-MC

Last year, I posted this on the exams required for new florists that the Louisiana board that licenses florists uses to keep its numbers down and their prices up, mentioning other cases of occupational licensing, like the ones for CPAs and massage therapists.

Back in June of this year, John Stossel penned this article on local regulation of both taxi operation and hair braiding, and how it hits the poor, the people that politicians often claim to be fighting for.  Stossel makes a great case here against this sort of occupational licensing.

When it becomes more difficult to become a competitor than to go along with the status quo, both consumers and these competitors lose, all in the name of consumer protection.  What irony!  Or is it just that we don’t realize that Orwellian “NewSpeak“ has been here  for some time.

-MC

While true enough, this is quite misleading.  Stossel points in his blog to a study, “Parallel Patterns: Teacher Attrition in Charter vs. District Schools,”  by the National Charter School Research Project (note that this could be a biased study).   While the study did find 52% higher attrition rates for teachers in charter schools, once one statistically controls for the sometimes conveniently neglected fact that charter schools are more likely to be in disadvantaged areas and that charter schools disproportionately hire teachers right out of college, teachers who are more likely to quit, the study finds:

“Teachers working in urban charter schools are 24% less likely to exit the system than similar teachers working in urban traditional schools.”

The use of appropriate control variables, our Ceteris Paribus  or “holding other things constant,” are vital to any serious study.

-MC

For students in macroeconomics, for students who will go into that class in the future and for just the ordinary Joe and Josephine, Rick Santelli of CNBC provides an important lesson  about looking reported numbers a little more closely, a little more critically.  We need to think about how those numbers are constructed.

Rates or ratios are the products of two numbers, and the unemployment rate is a ratio of the number of unemployed, which is measured as not just the number who do not have jobs, but those without jobs who are actively seeking a job, divided by the labor force. The labor force is the number of people with jobs plus those A drop in the unemployment rate can come from changes in either the numerator or the denominator.   

Be sure to read Santelli’s short piece.  It drives home the point that some reported numbers can be deceiving.  We often need to look a bit beyond what is reported. 

How do you know what to look for, though?  That is where one’s education comes into play.  I don’t know where Santelli went to college, but he certainly gets what many journalists miss.

Remember, whether looking at national statistics, or company accounts, it helps to look at other numbers for comparison and to know what those number really mean.

-MC

A good example of a tax is the driveway fee, a flat tax for households in Mission, Kansas, which also charges churches a fee based on the seats in their sanctuary and the number of parking places at Lowes, that is a tax.  http://www.foxnews.com/us/2011/02/10/taking-liberties-taxing-church-attendance/

But wait a minute, the federal, state or local government is not supposed to tax a church.  The good folks in Mission say that this is not a tax, but a fee.  Sorry, folks, but an elephant is still an elephant even if you call it a monkey.  Calling it by another name does not change things.  What the folks in Mission, Kansas have is a tax and a clearly unconstitutional one.  And our state college’s tuitions are fees for direct services, not taxes.

Of course, here in Louisiana, where state sponsored gambling is unconstitutional, we are getting away with our state lotteries, horse race betting and state casinos by calling it gaming instead of gambling.  Yes, I see the difference.  Not really.

-MC

This and all posts on this site are the ideas and opinions of the writers and not necessarily the position of Nicholls State University.

That is a question I will take.  The answer is a resounding NO!

In the article, Rep. Dee Richard, as a sitting member of the Louisiana House Ways and Means Committee, the committee charged with reviewing taxes in the state, stated that “it’s a tax increase, because it’s a cost being passed onto a consumer though a government directive.” (quote is from the article, not a direct quote from Richard).  Richard should note that according to his definition, almost any regulation would then be a tax.  Also, though rare, there can be taxes where costs are not passed on to consumers.

Taxes are coerced payments, payments that do not involve a direct quid quo pro, a direct exchange.  Whether you as an individual pay your taxes or not, the services you get from government do not change.  You pay your property taxes and the city can light the streets you drive along.  If you (just you) fail to pay your taxes, the street lights still go on.  Whether you drive through the streets at night or not, you still owe those property taxes.  The tax bill does not depend on your use of the service and your service does not depend on you paying your taxes.

On the other hand, user fees are what governments charge as a price for a good or service that the government can sell.  Water and sewerage bills are examples of user fees, as are rates paid for campground sites and park visitation at state and national parks.  Tuition paid to colleges is another example.  If you want to enjoy the park by camping there, you can expect to pay for that privilege.  If you wish to go to a state community college or a state university, you pay for that privilege.  Certainly, when Tulane and Centenary raise their tuitions, these increases are not deemed taxes.  Should you choose not to go to college, you do not have to pay tuition.

