (probably behind pay wall)

The theme of the story is that “renewable” energy sources, such as solar, paired with batteries to balance periods of low production, are rapidly becoming so cheap that they are likely to “disrupt” natural gas plants that have only recently been constructed:

[T]he combination of batteries and renewable energy is threatening to upend billions of dollars in natural-gas investments, raising concerns about whether power plants built in the past 10 years—financed with the expectation that they would run for decades—will become “stranded assets,” facilities that retire before they pay for themselves. . . . But renewables have become increasingly cost-competitive without subsidies in recent years, spurring more companies to voluntarily cut carbon emissions by investing in wind and solar power at the expense of that generated from fossil fuels.

OK, then, so if solar-plus-battery systems are about to displace natural gas plants, what’s the plan for winter? They won’t say. The fact is, the only possible plans are either fossil fuel backup or trillions upon trillions of dollars worth of batteries. But the author never mentions any of that. How much fossil fuel backup? That’s an arithmetic calculation that is not difficult to make. But the process of making the calculation forces you to actually propose the characteristics of your solar-plus-battery system, which then makes the costs obvious. How much excess capacity of solar panels and batteries do you plan to build to minimize the down periods? Do you need solar panel capacity of four times peak usage, or ten times? Do you need battery capacity of one week’s average usage (in GWH) or two weeks or a full month?

The simple fact is that wind/solar plus battery systems would not need any government subsidies if they were cost effective. The Biden Administration is proposing to hand out many, many tens of billions of dollars to subsidize building these systems. They are clearly not cost-effective, and not even close. But no one in a position to know will make the relatively simple calculations to let us know how much this is going to cost. Even the Wall Street Journal can’t seem to grasp the math involved. And President Biden? It’s embarrassing even to ask the question.

Lockdowns Didn’t Stop Covid

A new study finds more virus spread inside homes than work places.

Covid-19 lockdowns shaved 3.5% off U.S. GDP in 2020 even as the federal government spent more than $2.6 trillion in relief measures. Millions of children fell behind in learning and nearly 100,000 businesses closed for good.

Conventional wisdom holds this was worth it because lives were saved by shutting workplaces and schools and telling people to stay home. But a new study by University of Chicago economist Casey Mulligan shows the opposite. After the first month of the pandemic, organizations that adopted prevention protocols became safer places than the wider community. Officials who didn’t see that coming forgot that organizations are rational and look for cooperative solutions that improve the welfare of the group, such as reducing the risks of communicable disease.

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There is little doubt that infection would spread faster in congregations than in smaller groups if both engaged in similar practices. But since larger groups have an incentive to spend on expensive methods of prevention, larger organizations might be better at prevention than households with fewer people.

This is what happened. “Available data from schools, hospitals, nursing homes, food processing plants, hair stylists, and airlines,” Mr. Mulligan writes in the study, “show employers adopting mitigation protocols in the spring of 2020.” These were “physical barriers,” like masking and air filtering, but also included distancing protocols, pods and screenings. Households were less likely to implement similar precautions.

Source: Lockdowns Didn’t Stop Covid

How does raising the minimum wage affect the labor market? My long-read Q&A with Jeffrey Clemens

By James Pethokoukis and Jeffrey Clemens President Biden’s original American Rescue Plan would have increased the federal minimum wage to $15 an hour from the current $7.25. Ultimately, that part of the proposal did not make it past budget reconciliation rules.

Source: How does raising the minimum wage affect the labor market? My long-read Q&A with Jeffrey Clemens

Why Wind and Solar Energy Are Doomed to Failure

Wind and solar energy are both essentially obsolete technologies. There is a reason why only the very rich or the very adventurous sail across oceans: the wind is unreliable, and at best produces relatively little energy. Nevertheless, liberals have concocted fantasies whereby all of our electricity, or perhaps our entire economy, will be powered by those fickle sources.

