Fast food strike = economic ignorance

MoneypileSometimes I just have to marvel at the total lack of common sense and disregard for basic economic principles often shown by people in the grievance industry when they throw their little hissy fits. The latest example was the union-organized nationwide strike at fast food restaurants around the country.

It’s basic economics, and also just common sense, that if you increase the price of something people will buy less of it. That applies to labor as much as it does to, oh, I don’t know, let’s say oranges. Except that since most oranges are interchangeable, the decreased sales that inevitably follow a price increase applies to all of them equally. Not so with the minimum wage. People at the lower end of the wage scale are predominantly young, less educated, unskilled, and minority. If you arbitrarily raise the cost of hiring them, it’s just simple logic that fewer will be hired, since not all of them can add as much value to a product or service as the minimum wage that’s set. Or, someone or something else can be substituted for their labor at a lower cost than the minimum wage.

Low-skill jobs are especially susceptible to being replaced by technology or outsourcing. If a fast food restaurant can take orders at a rate of pennies per order from a self-serve touch screen versus dollars per order from a young and/or low-skilled employee, which option is better for the restaurant and for the consumers who ultimately pay the bill? The question answers itself.

So how does that translate into real people with real challenges?

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Dwight Howard, the Lakers, the Rockets and state tax policy

Los Angeles Lakers center Dwight Howard (Licensed AP Photo/Mark J. Terrill)

Los Angeles Lakers center Dwight Howard (Licensed AP Photo/Mark J. Terrill)

The Wall Street Journal highlights yet another example of how state policy (in this case, tax policy) has real implications. Los Angeles Laker big man Dwight Howard is the NBA’s most prominent free agent this off season and is being courted by five teams, with most prognosticators narrowing that list down to the Houston Rockets and the Lakers.

While Howard can certainly find pros and cons for joining each team, one significant factor could be each state’s tax policy. Texas has no state income tax; California’s is tops in the country. Also, cost of living is second-lowest in Texas and fourth-highest in California.

How does this all shake out for Howard’s bottom line? Even considering NBA labor agreements which allow the Lakers to offer $117 million over five years but limits the Rockets to $88 million over four years, Howard is better off financially heading to the Lone Star State. A lot better off. Like $8 million better off. From Harry Graver’s Wall Street Journal article:

[A]s Tony Nitti has noted in Forbes, this picture looks a lot different once the tax man cometh: “Howard would pay nearly $12 million in California tax over the four years if he signs with the Lakers, but only $600,000 in state tax should he sign with Houston. This means that a four-year deal with Houston would actually yield an additional $8 million in after-tax income.”

While Utah’s business policies are lacking in some areas (see yesterday’s blog post), Utahns are fortunate to live in a state with overall sane personal and business income tax rates and policies. Now if the Jazz could only find a premiere center looking to leave a high-tax state for a low-tax state….

Spending $24,696 per minute: The 2013-14 Utah State Budget

Spending Clock

In 41 hours, the Utah state spending has already burned through nearly $61 million of the state budget.

With the dawning of Utah’s new fiscal year, we’ve reset our state spending clock to show you, real time, how quickly the state spends our tax dollars. We understand governments have a legitimate and vital role to play in our pursuit of life, liberty and happiness. And we also understand the inherent and insidious “spending bias” created by the very nature of our political system.

That system is built to collect tax dollars from taxpayers to “solve” apparent “needs” in the service of the common good. The desires that drive this system are human. Legislators perceive a public need and determine resources to try to solve that need. The issue, of course, is that those resources aren’t created by government. They are created by we, the people. Those resources are otherwise sacred.

What elected officials do with these resources comes, rightly so, with increased scrutiny.

The idea of civil society within a democratic republic is that government provides an ordered framework for a free society to thrive and flourish, and lets the people voluntarily do what they do best: deliver the highest quality of life ever known to mankind. This is a very symbiotic relationship. Unfortunately, governments can turn toxic, hurting their citizens through excessive regulations, overly burdensome taxes, market manipulation, cronyism, preferential tax breaks and government competition with private enterprise. Read more

45% of union households in Utah would leave unions, if …

workers724160A new survey of 394 union households in Utah shows that 45 percent would leave their unions if they could do so without losing their jobs or receiving any other sort of penalty, while nationally 33.4 percent of union households would opt out of their unions if given the chance. The survey was conducted by Google Consumer Surveys March 17 – June 7, 2013, with a margin of error of +/- 5.3 percent.

“This survey shows that many in Utah desire liberty from union coercion,” said Derek Monson, Director of Public Policy at Sutherland. “We hope that National Employee Freedom Week can help these working Utahns in their struggle to achieve freedom and prosperity for themselves and their families.”

Sutherland Institute announces the release of the survey as part of its participation with National Employee Freedom Week, a national campaign with 60 partner organizations in 35 states, including 11 national groups. National Employee Freedom Week ( is a first-of-its-kind national campaign to educate union members about their legal rights regarding union membership — and empower them to make the decision about union membership that’s best for them. National Employee Freedom Week (NEFW) runs from June 23 to 29.

