Economics

Price Controls Will Harm Iowa

In the article Price Controls Create Man-Made Disasters we learn that although the Iowa attorney general has imposed Iowa's anti-price-gouging rule (Price-gougers beware, Attorney General says), the likely effect will be "shortages of needed supplies, long lines, delayed repairs, and, perhaps, increased incivility." The price system is very good at allocating scarce resources. That's certainly the case after natural disasters, where things as necessary as drinking water may be in short supply. Allowing the price of even essential items rise to high levels means that hoarding is discouraged, leading to more widespread availability of goods as necessary as drinking water.…
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Wichita’s Galichia provides what government health care doesn’t

A recent editorial in The Wichita Eagle (Dr. Bill Roy: Universal care is most economic, efficient) contains several mistaken impressions. One may be disproved by recent developments in Wichita. The writer states "It has never been a secret that a single-payer system is the most economic, efficient and fair way of providing universal care." Here's something interesting that I'm sure the author of this opinion piece knows, but somehow disregards. In Canada, home to the type of health care system the writer favors, many people come to the United States for care. In fact, Wichita is now providing service to…
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The Entrepreneur As American Hero

This is an excerpt of a speech given by Walter E. Williams on February 6, 2005 at Hillsdale College. The complete speech, titled "The Entrepreneur As American Hero," can be read here: http://www.hillsdale.edu/imprimis/2005/03/. At this juncture let me say a few words about the modern push for corporate social responsibility. Do corporations have a social responsibility? Yes, and Nobel Laureate Professor Milton Friedman put it best in 1970 when he said that in a free society ‚Äúthere is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits…
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The Candlemaker’s Petition

By Frederic Bastiat A PETITION From the Manufacturers of Candles, Tapers, Lanterns, sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting. To the Honourable Members of the Chamber of Deputies. Gentlemen: You are on the right track. You reject abstract theories and little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry. We come to offer you a wonderful opportunity for your --…
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Henry Hazlitt explains Frederic Bastiat, or, a broken window really hurts no matter what the New York Times says

This simple lesson from Henry Hazlitt's Economics in One Lesson explains so much, yet so little people realize and apply the truths explained here. Even trained economists like Paul Krugman, writing in The New York Times, fail to recognize the truth of Bastiat's lesson as explained by Hazlitt when he remarked that "the terror attack [of 9/11/2001 that destroyed the World Trade Center] could even do some economic good." Part TWO THE LESSON APPLIED THE BROKEN WINDOW Let us begin with the simplest illustration possible: let us, emulating Bastiat, choose a broken pane of glass. A young hoodlum, say, heaves…
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Gambling study flawed. Ask casino workers.

Did you know that a study used to promote the economic development benefits of gambling in Wichita has casino workers paying for a large part of the social costs of gambling? There is a document titled "Economic & Social Impact Anlaysis [sic] For A Proposed Casino & Hotel" created by GVA Marquette Advisors for the Wichita Downtown Development Corporation and the Greater Wichita Convention and Visitors Bureau, dated April 2004. One presentation concludes that the average cost per pathological gambler is $13,586 per year. Quoting from the study in the section titled Social Impact VII-9: Most studies conclude that nationally…
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The law vs. markets

One of the criticisms of raising the minimum wage is that it is Congress substituting its judgment for the market's in determining pay. While Congress can force an employer to pay an employee a minimum amount, it can't force the employer to keep the employee. In a similar fashion, the Mississippi Attorney General has forced an insurance company to pay for damage its policies didn't cover. He used a court of law to do that. What the court can't do, however, is force the insurance company to keep writing policies in Mississippi. State Farm, the nation's largest home insurer, announced…
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Sugarcane not so sweet

Writing from near Thibodeaux, Louisiana Driving though the sugarcane fields of southern Louisiana during harvest, it is impossible not to dwell upon the politics behind it all. Those politics being the sugar subsidy and the benefits it brings to these farmers, and the cost of it to the rest of us. Sugar in the United States costs from two to three times what it does elsewhere, even in Canada and Mexico. It is purely the government, through the sugar subsidy, that causes sugar to cost more in our country. There is no other explanation for this difference. The goal of…
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Unintended but foreseeable harms of the minimum wage

Understanding the minimum wage, and why an increase will be harmful to those it is meant to help, requires thinking beyond stage one. Commentary by David R. Henderson in the August 1, 2006 Wall Street Journal shows how the unintended effects may harm those who are still working after an increase in the minimum wage: ... because the minimum wage does not make employees automatically more productive, employers who must pay higher wages will look for other ways to compensate: by cutting non-wage benefits, by working the labor force harder, or by cutting training. Interestingly, the Economic Policy Institute (EPI),…
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Problem of low wages not easily solved

It seems like an easy fix for social injustice: pass a law requiring employers to pay workers more than they would otherwise. Magically, everyone has more wealth. It would be nice if it were so easy and simple. Looking at only the immediate effects and listening to the rhetoric of some politicians and editorial writers, it would seem that a higher minimum wage is good. But considering all effects of a higher minimum wage reveals a different situation. As Milton Friedman writes in Capitalism and Freedom: Minimum wage laws are about as clear a case as one can find of…
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