Sunday, February 4, 2018

February, 2018, Part 3, Political Class Insanity: More Voter Fraud and More Economic Stupidity From Economically Ignorant Politicians

It is the beginning of another month which means it is again time to review the latest political class insanity from Washington and around the world. Political class insanity takes many forms including the wasting of taxpayer wealth, criminal fraud within government programs, inane and stupid political quotes and actions, the inability to create and implement effective and efficient government programs, stupid and ill performing economic policies and strategies, and other forms of insanity that continue to evolve and surprise and shock us.

Let's get started:

1) We once did an extensive set of posts on how corrupted and open to fraud our current voting processes are. The first post in that series can be accessed at:

New results from a research study again magnify how bad our voting processes are:
  • According to Jim Holt, writing for the Gateway Pundit in 2016, Pew Research recently completed a disturbing voter fraud study and analysis. 
  • The study found that over 1.8 million people currently on the nation’s voting rolls are in reality, dead.
  • More than 2.75 million people are registered to vote in more than one state.
As we have said previously, if citizens even think that their voting processes are corrupted or tainted than the very basis of our democracy is endanger.

2) We have often discussed the incredibly stupid economic actions and strategies of our economically ignorant politicians. Almost always their ventures into the world of economics results in the exact opposite of what is intended which is never good.

And that maxim certainly holds when politicians try to force an unrealistic minimum wage level on the marketplace. In an attempt to improve the plight of lower paid workers, politicians often falsely believe that raising the minimum wage will improve the lives of those making below the higher proposed minimum wage. Usually what happens is that businesses react to the paying of higher wages by reducing the workforce, forcing people to have no job at a higher wage rather than having a job at the old minimum wage.

Reason magazine recently discussed another instance of politicians meddling in the wage sector of the economy and the bad results that occurred:
  • Eric Boehm, writing for Reason on January 10, 2018, discussed a bad consequence of Seattle’s minimum wage increase.
  • The Subway restaurant chain often runs a sales promotion where they have an ad campaign that advertises their Subway foot long sub sandwiches for just $4.99.
  • But that ad campaign was not honored by a Subway owner in Seattle, a town that has raised the minimum wage dramatically in recent years.
  • David Jones posted a sign explaining why his store was opting out of the national ad campaign and promotion: "Dear Seattle Subway Patrons: Unfortunately, we are not participating in the $4.99 Footlong Promotion. The cost of doing business in Seattle is very expensive. We are balancing the highest minimum wage in the nation, paid sick leave, ACA, Secure scheduling, soda tax and much more.”
  • Thus, even though some workers are now making more in the Seattle area, the cost of buying a sub sandwich is also relatively higher wiping out some of the benefit of having higher wages.
  • Which assumes you still have a job as a result of a higher minimum wage since according to researchers “at the University of Washington's School of Public Policy and Governance, the number of hours worked in low-wage jobs has declined by around 9 percent since the start of 2016 "while hourly wages in such jobs increased by around 3 percent." The net outcome: In 2016, the "higher" minimum wage actually lowered low-wage workers' earnings by an average of $125 a month...And now those same employees will have to pay more for sandwiches from Subway—and everything else too.”
We have stated the following many times in this blog when politicians screw with economics in the marketplace: The good news is that your current job now pays a higher wage. The bad news is that because your job now pays a higher wage you no longer have a job.

3) But the economic insanity of Seattle politicians does not stop with higher than reasonable minimum wage levels, according to that same Reason article. The city has imposed a tax on sodas sold in the city, a tax rate of 1.75 cents per ounce. This raised the cost of a can of Coke sold at retail in Seattle by 20 cents. It raised the cost of a 36 can case by $7.56. 

Ed Murray who was mayor when the tax was imposed, inanely claimed that the soda tax “could subsidize trips to the farmers market, pay for free community college, and roll back "white-privileged, institutional racism."” How a soda tax could end white privileged institutional racism is a mystery to me but that is a story for another day.

So what happened when the tax went into effect? The same thing that happened when the city of Philadelphia did the same stupid thing: people did their shopping outside of the city limits where they could avoid the soda tax. Seattle Costco locations in fact gave out directions to other Costco locations in the area outside of the Seattle city limits where the tax would not apply.

And not only did soda sales go down in the city, harming businesses and workers of those city businesses, sales of other groceries went down since when people went outside of the city limits to buy the less taxed soda, they did their other grocery shopping outside of the city also.

Thus, in two steps, Seattle politicians made life worse for the very people they claimed they were helping: raising taxes and raising the minimum wage resulted in less economic opportunity for those in the lower end of the economic spectrum. Insane.

4) Red Robin restaurants are a national restaurant chain which has a heavy concentration of its stores in the western part of the United States according to a recent article by Hank Berrien. However, it is in some of those western states where politicians are pushing the hardest to raise the local minimum wage. 

As a result, the chain has had to make some significant changes to its personnel policies in order to stay profitable and in business when faced with politician induced increased wage expenses:
  • Red Robin was forced to eliminate the busboy position in all of its restaurants to cope with the increased wages it is being forced to pay. 
  • Thus, as always, when politicians force an increase in the wage expense for businesses, businesses have to compensate by reducing costs somewhere else in their business, usually resulting in fewer jobs.
  • Eliminating the busboy positions will save the company about $8 million a year allowing it to apply the $8 million in savings to others that still have a job to comply with the higher minimum wage levels being imposed.
  • This change comes on the heels of another change, the elimination of expediters, employees that take the food from the cooks and place it on plates for the servers, a move that saved the company almost $10 million last year.
  • The company’s chief financial officer, Guy Constant, told a conference recently why the changes were made: “We need to do that [eliminate job titles and jobs] to address the labor increases we’ve seen.”
  • Michael Saltsman, director of the Employment Policies Institute (EPI), reacted to that statement: “I read that as minimum wage. Somebody like Red Robin, which has a lot of exposure in western states [where the minimum wage is rising faster] … this is sort of a burger and beer chain. If they can’t pass those increases off in higher prices … they have to find a way to do more with less.”
  • editor-in-chief Nick Powills also commented: “From a business standpoint, [Red Robin made a] very smart move. From an employee standpoint, you just cut out $8 million worth of labor. The interesting thing about the minimum wage hike is that those that made the decisions to do it, did it on behalf of the employee … when intentions are good, and you can’t please everybody, someone is going to eventually be on the short [end of the] stick.”
As we stated above: The good news is your job will now be paid at a higher level. The bad news is you no longer have a job because it was being paid at a higher level. Consider a recent report by Fox Business news: “Earlier this year, a study conducted by EPI, which analyzed employment trends from 1990 through 2017, found that each 10% increase in the minimum wage in California has resulted in a corresponding 2% decline in employment for affected employees. The impact was larger, 5%, for lower-paid workers."

Some things never change: politicians never fix our broken voting processes and politicians continue to be economic idiots, making the economic plight of lower paid Americans even worse. More insanity to follow.

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