Do Food Stamps Reduce Corporate Labor Costs?

On a recent segment of his popular Fox News program, conservative pundit Tucker Carlson took aim at the elite billionaires Jeff Bezos, the Walton family, and Travis Kalanick, arguing that their giant corporations rip off the taxpayers. Carlson claimed that Amazon, Walmart, and Uber underpay their workers—who must turn to government programs just to survive—and use regulations to stifle their competitors.

Although I agree that some corporations (such as Amazon) benefit from cozying up to the government, the basic economic logic in this popular critique is backwards: the food-stamp program tends to raise wage rates by giving workers more bargaining power. Worse, Bernie Sanders’s proposal to impose a 100 percent tax on large employers for every dollar their employees receive in government assistance would directly hurt these very same workers by punishing the companies that hire them.

Ten Years after Lehman—Will It Happen Again?

Robert Murphy has reminded us, ten years after the collapse of Lehman Brothers, what the real lessons of the financial crisis were. It now looks as if, having learned the wrong lessons, we might be headed for something nasty once again.

The original sin was the manipulation of money in the form of artificially low-interest rates following the bursting of the dotcom bubble. In the context of a fractional reserve banking system and of a world accustomed to easy money since the beginning of the 1980s, the incentives for too much leverage were irresistible. Artificially low-interest rates had another perverse effect—asset-price inflation. The credit binge and the asset inflation related to mortgages and real estate in particular because, due to political incentives for the lowering of lending standards, a large part of the action was concentrated in that sector.

Everything else people usually associate with the financial crisis of 2008, such as the explosion of securitization or the failure of regulation, was a symptom, not a cause. Given the prevailing system, the incentives were for bankers (both commercial banks and “shadow banking” institutions) to issue short-term debt and invest in long-term securities. Since assets were constantly rising in value, it was assumed refinancing short-term debt against all that collateral would never be an issue. Moreover, the excessive investment in long-term debt also had the effect of lowering long-term rates, creating in turn incentives for malinvestments that would eventually play a key part in the Great Recession.

Real Women Don’t Want the Government to Get Them in the Boardroom

Women, as well as all shareholders and debt-holders of California firms, should be flooding California’s Governor Jerry Brown’s InBox and Voicemail with calls to veto the recently-passed Senate Bill 826, mandating quotas for women on corporate boards.

Specifically, SB 826 would:

1) Provide for gender diverse representation on corporate boards by requiring each publicly-held corporation headquartered in California to have at least one woman on its board of directors by the end of 2019.

2) Beginning July 2021, the bill requires a minimum of 2 women directors on boards with 5 directors and at least 3 women on boards with 6 or more directors.

Women should be rightly against it because the sole effect will be for existing board members to assume new women board members are only there as quota-fillers who are by definition less qualified than they. I can’t imagine a woman of substance wanting a board seat under such circumstances.

The Last Refuge of Payment in Kind

Football season is in full swing, and on Saturdays college teams rule the television sports channels. The television deals rake in big money for the National Collegiate Athletic Association (NCAA), which in 2018 will generate $857 million from CBS and Turner Broadcasting alone. NCAA boss Mark Emmert bags a salary of $2.4 million, and Alabama football coach Nick Saban rakes in $8.3 million. Everybody makes big money except those the people pay to watch, the players. They are paid nothing and even barred from endorsement deals. Apologists of the system claim this policy preserves the spirit of amateurism, and that the various colleges pay the players’ tuition. Examples of payment in kind are rare, but here is an illustration. 

Gratitude in an Unfree World

Everyone who knows me knows that I loathe government as it now exists everywhere. For fifty years, my professional activity has pertained in large part to awful actions that governments at every level have taken. Because governments have been such a pervasive part of social and economic life in the past century or more, bringing into being the welfare/warfare/surveillance/therapeutic/police state under which most people in the world now live, specializing as I have is bound to leave one with a jaundiced view not only of the state but of much of society as well. And such an outlook does not make for personal happiness.

But yesterday, as I set out to walk Fly Boy down the road through the jungle as usual, I was struck by what a beautiful day it was, and I determined to count my blessings. They are too many to enumerate here, but let me simply mention some of the greatest.

