Finally, a rational discussion of minimum wages
I recently read this on Becker-Posner Blog, and thought it was a very interesting view on the federal minimum wage.
With the federal minimum wage so low, it strains credulity to think that increasing it would cause significant disemployment (though this depends of course on how much it’s increased—I’ll come back to that critical issue shortly). Many persons who can’t command a wage higher than the federal minimum will prefer not to work, but instead to live on public benefits, engage in petty crime, switch to household work, engage in protracted search for better employment (and not work during the search), or even beg. An increase in the minimum wage will increase their incentive to seek productive work. In addition, forced to pay a higher wage, employers may invest more in their workers’ human capital—may give them better training, for example, to make them more productive and thus worth their higher wage to the employer.
The arguments for and against an increase in minimum wage are typically fairly black-and-white. Those arguing for an increase appeal to your empathy and ask you how anyone could possibly live on the minimum wage as it stands today. Those against, paint a bleak picture of companies having to fire workers because the minimum wage is too high.
These people, even when they understand economics, tend to understand it in a vacuum. Picking and choosing the concepts which make the most sense to them. I think Posner’s quote above captures how nuanced the real world is. Things aren’t black and white and supply and demand for employment is not simply a matter of people looking for on paying job or another.
The minimum wage has declined in real terms from $10.68 in current dollars to $7.50 over the last 45 years. At some point, people begin trading off employment with either economically unproductive or societally unproductive pursuits. Neither of these are good for our country. You never hear the so-called “economists” against minimum wage increases acknowledge this phenomenon.
With unemployment continuing to be stubbornly high and labor participation rates at the lowest levels since 1978, I think there’s a huge argument for testing the elasticity of labor demand with a modest hike in minimum wages. I believe in the exceptionalism of the American capitalist spirit. Seems to me that companies always innovate their way out of cost pressures. Today, companies are complacent to treat low-skilled workers as replaceable cogs. Maybe if the minimum wage is a little higher, they’ll be forced to think a little outside the box.
Oregon Distillery Trail
We love this gorgeous video showcasing the Oregon Distillery Trail. Each stop is well worth a visit.
The Oregon Distillers Guild is an organization working in behalf of 28 distilleries in the state. Equal parts brotherhood and ipseity, the Guild promotes its growing industry in the beautiful state of Oregon, as well as the individual characteristics that make each distillery unique.
"Drunk Again" New 18"x24" screen print by me, available to order in my web store:
Frankly, we don’t care how red your red velvet pancakes are - no piece of pan-fried dough is worth a two-hour wait on a Sunday. The weekend is a time for rest, and that rest should not be happening in line for breakfast foods that are served until three in the afternoon.
In summary, the average endowment did not earn an abnormal return (alpha) relative to standard benchmarks. The elite institutions earned alpha, however, this was only due to a higher allocation to alternative investments (which are illiquid and can be considered more risky). There is evidence of performance persistence in endowment returns, however this can be attributed entirely to a higher allocation to alternative investments and not market timing, manager selection or tactical asset allocation.
As someone interested in the being a professional in the active management industry, I come away with two conclusions that are not necessarily obvious from this article.
1. Endowments should rotate assets that haven’t already should rotate into alternatives. (I wonder how much AUM this might represent?)
2. Active managers are currently appropriating most (or all) of the value they create, but they do seem to create value. (Active management seems to deserve to exist, but pricing needs to rationalize. But, by how much?)
UNICORNS. SHOW PONIES. WHERE’S THE BEEF?
Tom Brady’s Game Winning Touchdown Pass to Kenbrell Thompkins…According to Tecmo Super Bowl (by MrNFL)