Some of the rich are getting poorer, and some of the poor are getting richer.

The Des Moines Sunday Register published a lead article (Page 1) titled, “The rich keep getting richer”.  (See link below.)  Included were a number of misleading statistics or misleading conclusions based on the statistics.  For example, according the think tank, Iowa Policy Project, the median hourly wage in 2016 was $16.04 per hour.  37 years ago, the average wage, adjusted for inflation, which is fair, was $15.91.  The Register concluded, “This means a typical wage earner  working 40 hours per week for a full year would have seen a real increase of $270.40 over a 37 year span.”  While the statistics are technically true, you cannot logically conclude and that any specific person or group of people did not move themselves from a lower wage to a significantly higher wage.  I’m sure it is true some people moved down while some people moved up.  An interesting study would be to see how wages correlate to the number of years in the employment market.  It would be interesting to know the median starting hourly rate for a young inexperienced worker versus and an experienced worker who has been in the labor market to 30 years.  The fact that the average stays about the same my be a problem, but almost no one stays at the average wage for 37 years.

Another statistic was that the number of people who earned $1 million or more during specific years increased from 5,031 in 2010 to 8,325 in 2015.  Their “slice” of the state’s total adjusted gross income grew 37%.  Meanwhile, the number of Iowans claiming gross incomes of $40,000 to $99,999 climbed by 23%  while their slice of the state’s total adjusted gross income fell 2%.  First, I would venture to guess that a significant majority of the $1 million+ earners are people who sold their businesses or had other one-time income.  So, again,there is no logical reason to presume that the $1 million+ club is made up of the same people year-after-year.  At the same time, from 2010 to 2015 the Iowa economy was generally continuing to improve, so values and prices of businesses likely climbed.  Also, in the case of an “expanding pie”, the fact that any group gets a smaller percentage of the total does not mean that their real income is not increasing.

Finally, the Register reported that their analysis of U.S. Census data showed that the bottom fifth of earners saw practically no growth in household income – going from $13,798 in 2006 to $13,848 in 2016, again adjusted for inflation.  Here again, there is no logical reason to believe that the specific group of people who were in the bottom 20% in 2006 are the same people who were in the bottom 20% 10 years later.  It would be interesting to know what percent of the people in the bottom 20% in 2006 were still in the bottom 20% 10 years later.   My guess is there would be some, but not a majority.

As a society we need to make sure we don’t put hurdles in front of people who are trying to improve their lot in life.  In many cases this means removing government created regulatory barriers to entry into certain jobs.  The Register has done very good work exposing job licensing regulations that are in place more to protect existing businesses from competition and to protect the profits of licensing education businesses, than to protect the public.  Yet, the Iowa Legislature has done precious little to address this real problem for low income workers who are trying to work their way up in our economy.

Link to Register article:  https://www.desmoinesregister.com/story/money/business/2017/11/25/most-iowa-wages-have-stagnated-but-rich-keep-getting-richer/818770001/

 

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EpiPen fiasco was caused by the FDA – don’t blame free market capitalism

Our government, not free market capitalism, is to blame for this situation which has allowed Mylan Pharmaceutical company to jack-up prices for its EpiPen. The FDA is has created a huge delay in approving generic epipens.  This has effectively given Mylan a monopoly.  Established drug companies should have some type of fast-track authority to manufacture generic products without having to get advance approval from the FDA.  Don’t blame private enterprise for problems created by government.

Why do taxpayers pay for bird flu?

According to a report in the Des Moines Register today, 10/26/2015, the last bird flu outbreak cost taxpayers $1 billion.  (See link below.)   The payments to chicken and egg producers included the cost of the birds that were destroyed, the cleanup, and “indemnity payments” to cover their losses.
I understand that we citizens, through our government, need to prohibit diseased meat from entering our food supply.  I don’t understand why producers are not insured against such a foreseeable risk.  If we have a law that prohibits diseased meat from being sold, and if we do not provide producers with a taxpayer paid bailout, then producers will do one (or more) of three things:  they will reduce their own risk by splitting large flocks into smaller, geographically separated flocks; they will buy insurance to cover the risk; or they will take the financial risk of loss upon themselves.
To the extent that taxpayers bail out producers, they will not take the necessary steps to manage and reduce their own risks.  We need to give notice to producers that they will not be bailed out in the future.
Link to Register article: http://www.desmoinesregister.com/story/money/agriculture/2015/10/25/bird-flu-when-return/74334080/

No need to be energy independent.

