For many candidates running for office, at least at the national level, a significant portion of their campaign contributions come from political action committees, or PACs. These are typically set up by some interest group, organization, or business with the intent of sending monetary aid to candidates that align with their ideological interests.
At least, that's what allegedly happens.
In reality, most PACs operate on the basic premise of reciprocity. If they help a young Senator get elected, they expect some cutback in return. It's common to link this phenomenon purely with businesses and the corporate sector, but that only encompasses part of the story. In reality, all PACs (even those of such high-minded organizations as state chapters of Right to Life) excpect something in return for their contribution.
Whenever the quarterly FEC reports are released, a veritable army of analysts begins to pore over it, looking for trends, specifics, anything that might help show where an election is going, and why. A couple of weeks ago, the Q3 report came out. One of these trends, which shouldn't come as much of a surprise, is the dramatic shift of contributions from Democratic Senate candidates to Republicans.
It's common to associate corporate interests with the Republican party, but in reality, all they want is influence. Whether that comes with the Democrats or the Republicans is largely irrelevant. A quote from the article illustrates this well:
“Wall Street expects return on investment,” said Nicholas Colas, chief market strategist at ConvergEx Group, a brokerage firm. “It makes no sense to contribute to a losing campaign.”
In other words, what reciprocity are you going to get if the man you're funelling money to didn't win? This shift illustrates the continually rising tide of the Republican party in their bid to retake the Senate in 2014, and dramatically so.
The real question isn't if the Republicans will suceed. That's all but certain at this point. The real question is what they'll do with it.
Wednesday, October 29, 2014
Wednesday, May 28, 2014
Minimum Wage in Michigan
Today, the minimum wage in Michigan is $7.40 an hour, fifteen cents above the federal standard.
As of yesterday, the state plans to raise the mandated minimum wage to $9.25 by 2018. Despite Michigan being (surprisingly) run by Republicans both in the State House and in the Governor's Office, this horror of a bill passed the House 76-34, and the Senate 24-12. (For the record, the House has 64 Republicans to 46 Democrats and the Senate has 22 Republicans to 16 Democrats)
The Republicans didn't do this blindly. There was, and still is, a planned ballot initiative to raise the minimum wage in Michigan to $10.10 an hour by 2017. Clearly, this bill is better than that alternative, but that does not make it good or wise.
So, what exactly is the problem with the minimum wage? Doesn't it just help workers who would otherwise be taken advantage of? Isn't it a safeguard against the inner workings of capitalism?
Not really. All the minimum wage does it make it harder for business to employ people. Sure, some people will be making more than they otherwise would have. That's the effect that everyone sees. But, as Bastiat famously said, we have to look at the unseen effects of an action, the secondary consequences, just as we have to look at the seen effects.
Those who support a raise of a minimum wage typically rely on one of three fallacies. The first is clear: looking only at the seen effects, and not the unseen. Even if there aren't eventual layoffs in light of this raise in the minimum wage (which there certainly will be), there will be thousands upon thousands of jobs that never came to fruition.
The second fallacy relies on the false conception of businesses. Many politicians, along with others in the general population, think that businesses (often pejoratively referred to as "Big Business" or "the corporations") are sitting on a vault of cash and profit that they're selfishly hoarding for themselves. First, most businesses don't have that. Businesses have expenses, including their payroll, utilities, rent, and other costs they incur just in the process of operating the business. A grocery store has to buy the groceries they later sell, that money didn't come out of thin air. Most business revenue has to cover expenses, only after that is there any profit.
By making labor more expensive (raising the minimum wage), the government is forcing additional costs on a business. Someone's wage is reflective of the productivity of their labor. Right now, even with a smaller minimum wage than will come within the next few years, there are certainly some workers paid more than their labor is worth. If the minimum wage is even further raised, the problem will only be greater. Raising the cost of doing business, without simultaneously raising the productivity of labor, is bad for the economy.
