Monday, October 31, 2005
Wednesday, October 26, 2005
However, they are not leading the way by raising wages for their own employees.
They hope that a higher minimum wage will result in more people spending more money at Wal Mart.
The minimum wage has been set at $5.15 for about 10 years, and Wal Mart backs an increase to $6.25. Personally, I believe that if we are going to have a minimum wage, it should be indexed to inflation, as should breakpoints in the income tax laws. But let's take a look at the economics of the minimum wage and evaluate if it is a good idea to begin with.
The main proponents of minimum wage, and of increases in minimum wage, are labor unions. They argue for increases, saying "$5.15/hour is not a living wage." That is true. Someone working full time at minimum wage will earn about $10,300 in a year. It is not intended to be a living wage. No one is supposed to support a family on minimum wage. High school kids working summer jobs are the only ones who actually are paid minimum wage.
If you have been working for years and have a spouse and kids and are still being paid minimum wage, its time to develop some skills, maybe take a few courses, and get a new job.
Labor unions want increases in minimum wage not because their members earn minimum wage, but because their salaries are tied to minimum wage, either implicitly or explicitly. Some union contracts define the members' salaries as a function of minimum wage. If the contract says that the workers get two and a half times minimum wage, when Congress raises minimum wage by a dollar, the union members get a $2.50 raise. But even if the contracts are not directly tied to minimum wage, the wage compression caused by an increase in minimum wage will drive union salaries higher. This is why unions favor an increase in minimum wage.
What are the unintended side affects of a minimum wage?
First of all, the minimum wage is an artificial barrier to entry-level jobs. If some particular worker will only provide $5.50 of benefit to an employer, and Congress raises minimum wage to $6.25, that worker will not be employable. That person may just need a year or two of experience to become a more productive employee, but the lowest rung of the ladder has been cut off, making it difficult for him to start the climb to better-paying jobs. If the market price for a certain job is below minimum wage, we have essentially told people who would take those jobs that they can not have a job.
Secondly, the minimum wage is inflationary. By increasing the cost of doing business, some companies will be forced out of business, reducing the supply of goods and services. The other companies will roll the extra cost into the price they charge for those goods or services. The result is that a significant part of the increase in wages is eaten up in higher prices, and does not increase the standard of living of the people it is intended to help.
Third, the minimum wage drives the illegal job market. Thousands of illegal immigrants enter the country every year because they can illegally get a job which pays below minimum wage. The fact that this is desirable indicates that the job pays better than what they could get at home. If employers could legally hire legal workers for these jobs at market wages, they would do so rather than risk hiring an illegal worker. We need a better guest worker program to let people legally enter the country to work in these jobs, but we could also address the problem by eliminating the minimum wage.
The minimum wage drives up costs of doing business. These costs are passed along to consumers in higher prices. It increases unemployment and inflation and creates an illegal labor market. Free market pricing of labor is a more efficient method than government regulation, and results in a stronger economy which provides opportunity for everyone to benefit.
Tuesday, October 25, 2005
Wednesday, October 19, 2005
Being good at math, let's run the numbers ourselves.
The smaller prizes, ranging from $3 to $200,000 have a total expected value of just under 20 cents. To break even the grand prize must have an expected value of 80 cents. We know that we won't break even, because the whole point of the lottery is to fund the government. The worst odds in privately operated casinos are around 90 cents on the dollar. To match that, the expected value of the Powerball grand prize would have to be 70 cents.
At first glance, the expected value of the grand prize appears to be $340 million / 146 million = $2.33. However, the real value of the grand prize is about half of $340 million. The winner has the option of taking roughly $164 million now, or getting the full $340 million in 30 annual payments. Either way, the present value is less than half of what they advertise. At $164 million, the expected value of a ticket is still in the money: $1.12.
But of course, Uncle Sam will want his cut. By the time he is done with you, a third of the jackpot will be gone. You will be left with $118 million. Now the expected value is $0.81.
This is right at the break even point. And this is as good as the odds ever get. I must point out that for the odds to get this good, 540 million losing tickets were sold over the last 10 weeks. All those people who are bad at math are responsible for the odds being anywhere close to even in this one drawing.