In a letter to the Des Moines Register today, 6/24/2015, Jacob Hession advocated for American energy independence and for the renewable energy Production Tax Credit.
We need to be energy independent just like we need to be food independent, clothing independent, pharmaceutical independent, electronics independent… – that is, we don’t need to be independent.
World-wide free market capitalism is a wonderful thing. It gives us a more varied and consistent supply of pretty much everything we need or want. If there is a shortage of anything anywhere around the world, there are people in other parts of the world who will rush to supply what is needed.  Shortages mostly occur where trade is restricted and protected.
Any call for for a certain type of “independence” or “security” is usually cover for special interests who will benefit if we protect them from competition or give them special benefits.
What we really need to do is end special protections and subsidies for all forms of energy.  Free market capitalism has done more to provide for the security and dependability of the supply all types of products than any scheme devised by government.
LInk to Register article: http://www.desmoinesregister.com/story/opinion/readers/2015/06/24/renewable-energy-hession/29196411/

Export-Import Bank should go.

In the Register today, 1/30/2015, Daryl Bouwkamp, with the Vermeer Corp., advocated that the Export-Import Bank (Ex-Im Bank) be reauthorized by Congress to help exporters, such as Vermeer Corp.  He wrote, “Vermeer currently serves customers in more than 60 nations – some of whom could we could not reach without financing support from the Ex-Im Bank.”  I don’t understand why couldn’t Vermeer provide the financing or the guarantees needed?  Are there no banks that would loan money to Vermeer or its customers if Vermeer guaranteed that the loans will be paid back?  If not, why should taxpayers be on the hook?

This is a chance for Republicans to show whether or not they really mean what they say when they talk about ending crony capitalism.  It appears that the exporters and bankers that use the Ex-Im Bank have become dependent on the taxpayer guarantees.  We need to get back to true free market capitalism, where both the risks as well as the rewards are are kept in the private sector.  If Republicans allow the Ex-Im Bank to be reauthorized, it will send a clear signal that crony capitalism is alive and well in America.

 

Link to article:

Auto dealers want government force to protect them against competition

The Des Moines Register reported that the Iowa Department of Transportation, at the urging of the Iowa Automobile Dealers Association, has stopped Tesla Motors from allowing Iowans to test their all-electric car.  Under Iowa law, it is illegal to sell new cars without going through a dealer.  Auto dealers have a strong lobby in the Iowa Legislature. They want to use the force of government to prevent free market competition and voluntary free market transactions. Just like they lobby to keep it illegal for a dealer to be open on Sundays. Nobody wants these laws except the dealers.  Let your Iowa legislator know what you think.

 

Link to Register article:  http://www.desmoinesregister.com/story/money/companies/2014/09/25/tesla-test-drives-iowa-dot-west-des-moines-laws-illegal/16192477/

Inequality is unjust and immoral – if government force is used.

Today, 9/16/2014, The Des Moines Register once again reinforced the idea that there is something inherently wrong with increasing income inequality.  (See “Ag economy cited in study showing growth in rich-poor gap” – link below.)  In a free market, where government does not interfere except to stop fraud and force, people only become wealthy by producing things that others value and purchase voluntarily.  Under free market capitalism, voluntary trade only makes every participant richer.

Unfortunately, we don’t have a free market in much of our agricultural sector.  So, an important question is how did the wealthy gain their wealth. If they gained their wealth by receiving subsidies from our government, then they gained their wealth by making others poorer. Today, farmers receive various kinds of government subsidies, both directly and indirectly.  For example, crop insurance premiums are subsidized 60% by taxpayers, regardless of the income or wealth of the farmer. And, crop insurance not only covers losses from natural disasters, it also covers loss of profits due to lower crop prices. There should be no subsidy at all for crop insurance, but it is particularly distasteful when the subsidy goes to the rich.  So, we must blame our own government’s policies for at least some of the unjust and immoral aspects of income and wealth inequality.