There are a number of reasons why this will never happen, but a paper published last week by Center of the American Experiment argues that land use constraints are the most basic reason why wind and solar are inexorably destined to fail. The paper, titled Not In Our Backyard, is authored by internationally recognized energy expert Robert Bryce, producer of the terrific documentary Juice: How Electricity Explains The World and the book A Question of Power: Electricity and the Wealth of Nations

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Because wind and solar produce so little energy per square mile, an enormous amount of land would have to be devoted to panels and turbines if we seriously tried to get all of our present electricity needs from those weak sources:

Miller and Keith determined that “meeting present-day U.S. electricity consumption, for example, would require 12 percent of the continental U.S. land area for wind.” A bit of math reveals what that 12 percent figure means. The land area of the continental U.S. is about 2.9 million square miles, or 7.6 million square kilometers. Twelve percent of that area would be about 350,000 square miles or 912,000 square kilometers. Therefore, merely meeting America’s current electricity needs with wind energy would require a territory more than two times the size of California.

Suffice to say that this just isn’t going to happen.

For one thing, no one places wind farms in Washington, D.C. or midtown Manhattan. Nor are wind projects slated for Long Island, Marin County, or near any valuable suburban developments. It is rural America that bears the burden of many square miles of wind and solar installations.

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“Green” energy holds political sway, which has made a relative handful of people (largely non-Americans and lobbyists) immensely wealthy, while impoverishing utility rate payers and taxpayers–that is to say, the rest of us. This insanity will continue until voters wise up, or–more likely, I am afraid–until the laws of physics, along with land use and raw materials constraints, make it blindingly obvious that the “green dream” is just that. A nightmare.

Source: Why Wind and Solar Energy Are Doomed to Failure

Middle-Class Stagnation is a Myth

(Don Boudreaux) Tweet Here’s a comment – that, alas, I discover that I’m unable to post – on a response by “Matthew A.” to Scott Winship’s devastating analysis of the latest from Oren Cass’s shop, American Compass:

I write in response to your comment on Scott Winship’s thorough exposé of the many flaws in American Compass’s latest portrayal of the American economy. I here focus on your assertion that official measures of inflation intentionally undercount the dollar’s devaluation.

While I’m the last person to doubt government-officials’ scurrility, I believe that the Boskin Commission finding remains valid – namely, that the Consumer Price Index overcounts (or, you might say, “inflates”) inflation.

But we needn’t quibble over this matter. When reckoning changes in living standards, a way to avoid the need to adjust for inflation is, first, to calculate the amount of time that an ordinary worker today must toil to purchase various goods and services, and then, second, to compare these findings to the amount of time that an ordinary worker in the past had to toil to purchase these same items. We can perform this comparison using only nominal wages and prices. If workers today must toil longer for most goods and services, living standards are lower than in the past; if not, not.

A quick Google search turned up this list of prices of 16 familiar grocery items along with their nominal prices in both 1990 and 2020. And FRED has, for each of these years, reliable records of the nominal hourly wages of private-sector production and nonsupervisory workers. And so we can then divide the nominal price, for example, of a pound of beef in 1990 ($2.81) by the nominal hourly wage in 1990 ($10.22) to determine how long an ordinary worker in 1990 had to toil to earn enough income to buy a pound of beef (16.5 minutes). After performing the same calculation for 2020, we can then see if a worker today has to work longer or less, compared to a worker in 1990, to earn the requisite purchasing power.

In the case of beef, priced at $4.35lb in 2020, an ordinary worker in 2020, earning $24.67 per hour, had to work only 10.6 minutes to earn enough income to buy a pound of beef. That’s 36 percent less time – or nearly six fewer minutes per hour – than he or she had to work to earn the same ‘beef’ purchasing power in 1990.

I performed this calculation for each of the 16 grocery items listed at the above-mentioned link. The amount of time that an ordinary worker today must work to earn income sufficient to purchase each and every one of these products is lower than it was in 1990.

Of course, the fact that ordinary workers today don’t have to work as long as did their counterparts of 30 year ago to buy these 16 grocery items itself doesn’t prove that middle-class Americans today aren’t worse off than they were decades ago. But it does counsel some skepticism of your assertion that, unlike in the past, to maintain a middle-class lifestyle today “most wives are forced to work.”

