On October 11th, American University’s YAL chapter hosted Cato economist Ike Brannon to discuss the minimum wage’s impact on the economy and the mistaken idea of income inequality.
Mr. Brannon discussed the economic theory behind why the minimum wage reduces employment. Minimum wages impose mandatory costs on hiring labor that negatively impact a company’s ability to hire its optimum number of employees. Mr. Brannon noted that most minimum wage workers are high school or college aged students without marital status. A high minimum wage would incentive these individuals, especially those with poor academics, to leave school in favor of work. Brannon claimed that liberal sob stories of single parents past age 30 working minimum wage jobs to feed their kids are myths at best. Barely any minimum wage workers match this description. The real compensation involved in working a minimum wage job comes from learning basic skills such as time management, personal cleanliness, working on a team or under supervision, communicating with customers, etc. These skills will increase an individual’s qualifications for higher employment.
Then, Mr. Brannon addressed liberal concerns of income inequality bedeviling society. He says these claims are totally false. Brannon likened today’s system of massive CEO compensation to the development of the National Basketball Association over time. Previously, in the 70s and 80s, there was little deviation between NBA player salaries. The NBA’s quality of play and TV production also sucked. Today, you have players like Lebron James, Carmelo Anthony, and Russell Westbrook making enormous paychecks in comparison to their peers, playing at a far higher level than their peers, and the result is a massive demand for the NBA’s entertainment. This huge demand leads to the creation of hundreds of front office jobs for NBA teams, data analysis for marketing departments, and even massive charity projects. Plenty more people benefit from Lebron James’ incentive to earn money by dominating than they would from equality. Everybody is better off in an unequal system.
On Thursday, Jared Meyer from the Manhattan Institute traveled to the University of Michigan to give a talk to our YAL chapter! The event was titled "The Government's War on the Sharing Economy" and elaborated on what the sharing economy is, how useful it is to millennials, and why the government is wrong to regulate it like a normal business. Jared Meyer's definition of the sharing economy was any app or business that allows for one to get paid for something that they would do for their friends for free.
For example, Uber pays you to drive someone around whereas you would just give your friend a ride. Airbnb pays you to let someone stay at your home whereas you would just let your friend stay for free. The reason this is so good is because it opens up a whole new section of the market that couldn't afford traditional forms of travel/rent while at the same time allowing for a new type of employment that allows for workers to pick their own hours. There was a lot of thoughtful and interesting discussion after the talk and it was a great way for our school to learn more about the economics behind and reactions to this new business phenomenon.
One thing that makes Salt Lake City an interesting place is its central location. Because of where it is located, it frequently becomes a hub for many large organizations. Adobe, Wells Fargo, Goldman Sachs, Ebay, and many other companies have offices here on the Wasatch Front. Another entity with an office is the US Federal Reserve.
The intrepid members of YAL at LDSBC, ever taking advantage of opportunities around them, descended into the belly of the beast. In the last week of September, over 20 students met at the Federal Reserve branch in Salt Lake to see what goes on there. The tour was nice, the guide gracious, and the information interesting.
While we were shown around and told about the Fed's many responsibilities and duties, we asked a lot of questions. None of them were outwardly antagonistic, but they were still enlightening. In addition to showing us the shredding of fake and worn out currency, the map of all the branches, and the safe with easily over $150 million in cash, many members saw the underlying problems with the Fed.
While a tour is nice, the truth is not. When asked about hyperinflation, the guide (who admittedly only deals with physical cash and coin) left things obscure, stating that it simply couldn't happen or that Congress would have to approve it. We saw just how centralized all of the power in our monetary system is, from cash flow to interest rates. While students walked away with a good impression of the staff we met, many had their doubts.
Just a week later, we sat down for a discussion on the Fed. We talked about what there was before the Fed, and how we could feasibly replace it. Good discussion was had, and even the YAL veterans learned a lot. In the end, that is what we want to do at LDS Business College. We want to leave everyone who walks into our chapter to learn about liberty and how to preserve it, and to spread it wherever they go.
