Tuesday, February 26, 2013

More Stimulus Waste

Remember the 2009 stimulus package?  It was sold as $800 billion of shovel ready jobs, guaranteed to keep unemployment below 8%, and fast-track the American economy.  We all know how that worked out.  Here’s a little more evidence that no one wastes money like Uncle Sam.

West Virginia state auditors found widespread waste and abuse of taxpayer money as government officials were implementing the Broadband Technology Opportunities Program (BTOP).  This revelation isn’t new, but W. Virginia’s recent report sheds new light on how well-intentioned programs go very wrong. 

 In short, West Virginia officials were buying $20,000 routers to interconnect libraries, community centers, and other public offices using federal grant money.  One library in particular was the size of a small shed, yet boasted a $20,000 Cisco router.  There’s plenty of blame to go around, but the moral of the story is this: government should stop spending other’s people money.

Read the whole story here.

Thursday, February 21, 2013

A Little History on the Min Wage

President Obama’s minimum wage hike proposal delivered in the State of the Union address has prompted much chatter in the blogosphere on the subject.  If you’re a CafĂ© Hayek patron, your min wage cup runneth over, and over, and over..
I did a little research on the matter, and learned that min wage laws were not always allowed.  In 1905, the US Supreme Court ruled, in Lochner v. New York, that the NY legislature went too far in restricting the vocation of bakers.  The law attempted to put a ceiling on the number of hours and days a person could work as a baker.  (According to some, this law was to protect American bakers from immigrant competition, who would work harder and longer than their American counterparts.)  The law was upheld through lower court rulings but was eventually overturned (5-4) in a landmark decision.  Justice Rufus Wheeler, speaking for the court said that, “[the] Fourteenth Amendment protected an individual's "general right to make a contract in relation to his business.”  Seems like common sense to me.  This ruling began what was known as the Lochner Era, a prolonged period where the high court struck down many regulations aimed at restricting personal liberty.

Then, in 1923, the Court struck down a federal 1918 law that set minimum wages for women and children in the District of Columbia.  The Court said that if the legislature could set a min wage, nothing would prevent it from setting a max wage, and apparently that notion did not sit well with the Justices.  (I touched on this topic here.)  They ruled 5-4 that this minimum wage law was unconstitutional, based on similar grounds found in the Lochner case.  However, this reprieve from the min wage wouldn’t last long.

After fourteen years, a new case was brought before the Court that would reinstate the min wage.  In West Coast Hotel Co. v. Parrish, the Court ruled that legislatures could indeed restrict the activities of individuals where the health and welfare of the community was involved.  (And when isn’t the health and welfare of the community not involved??)  This case effectively ended the Locher Era, as the New Deal Era drastically shifted the direction of the Court.

Bring back the Lochner Era I say!

Monday, February 18, 2013

Boudreaux on Min Wage

In typical Boudreaux fashion, Don challenges the political wisdom of Washington with a simple question:

"Question: If a government policy that artificially raises the price of Chinese-made tires reduces the quantities of such tires that are bought, why does a government policy that artificially raises the price of low-skilled labor not reduce the quantities of such labor that are hired?"

Answer:  Crickets.

Why should one man (or group of men) arbitrarily determine what another man's labor is worth?  And if you believe that some men are qualified to arbitrarily price another man's minimum labor, why aren't these same men endowed with enough wisdom to price a man's maximum labor?

Thursday, February 14, 2013

Political Pornography

The annual February carnival in Washington D.C., known officially as the State of the Union Address, has slowly devolved into a sickening and unprincipled political orgy.  Apparently Justice Scalia feels much the same way.  He hasn’t attended one in 16 years.  The whole thing is pure political theatre.  Here’s how it unfolds:

The President, not unlike a pop star diva, arrives in the House Chamber and is swarmed by other politicians like a pack of hyenas.  Hands are shaken, backs are slapped and smiles exchanged as the demi-god makes his way to the pulpit. This act of worshipfulness to the current president serves only to embolden the statist mind.  Even a president with free-market inclinations can’t help but feel like an economic messiah prepared to deliver a panacea.

After the fans regain their composure and put away their pom poms, the propagandizing begins.  Facts are misconstrued, figures are distorted, and lies are told with a straight face.  Promises are doled out, fears are rolled away, and good times ahead are assured.  Then, cheers are given, standing ovations are observed, and an air of self-righteousness fills the arena.  What a scene to behold. 
That any halfwit takes any part of this contemptible act seriously is shameful and an insult to the citizenry. 

Friday, February 8, 2013

Stock Trade

I made a few adjustments to my portfolio this week.  I’m a Foolish Investor, buying advice from the investing gurus of The Motley Fools.  So far, my investment with them has paid off.  These guys aren’t clairvoyant or anything, but do have resources with which to scour the financial landscape looking for great companies.  With that in mind, I decided to do a little 2013 house cleaning.

My first order of business was to sell my position in Amazon.  Amazon has done me well over the last 18 months (43% return), but it’s quite expensive relative to earnings.  And I’m not sure this Dot Com hold-over can keep its momentum going.  Wall St. is all about growth, and it’s hard to keep doubling sales year after year.  So, I decided to part ways with the online Wal Mart and do some fruit shopping.

In case you lived in a cave, Apple stock has shed about 35% of its value over the past four months.  It was trading at $700/share on 21-September 2012, and hit a low of $439/share on 25-January 2013.  It’s now trading at about eleven times earnings. I thought now was a good time to get in, so I hopped on the Tim Cook train.  So, let’s see if Cook & Co. can get things rolling again.

Thursday, February 7, 2013

Clearing the Smoke

"Congress should simply allow states to regulate marijuana as they see fit and stop wasting federal tax dollars on the failed drug war" [emphasis mine].

Wrote Colorado Rep. Jared Polis, a democrat.

I couldn’t agree more with the good congressman.  But why stop with marijuana.  If states can responsibly regulate marijuana, why can’t Congress allow states to manage their own affairs on most issues?

Too bad his, and the majority of his colleagues’, federalism stops well short of what the founders intended.