Power & Market
In November, Harvard economists Valentin Bolotnyy and Natalia Emanuel published a new working paper titled "Why Do Women Earn Less Than Men? Evidence from Bus and Train Operators."
In the study, Bolotnyy and Emanuel study unionized bus and train operators to determine whether or not a gender pay gap exists, and what its causes might be.
The use of unionized workers was helpful to the researchers because the rigid union rules meant that few pay decisions were left up to managers who might otherwise be blamed for bias in these cases.
As it is, the union rules provided clear rules for how seniority affects pay and setting of work hours.
This allowed the researchers to focus on the behavior of the workers themselves while largely ignoring the role of supervisor decisions.
The researchers did find that a gap existed:
The gap of $0.89 in oursetting, which is 60% of the earnings gap across the United States.
But, the gap
can be explained entirely by the fact that, while having the same choice sets in the workplace, women and men make different choices. Women use the Family Medical Leave Act (FMLA) to take more unpaid timeoff than men and they work fewer overtime hours at 1.5 times the wage rate. At the root of these different choices is the fact that women value time and flexibility more than men. Men and women choose to work similar hours of overtime when it is scheduled a quarter in advance,but men work nearly twice as many overtime hours than women when they are scheduled theday before. Using W-4 filings to ascertain marital status and the presence of dependents, we show that women with dependents – especially single women – value time away from work more than men with dependents.
the earnings gap can be explained in our setting by the fact that men take48% fewer unpaid hours off and work 83% more overtime hours per year than women. Thereason for these differences is not that men and women face different choice sets in this job.Rather, it is that women have greater demand for workplace flexibility and lower demand for overtime work hours than men. These gender differences are consistent with women taking on more of the household and childcare duties than men, limiting their work availability in the process. ... When overtime hours are scheduled three months in advance, men sign up for about 7%more of them than women. When overtime is scheduled the day before or the day of thenecessary shift, men work almost twice as many of those hours as women.
Women with dependents – single women in particular – are considerably less likely than men with dependents to accept an overtime opportunity. This is especially the case during weekends and after regular work hours, times when there are fewer childcare options available.
These insights are helpful in seeing some specific of how men and women behave in the workplace. They also help to highlight the fact that even when men and women have the same job title and the same job description, the work they do is not homogenous. A worker who works at odd hours (and thus makes more overtime pay because of it) simply isn't doing the same work as a person who requires extremely regular hours. Similarly, a worker who requires sizable chunks of time off every several years (for maternity leave or childcare needs) is also not doing the same work as a worker who rarely takes time off.
If one of the workers is available nearly all the time, but the other one has a far more inflexible schedule, don't have the same job when it comes to actual executions of duties.
Yet, we still continue to hear that "women are paid less to do the same work," presumably because of gender bias. This latest study should help to expose, yet again, that this is an empirically untrue statement, and does not describe the nature of workplace behavior in the real world.
Moreover, this study found a pay gap in a single industry between workers doing similar work. How much more does the heterogeneity of work and workers explain an overall, nationwide "pay gap"? Nationwide, differences in work span across thousands of industries, jobs, and working conditions. The many differences in these cases are uncountable.
Leftists, of course, may see this data and argue that this shows women are still at a disadvantage because single women with children (which are more common than single men than children) are constrained in their choice of hours by childcare needs. Therefore, we need government policies to equalize this situation.
This is true, but only in the sense that, when it comes to earnings, people who work fewer hours are at a "disadvantage" compared to people who work longer hours. It is possible that policies forcing "equality" between people who can work longer, odder hours, and those who can't, could help those who aren't flexible. This, of course, would come at the expense of those who work odder hours right now.
But this is not at all a situation in which "women are paid less to do the same work." And we should stop pretending that it is.
In fact, in a variety of settings, women earn more than men. As Andrew Syrios has noted:
When comparing never-married women with never married-men, the wage gap doesn’t just disappear, it flips. As far back as 1971, never-married women in their thirties have earned slightly more than similar men. 2 In 1982, never-married women on the whole earned 91 percent of what men do. 3 Today, among men and women living along from the age twenty-one to thirty-five, there is no wage gap. And among unmarried college-educated men and women between forty and sixty-four, men earn an average of $40,000 a year and women earn an average of $47,000 a year! 5
And when all of this is taken into account, the wage gap all but disappears, as many studies have found:
- A study by the CONSAD Research Corp. for the US Department of Labor found that once they controlled for the variables, there was “an adjusted gender wage gap that is between 4.8 percent and 7.1 percent.” 6
- A study by June and Dave O’Neill for the National Bureau of Economic Research found that “… the gender gap largely stems from choices made by women and men concerning the amount of time and energy devoted to a career.”
- Warren Farrell conducted a thorough study reported in his book Why Men Earn More and found no evidence of a wage gap.