September 8th SPC Gibbs campus held a liberty fair that was a great success. The fair featured a free speech table, a Turning Point USA table focusing on economic issues, an Incarceration nation table and a gun rights table. We also had the wonderful privilege to do the " Your Right, Your Life" activity before it was officially released. We only planned for 50 people but 150 students came thru the fair this day. We ran out of pizza and free educational materials in the first 50 minutes of the 2 hour event! We worked with the Student Government and Phi Theta Kappa to make this event a success. In addition to pizza we had bottled water and popcorn to feed the hungry stomachs of the hungry minds, and we also had a sound system playing energizing house music.
It was a great privilege that our campus allowed us to put on this event. Our school is so lucky to have the fullest cooperation from our administration on all the events we do. We plan to do a bigger and better event during the spring semester, so stay tuned.
It’s hard to believe the year is over. UNC YAL is happy to reflect on a successful year of growth and activism on campus. During the fall 2015 semester, we successfully recruited from the incoming freshman class, hosted a free speech wall, and raised awareness about the dangers of military interventionism.
This spring, we attended the YAL North Carolina State Convention in Charlotte and organized a group to attend the International Students for Liberty Conference in Washington, D.C. To end the year, UNC YAL took part in a panel-style debate with the UNC College Republicans and Young Democrats—advancing the ideals of liberty, peace, and markets against the statist status quo. UNC YAL sent two representatives to the debate, the topics of which ranged from the drone war to economics to personal freedom. The debate was received well, and YAL was able to gain exposure by participating in the event with the two established partisan groups on campus.
During the first week of March, the Young Americans for Liberty chapter at the University of Central Florida hosted Incarceration Nation to bring more attention to how America, "Home of the Free" is not as free as many may think. America has the largest prison population in the world - more than North Korea and China COMBINED! America has 5% of the total global population, but cages 25% of the total global prison population. Some of the reasons are due to the war on drugs, the number of laws that are still on the books and the number of new laws enacted per year (around 40,000), mandatory minimums, and the list unfortunately goes on...
Thanks to YAL National, who provide us with a materials stipend, we were able to build a jail cell to make our activism more effective.
The day we went out to execute our activism, Rachel, a representative from Generation Opportunity decide to join in to help spread the word and table with us. Thanks again, Generation Opportunity!
Most of the members of the chapter used the question, "Are you a criminal?" to approach students. Many students raised their eyebrows and answered, "No," right off the bat. After they finish the very short "Are You a Criminal Quiz" (and a little explaining about the situation in the U.S.) they realized how easy it is to become a criminal in America.
When Raphie called in to Freedomain Radio to argue for an end to the market economy, he didn't do so as a sociology student whose only exposure to economics came from a required reading by Marx.
Instead, at the time he called, Raphie had been a Canadian businessman with 21 years of experience running his Montreal-based shoe repair service. He charged money prices, pursued profit, charged interest, and paid hourly wages, just as his competitors did, without a second thought, before one day in his mind "it just clicked." Raphie found himself looking in the mirror, questioning what worth to society these activities had:
"What bothered me most in this traditional way of doing business was the lack of connection I had with the customers. Then I went deeper into the philosophy of my way of thinking and asked 'why don't I charge...my daughter to fix her boots? Why is it free for her? Why is it free for friends, family, loved ones? Why do I charge to strangers, to customers?"
Raphie arrived at the answer which seems intuitive to the contemplative layman: man is a selfish creature, who does not make great sacrifices for others unless he stands something to gain. Profit exists solely as a motivator for some to do good for others. But man willingly makes sacrifices for loved ones out of compassion.
Why then is it not possible to regard everyone on Earth as your "loved one," and make sacrifices for the neediest among them, without expecting anything in return? Without a meaningful answer, Raphie concluded that money, interest, wages, private ownership, and profit could be done away with, without a tear shed, if only we humans weren't so greedy.
To see why the invisible hand wags its finger at Raphie's conclusion, let us first consider one model that economist Ludwig von Mises uses in Human Action, called the "Evenly Rotating Economy" model. In this purely hypothetical construction of the economy, all needs are continually being satisfied, and these needs do not change from one "rotation" to the next. Thus, there is perfect certainty about which goods need to be produced, in what quantities, and which people will consume them.
