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 Richmans' Trade and Taxes Blog



Minimum Wage Misconceptions -- Ray was published in yesterday's Tribune-Review
Howard Richman, 6/23/2014

Here's how he begins:

Economists are divided on how much unemployment the minimum wage causes. But there is little doubt that a minimum wage decreases the demand for unskilled workers. What wage potential employers are willing to pay depends on what the employer believes that hiring an additional worker would be worth to him. No employer will hire a worker unless he believes the worker will contribute as much value as the worker costs.

Who is hurt the most by a minimum wage? Teenagers having no work experience and the unskilled, 20 or over, without work experience. And as the data show, black teenagers and the black unskilled are affected the most, which is an unintended consequence.

The unemployment statistics speak for themselves....

To read the article go to: http://triblive.com/opinion/featuredcommentary/6291221-74/wage-minimum-percent#ixzz35SPgmUqV

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Minimum Wage Is a Barrier to Employment of Teenagers, Blacks, and Hispanics
Raymond Richman, 6/18/2014

Before 1938, all minimum wage laws were declared unconstitutional by the U.S. Supreme Court. Pres. Franklin Roosevelt signed the Fair Labor Standards Act in that year which, inter alia, established a minimum wage of $13 per week. The Roosevelt packed Supreme Court upheld its constitutionality under the Constitution’s commerce clause. Arguably the ruling enabled the federal government to legislate without constitutional restriction on its power, except for the first ten amendments of the Constitution. The federal government established a minimum was of $7.25 in 2007 when we were just entering he Great Recession, which no doubt helped deepen the recession and slow the recovery. There is little doubt that the minimum wage causes unemployment; a poll showed that 70% of economists believe that the law affects mostly unskilled labor, those without previous work experience. The principal group are teenagers and the statistics bear that out, with particular effect on blacks and Hispanics as the following table shows:

Unemployment by Age, Sex, Race, and Ethnicity, %, 1st q. 2014

           

Age

Total

White

Black

Asian

Hispanic

           

All

         

16+

6.9

6.1

12.2

5.4

8.6

16-19

20.9

18.3

34.5

15.4

24.4

20-24

12.7

18.3

34.5

15.4

24.4

25+

5.8

5.1

10

4.4

7.3

           

Men

         

16+

7.4

6.5

13.9

5.9

8.1

16-19

24.4

21.4

42.8

19.9

24.3

20-24

14.3

12

25.5

17.3

12.2

25+

6.1

5.4

11.1

4.7

6.7

           

Women

         

16+

6.4

5.6

10.7

4.9

9.4

16-19

17.5

15.3

27.5

11.1

24.5

20-24

10.9

9

18.5

13.7

12.1

25+

5.4

4.8

9

4.1

8.1

 

 

 

 

 

 

           

Source: US Bureau of Labor Statistics ...

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Is the U.S. stock market going up because of Central Bank Purchases?
Howard Richman, 6/16/2014

On June 17, the Official Monetary and Financial Institutions Forum is going to launch its Global Public Investor Report in London. If you check out their website today (June 16), you will find the following headline for that forthcoming report:

Central banks are switching into equities to offset risks, outlined in OMFIF's Global Public Investor report, launched in London on 17 June.

Financial Times has already published an article based upon that report, and Zero Hedge has already put up a blog posting about it which includes a graph that shows that as predictions of future world economic growth go down world stock markets go up. The mechanism could be the following: 

  1. First, the mercantilist central bank of a country sees that predictions for growth in its economy are going down. 
  2. Second, the central bank engages in a beggar-thy-neighbor policy, designed to boost its economy by lowering its exchange rate, thus increasing its exports and reducing its imports. So it creates money which it gives to its Sovereign Wealth Fund to buy foreign currencies and then use those foreign currencies to buy foreign equities.
  3. Result, as economic growth in the mercantilist countries deteriorates, stock markets in the beggared countries (including the United States), go into bubbles.

The Central Bank of Japan may be the chief culprit here. As part of Abenomics...