Moreover, the idea of "excessive" profit, or profit as a bad thing in itself, is ludicrous. Profit is just a sign that a business has done what consumers want. In other words, a business that earns profit creates value in the eyes of the consumer, that is, the people. The people decided that whatever good or service that business provided was worth their hard-earned money, reflected in profit. A business making a profit is a good thing for everybody.
The last fallacy is that of the multiplier principle. This, among many other things, is a reflection of the Keynesian bias in much of modern economics. Essentially, Keynes believed that there exists a Marginal Propensity to Consume. What does that mean?
It means that with any increase in income comes an increase in consumption, following a mathematical model. So, advocates of the minimum wage argue that since people now have more money, they'll spend more on consumption. This increased consumption expenditure leads to more revenue for businesses, and thus more profits. They argue these profits exceed the increased costs incurred by having to pay their workers a higher wage. I actually heard this argument almost verbatim by a Democratic Representative on the radio about a week ago.
This model assumes a lot about the human being. Though some economists also advocate the Marginal Propensity to Save (the increase in saving that comes with an increase in income), both these models assume there is some mathematical proportion that perfectly covers the workings of millions of individuals. If I were to receive a raise, the degree to which I would save and spend, both proportionally and numerically, would likely radically differ from someone else receiving an identical raise.
Moreover, there's no guarantee that I'd be increasing my consumption on businesses within the state. Suppose I bought a nice book on Amazon. That book was manufactured and stored in another state. What business in Michigan gains from that?
Businesses would be forced to charge more for their products to cover the additional costs imposed by the state. While it's true there are certain things I, and everyone else, would buy regardless of price, that's not true for everything. If that same book suddenly costs $50 where it had once cost $10, I probably wouldn't buy it.
Obviously that's an extreme example, but still. The multiplier effect simply does not hold water as a mystical cure-all for any economic ills.
The increase in the minimum wage is bad for Michigan, and I'd like to end with a quote by State Representative Tom McMillin that sums a lot of this up. He voted against the bill.
"Requiring business to pay more than the market can bear is just very bad policy. This is the kind of thing that sends jobs to China. We need to keep American jobs here."
As of yesterday, the state plans to raise the mandated minimum wage to $9.25 by 2018. Despite Michigan being (surprisingly) run by Republicans both in the State House and in the Governor's Office, this horror of a bill passed the House 76-34, and the Senate 24-12. (For the record, the House has 64 Republicans to 46 Democrats and the Senate has 22 Republicans to 16 Democrats)
The Republicans didn't do this blindly. There was, and still is, a planned ballot initiative to raise the minimum wage in Michigan to $10.10 an hour by 2017. Clearly, this bill is better than that alternative, but that does not make it good or wise.
Not really. All the minimum wage does it make it harder for business to employ people. Sure, some people will be making more than they otherwise would have. That's the effect that everyone sees. But, as Bastiat famously said, we have to look at the unseen effects of an action, the secondary consequences, just as we have to look at the seen effects.
The second fallacy relies on the false conception of businesses. Many politicians, along with others in the general population, think that businesses (often pejoratively referred to as "Big Business" or "the corporations") are sitting on a vault of cash and profit that they're selfishly hoarding for themselves. First, most businesses don't have that. Businesses have expenses, including their payroll, utilities, rent, and other costs they incur just in the process of operating the business. A grocery store has to buy the groceries they later sell, that money didn't come out of thin air. Most business revenue has to cover expenses, only after that is there any profit.
By making labor more expensive (raising the minimum wage), the government is forcing additional costs on a business. Someone's wage is reflective of the productivity of their labor. Right now, even with a smaller minimum wage than will come within the next few years, there are certainly some workers paid more than their labor is worth. If the minimum wage is even further raised, the problem will only be greater. Raising the cost of doing business, without simultaneously raising the productivity of labor, is bad for the economy.
Moreover, the idea of "excessive" profit, or profit as a bad thing in itself, is ludicrous. Profit is just a sign that a business has done what consumers want. In other words, a business that earns profit creates value in the eyes of the consumer, that is, the people. The people decided that whatever good or service that business provided was worth their hard-earned money, reflected in profit. A business making a profit is a good thing for everybody.