For more information on National Employee Freedom Week, which is spearheaded by the Nevada Policy Research Institute and the Association of American Educators, please visit or contact David Buer with Sutherland Institute at 801-355-1272.

Lehi Roller Mills and bureaucracy

Lehi Roller Mills (Photo: David Jolley / Staplegunther, via Wikimedia Commons)

A great local business in northern Utah County, Lehi Roller Mills, has recently filed for bankruptcy protection. Hopefully the move will allow the company to get back on its feet and remain viable for the sake of the community, employees and owners.

It’s a mighty thin pancake that doesn’t have two sides. So, without knowing all the details, it’s impossible to say any of the players in this story is wholly in the right or in the wrong.

Having said that, some of what has contributed to the Roller Mills’ difficulty seems to be government overreaching.

Specifically, when the Roller Mills had trouble making payroll in July of 2012, the U.S. Department of Labor sent a letter to its suppliers and distributors threatening that they were in possible violations of the Fair Labor Standards Act for dealing with the Roller Mills.

Whatever the practices of a company, it cannot be helpful to their business survival to have other companies with whom they do business threatened by the government. Read more

Freedom to close businesses on Sunday is worth preserving

Living in a community bordering Highland, we see lots of signs for and against local Proposition 6, which would do away with the city’s Sunday closing. The anti-Proposition 6 campaign is in the right. People don’t need to shop on Sunday, essential services are still available, and communities ought to be able to protect widely shared standards in their policies. The Deseret News made a good case for Sunday-closing laws in April.

What is intriguing to me is the slogan the proponents of adding one more day of merchandising to the week have chosen. The “Yes on Proposition 6” signs include a one-word motto: “Freedom.”

This slogan is fatuous. Freedom from what? Community standards? What about employees who want the freedom to spend the day with their families? What about the freedom of young people to find jobs in the community that don’t require them to miss church services? What about the freedom of businesses that would be forced by national management to open on Sundays absent the law? What about the freedom of people who move to a city because of its standards to choose the environment in which they will live? Read more

No liberty is violated by Highland’s Sunday closures

Residents of the city of Highland are considering repealing a Sunday closure regulation. They alone will decide.

My interest in this debate is intellectual. My two cents is simply to remind Highland residents that there is no liberty interest at stake with your decision about Sunday closures, one way or another. In other words, no resident’s liberty is being violated by maintaining the Sunday closure regulation.

Argue for or against the regulation. Argue that the regulation is arbitrary and inconsistent. Argue in support of the regulation for religious or social reasons. Argue whatever you want … except … don’t argue that any individual’s liberty is being diminished because of the Sunday closure rule. It’s not. Read more

Dr. Moneylove or: How Al Gore Learned to Stop Capitalism and Love Government Connections

What happens when government begins to direct more and more of a country’s economy with the wealth it has taken from its people through taxation? China and Al Gore provide us examples. According to a Bloomberg report quoted by The Wall Street Journal,

“[T]he net worth of the 70 richest delegates in China’s National People’s Congress . . . rose to 565.8 billion yuan ($89.8 billion) in 2011, a gain of $11.5 billion from 2010.” That averages out to more than $1 billion per delegate, and we’re not even talking about the senior party leadership.

The excellent Wall Street Journal article continues.

All this is good to know as a reminder that China, so recently extolled as the very model of technocratic know-how, turns out to be a country heavily populated at the top by rent-seekers and kleptocrats. Should that be surprising? Not if you think that nothing else can come from the lucrative crossroads where politically directed capital and politically connected individuals meet.

Enter Al Gore. Read more

Utah government entities catalogue how they compete with the private sector

During yesterday’s interim meetings, the Legislature’s Political Subdivisions Interim Committee heard reports from representatives of higher education, K-12 public schools, counties, cities, and others about activities they participate in that potentially compete with the private sector and how they go about deciding to engage in such activities.

Those activities were fairly wide-ranging. For instance, universities compete sometimes with the private sector by allowing their catering services to do business off campus, often at a lower price than private caterers do it. Public schools compete with private beauty schools by providing cosmetology courses. Cities and counties compete with private businesses by building recreation centers and golf courses. Read more

Prospects for a humming future in the Beehive State

A recent publication by the Gallup organization is the latest to suggest a humming future for the Beehive State. In “Utah Poised to Be the Best U.S. State to Live In,” Dan Witters reports that the state leads all others with respect to 13 different categories of inquiry that address economic, workplace, community and personal choices.

As noted in the article, the selection of the 13 metrics was not based on any statistical model, but rather on their presumed relevance to future livability. The findings are based on the results of more than 530,000 interviews with U.S. adults conducted Jan. 2, 2011, through June 30, 2012, as a part of Gallup Daily tracking and the Gallup-Healthways Well-Being Index.

The specific categories include

  • Percentage of workers employed full time for an employer
  • Economic Confidence Index
  • Job Creation Index
  • Employee-supervisor relationship
  • Standard of living optimism
  • City optimism
  • Daily learning – of something new and interesting
  • Easy access to clean, safe water
  • Easy access to a safe place to exercise
  • Obesity
  • Smoking
  • Dentist visits
  • Future life evaluation

Read more