Great article from the Denver Post on chicken littles and economic demogoguery:
As market strategist Ed Yardeni (hat tip
to U.S. World and News Report) claimed, "this profits recession is very
much limited to the Financials sector and the Homebuilding industry
. . . . Removing these two reveals that profits rose 15.9 percent in Q4
and around 12.0 percent during Q1. The resilience of ‘core’ profits and
of the economy in the face of the worst credit crisis since the 1930s
is impressive indeed."
That kind of perspective is, typically, lacking in economic
coverage. Take, for instance, the housing crisis. It is real. It is
painful. Yet more Americans own their own homes now than ever before.
Those evil corporate warlords who had the audacity to offer
low-interest mortgages put millions of families that otherwise would
never have been able to afford it into homes. Only a fraction risk
losing their investment.
And speaking of doomsaying, Boston’s NPR affiliate is lamenting the lack of jobs for teens during the downturn. Professor Boudreaux explains that minimum wage laws are largely to blame:
I listened to your segment documenting teenagers’ struggle to find
summer jobs (May 2). Several times you asked why teens are suffering
this difficulty, but not once did you mention, as a possible
explanation, the higher minimum wage.
The economic theory (and much evidence) of how minimum-wage legislation
affects employment explains remarkably well the patterns you document.
Teenagers have few skills, so their value to employers is low. It is
precisely such low-skilled workers who are priced out of the job market
by minimum-wage legislation. In addition, the fact that the teens
having the hardest time finding jobs are minority kids from inner
cities is also explained by economics: by creating a surplus of
low-skilled workers, the minimum-wage encourages employers to
discriminate in favor of white suburban kids and against minority
The government reaps what it sows.