The last fallacy is that of the multiplier principle. This, among many other things, is a reflection of the Keynesian bias in much of modern economics. Essentially, Keynes believed that there exists a Marginal Propensity to Consume. What does that mean?
It means that with any increase in income comes an increase in consumption, following a mathematical model. So, advocates of the minimum wage argue that since people now have more money, they'll spend more on consumption. This increased consumption expenditure leads to more revenue for businesses, and thus more profits. They argue these profits exceed the increased costs incurred by having to pay their workers a higher wage. I actually heard this argument almost verbatim by a Democratic Representative on the radio about a week ago.
This model assumes a lot about the human being. Though some economists also advocate the Marginal Propensity to Save (the increase in saving that comes with an increase in income), both these models assume there is some mathematical proportion that perfectly covers the workings of millions of individuals. If I were to receive a raise, the degree to which I would save and spend, both proportionally and numerically, would likely radically differ from someone else receiving an identical raise.
Moreover, there's no guarantee that I'd be increasing my consumption on businesses within the state. Suppose I bought a nice book on Amazon. That book was manufactured and stored in another state. What business in Michigan gains from that?
Businesses would be forced to charge more for their products to cover the additional costs imposed by the state. While it's true there are certain things I, and everyone else, would buy regardless of price, that's not true for everything. If that same book suddenly costs $50 where it had once cost $10, I probably wouldn't buy it.
Obviously that's an extreme example, but still. The multiplier effect simply does not hold water as a mystical cure-all for any economic ills.
The increase in the minimum wage is bad for Michigan, and I'd like to end with a quote by State Representative Tom McMillin that sums a lot of this up. He voted against the bill.
"Requiring business to pay more than the market can bear is just very bad policy. This is the kind of thing that sends jobs to China. We need to keep American jobs here."
Monday, May 26, 2014
The Rebel Alliance of the GOP
There's been a lot of hubbub recently over so called "Tea Party" challengers to Republican incumbents across the state, many of whom lost to their more moderate, establishment counterparts. Many within the Republican Party see this as a good thing, after all, some crazy far-right wing nutjob couldn't ever win past a primary, right?
I don't like the term Tea Party. Well, I used to, in its earliest days. I think as the movement grew and expanded, it became less and less meaningful. What started as an ostensibly grass-roots movement (funded by the Koch brothers, which for some reason gets a lot of people riled up) against government excess has become, for a large part, a meaningless stamp used to get elected.
There's no shortage of challengers from the right claiming the Tea Party moniker, but I don't think that's the best word for it anymore. What instead, then? How should the libertarian-leaning wing of the Republican Party be described in a way that's actually accurate and meaningful?
Justin Amash (who is so transparent he posts an explanation for every vote he casts on Facebook) and his supporters coined the term "Rebel Alliance" as a description of these politicians; those who, when elected, refused to play along with the leadership in violation of their principles.
I don't like the term Tea Party. Well, I used to, in its earliest days. I think as the movement grew and expanded, it became less and less meaningful. What started as an ostensibly grass-roots movement (funded by the Koch brothers, which for some reason gets a lot of people riled up) against government excess has become, for a large part, a meaningless stamp used to get elected.
There's no shortage of challengers from the right claiming the Tea Party moniker, but I don't think that's the best word for it anymore. What instead, then? How should the libertarian-leaning wing of the Republican Party be described in a way that's actually accurate and meaningful?
Justin Amash (who is so transparent he posts an explanation for every vote he casts on Facebook) and his supporters coined the term "Rebel Alliance" as a description of these politicians; those who, when elected, refused to play along with the leadership in violation of their principles.