- A 1983 study by Walter E. Williams and the aforementioned 1981 study by Walter Block discredit the idea that the wage gap is caused by discrimination.
- Carrie Lukas notes that “In a 2010 study of single, childless urban workers between the ages of 22 and 30, the research firm Reach Advisors found that women earned an average of 8% more than their male counterparts.”
But what if you want to know the place with the most overall freedom? In other words, what is the most libertarian place to live based on both economic liberty and personal liberty?
If you don’t mind a bit of travel, the answer is New Zealand.
For those who prefer to stay in the United States, Will Ruger and Jason Sorens periodically crunch numbers to calculate Freedom in the 50 States.
This 2018 edition of Freedom in the 50 States presents a completely revised and updated ranking of the American states on the basis of how their policies promote freedom in the fiscal, regulatory, and personal realms. …More than 230 policy variables and their sources are now available to the public on a new website for the study. …the 2018 edition provides annual data on economic and personal freedom and their components back to 2000. …Freedom in the 50 States is an essential desk reference for anyone interested in state policy and in advancing a better understanding of a free society.
The publication is loaded with data, as you’ll see from the following charts.
To put all this data in context, the report separately calculates fiscal freedom, regulatory freedom, and personal freedom.
We’ll start with the fiscal section, which includes variables about taxes and spending, as well as other measures such as debt and government employment.
For those interested, the report has plenty of analysis and explanation about the variables that are used and the weights that are assigned.
Most of us, though, simply want to see which states get good scores and which ones get bad scores.
I assume nobody is surprised to see New York in last place.
Now let’s shift to regulatory policy and see where the burden of red is most onerous.
This part of the ranking covers a range of issues, most notably controls on land use and restrictions on the use of markets in health care.
But there are other important variables, including the extent and burden of occupational licensing.
Indeed, before getting to the overall rankings for regulation, I want to share those scores because it is so galling and upsetting that politicians impose barriers that limit the freedom of people to earn income.
Colorado deserves hearty applause for being at the top, edging out Idaho by a narrow margin. And even though Vermont was near the bottom of the fiscal rankings, it merits a mention for being good on the issue of occupational licensing.
California deserves hearty condemnation for being in last place. And I’m not surprised to see states like Illinois and New Jersey near the bottom.
I’m very disappointed, however, that Texas and Florida have such a dismal record.
But let’s not fixate on just one of the variables. If we look at the rankings for all regulatory issues, Kansas is in first place, followed by Nebraska and Idaho.
The worst states (hardly a surprise) are New York, New Jersey, and California.
Now let’s combine fiscal policy and regulatory policy and see the report’s ranking for overall economic freedom.
Florida is in first place by a comfortable margin, followed by three other zero-income-tax states (though the absence of a state income tax does not guarantee a good score, as you can see from the poor performance of Alaska, Wyoming, and Washington).
New York wins the Booby Prize by a large margin.
Hawaii and California also stand out in a bad way.
The above table tells us which state enjoys the most economic liberty, but that doesn’t tell us where to live if you want the maximum amount of overall freedom.
To identify the nation’s most libertarian state, we also need to look at rankings for personal liberty.
This means, in part, whether people are harassed and persecuted for victimless crimes, but it also includes measures of educational freedom and gun rights.
Speaking of which, I can’t resist sharing the data on which states most respect the 2nd Amendment.
Kansas gets the best score, followed by Vermont(!), Arizona, Idaho, and Mississippi.
Hawaii is the worst state by a significant margin and we (again) find California near the bottom.
Another issue which is near and dear to my heart is asset forfeiture.
I am nauseated and disgusted that governments are allowed to steal property from people who have not been convicted of any wrongdoing.
So let’s applaud New Mexico, Nebraska, and New Hampshire for putting limits on this awful practice.
And let’s heap unending score on Rhode Island for having the nation’s worst track record on this issue.
But what happens when we combine all issue relating to personal freedom?
Well, that’s exactly what the authors did, which means we get a comprehensive ranking for personal freedom. I’m not surprised that Nevada, Colorado, and New Hampshire are in the top 5, but I’m surprised to see that Maine leads the pack.
Likewise, I guess I’m not too surprised that Texas and other bible-belt states are socially conservative.
But Hawaii next to last?!?
In any event, the report combines economic freedom and personal freedom and tells us which state could be considered the most libertarian.
And the winner is the Sunshine State of Florida, followed by New Hampshire, Indiana, Colorado, and Nevada. I’m surprised that Florida does so well, though some of the other high-scoring states make sense (especially when I look at data on who reads these columns).
By contrast, the most dirigiste state is New York. That doesn’t surprise me, and I’m also not shocked by some of the other bottom dwellers.
I’m tempted to end here since we’ve already surveyed so much information.
But there’s one final chart which hopefully should be very fascinating.
We just looked at the data on how states currently rank for overall liberty.