In the near future, The Age of Superabundance­ ­– a brilliant, data-drenched book by Marian Tupy and Gale Pooley – will be published. The authors document beyond any doubt that each hour of work on the job today by an ordinary American worker yields that worker far more purchasing power, across a wide range of goods and services, than was yielded just a few years ago. (Here’s an essay that gives you a flavor of the book. And you’ll find here my own, more-modest efforts that point to the same happy conclusion.)

The only reason women ‘must’ work today to maintain a household’s middle-class living standard is that what we regard today as a middle-class living standard is far more luxurious than it was in 1990, and made so by the voluntary participation today of more women in the labor force.

Source: Middle-Class Stagnation is a Myth

How a Physicist Became a Climate Truth Teller

After a stint at the Obama Energy Department, Steven Koonin reclaims the science of a warming planet from the propaganda peddlers.

Barack Obama is one of many who have declared an “epistemological crisis,” in which our society is losing its handle on something called truth.

Thus an interesting experiment will be his and other Democrats’ response to a book by Steven Koonin, who was chief scientist of the Obama Energy Department. Mr. Koonin argues not against current climate science but that what the media and politicians and activists say about climate science has drifted so far out of touch with the actual science as to be absurdly, demonstrably false.

This is not an altogether innocent drifting, he points out in a videoconference interview from his home in Cold Spring, N.Y. In 2019 a report by the presidents of the National Academies of Sciences claimed the “magnitude and frequency of certain extreme events are increasing.” The United Nations Intergovernmental Panel on Climate Change, which is deemed to compile the best science, says all such claims should be treated with “low confidence.”

In 2017 the U.S. government’s Climate Science Special Report claimed that, in the lower 48 states, the “number of high temperature records set in the past two decades far exceeds the number of low temperature records.” On closer inspection, that’s because there’s been no increase in the rate of new record highs since 1900, only a decline in the number of new lows.

Mr. Koonin, 69, and I are of one mind on 2018’s U.S. Fourth National Climate Assessment, issued in Donald Trump’s second year, which relied on such overegged worst-case emissions and temperature projections that even climate activists were abashed (a revoltcontinues to this day). “The report was written more to persuade than to inform,” he says. “It masquerades as objective science but was written as—all right, I’ll use the word—propaganda.”

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For the record, Mr. Koonin agrees that the world has warmed by 1 degree Celsius since 1900 and will warm by another degree this century, placing him near the middle of the consensus. Neither he nor most economic studies have seen anything in the offing that would justify the rapid and wholesale abandoning of fossil fuels, even if China, India, Brazil, Indonesia and others could be dissuaded from pursuing prosperity.

He’s a fan of advanced nuclear power eventually to provide carbon free base-load power. He sees a bright future for electric passenger vehicles. “The main reason isn’t emissions. They’re just shifted to the power grid, and transportation anyway is only about 15% of global greenhouse-gas emissions. There are other advantages: Local pollution is much less and noise pollution is less. You’re sitting in a traffic jam and all of these six- or four-cylinder engines are throbbing up and down burning fuel and just doing no good at all.”

But these are changes it makes no economic sense to force. Let technology and markets work at their own pace. The climate might continue to change, at a pace that’s hard to perceive, but societies will adapt. “As a species, we’re very good at adapting.”

The public now believes CO2 is something that can be turned up and down, but about 40% of the CO2 emitted a century ago remains in the atmosphere. Any warming it causes emerges slowly, so any benefit of reducing emissions would be small and distant. Everything Mr. Koonin and others see in the science suggests a slow, modest effect, not a runaway warming. If they’re wrong, we don’t have tools to apply yet anyway. Decades from now, we might have carbon capture—removing CO2 directly from the atmosphere at a manageable cost.

Source: How a Physicist Became a Climate Truth Teller

Unintended Consequences of De-funding the Police

There exists an essentially universal belief that generally reducing adverse criminal justice outcomes will tend to reduce (a) relative racial differences in rates of experiencing the outcomes (as commonly presented in terms of the ratio of the rate for Black individuals to that of white individuals) and (b) the proportion Black individuals make up of persons experiencing the outcomes (compared with the proportion they make up of the population).

