Ah, Labor Day. The punchline of so many unfunny jokes. We won’t attempt to humor you with any jokes, but we would like to briefly discuss a topic that'll make you smile...
Great golf, gorgeous beaches, spicy shrimp and grits, and tea so sweet it’ll knock you into next Tuesday: welcome to South Carolina!
Trade matters. The dizzying array of countries that fill in the blank on the “Made in ______” tags attached to everything we buy proves that. This is currently a hotly debated issue in Congress, and we all ought to care deeply what they decide: because it will affect us all as consumers.
Late in 2014, headlines heralded the news that America’s official unemployment rate had fallen below 6% for the first time since 2008. Surely, a sign that we’re on the path to recovery, right? A closer look says “not so fast.” From 2008 to the most complete numbers we have in 2013, South Carolina’s labor participation has seen a uniform, steady decline across gender and race, aside from a 2012-2013 rebound among Hispanic workers.
“Inflation everywhere is a monetary phenomenon,” said Milton Friedman, in his famous 1970 essay titled, The Counter-Revolution in Monetary Theory. What he meant is actually quite simple. Inflation (an overall increase in the price levels of an economy) only occurs when the amount of currency printed by the Federal Reserve exceeds the amount of goods being produced.
People often associate capitalism with “Wall Street greed” and corporate fat cats getting special favors from government. The truth is, anytime the government is involved in the business of anything beyond protecting individual and property rights, it leads to a distortion of the free market and in fact detracts from authentic capitalism. We call this cronyism.
Many feel-good policies are ultimately disastrous. One of these, the concept of a government-mandated minimum wage, is particularly counterproductive. On the face of it, what could be so bad about guaranteeing the poorest workers in society receive wages high enough to ensure a minimum standard of living? (Especially since it only comes at the cost of “immoral corporate greed”?) The answer is: a lot.
In the history of civilization, income tax policies designed primarily to soak the rich have always failed. Why? Because of a basic concept of economics called elasticity. Imagine the price of gas goes up by $4 per gallon (to say, the European price). If you routinely buy 20 gallons of fuel a week for your “fun” car (maybe a BMW M3 or Chevy Corvette), would you, after this price hike, be likely to add an extra $80 a week to the coffers of the gas company? The answer is, of course, no. You observe the price of gas going up and cut your consumption.
Despite their declining membership rolls, public sector unions ostensibly attract members by touting unions’ collective bargaining abilities to promote higher pay, improve benefits, and increase job security. But that’s not the case in the Palmetto State. Data shows that unionized government workers in South Carolina make 4% less than their non-union counterparts.
Widely regarded as the groundbreaking leader of the Chicago School of monetary economics, Milton Friedman led a long and storied career, receiving the 1976 Nobel Prize for Economic Science, the Presidential Medal of Freedom in 1988 and the National Medal of Science the same year. But he is beloved because his academic brilliance was employed in the practical service of people. Friedman’s observance of the facts led him to a passionate belief that people truly free to choose their course in life without the heavy hand of undue government interference is the surest way forward to create hope and opportunity – a rising tide of prosperity – for all.