Bastiat’s Bastions

Today, the Bureau of Labor Statistics released the latest version of its “Employment Situation Survey,” a report that regularly provides information on how many jobs are “created” in the economy. The new report explains that employers added 243,000 non-farm payroll jobs in February, and the unemployment rate remained at about 4.8 percent.

The survey also indicates that average hourly earnings have been rising a bit. In fact, according to the last twelve surveys, the U.S. economy has added about 2 million jobs during the last year (from February 2005 to February 2006). What does this have to do with monetary policy?

As explained in today’s Wall Street Journal (subscription required for full article):

The Fed has raised interest rates 14 straight times in quarter-point increments to 4.5%, and have stressed in recent weeks that future moves will be dependent on economic data.

As the story goes, the Federal Reserve is supposed to be able to “cool off” the economy by raising the Fed-Funds target. The problem is inflation. For example, if too many jobs are created too fast, and/or if wages rise too fast, prices could rise throughout the economy. Pushing interest rates upward is supposed to reverse this situation, thus heading off inflation.

So, here are my questions for discussion:

If monetary policy really works, how is that wages have been rising and more employers have been hiring even though the Fed has been raising rate targets every quarter (for the last 14 in a row)?

Is it wise to have a national policy that, essentially, penalizes people for improving their economic situation?

NM

Read this article on an instant replay system in tennis. It sounds eerily similar to the NFL system. Computers, two challenges per set, etc. Interestingly, there will be no videotape and interpretation – it will be wholely a machine that makes the call as I understand it. This begs the questions of why not on all calls? Why limit it to only a few calls a match?

I for one am not sure fans would like this. We’ll see. I personally enjoyed John McEnroe berating officials.

Are bad calls part of the game? It’s an old tired story. Who can forget JM yelling “You can’t be serious?”

One more reason for posting; I think this article contains the understatment of the year. When asked his opinion, John McEnroe himself, suggested:

“If anyone’s been listening to my commentary the past year then they know I’m in favor of using replay…”

Is John McEnroe serious? I bet he is.

–CT

This morning’s Times Picayune contains an excellent article that explains the current state of teachers’ unions in New Orleans. Basically, Katrina has busted the unions, for better or worse. Either way, the article serves as a great summary of the arguments for and against these unions in public education systems.

Here’s a synopsis:

Critics accused the union of coddling incompetent teachers and stifling moves toward a more innovative curriculum. Supporters saw the union as a necessary resource for employees of a highly dysfunctional system that routinely lost paychecks and was so cash-strapped it almost failed to make payroll before a private management team was brought in last year.

What usually bothers people about this issue is that the unions always seem to fight against hiring/promoting teachers based on merit. Instead, the unions almost always favor using seniority as a criterion. Charter schools, on the other hand, are exempt from collective bargaining rules and, theoretically, free to hire teachers based on merit.

What I find most tragic is that the unions never seem to be fighting for the kids in their schools. There is a well documented failure of most of New Orleans’ public schools to deliver a decent education, and the unions don’t want the teachers to be held accountable – literally.

Mitchell [the president of the local union in New Orleans] said it’s unreasonable and unfair for charter schools to lay years of poor student performance at the feet of the union. “The whole notion of eliminating unions so the school can work well is a crock,” Mitchell said. Even in pre-Katrina days, “Ben Franklin High and Lusher School had union teachers, and they were performing well.”

Interestingly, the principal at Ben Franklin (the highest performing public school in the state), Carol Christen, admits that she has circumvented union hiring rules. Christen says:

Whenever I would have a vacancy I would write a job description with expected performance outcomes, and plenty of people shied away from that.

The debate over whether unionized public schools or charter schools are better for delivering education is being waged across the country. Another recent example, one that has nothing to do with Katrina, can be found in Minneapolis, MN. In this traditionally Democratic city, poor African-American families are getting fed up with the public schools and leaving them – in droves – for charter schools. See this recent article at the Wall Street Journal’s (free) OpinionJournal website.

Should teachers be fired if they don’t do their job well? What about tenured college professors who perform poorly? Would parents care more about the education their kids receive if they paid (directly) for the tuition?

In the interest of full disclosure: I’m not tenured.

NM

Read the article here (AP – Seattle Times) about the founder of Domino’s pizza, Thomas Monaghan, and his plan to create an entire town devoted to Catholicism. The idea would be to have a town full of strictly Roman Catholic people. Monaghan would control all of the commercial real estate in town, and thus could prevent renters from selling birth control pills, condoms, and pornography as a condition of their leases.

Bear in mind this town doesn’t exist yet. People are voluntarily going to move there. It isn’t like already existing business owners will be harmed – there are none there yet as I understand it. These polices would be known before business were located there.

Someone explain to be why the ACLU should be using their resources to fight this? Is it just litigation for litigation’s sake? Someone tell me whose civil liberties are really harmed.

When I was a child, a condition of the “lease” I had at my mom’s house was that I couldn’t have pornography, let alone sell it. Where was the ACLU then?

One last thought – immediately when you cross the border from Illinois into Wisconsin on the main interstate from Chicago to Milwaukee, you are inundated with adult book stores, cheese shops, and fireworks stands. There are obviously people who are living in Illnois who wish to buy fireworks, but must go to Wisconsin to do so. Do you think there will be pharmacies and adult bookstores cropping up in a similar fashion outside of this town in Florida should the town be developed?

–CT