But it is not as good as it looks even now. We have not yet considered that you might have to split that jackpot two or three ways, or more. With 120 million tickets sold for this drawing, the odds are good that there will be multiple winners. If you do happen to win, there is a 56% chance that someone else won too. There is a 31% chance that you will have to split the jackpot 3 ways or more. On average, a winner will get $78 million after taxes. Taking this into account, the expected value of that ticket is just 73 cents, including the 20 cents from the small prizes.
It would be illegal for any private casino to offer odds this bad.
So why does the Lottery Commission tout the $340 million number instead of what it is really worth: $78 million? It's all marketing hype. The bigger number will attract more ticket sales. More ticket sales mean more profit for the Lottery Commission. Every ticket sold, regardless of the results of the drawing, means a 20 cent profit for the Lottery Commission.
Proponents of the lottery say that it helps to fund beneficial government programs, such as education. After all, who could be against better schools? But at what cost? And from whose pocket? The evidence clearly shows that most lottery revenue comes from people who can't afford to play. For many people who are professional wards of the state, dependent on government for their meager existence, the conditioned response is to look to government as the source of all hope. The lottery acts to maintain the cycle of dependency. Similarly, unskilled, uneducated people in low-paying jobs, the same one's who don't have the mathematical ability to know how bad a deal the lottery is, see the lottery as their only chance to escape their paycheck-to-paycheck existence. These are the products of the public education that the lottery provides.
It is true that some people who can afford to play and do recognize that the system is heavily rigged against them still do play for entertainment purposes. It gives the buyer the chance to dream what she would do if she won. An argument can be made that the jackpot is "big enough" even though the expected value is less than the price of the ticket. After all, $118 million split three ways is still enough to change a person's life. However, for most people, the change is not as positive as they imagined. Many squander their money. Most find friends and relatives distancing themselves, or scheming for how to cash in on the sudden wealth. The case of William "Bud" Post is a great example. Bud had been living on a government disability pension. In 1988, Bud won $16.2 million in the Pennsylvania Lottery. The government immediately took $5 million. Soon after winning, a former girlfriend sued and won a third of his winnings. Bud's brother was later convicted of hiring a hit man to kill Bud and take a share of the winnings. Post used up what was left on fancy vehicles and high-dollar toys. He gave loans to relatives and lost money in investment scams. He soon was deep in debt, with the future lottery payments as collateral. Post now lives on a $450/month government disability pension. Some dream, huh? If Post had not been so bad at math, he might not have played in the first place, or he might have planned wisely, budgeted, and invested the money for long-term growth. He could have gotten by on a mere quarter-million dollars a year for the rest of his life.
If someone has the extra money they can afford to lose, I don't object if they choose to spend a few dollars on the lottery for entertainment purposes. Personally, I can find plenty of more entertaining ways to waste my money.
Monday, October 17, 2005
Thursday, October 13, 2005
I encourage President Bush to nominate Janice Rogers Brown to fill the vacancy on the Supreme Court. She is highly qualified, and has a well-documented judicial philosophy, and she could tear up any liberal who challenged her.
Wednesday, October 12, 2005
Zawahiri, in a letter to his chief operative in Iraq, Abu Musab al-Zarqawi, wrote:
"Things may develop faster than we imagine. The aftermath of the collapse of American power in Vietnam-and how they ran and left their agents-is noteworthy. Because of that, we must be ready starting now, before events overtake us, and before we are surprised by the conspiracies of the Americans and the United Nations and their plans to fill the void behind them."
Compare this to Ted Kennedy, who said
"The Iraq war has been consistently and grossly mismanaged, ... and our troops are now in a seemingly intractable quagmire."
Kennedy's comments are nothing short of treason. Quagmire is more a state of mind than an actual condition. Many times, America has been in a situation where it would have been easy to throw up our hands, declare ourselves to be in a seemingly intractable quagmire, and cut and run, just as Zarqawi is counting on us doing. Thankfully, in most cases we did not cut and run. Freedom is worth fighting for. Defeating the spreading threat of islamofascism as expressed in the letter from Zawahiri is necessary to maintain the freedom of the world. We should be glad that, as our troops encountered heavy resistance on the beaches of France, they did not decided that they were in an "seemingly intractable quagmire", turn around, and go home. They fought on, freed France from the most evil aggressor in history, and eventually defeated him.