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Comments: 1


CPA's Balanced Trade Push
Jesse Richman, 6/11/2014

The Coalition for a Prosperous America has launched a new push to enact legislative language prescribing balanced trade as a national trade policy objective. We heartily endorse this effort. As we argued in our recent book Balanced Trade, imbalanced trade has a wide range of negative short and long term consequences for the U.S. economy. Balancing trade is an essential element of U.S. trade policy. Although only a beginning, a good place to start is with the effort to legislatively define this as the goal U.S. executive branch officials should be pursuing.

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German mercantilism and the European depression
Howard Richman, 6/10/2014

On May 30, John Weeks wrote a great commentary (Why did Europe Lurch right? Because the 'recovery' is a farce) about the current European depression. He explains why the European depression is not about to end and the reason why European voters are turning toward the right.

His graphs are worth looking at. They show just how deeply the Southern European countries are locked in a depression. It is every bit as deep as the Great Depression was in the United States.

The whole piece is worth reading. I especially found his discussion of German mercantilism to be interesting. He wrote:...

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The Current Minimum Wage May Cost Teenagers and Blacks More than $29 Billion!
Raymond Richman, 6/9/2014

Economists are divided on how much unemployment the minimum wage causes. About 70% or more of economists believe that a minimum wage decreases the demand for workers, especially unskilled workers. The demand for any worker depends on what the employer believes that hiring him would be worth to him. No employer will hire a worker unless he believes the worker will contribute as much value as the worker costs. Who is hurt the most? Teenagers and the unskilled who are unable to find jobs and those who patronize fast food restaurants, the less expensive hotels, and businesses catering to customers of the low and moderate income classes who are forced to pay higher prices for their necessities.

The unemployment statistics speak for themselves. Compare the unemployment rates of teenagers and the rest of those in the civilian labor force. The unemployment rate during the first quarter of 2014 was 6.5 percent for those 20 years of age and older but 20.9 percent for those aged 16 to 19. White teenagers had an unemployment rate of 20.9 percent, black teenagers 34.5 percent, Latin teenagers 24.4 percent and Asian 15.4 percent. The minimum wage laws affect blacks more than any group. Even in the population over 20 years of age, the black rate of unemployment was 11.5 percent compared to whites 5.7 percent.  It could be argued that the minimum wage laws affect blacks more than any other group. ...

 

 

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The push for fraudulent 'manufacturing' statistics continues -- "Factoryless Goods Producers"
Jesse Richman, 6/6/2014

The reclassification in the trade statistics is merely the first step in the effort to massively (and fraudulently I would argue) reclassify companies that manufacturing NOTHING in the United States as US manufacturers, with their manufacturing 'production' attributed to their locations in the United States. For an excellent blog post about the currently open comment window on the next stages of this regulatory fraud see the EPI blog.

http://www.epi.org/blog/statistics-spin-foreign-goods-considered/

The key step now is to take action to block this by generating negative comments. The Ideal Taxes Association will be drafting a letter as part of this comment period. Here are some key points to note about this revision....

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Comments: 3


Dismal Trade Report for April
Howard Richman, 6/5/2014

The June 4 trade report was dismal in every way.  U.S. exports fell. U.S. imports rose. And net exports (exports minus imports) reached their lowest level in two years, down from a negative $44.2 billion in March to a negative $47.2 billion in April.

Worsening net exports are a huge drag on the U.S. economy. During the first quarter (January through March 2014), they contributed a negative 0.9% to real GDP, accounting for almost the entire 1.0% fall in real GDP. The April trade statistics are even worse. Apparently, the drag of worsening trade deficits upon U.S. economic growth is continuing. 

There are at least four trends contributing to falling U.S. net exports:...

 

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BEA Trade Statistics Revisions Coming
Jesse Richman, 6/3/2014

On June 4th the Bureau of Economic Analysis will release its revisions in the way trade statistics are collated.  This may mark the end (or beginning of the end) of meaningful trade statistics in goods that actually reflect the value of goods imported and exported by the United States' territory....

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Comments: 0





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    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]