Do I like tuition hikes?  With 2 of my children at a state-run university, I am not thrilled with the prospect of having to pay more.  However, my children and I both think that their education is important enough to pay something for it.  While the state as a whole may benefit from having more college-educated citizens, my children certainly expect to benefit from their studies.

By calling something a “tax,” certain opponents of the tuition increases distort the language for their political ends, hoping to taint the tuition increases with despised term, tax. Words are meant to communicate ideas that are shared and understood both by those using the words and those they mean to affect.  Tuition is a payment for something received, part of a voluntary exchange.  There is nothing voluntary about taxes.

-MC

This and all posts on this site are the ideas and opinions of the writers and not necessarily the position of Nicholls State University.

What you may not realize is that Daniel Ellsberg was something of a genius, too.  Ellsberg was a military analyst and used game theory in analyzing diplomatic rhetoric, especially the use of blackmail.  Here is a paper he gave before his Pentagon Papers release, which is really a rehash of a paper he gave in 1959.

I must give a big thanks to Donald A. Coffin, Associate Professor of Economics at Indiana University Northwest, for distributing Ellsberg’s paper to a listserv for teachers of economics.

-MC

Everyone knows that U.S. Manufacturing has been declining since the 1980s.  The problem is, it just is not so.  The facts are easy enough to check out.  You can go to the Federal Reserve’s web page on Industrial Output.  Here is the combined data, from 1972 t0 2010, using the seasonally adjusted values for January of each year in a time-series graph.

While there are noticeable dips in 2001 and again starting in 2008, the long-term trend since the 1980s has clearly been an increase in manufacturing output. 

What has made manufacturing jobs so attractive, their high wages, is the high growth in output possible in manufacturing by the use of equipment to subsitute for people.  Growth in production means for the same amount of labor we can produce more, so manufacturers can cut costs per unit and pay more to their workers as well.   What has declined in the U.S. since the 1980s is the number of jobs in manufacturing, not the amount of manufacturing. 

Perhaps the author, while in Michigan, should have talked to one of the University of Michigan’s economic professors, Mark Perry, who notes here that the decline in manufacturing jobs is the result of the productivity of American workers, not the reduction of manufacturing in America. 

Daniel Ikenson wrote this article  in the Pittsburgh Business Times in November of 2007, reprinted here at the Cato Institute website. 

Output per worker has dramatically increased over the years.  Machines, while replacing some workers, have so increased the productivity of the remaining workers, that those highly productive workers are able to fetch higher pay.  The high pay has also contributed to the incentive for manufacturing innovation, as businesses seek to find ways to do without so many expensive workers.  Technology and the education and training that make that technology usable have increased the output per worker, raising manufacturing wages.

The lesson is that some things become part of general knowledge that may not be so–check out media claims–go to the data.   So much information is publicly available and easy to check out.  Be on the lookout for undocumented, “supposed” facts. 

-MC

The statement quoted above stems from an observation—that some U.S. jobs are held almost exclusively by immigrant workers. From this observation, a fallacious conclusion—that domestic workers would not work in such jobs at any wage level—is drawn. To say that a group’s quantity of labor supplied is zero for a given job and wage is to say nothing about the group’s behavior at other wage levels. The graph below represents a possible depiction of a labor market with and without immigrant labor.

The graph features two supply curves, one showing quantity of labor supplied by citizens at each possible wage and another showing quantity of labor supplied by the combination of citizens and immigrants at each possible wage. In the absence of immigration, citizens would earn a wage of w_zero an hour and work q_zero hours in the featured labor market. However, if immigrants enter the country and work in the same market, the supply of labor shifts right (quantity of labor supplied increases at any given wage). In equilibrium, workers in this market now earn w_one per hour and work q_one hours. However, by looking along the labor supply curve of citizens, we find that citizens supply zero hours of labor to this market at a wage of w_one . Given their work and non-work alternatives, citizens opt out of the type of labor depicted in the presence of immigration (and its wage-depressing effect). However, citizens will rejoin this workforce if the wage rises above w_one .  Economist Chad Turner points out that this inducement of domestic labor at the higher wage will not obtain if the domestic labor supply curve is sufficiently leftward-shifted.   

Though immigrant laborers do benefit other members of our economy (e.g., consumers and producers), jobs would not go undone without them. Rather, in the absence of immigrant laborers, relevant market wages would move upward and induce the participation of citizens.

-SS