Category Archives: Uncategorized

In the News: Minimum Wage

Ingrid Case at Employee Benefit News has a thorough writeup of my recent minimum wage paper.

The article is here. The paper is here.

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Alan Greenspan and Adrian Wooldridge – Capitalism in America: A History

Alan Greenspan and Adrian Wooldridge – Capitalism in America: A History

Deirdre McCloskey’s review is here. An economic history of the U.S. that is optimistic without being to starry-eyed. Greenspan and Wooldridge say wise things about two of my main policy interests. Early on, they have an excellent 30,000-foot level discussion of regulation. They don’t directly cite my colleague Wayne Crews or his Ten Thousand Commandments, but some of his numbers and many of his arguments appear prominently.

Later in the book, they give a defense of modern prosperity, complementing thinkers such as Julian Simon, Matt Ridley, Hans Rosling, and Deirdre McCloskey. They also draw on Cox and Alm’s ever-useful measure of how many hours an average person must work in order to afford a loaf of bread, a tv, a car, and other things. For the better part of two centuries, Americans have been getting more and better goods in return for steadily decreasing amounts of effort.

In between these two highlights is a fairly comprehensive business history of America, from roughly the founding up until now. Their discussion of the rise of the Carnegie, Rockefellers Vanderbilts, and Morgans of the world would have improved from a deeper discussion of competition theory that includes the Brandeisian view, the Borkian view, as well as the public choice critique of both (see Wayne Crews’ and my recent paper for that). Given Greenspan’s name recognition and Woodridge’s skilled writing and distillations, this is a book that will likely sell far better than the average of its genre, and hopefully will be more read as well. Not perfect, but good—much like the economy it studies.

Nicholas R. Lardy – The State Strikes Back: The End of Economic Reform in China?

Nicholas R. Lardy – The State Strikes Back: The End of Economic Reform in China?

Lardy’s “core conclusion is that absent significant further economic reform returning China to a path of allowing market forces to allocate resources, China’s growth is likely to slow, casting a shadow over its future prospects.” In this case, Lardy largely echoes other recent works such as Elizabeth C. Economy’s The Third Revolution: Xi Jinping and the New Chinese State and Ronald Coase and Ning Wang’s How China Became Capitalist.

China has taken a decidedly dirigiste turn under Xi Jinping. If Xi continues down an increasingly statist path, China’s growth will slow. If market reforms continue, China will prosper. Given the outsize amount of power centralized in his person, this choice is up to him more than anyone else. This will remain the case regardless of whether the current U.S.-China trade war ends tomorrow or continues for years. U.S. presidents come and go, but Xi will likely be around for a long time. And if not him, then someone in his inner circle with similar policy views.

Lardy is an excellent economic analyst, parsing through China’s not-entirely-truthful official statistics as well as international data to give as accurate a picture of China’s trajectory as he can, given the sources. One of his major conclusions is that China’s state-run businesses are severely underperforming compared to the country’s private businesses. State-run enterprises consistently make more and larger losses, are more heavily in debt, and the ones that are profitable tend to be less profitable than their private counterparts. They are also concentrated in legacy industries; China’s growth is less in energy and manufacturing and more in services and technology—precisely where China’s private sector is strongest.

This sounds like good news, but the trouble is that under Xi, the poor-performing state-run share of the economy has been growing. Since government tends to make a hash of whatever it does, if Xi keeps this up, China’s growth will slow. This is an avoidable mistake, but it is an open question if Xi will be willing to admit it.

China has several massive white elephant projects that are wasting precious capital, such as its Belt and Road initiative. While this program and others like it scare China hawks in the U.S., they are weakening China. Government infrastructure projects worldwide are late, overpriced, and often of low quality. The Belt and Road initiative is no different, according to available evidence so far. Moreover, the billions of dollars Beijing is putting into it now cannot put into more productive ventures.

Lardy, like everyone else, is unable to guess which path China will take—state-run and poor, or free and prosperous. Unlike many analysts, Lardy is humble enough to admit that he cannot predict the future. He is hoping Xi will eventually decide to turn China’s policy momentum back towards liberalization. The Chinese people share this hope, and China observers of all stripes should hope the same, whether their politics are hawkish or dovish.

