Even The Feds Admit Minimum Wages Cause Unemployment

This article, written by Nicholas Freiling, was originally published by Mises on June 17.

Minimum wage doesn’t apply to everyone.

When Congress first established minimum wage in the Fair Labor Standards Act of 1938, it left a loophole for businesses that employ people with disabilities.

The Secretary, to the extent necessary to prevent curtailment of opportunities for employment, shall by regulation or order provide for the employment, under special certificates, of individuals … whose earning or productive capacity is impaired by age, physical or mental deficiency, or injury, at wages which are lower than the minimum wage.

These special certificates are known today as 14(c) permits, and thousands of employers have one. Some studies claim that more than 300,000 Americans work for subminimum wage under the auspices of such permits.

Economic Scholar: The Fed Won’t Let The Economy Heal

This essay, written by Frank Shostak, was originally published at Mises.org.

Most commentators are of the view that the massive monetary pumping of the Fed during 2008 prevented a major economic disaster. The yearly rate of growth of the Fed’s balance sheet jumped from 3.9 percent in January 2008 to 150.9 percent by December of that year. The Federal funds rate target was lowered from 3 percent in January 2008 to 0.25 percent by December of that year.

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According to popular thinking, the Fed’s actions have bought time to allow the U.S. economy to heal — much like keeping a coma patient on life support. Consequently, popular thinkers are harshly criticizing commentators that advocate allowing economic recession to take its course.

Contrary to popular thinking, economic recessions or economic busts are not about the end of the world but about the removal of various non-productive activities, also labeled as bubble activities brought about by previous loose monetary policies of the central bank.

The Mythology Of The Supreme Court

This column by Ryan W. McMaken originally appeared on the Ludwig von Mises Institute website on May 13.

The Supreme Court’s recent decision on prayer at government meetings reminds me that Supreme Court “season” is upon us. And for the next two months or so, we can expect to see the court decide on a variety of cases that can have profound impacts on the lives of citizens and non-citizens alike. The court’s decision in Town of Greece vs. Galloway has produced a lot of commentary on both sides, with much discussion about the dynamics between justices, and how Justice Anthony Kennedy must have been in a pro-prayer mood that day, since his decisions appear to be made on a variety of unknowable whims.

Nearly all of this commentary contains the assumption that it is perfectly normal, and probably laudable, that the Supreme Court has the power to decide the legality of virtually everything under the sun, from the death penalty to where local governments can build strip malls.

Mises: With Government Roads, The Customer Is Always Wrong

This essay, written by anarcho-capitalist Ben Wiegold, was originally published on the Mises Institute’s website.

From the moment automobiles became commonplace in society, people have been dying in them at astonishing rates. Tragically, over the last century almost 4 million people (around 35,000 per year) lost their lives on U.S. roadways alone, with India, China, and Russia averaging almost 300,000 per year combined.

But early figures indicate that 2013 saw the lowest number of traffic fatalities in the U.S. since 1936. Jenny Robinson of AAA Mid-Atlantic commented that this is “good news” and that it appears “tougher laws … have been effective.”

Certainly this begs the question: if tougher laws are such an easy solution, why do so many people still lose their lives? Whenever the National Highway Traffic Safety Administration (NHTSA) or Mothers Against Drunk Driving (MADD) attempts to answer this question, they typically point to such well-known culprits as texting, car safety, drunk driving, weather, or inexperienced drivers. In its sum, the total list of causes is limited only to the number of factors that one can think of.

Economics Professor Explains Why Keynesian Economists Don’t Understand Inflation

This essay, written by economist Frank Hollenbeck, was originally published on April 7 on Mises.org.

The “monetary cranks” and “ignorant zealots” of old are back preaching salvation if only we had more inflation. Keneth Roggoff and Fed President Charles Evans did not mince words, while others have been more circumspect. Christine Lagarde warns us of the “ogre of deflation” and the “risks” of low inflation, while others have been urging easier monetary policy to reduce the value of the yen or the euro. Of course, it’s much easier to let this inflation tiger out of its cage than to get it back in. We have ample evidence that once inflation picks up, it’s extremely difficult to control. Inflation in the US was 1 percent in 1915, almost 8 percent in 1916, and over 17 percent in 1917. It was about 2 percent in 1945 and jumped to over 14 percent by 1947. During the 1970s, inflation was mild in 1972, and climbed to 11 percent by 1974 and stayed at very high rates until Volker raised interest rates to 19 percent to tame the beast.

Mises Institute: A Closer Look At Income Inequality

This article by Andrew Syrios originally appeared on the Ludwig von Mises Institute website on March 31.

Economic inequality is the big thing these days. Barack Obama has called it the “defining challenge of our time,” and the number of books being published on the subject could fill a small library. Of particular note is a survey by Michael Norton and Dan Ariely of 5,000 Americans asking what they thought wealth inequality should be compared to what it actually is. Norton and Ariely asked which of two distributions the survey participants preferred, either that of the United States or Sweden (without knowing what those distributions represented). Here’s what they were given:

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The Fed’s Hands Are Tied

This article, written by banking consultant Patrick Barron, originally appeared on the Mises Institute’s website on April 1.

No change.

Oh, you want more? Groucho Marx used to tell a joke on himself that “I wouldn’t want to belong to any club that would admit me as a member.” That pretty much sums up why we shouldn’t expect much from the new chairman of the Federal Reserve System. This Administration and this Congress will never admit anyone that is not of the Keynesian-School-of-economics persuasion. As long as this mentality resides in the political halls of power, our Nation will not get another Paul Volcker.