The belief underlies the calls for defunding the police that were heard in many places over the past year. The belief also plays an important role in support for criminal justice reforms aimed at generally reducing prison populations, expanding options for pretrial release and diversion programs for defendants with low risk of recidivism, de-incentivizing traffic stops, and modifying police practices in ways that can reduce all adverse interactions between the police and the public.

Law 360

That is, when two groups differ in their susceptibility to an outcome, generally reducing the outcome tends to increase, not reduce, relative differences in rates of experiencing the outcome while reducing relative differences in rates of avoiding the outcome, i.e., experiencing the opposite outcome.

Correspondingly, reducing an outcome tends to increase the proportion the more susceptible group makes up of persons experiencing the outcome and persons avoiding the outcome. The pattern can be easily illustrated with test score data where two groups differ in the average performance on the test, as in Table 1 below.

The table is a slightly modified version of a table I used in my testimony at a December 2017 U.S. Commission on Civil Rights hearing on discipline disparities in public schools, where I attempted to explain the effects of reducing adverse discipline outcomes.

If your goal is to reduce disparities, being more strict seems to be the way to go.

Man-of-System Madness!

Merch madness…

(Don Boudreaux) Tweet Every Spring in the U.S., many Americans are tuned in to what is called “March Madness.” (This madness usually occurs in early April, but because of Covid-19, it actually is occurring in 2021 in March. In 2020 it was cancelled by Covid Craziness.) Sixty-four – well, now more, but traditionally 64 – college basketball teams are invited to participate in the NCAA Division I basketball tournament.

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Café Hayek isn’t a sports or betting blog; it’s an economics blog.

Here’s the relevance.

Production involves matching different inputs together in ways that generate outputs that are useful to human beings. And production is ‘better’ the more useful are the outputs produced relative to the value of the inputs used to produce these outputs. If McDonald’s produces one million Big Macs this year using only half of the inputs that it used last year to produce one million Big Macs, there are more resources available this year to produce goods and services that last year were too costly to produce. McDonald’s improved efficiency at producing Big Macs makes increases the wealth not only of McDonald’s shareholders but of countless people who have nothing at all to do with McDonald’s, either as owners, workers, or customers.

And so we, simply as denizens of the modern economy, should care how well different inputs are combined with each other to produce outputs. Suppose that $X value of some good can be produced in one of two ways: (1) by combining input A with input B; or (2) by combining input A with inputs C and D.

Which is the better way? The answer is easy: the one with the lowest cost. If here using inputs A, C, and D costs less than using inputs A and B, we should all want this good produced with inputs A, C, and D.

Nothing is easier than to write ‘We should produce as efficiently as possible’ – which, in effect, is just what I wrote. The challenge in this complex reality of ours is to actually achieve production that is as efficient as possible.

To the extent that we let government override market decisions and processes, we let government do the equivalent of trying to fill out a perfect NCAA tournament bracket. The actual play of each game determines which team, at least under the particular circumstances – and at the particular times – of the games, is the best team. Likewise, the actual play of market competition determines which particular combination of inputs is the best way of producing some (given) output.

It would be folly to think that we can eliminate the need to actually carry out the competition of tournament games by having some ‘experts’ fill out the brackets in order to determine which teams are best. It would be even greater folly to think that we can eliminate the need to actually carry out market competition by having some ‘experts’ write down ahead of time which is the ‘best’ method of producing some (given) output.

The latter folly would be greater than in the basketball-tournament case for at least two reasons. First, unlike in the basketball-tournament case, in the economy we must also somehow figure out what is the best combination of goods and services to produce. The ‘best’ outcomes in the basketball tournament are simply those outcomes that emerge from the playing of the games fairly. In the economy, though, the relative ranking of ultimate outputs – of consumer goods and services – must be made such that all production effort is geared to producing those goods and services.

Second, there are only 64 teams in the NCAA tournament, with only one eventual ‘winner’ (which can be thought of as a final consumer good). In the economy, there are literally trillions of resources and hundreds of billions of ‘winners’ – that is, final consumer goods and services the production of which justifies using inputs. The complexity of the economy is untold magnitudes greater than is the complexity of the NCAA basketball tournament.

Source: Man-of-System Madness!