Is infinite economic growth a fantasy? Or is the fantasy the idea that we are quickly using up the Earth?

In his recent book, “ Stubborn Attachments ,” economist Tyler Cowen offers a brief thought experiment meant to illustrate how seemingly tiny differences in GDP growth rates generate massive wealth differences over time. What if, Cowen asks, the US economy grew at one percentage point less annually from 1870 through 1990?

Source: Is infinite economic growth a fantasy? Or is the fantasy the idea that we are quickly using up the Earth?

Do Blue States Subsidize Red States?

Countering those concerns, some leftists have resurrected the myth that it’s actually red states that are “welfare queens.” While this represents a pivot from the original argument (which is over states in better fiscal condition subsidizing those in worse), it is relevant, as it would imply that perhaps the reason red states are in better fiscal condition is because the federal government has been giving them an assist.

And it would be false.

In my 2019 book Debunk This!, I analyzed a similar argument from two angles; that Republicans themselves were more likely to be moochers, and that red states as a whole are.

Liberals Resurrect Myth That Blue States Subsidize Red States

In other words, Sammin points out that because red state budgets tend to be smaller, it would make more sense to look at intergovernmental grants (payments from the federal government to state governments) on a per-capita basis, not as a percentage of state budgets.

Against a national average of $1,935 in intergovernmental spending per American, red states receive just $1,879. Blue states get considerably more, at $2,124 per resident. Purple states see the least of their money returned to them per capita, at just $1,770.

StatesPopulationInterGov.InterGov. Per Capita
Total Red State96,086,631$180,551,551,000$1,879
Total Purple State77,676,459$137,532,631,000$1,771
Total Blue State134,982,448$286,776,111,000$2,125
Grand Total312,471,695$604,860,293,000$1,936

To address the question of “subsidizing”, it might be interesting to look at per capita taxes paid by each class of state.

It was inevitable that socialized medicine gave up on the elderly with COVID-19 — Bookworm Room

It’s no surprise that socialized medicine countries stopped treating their old people. Socialized medicine rations care even when there’s not an emergency. I was talking to a friend in Spain who has taken his 88-year-old mother into his home. His mother had previously been living in a retirement community near his house. There, as here,…

It was inevitable that socialized medicine gave up on the elderly with COVID-19 — Bookworm Room

Four Ways to Judge Minimum Wage Laws

There are at least four levels on which the effects of minimum wage legislation need to be analyzed.

When employers are required by law to pay a higher wage, some workers in some workplaces will receive this higher wage. If you assume that these workers deserve this higher wage and will be made happier by it, then the legislation is helpful. This is the good intentions level of the policy.

1. Immediate Effects

When employers are required by law to pay a higher wage, some workers in some workplaces will receive this higher wage. If you assume that these workers deserve this higher wage and will be made happier by it, then the legislation is helpful. This is the good intentions level of the policy.

2. Demand Effects

When you arbitrarily raise the price of something, you reduce the demand for it. This is elementary supply and demand theory. For example, suppose a grocery manager in a market has set a price of $1.00 a pound on tomatoes that are turning overripe. A well-intentioned legislator feels sorry for these tomatoes and arbitrarily raises their price to $1.50 a pound. The result will be that customers buy fewer these of these tomatoes, and more will end up rotting in the bin.

The same thing happens with marginal labor, including workers who are physically or mentally impaired, or young and inexperienced. If you arbitrarily raise the price that must be paid for this labor, less of it will be purchased. Employers adjust by substituting labor-saving machinery, by hiring fewer but more productive employees, or by closing the business altogether. What started out as a good intention ends up hurting many of the very workers one feels sorry for, pushing them into unemployment.

3. Price Effects

To the extent that a minimum wage law does put more money in the hands of some workers, this money has to come from somewhere. At first glance, it might seem that employers will pay this extra out of their own pockets. The problem with this expectation is that in all economic arrangements there is a great deal of cost-shifting going on. Businesses adjust to increased costs by increasing prices. The restaurant that charged $5.00 for a hamburger will raise the price to $5.50 to cover the higher wages being paid.

As a result of this cost-shifting, the burden of paying for an increase in the minimum wage falls on everyone, including the low-wage workers one hopes to help—and on non-working poor we didn’t even stop to think about.

4. Social Effects

From a distance, a job may seem a mere transfer of money, but in practice it involves many social and psychological benefits. A recovering drug addict may need a temporary job as therapy, a teenager may need employment to develop responsibility and self-confidence, a senior may need informal work to gain companionship. For these workers, the benefits of a job lie beyond the money being paid. Forcing an employer to pay a higher wage can destroy such arrangements, eliminating the social benefits connected with them. In one case I’ve learned about, a program that had patients of a mental hospital doing gardening and beautification work on hospital grounds was closed down by state regulators because it violated minimum wage requirements.

“How Can you Talk Economics When People are Dying”: A Blast from the Past. — The Writer in Black

Some people have been “pushing back” against the panic over the Chinese Coronavirus (Winnie the Flu), noting the damage these overreactions are doing, and will continue to do, to the economy. But you know what else leads to people dying? A faltering, let alone crashing, economy. Which brings up this Blast from the (quite recent […]

“How Can you Talk Economics When People are Dying”: A Blast from the Past. — The Writer in Black

Bernie’s own private Denmark

There is nothing like a Dane…

(Paul Mirengoff) Whenever Bernie Sanders’s socialism comes up in the Democratic debates, he deflects criticism by saying he favors something along the lines of Denmark’s model. Sanders’s debate rivals almost invariably let this answer pass. (I think Pete Buttigieg tried to take it on in the last debate but couldn’t get the floor.) In reality, the policies Sanders advocates bear little resemblance to those of Denmark and other Scandinavian countries today .

Source: Bernie’s own private Denmark

The Consequences of Treating Electricity as a Right

In poor countries the price of electricity is low, so low that “utilities lose money on every unit of electricity that they sell.” As a result, rationing and shortages are common. Writing in the JEP, Burgess, Greenstone, Ryan and Sudarshan argue that “these shortfalls arise as a consequence of treating electricity as a right, rather than as a private good.” How can treating electricity as a right undermine the aim of universal access to reliable electricity? We argue that there are four steps. In step 1, because electricity is seen as a right, subsidies, theft, and nonpayment are widely tolerated. Bills that do not cover costs, unpaid bills, and illegal grid connections become an accepted part of the system. In step 2, electricity utilities—also known as distribution companies—lose money with each unit of electricity sold and in total lose large sums of money. Though governments provide support, at some point, budget constraints start to bind. In step 3, distribution companies have no option but to ration supply by limiting access and restricting hours of supply. In effect, distribution companies try to sell less of their product. In step 4, power supply is no longer governed by market forces. The link between payment and supply has been severed: those evading payment receive the same quality of supply as those who pay in full. The delinking of payment and supply reinforces the view described in step 1 that electricity is a right [and leads to] a low-quality, low-payment equilibrium.

Source: The Consequences of Treating Electricity as a Right

The thing is, this isn’t limited to electricity. The same process applies to any good or service, including health care.