James Dickey – Deliverance

James Dickey – Deliverance

As a long term project, I am slowly winding my way through the Modern Library’s highly subjective list of the 100 best novels. This entry was on sale for five dollars on Audible, so I took the plunge. I had previously seen the movie, but didn’t much care for it. Many years ago I also once went rafting on the same river where the movie was filmed, and didn’t much care for that. Perhaps unsurprisingly, the book wasn’t really to my taste, either.

The reason is likely that Deliverance is essentially sturm und drang that doesn’t let up. Angst and guilt are constant presences, but there isn’t a reason given for why that should be. They’re simply background conditions woven into the fabric of the book’s world. A good story contains both tension and release; this story has too much of one and too little of the other. Whereas I tend to prefer literature, music, and art that contain both light and shade, Deliverance is essentially monochrome.

As for the story, a rafting trip in rural Georgia among four city-dwelling friends goes about as wrong as it possibly can. The characters variously endure being brutally raped by a hillbilly, a broken leg, an arrow wound, and a drowning. The protagonists also kill two people, perhaps justifiably and perhaps not–the ambiguity is easily the most interesting part of the book.

Afterwards the three survivors create a cover story, wrestle with guilt, and arouse some suspicion among wary locals, but aren’t caught. The river basin they went through is dammed and flooded as part of a federal infrastructure project, destroying any evidence, as well as their friend’s body. Back in Atlanta, they go on with their lives as best they can, but never quite return to normal. Two of them ending up buying rural cabins near the area where it all happened. This unsatisfying ending, with no release for the built-up tension, is in direct, and probably intentional, contradiction to Deliverance‘s title.

In the News: Minimum Wage Tradeoffs

Here is a writeup of my recent minimum wage paper being syndicated to local newspapers by the Center Square. The full paper is here.

CEI Commends White House for Executive Action Restricting Use of Regulatory Dark Matter

This is a CEI press statement, originally posted at CEI.org.

The White House today announced President Trump will sign two Executive Orders aimed at stopping the practice of agencies using guidance documents to effectively implement policy without going through the legally required notice and comment process. CEI Vice President for Policy Wayne Crews has long advocated executive action aimed at curtailing the use of “Regulatory Dark Matter” or guidance documents.

CEI Vice President for Policy and A Partial Eclipse of the Administrative State: A Case for an Executive Order to Rein in Guidance Documents and other “Regulatory Dark Matter” author Wayne Crews said:

“I commend President Trump and the White House for taking strong executive action aimed at restraining agencies from using guidance documents or ‘Regulatory Dark Matter’ to effectively implement policy without at least adhering to the legally required notice and comment process created by the Administrative Procedure Act nor submitting guidance to Congress and the GAO as required for review. CEI has long been making the case that the Administrative State cannot be tamed until the proliferation of guidance and dark matter is addressed. This executive order is a vital start; in the future, Congress will also need to act in order to completely stop the practice of regulating through guidance documents.

“In the absence of a Congress willing to address this important issue, it is critical for the president to sign executive orders like these in order to advance the cause of regulatory reform and cement his legacy as a deregulatory president.”

CEI President Kent Lassman said:

“Progress was made today. The President makes clear through executive orders that undemocratic, unresponsive, and unaccountable agency action is on a path to extinction. More work is required to reestablish a proper separation of powers and limits on administrative authority however the executive orders on guidance, regulatory dark matter, and transparency are a necessary disinfectant to a diseased regulatory state.”

CEI Senior Fellow Ryan Young said:

“Restoring a healthier separation of powers requires effort from all three branches. Hopefully today’s Executive Order will jump-start that needed process. Congress now needs to strengthen transparency and other protections against agency abuses with legislation, which is more permanent than an Executive Order.

“This has so far been a missed opportunity for congressional Democrats, who have an opportunity to rein in a too-powerful executive branch, and to do it with bipartisan cooperation. Over in the judicial branch, the Supreme Court needs to end the judiciary’s near-automatic acquiescence to agencies in upcoming cases concerning Chevron deference and Auer deference.”

Read more:

On the Radio: Minimum Wage Tradeoffs

I recently appeared on the Conservative Commandos Radio Show to talk about my recent minimum wage paper. My segment starts at about 28:00 into this YouTube video of the show.