Justin Amash's personal vehicle
The "Rebel Alliance" is a fairly consistent group of two dozen or so Senators and Representatives in Congress. Some of the most prominent Senators include presidential hopeful Rand Paul (R-KY), Mike Lee (R-UT), and Ted Cruz (R-TX). The House has a few more prominent names, most notably Justin Amash. Justin Amash took over the mantle of Ron Paul as the House's libertarian leader, often standing alone as the only one to vote "No" on one of the many ridiculous bills that manages to pass through Congress. However, he's slowly gaining allies, the strongest of which is Thomas Massie. Often, these two stand alone voting against a bill. There are many others in the House who are frequently allied with them, like Paul Broun, Jeff Duncan, or Tim Huelskamp.
This small Rebel Alliance has grown every session of Congress, and will continue to grow, despite minor primary victories coming in. These principled few represent essentially the last hope for stopping the horrific growth in debt and government that has been continuing unchecked for decades. Many libertarians gripe and complain about some minor ideological impurity found in some of these men, or loudly proclaim they'll never support anyone besides a Libertarian Party candidate.
In an ideal world, yes, we'd have a perfectly pure, nationally viable, Libertarian candidate. But we don't live in a perfect world. I see this branch of liberty Republicans, this Rebel Alliance, as the best way to bring libertarian ideas to the mainstream and make a genuine difference.
This small Rebel Alliance has grown every session of Congress, and will continue to grow, despite minor primary victories coming in. These principled few represent essentially the last hope for stopping the horrific growth in debt and government that has been continuing unchecked for decades. Many libertarians gripe and complain about some minor ideological impurity found in some of these men, or loudly proclaim they'll never support anyone besides a Libertarian Party candidate.
In an ideal world, yes, we'd have a perfectly pure, nationally viable, Libertarian candidate. But we don't live in a perfect world. I see this branch of liberty Republicans, this Rebel Alliance, as the best way to bring libertarian ideas to the mainstream and make a genuine difference.
Sunday, May 25, 2014
Return
I haven't written anything in this space for a very long time.
At one point this was essentially a training ground for writing, used frequently by my young self. A lot of the posts were...not the best. Immature, poorly researched, poorly written; everything that one would expect from a teenager's blog. I've since deleted or archived all the posts that were on here, on the basis that I'd like a fresh start.
So, what does that entail?
I plan to make this a space to post my thoughts regarding politics and current events, both global and domestic. I might also occasionally write book reviews about whatever I've just read, or maybe just thoughts that spring from that.
A bit about me. I'm a rising sophomore majoring in economics at a private college in southern Michigan, currently off for the summer. I've described myself as a libertarian and a classical liberal. I was a huge supporter of Ron Paul during his presidential runs, and currently a big fan of Congressmen Justin Amash and Thomas Massie, along with Senator Rand Paul.
I am a proponent of the Austrian school of economics. My favorite authors include Frederic Bastiat, Ludwig von Mises, and F.A. Hayek.
Anyways, I don't really know how this is going to pan out, or how frequently I'm going to post. If, for whatever reason, you've stumbled across this...enjoy.
- Horatio Aldunez
At one point this was essentially a training ground for writing, used frequently by my young self. A lot of the posts were...not the best. Immature, poorly researched, poorly written; everything that one would expect from a teenager's blog. I've since deleted or archived all the posts that were on here, on the basis that I'd like a fresh start.
So, what does that entail?
I plan to make this a space to post my thoughts regarding politics and current events, both global and domestic. I might also occasionally write book reviews about whatever I've just read, or maybe just thoughts that spring from that.
A bit about me. I'm a rising sophomore majoring in economics at a private college in southern Michigan, currently off for the summer. I've described myself as a libertarian and a classical liberal. I was a huge supporter of Ron Paul during his presidential runs, and currently a big fan of Congressmen Justin Amash and Thomas Massie, along with Senator Rand Paul.
I am a proponent of the Austrian school of economics. My favorite authors include Frederic Bastiat, Ludwig von Mises, and F.A. Hayek.
Anyways, I don't really know how this is going to pan out, or how frequently I'm going to post. If, for whatever reason, you've stumbled across this...enjoy.
- Horatio Aldunez
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