Should Missouri Raise Its Minimum Wage?

Should Missouri Raise The Minimum Wage? from Missouri Viewpoints on Vimeo.

My bit starts at about the 15:30 part. There's so much ill-informed nonsense in the pro- camp, which is on display in the first half of the video, as well as in a radio debate I participated in last year. There are intellectually sound arguments to be made, but they aren't being made. Instead we get flat-eathers who believe that the law of demand can be repealed just because a bunch of progressive no-nothings can feel good about themselves. Also see this earlier post, with my letter to the editor.

Good policy, properly argued, can win

Scott Walker, Republican governor of Wisconsin, has been touted by some as presidential timber. Back in November, Rich Cromwell argued that Walker is what the country needs in 2016. The argument included this assessment of Walker's electoral chances:

Does Walker sizzle? Not exactly. Is he a particularly charismatic speaker? No, he isn’t. But does he sit upon a throne made of the skulls of his enemies? Yes, yes he does.

The line has stuck in my head ever since, and reminds me that there is more to successful governing than shallow phrases, a fiction-filled origin story, and class and race warfare. Instead, it's possible for good policies, if properly argued and presented, to defeat divisiveness, lies, and hate.

Have some dignity St. Louis

Kevin Horrigan has an excellent rundown of the history of the St. Louis Saps, the collective of regional residents who are being asked yet again to lay down millions of dollars at the altar of the NFL. The article is behind some sort of paywall, but be sure to read it if you can. It includes this 1988 quote about the NFL from then-mayor Vincent Schoemehl following the departure of the football Cardinals:

The fact of the matter is, these are not reputable people, and I don't think it's becoming of a city to extend themselves to postures that allow them to kiss the backsides of such people.

St. Louis resigned to losing the Rams

Tim Logan, formerly of the Post-Dispatch, wrote an interesting article for the LA Times describing the mood in St. Louis about the Rams: In St. Louis, Rams fans seem resigned to losing football team.

Yours truly was quoted in the article:

The Rams do bring value to the St. Louis region, said Howard Wall, an economics professor at Lindenwood University in suburban St. Charles. But in a cash-strapped state with many needs — from roads to schools to the aftermath of this summer's unrest in Ferguson — shelling out for a football team doesn't seem so essential. 

With such pressing priorities, Wall said, many are asking: "Should we spend a half-billion dollars on a football stadium for a billionaire?"

Also see my post from yesterday on the economics of publicly financing of stadiums.

Rams' stadium plan is corporate welfare at its worst

I was going to write a post about the how study after study shows that the economic impact of pouring public money into sports stadiums is effectively zero.  I was also going to describe how whatever economic benefit there is from having an NFL team was in the amenity value, not the economic development effect. It turns out that I don't have to write that post because Dave Nicklaus has already written an excellent piece making those arguments. Read the whole thing, but here's his conclusion:

St. Louis is being asked to pay dearly for the prestige of remaining an NFL city, so I think Peacock described his stadium plan accurately when he called it a “crown jewel.” A jewel can sparkle and make its owner feel good, but it’s hardly a productive use of half a billion dollars.

I'll add two things for now:

1. We will no doubt be hearing from those who support the stadium plan that the economic impact of the project will easily exceed the investment. We'll even be given a number for economic effects that is in excess of double the amount of public funding. This study will come from economic consultants, not from independent economists. The study will sound convincing but will be complete bunk. Here is something I wrote recently that provides a list of the deceptions to look for when hearing about the supposed economic impact of the stadium plan.
2. We've already been hearing how the plan doesn't involve any new taxes, which is true, but irrelevant. In Missouri, tax increases require a popular vote, and this proposal would go down in flames if it were put to the voters of the state. So instead, the state government would rely on the refinancing of existing bonds from the stadium we're still paying off, and on tax credits. Tax credits are functionally equivalent to a bag of cash from taxpayers. If I have a $100 tax credit, my tax bill is lowered by $100. If I don't owe taxes, I can wait until a year in which I do, or I can sell my credit to someone else at a price very close to its face value. So, the tax credits in the stadium plan are nothing short of a cash giveaway that reduces the amount that is available for the state to spend on other things. Thus, either the state will have to raise taxes to make up for the tax credits, or some possibly worthwhile government spending will not be done because the state decided instead to give away hundreds of millions of dollars to a billionaire NFL owner.

No, the minimum wage is NOT good for businesses

The Post-Dispatch had an op-ed the other day arguing that the minimum wage is actually good for business. The author of the op-ed, Chris Sommers, is a successful businessman in St. Louis who I debated with on this issue a few months back. You can listen to the debate here.

The crux of his argument then and now is that he raised the wages in his businesses, which worked out for him, so the Federal government should force every business in the United States to do the same. There were two good letters published today that tore apart this logic (here and here).

It's pretty tiring having to keep arguing against such a demonstrably horrible policy, but I submitted this letter to the editor anyway:

In his op-ed arguing for an increase in the Federal minimum wage (Boost business by raising the minimum wage), Chris Sommers thinks that he has hit upon a magic formula by which increases in the minimum wage do not decrease employment but, instead, are actually good for businesses. He dismisses the reams of empirical evidence to the contrary with the story that his own restaurant chains benefited when they unilaterally raised their internal minimum wage. 

In a nutshell, his argument has four parts:

1. Because his businesses benefited from voluntarily increasing the wages it paid, every one of the millions of businesses in the United States would benefit by increasing their wages. 
2. The owners and managers of these millions of businesses spread across millions of square miles are too ignorant to know how to run their own businesses. 
3. Because of (1) and (2), the Federal government should step in and force a uniform minimum wage for every business of any size in every industry no matter where it is located. 
4. The result is higher wages with no effect on the number of people employed.  

You can accept this fanciful logic if you like, but I would like to offer an alternative, which is backed up by actual empirical evidence.

1. Wages tend to be related to the productivity of workers. 
2. If a law forces a business to pay a wage that is not justified by the productivity of some of the firm’s workers, the firm will not continue to employ those workers. 
3. The minimum wage leads to job loss and poverty for the lowest-skilled workers, who might never gain the experience they need to get a job that pays above the minimum wage.