Let us contrast this with a real economy. We live in a world of unlimited desires but limited resources. There is no formal distinction between "want" and "need," and everyone prefers more goods to fewer. To produce goods, we need to expend time and energy—time and energy that could be spent doing other things.
Given all these facts of reality, we need some convenient way both to discover and to communicate among our seven billion brethren whose desires are most worthwhile trying to satisfy. Without this information, worldwide cooperation is impractical to impossible.
This is the role of the price system. It allows us to communicate in standardized terms (money) which desires are most urgent to satisfy. Because we live in a world of uncertainty where desires change based on circumstance, we need to make educated guesses about what to produce. The entrepreneur assumes this task.
If an entrepreneur's predictions about what, how much, and for whom to produce are correct, that information is recorded in terms of profit. If his predictions are incorrect, the corresponding loss is noted. Financial markets exist to make this information known quickly, for all to see, so its participants can direct money resources into the lines of production that are most profitable (satisfy the most desires).
In the linked video, Stefan Molyneux makes this point, albeit vaguely, with the example of a banana producer. His point is that no matter how altruistic the banana producer may be, no matter how motivated by compassion he is to produce, he cannot serve his fellow man effectively without the sort of information that the price system provides.
Today, Raphie does not charge a standard price to his customers. For a year, he has allowed his patrons to offer whatever price they can afford. He has not given up money for barter however, and he still buys from his suppliers at prices determined by supply and demand. Like a good father should, he continues to fix his daughter's shoes for free. He is able to provide for her because of the prosperity he inherited from a system where worldwide cooperation becomes ever more possible—the system we call capitalism.
This February, the Young Americans for Liberty chapter at Valencia Community College hosted a debate between our advisor, economics professor Jack Chambless, and socialist biology professor Dr. Lindbeck. We had a great turnout and added around 75 people to our e-mail list.
“Allowing people to be free, allowing people to own property, taxing them little, regulating them little: that’s where we see prosperity abound,” Chambless said.
Lindbeck’s opinion of capitalism was equally clear: “Capitalism can become a weapon to be used by those who have, to keep down those who have not.”
The central question of the debate was “Is Capitalism Evil?” Among other things, they discussed the efficiency of the private sector versus the government, crony capitalism, legal plunder, the definition of “exploitation,” and the implications of Australia’s economic freedom ranking. When we offered the opportunity for students to ask questions, we got a lot of participation.
We’re excited about what the future holds for our chapter! We’re hoping for many more successful events in the coming weeks.
Have you ever thought about why the soft drink industry, even health drinks like Naked Juice or Odwalla, are usually limited to Coca Cola or Pepsi Co.? How about that pesky CRV fee when you buy a soda? Or better yet, soft drinks usually sweetened with corn syrup?
Take a look on why government actually ruins the everyday product we enjoy. John Nese, propreitor of Galcos Soda Pop Stop in Los Angeles, explains just how big government ruins soft drinks.
*Plus, Mr. Nese also tells you when to buy Coca Cola sweetened with cane sugar!*
Watch the entire video here:
If you don't have time to watch the whole video, then scroll down to see a few of my favorite quotes:
Recently, actor Leonardo Di Caprio spoke on the issue of climate change. Of course, being a staunch liberal, he basically advocated for policies that increase taxation and regulations to centralize government control. The libertarian in me cringes when rich Hollywood actors advocate for policies that increase the cost of living for people like my family. So I would like to quickly comment on libertarian solutions to climate change.
The fact is, climate change is idiosyncratic to overconsumption of natural resources. But how do we solve it? Government regulation and taxation on emissions? Or is it the role of the government to subsidize clean technology? Well there are several issues.
When placing these tough regulations on emissions standards, there are going to be higher energy prices and food prices, both of which hurt the poor. If there are subsidies given to major corporations to provide clean technology, then there’s the high probability that cleaner and more efficient technology will be excluded from the market, thus causing cronyism and an inability to resolve the issue efficiently.