Category Archives: Economics

The Unseen Costs

…of the minimum wage:

Several years ago, the city council of Santa Monica, Calif., decided to make the town a workers’ paradise by passing a union-backed law requiring everyone to be paid at least $12.25 an hour.

At the time, restaurant owner Jeff King complained to me that that law would “dry up the entry-level jobs for just the people they’re trying to help.”

He was right. It’s why gas stations no longer hire teenagers to wash your windshield. Wage minimums tell employers: “Don’t give a beginner a chance.”

Such losses are hard to see, but they are widespread. One company closes because it can’t afford to pay higher wages. Another decides to produce its product with fewer workers, and another never expands. Perhaps most importantly, there’s the business that never opens. The people who were never hired don’t complain—they wouldn’t know whom to blame—they don’t even know that they were harmed. They are the unseen victims.

And many of them are black, and the people that the economic ignorami, including the African-American one in the White House, falsely purport to be helping.

The President’s “Science” Advisor

The more we learn about John Holdren, the more of a whack job he seems to be:

Holdren’s harebrained endorsement of the arboreal legal rights comes on the heels of learning he had previously advocated:

Laws requiring the abortion or adoption of illegitimate children; sterilizing women after having two children; legally requiring “reproductive responsibility” to those deemed by pointy-headed eugenicists to “contribute to general social deterioration”; and incredibly, putting sterilizing agents in the drinking water.

All this in the name of dealing with an impending overpopulation crisis that never materialized. When the news broke about Holdren’s troubling views, I thought it was particularly telling that despite the fact that Holdren thinks that Dr. Strangelove is a how-to manual, the New York Times ignored the revelations about Holdren’s past writings.

But as Mark Hemingway points out, at least he’s not a Christian.

Not A Jobs Program?

A couple months ago, I offered some advice to the Augustine panel:

Ignore the politics

Yes, of course Senator Shelby (R-AL) is going to want to see a new vehicle developed in Huntsville, Alabama, and Senator Bill Nelson (D-FL) is going to want to ensure the maintenance of jobs at the Cape, and Senator Kay Bailey Hutchison (R-TX) and various Houston-area congressmen are going to want to maintain jobs at Johnson Space Center. That will take priority in their minds over actual accomplishments in space.

But your job is to tell the policymakers how to give the taxpayers the best value for their money — and how to maximize our space-faring capabilities as soon as possible, so that if we do see something coming at us or find riches off the planet, we can take advantage of it.

Think of yourself like a Base Closing and Realignment Commission that provides recommendations for the nation as a whole, not local interests. Let the politicians argue about how to preserve jobs (while ignoring all of the jobs and wealth not being created due to the opportunity costs of their parochial decisions).

I don’t know whether he read it or not, but he seems to be following it:

A presidential space panel on Thursday challenged NASA’s vision of establishing a base on the moon and instead weighed other ambitious options that include free-ranging spaceships that could visit destinations throughout the inner solar system.

Noticeably absent, however, was discussion of NASA’s work force — despite a packed hotel ballroom filled with dozens of Kennedy Space Center workers worried about pink slips.

“We’re not designing any option with the idea in mind of preserving or not preserving the work force,” said Norm Augustine, the retired Lockheed Martin CEO who leads the 10-member panel named by the White House to evaluate NASA’s human spaceflight program.

…But even testimony from Lt. Gov. Jeff Kottkamp did little to steer the conversation in that direction. He warned that Florida faces an “economic shock wave” during the time between the shuttle’s retirement and the first launch of its problem-plagued successor, which may not be ready until 2019.

“Due to the impending gap, Florida is bracing for a hardship — the magnitude of which the state has not seen for decades,” said Kottkamp, who estimated that the 7,000 job losses at KSC could ripple into 20,000 more unemployed workers on the Space Coast.

Defense has the same political problems, of course, with the fight in Congress to keep the F-22 funded being the latest example, and one in which the arguments are explicitly made that they have to do so to preserve jobs, with whether or not it actually helps us defend the country a second-tier issue at best. It’s even harder to fight this pork mentality when it comes to something as unimportant as space exploration and development, so we’ll see how long Augustine’s attitude remains once the politicians get involved. But I’m glad that we will at least make clear the difference between a program designed to explore and develop space, and one designed to make work for the politically connected.

FUD

Commercial space advocates have often complained that NASA tends to put a stick in the spokes of attempts to raise money and get ventures off the ground. Critics claim that this is a fantasy, and that NASA is both uninterested in, and incapable of doing such a thing. Jeff Foust points out the latest example of the “fantasy”:

[Here’s] a passage in a Wall Street Journal article this week (subscription required) about Virgin Galactic’s deal to sell a stake to an Abu Dhabi fund:

However, a NASA official cautioned that venturing into space is extremely costly, dangerous and difficult.

“Everyone has the opinion ‘we can do this’ but I’ve seen so many fail,” he said, adding that running a shuttle costs at least $3 billion a year.

All this is true: spaceflight is difficult and not cheap, and many ventures who have tried it before have failed. But what does the operating cost of the shuttle have to do with a suborbital space tourism system?

Absolutely nothing, of course. But it helps sow the seeds of doubt in the mind of an investor who might not know any better. And of course, the clueless reporter doesn’t challenge the comment, but simply stenographs it as though it’s not a complete non sequitur. Because he or she got the valuable opinion of an unnamed NASA official, which is all that matters.