Economics

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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Economic fallacy alive in Kansas at Docking Institute

As reported in the Wichita Business Journal at wichita.bizjournals.com/wichita/stories/2007/03/19/daily26.html, the Docking Institute of Public Affairs at Fort Hays State University has produced a report that seems to say that the $727 million deferred-maintenance backlog at Kansas universities is, well, really a good thing. (The report is available to read at www.kansasregents.org/maintenance.html) Why? Quoting from the press release that accompanies the report: “This report displays the substantial and positive economic impact that a comprehensive state university building maintenance funding solution would have on the state’s economy,” said Reginald L. Robinson, President and CEO of the Kansas Board of Regents. “University maintenance…
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The Williams rules

Here's why we should listen to the economist Walter E. Williams. From a column of January, 2007. The kind of rules we should have are the kind that we'd make if our worst enemy were in charge. My mother created a mini-version of such a rule. Sometimes she would ask either me or my sister to evenly divide the last piece of cake or pie to share between us. More times than not, an argument ensued about the fairness of the division. Those arguments ended with Mom's rule: Whoever cuts the cake lets the other take the first piece. As…
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How To Judge the Worth of Ethanol

From The Wall Street Journal, January 27, 2007: "Ethanol gets a 51-cent a gallon domestic subsidy, and there's another 54-cent a gallon tariff applied at the border against imported ethanol. Without those subsidies, hardly anyone would make the stuff, much less buy it -- despite recent high oil prices." Remove this subsidy and the tariff. Remove the subsidy paid to farmers who grow the corn that is used to make ethanol. Then, the free market will rapidly tell us the true value of ethanol.
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Denouncing “Greed”

Today there are adults -- including educated adults -- who explain multimillion-dollar corporate executives' salaries as being due to "greed." Think about it: I could become so greedy that I wanted a fortune twice the size of Bill Gates' -- but this greed would not increase my income by one cent. ...One of the reasons why central planning sounds so good, but has failed so badly that even socialist and communist governments finally abandoned the idea by the end of the 20th century, is that nobody knows enough to second guess everybody else. Every time oil prices shoot up, there…
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Preserve farmland at what cost?

A writer in the January 2, 2007 Wichita Eagle laments the loss of farmland to development, particularly residential homebuilding. The writer states that if farmland were preserved, Kansas could become more prosperous. There are two areas in which I believe this writer is mistaken. First, if the transaction between developer and farmer was voluntary, each is better off than they were before. The developer (and by extension the people he hopes to sell houses to) valued the land more than the farmer did. Otherwise, why would the transaction take place? These voluntary transactions that make both parties better off than…
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Minimum wage price controls hurt Kansas

This article presents compelling evidence that raising the minimum wage is not in the best interests of low-wage workers. An issue that the very existence of a minimum wage reveals, one that no one seems to talk about is this: Why are so many workers capable only of doing work valued so low? We should be asking why we spend so much on public schools and education, only to have groups of workers with so little skill that their work output is valued so little. Minimum Wage Price Controls Hurts Kansas By Karl Peterjohn The minimum wage is going to…
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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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Remarks to Wichita City Council Regarding the AirTran Subsidy on July 11, 2006

Mr. Mayor, Members of the City Council: You may recall that I have spoken to this body in years past expressing my opposition to the AirTran subsidy. At that time we were told that the subsidy was intended to be a short-tem measure. Today, four years after the start of the subsidy, with state funding planned for the next five years, it looks as though it is a permanent fixture. Supporters of the subsidy have made a variety of claims in its support: that the subsidy and the accompanying Fair Fares program are responsible for $4.8 billion in economic impact,…
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