Constitution Day

Today, by statutory law, is Constitution Day. It is more a wake for the dead than a celebration for one that is living. Actually, the Constitution is dead because so many have insisted on it being a living and breathing document. A Constitution should be a lighthouse, a beacon for the people to gaze upon to ensure their liberties are not wrecked upon the rocks by reckless government officers. To perform such a task it must be firmly fixed. If not, then one can never be sure just where the danger lies.

The demise of our Constitution is evident in the recent confirmation fight with Judge Brett Kavanaugh. The fixed nature of originalism so scares the Left that the nominee must be stopped at all costs. The Left depends on a living Constitution to promote and allow various expansions of national power.

So, on this day let us raise our glasses to the good old written Constitution. It is dead, because the Left made it living.


William J. Watkins, Jr. is a Research Fellow at the Independent Institute and author of the book, Crossroads for Liberty: Recovering the Anti-Federalist Values of America’s First Constitution.

The Silence of the Deficit Hawks

The U.S. government did something in August 2018 that it has never done before. It spent $433 billion in taxpayer and borrowed dollars in a single month!

For the U.S. government’s 2018 fiscal year to date, which will end on September 30th, the cumulative amount of spending it has done is well ahead of where it was at this point in 2017, while the amount of money it has collected in taxes is, perhaps surprisingly, slightly ahead of where it was at this time last year.

U.S. Government Cumulative Tax Collections and Spending by Month, Fiscal Years 2017 and 2018 (Year To Date, Through August 2018)

You might think this dubious fiscal achievement would attract howls of disapproval on Capitol Hill, but you would be wrong. According to reporting by Damian Paletta and Erica Werner of the Washington Post, there is bipartisan approval for spending even more money, with the only disagreements being over what.

California’s Degrees of Separation from Truth and Accountability

California’s pension woes are constantly making news and the unfunded liabilities of the California Public Employees Retirement System (CalPERS) have increased 383 percent in ten years and last year CalPERS was some $100 billion short of funding its pension obligations. Taxpayers are now getting some clues about the reason for this mess. 

In 2016 CalPERS hired as CEO Marcie Frost, who had no college degree of any kind. A degree does not guarantee competence but taxpayers might expect the nation’s biggest state pension fund to demand a degree in math, economics or business administration for its chief executive officer. As it turns out, when CalPERS sought a successor for previous CEO Anne Stausboll, who argued that public employee pensions deserve special protections from cuts, CalPERS did not even list a college degree as a qualification. 

Lehman Brothers and the 2008 Financial Panic: Learning the Right Lessons

This week marks the 10th anniversary of the collapse of Lehman Brothers, the pivotal event that serves as the official starting point of the financial panic of 2008. Officials in both the George W. Bush administration and Ben Bernanke’s Federal Reserve did not let that particular crisis go to waste, but instead rescued Wall Street from its reckless behavior as the U.S. Treasury Department infused equity capital into major banks and the Fed began its “Quantitative Easing” programs, whereby it bought trillions of dollars worth of “toxic” mortgage-backed securities.

In the wake of Lehman’s collapse, a familiar refrain from government officials, academics, the news media, and even Hollywood served to cement the “lessons” that deregulation and greed were the main causes of the financial crisis, while bold political intervention spared Americans from another Great Depression (the last time policymakers allegedly stood back and did nothing).

A Boom in Small Business Optimism

When President Trump came into office, many small businesses in the United States had been laboring under burdensome conditions for a very long time. Writing at Entrepreneur magazine in 2014, Scott Shane identified the regulatory burden imposed by the U.S. government as one of the main contributors to the ongoing malaise of small business owners.

One of the best ways for Congress to help small businesses would be to reduce their regulatory burden, which is heavier now than when President Obama took office in January 2009.

This increase in regulation is both unfair and inefficient: Compliance with governmental rules and laws is a greater encumbrance on small companies than large ones, and regulation hinders small business formation, growth, and job creation.

The cost of federal regulations rose by $70 billion during the President’s first term in office, the Heritage Foundation reports. And small business has not been exempted from the rising tide. At the end of 2012, the number of federal regulations affecting small companies was 13 percent higher than at the end of 2008, Forbes reports.