Today, our choice is to allow Al Qaeda to establish their "Islamic State" centered in Iraq and spreading to Iran, Syria, Egypt, Saudi Arabia, Turkey, Pakistan, Afghanistan, India, Indonesia, Palestine, Israel, France, Germany, England, and the United States. This is their goal. Read it in their own words, if you wish. Or we can continue to fight, continue to oppose this great threat to the Middle East and the rest of the world. All that we need to do to allow evil to prevail is give up and do nothing.
In fact, I will withdraw from the race for President if Condi decides to run. I will make myself available as a running mate or a cabinet-level appointment. It would be an honor to serve in the administration of such a great President.
To make it happen, we first need a "Draft Condi" movement to convince her to run. I will be starting a "Condi for President" club in Fort Worth. Similar clubs are springing up from coast to coast. We will work on raising funds, so that she will not start out with a huge disadvantage resulting from her late start.
Can Condi win? You bet! She is already just 3 points behind McCain in several key states with early primaries, and she has not even declared herself to be a candidate. And she may be the best candidate to defeat the great meglomaniac coat-tail rider, Hillary Clinton.
Condoleezza Rice would make an exceptional President. Let's get busy and convince her to run.
For more information, read the book by Dick Morris.
Saturday, October 08, 2005
Being eternally dedicated to you, the reader of this fine blog, I decided to do a review of this movie. Normally, this would entail actually going to see the movie. However, in this case I found a perfect way to circumvent this requirement. I simulated the experience in a very realistic manner. I stuck my head into a vat of raw sewage for an hour and a half. This was very much like the actual experience of seeing the movie, but higher in comical value, not quite as disgusting, and as an added bonus, it saved me $6.
So why is it that Hollywood produces rot such as this? It certainly is not because of the great demand. This movie was a flop at the box office. Many theaters didn't show it, and those that did saw attendance far below average. My theory is that there are a certain percentage of people in Hollywood who live in a fantasy world where they really believe that there is some merit in a movie such as this. They are convinced that it is somehow liberating. Liberating from what? I don't know. Personally, I don't think that it is important enough to be outraged over. I find it sophomoric, juvenile, dull, and unimaginative. It is the kind of thing that junior high boys do in the locker room. I think that it is time for Hollywood to grow up and give us quality movies with an engaging plot, character development, and a message which elevates the viewer.
Lawrence of Arabia, anyone?
Tuesday, October 04, 2005
At least three Palestinians were killed in fierce clashes between Palestinian Authority security forces and Hamas gunmen that erupted on Sunday evening in various parts of the Gaza Strip. PA security sources said the three victims, Ali Makkawi, the commander of the PA Police station in Shati refugee camp, a police officer and a 10-year-old girl, who was run down by a police car, were killed when hundreds of Hamas gunmen attacked the station with rocket-propelled grenades and automatic weapons. They said another 30 people, mostly Hamas members and civilians, were wounded in the confrontations. The attackers also set a number of PA police vehicles on fire.
Earlier in the day, Fatah gunmen shot and killed a taxi driver during a protest against the rising cost of gasoline in the Gaza Strip.
In the West Bank, Hamas gunmen shot and killed Hani al-Hilakawi, director of the Al-Fawwar refugee camp west of Hebron.
The Gaza Strip, now solely under Palestinian control, is slipping into civil war. However, the media is not picking up on this "insurgency" at all. Why not? Perhaps it is because it proves that giving in to terrorists doesn't lead to peace. It does not provide an opportunity to bash President Bush, but instead illustrates that a proactive anti-terror approach is necessary. Perhaps appeasement is not such a good policy after all.
Yesterday, at the grand opening of the new laundrymat, Mr. Delay said that his new venture was inspired by accusations that he laundered money in a legal transaction. One of his biggest customers is Texas District Attorney Ronnie Earl, who pledged to "bring DeLay down" at a Democrat fundraiser. Calls to Mr. Earl to ask why he launders clean clothes were not returned.
Monday, October 03, 2005
But all of this is really unnecessary. In the end, we know all we need to know in order to form our opinion of Harriet Meirs by asking one person: Richard Gere.
Hollywood actor Richard Gere is qualified to speak for the entire world and determine what we think about any topic because he has appeared in Hollywood movies. Richard Gere is a noted authority on whatever he chooses to talk about. Without the input of Richard Gere, we don't know what to think about Harriet Miers. Senators don't know how to vote on Harriet Miers. Richard Gere, we eagerly await the wisdom which only you can impart to us. Please speak for us. Speak for the whole world. Tell us what our opinion is. Without you we are helpless.