regulatory distortions

The minimum wage made unemployment worse during the Great Depression

Minimum wage laws also extended the Depression. That from Amity Shlaes, in The Minimum Wage Makes Depressions Worse. (cross post from Outrun Change.)

In a lousy economy, forcing wages above the value of the output makes employment worse. When there is currency deflation the effect is compounded. Adding another layer of minimums every couple of years and slowly gathering more employers into the minimum wage rules further compounds the effect.

If you can’t afford the staff you have, and you can’t reduce wages, what options are left? Lay off more employees. Shrink your company.

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By Jim Ulvog, ago

Crony Capitalism is the reason we won’t find any incandescent bulbs on the shelves

As of the start of 2013, it is illegal to manufacture or import 40- and 60-watt incandescent light bulbs in the U.S.  Last year the 75-watt bulbs were gone and the 100-watt the year before. The last of the smaller bulbs will be off the shelf.

Then you will only be able to buy more expensive bulbs that may or may not last a lot longer.

Why?

It isn’t to improve efficiency or save consumers money. That’s the excuse.

Blame crony capitalism. The ban is courtesy of businesses seeking favors from the government and the government happily granting said favors.

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By Jim Ulvog, ago

The Great Recession just sort of happened. The Fed had absolutely nothing to do with it.

A long article from the Federal Reserve on the housing bubble and recovery from the great recession doesn’t mention the fed’s role in anything other than generating the recovery. See:  Subprime Mortgage Crisis. Absolutely no mention of the massive role played by easy money and Congressional policy pumping up the housing market.

The first part of the article is called How and Why the Crisis Occurred.

The short paraphrase is the runup in housing prices, increased demand for homes, surge in subprime loans, collapse of prices, and mass of foreclosures kinda’ sorta’ just happened.

No cause mentioned, especially no role assigned to the federal government in general or the Fed in particular.

Let’s look at the article in more detail.

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By Jim Ulvog, ago

200 years of economics history in one editorial, which explains how we got into our current mess

(Cross-post from my other blog, Outrun Change.)

World War I generated most of the horrible disasters we’ve seen in the last 100 years.

With the possible exception of the decline of the Roman Empire, World War I was the greatest disaster in human history.

It contributed mightily to the Great Depression, which fed the Nazi revolution. That in turn led to WWII.

The war unleashed the totalitarian ideologies of communism, fascism and Naziism, which very nearly destroyed Western civilization. Their poisonous legacy lives on in radical Islamic extremism.

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By Jim Ulvog, ago

Lots of blame for the financial crisis of ’08 falls on the federal government

There is a huge amount of blame to be spread for the Great Recession that started in 2008. While the recession technically ended four years ago back in June of 2009, most people in California and lots of charities here are still feeling the effects.

I see exquisitely little discussion of how intentional federal policies created the distortions that led to the financial crisis. An op-ed in the Wall Street Journal by Phil Gramm and Mike Solon help explain why much of the blame belongs to the federal government:  The Clinton-Era Roots of the Financial Crisis.

To make this non-partisan, I’ll point out that the flawed policies from the Clinton administration were ratified, continued, and extended by the Bush administration. Not to worry, both parties have worked lots of overtime to earn their share of blame.

While you can argue on the proportionate blame between the two parties, I’ll point out that regardless of the allocation you determine, 100% of that particular allocation falls on deliberate federal policy.

Initial efforts to persuade private pension plans to fund low-income housing failed. The administration forced (more…)

By Jim Ulvog, ago

It’s okay to kill California condors. As long as you are running a wind farm. Or building luxury homes. In the middle of condor habitat.

And as long as you didn’t really mean to off them.

(Cross-post from my other blog, Outrun Change.)

The Los Angeles Times reports Companies won’t face charges in condor deaths.

The federal Fish and Wildlife Service told the operators of Terra-Gen Power’s wind farm in the heart of condor habitat they

…will not be prosecuted if their turbines accidentally kill a condor during the expected 30-year life span of the project.

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By Jim Ulvog, ago

Q: Did the New Deal end or extend the Great Depression?

A:  Extend.

That’s the conclusion of Dr. Lee Ohanian, Professor of Economics at UCLA, as explained in his video Did FRD End or Extend the Depression?

 

[youtube=http://www.youtube.com/watch?v=a7KYn5xCyCI&feature=player_embedded]

The primary reason cited by the Professor is artificial increases in prices and wages driven by federal policy, specifically the National Industrial Recovery Act. (more…)

By Jim Ulvog, ago