This final selection tells us which ones have been moving in the right direction and wrong direction since the turn of the century.
Kudos to Oklahoma for adopting a lot of good reform. Same for New Mexico. And it’s also interesting to see that several states from the Great Lakes region boosted their scores (with Illinois being a laggard, of course).
Vermont has the dismal distinction of having moved the fastest in the wrong direction (No wonder it’s the Moocher State).
Originally published at International Liberty
Last week the United States, Mexico, and Canada agreed to replace the North American Free Trade Agreement (NAFTA) with a new United States-Mexico-Canada Agreement (USMCA). Sadly, instead of replacing NAFTA’s managed trade with true free trade, the new USMCA expands government’s control over trade.
For example, under the USMCA’s “rules of origin,” at least 75 percent of a car’s parts must be from the US, Canada, or Mexico in order to avoid tariffs. This is protectionism designed to raise prices of cars using materials from outside North America.
The USMCA also requires that 40 to 45 percent of an automobile’s content be made by workers earning at least 16 dollars per hour. Like all government-set wages, this requirement will increase prices and decrease employment.
The USMCA also requires Mexico to pass legislation recognizing the “right of collective bargaining.” In other words, this so-called free trade agreement forces Mexico to import US-style compulsory unionism. If the Mexican legislature does not comply, the US and Canada will impose tariffs on Mexican goods.
The USMCA also requires the three countries to abide by the International Labour Organization (ILO) standards for worker rights. So, if, for example, the bureaucrats at the ILO declared that Right to Work laws violate “international labor standards”’ because they weaken collective bargaining and give Right to Work states an unfair advantage over compulsory unionism states and countries, the federal government may have to nullify all state Right to Work laws.
The USMCA also obligates the three countries to work together to improve air quality. This sounds harmless but could be used as a backdoor way to impose costly new regulations and taxes, such as a cap-and-trade scheme, on America.
This agreement also forbids the use of currency devaluation as a means of attempting to gain a competitive advantage in international trade. Enforcement of this provision will be difficult if not impossible, as no central bank will ever admit it is devaluing currency to obtain a competitive advantage in international trade. Of course, given that the very act of creating money lowers its value, the only way to stop central banks from devaluing currency is to put them out of business. Sadly, I don’t think the drafters of the USMCA seek to restore free-market money.
The currency provision will likely be used to justify coordination of monetary policy between the Federal Reserve and the Mexican and Canadian central banks. This will lead to region-wide inflation and a global currency war as the US pressures Mexico and Canada to help the Fed counter other countries’ alleged currency manipulation and challenges to the dollar’s reserve currency status.
A true free trade deal would simply reduce or eliminate tariffs and other trade barriers. It would not dictate wages and labor standards, or require inter-governmental cooperation on environmental standards and monetary policy. A true free trade deal also would not, as the USMCA does, list acceptable names for types of cheeses.
Those of us who support real free trade must not let supporters of the USMCA get away with claiming the USMCA has anything to do with free trade. We must also fight the forces of protectionism that are threatening to start a destructive trade war. Also, we must work to stop the government from trying to control our economic activities through regulations, taxes, and (most importantly) control of the currency through central banking and legal tender laws.
The “libertarian socialists” have struck again.
It began when a state Libertarian Party chapter posted a link to a court decision about an employer that did not allow its employees to have dreadlocks.
This was “discrimination,” the suit against it alleged.
Not so, said the court. The “race-neutral grooming policy,” it declared, was not discriminatory, since a hairstyle, unlike a racial identity, is not an “immutable physical characteristic.” Therefore, an employer is at liberty to enforce such a requirement.
Now that isn’t quite how a libertarian would argue the question, since the crux of the matter is that no contract should be entered into unless both sides agree to its terms, period. The employer may offer terms, and the employee may offer terms. If one side offers terms the other opposes, then they go their separate ways and find people willing to engage with them on terms they prefer.
This is also how we deal with the notorious “bake the cake” case. If the baker prefers not to bake the cake, that ends the discussion. Violently forcing him to bake the cake is out of the question. The Supreme Court may spend its time tying itself in knots analyzing whether cakes themselves are endorsements of relationships, or just the icing on them, or whether a cake is a form of expression, or whatever. We libertarians don’t need any of that nonsense.
All the same, the court reached the correct decision in the dreadlocks case from a libertarian point of view. Not a “right-wing libertarian” point of view, mind you, but a plain-vanilla libertarian one.
Now enter one of the two or three spokesmen for a group calling itself “libertarian socialists” that wants to get a foothold within the Libertarian Party.
He is not happy about this decision at all.
Let’s go one passage at a time.
“This is an affront to the principle of equal liberty. Using financial leverage to compel another human to change their [sic] hair is an initiation of coercive fraud, and the lie is that hair has anything to do with job performance whatsoever.”
Well, whatever “the principle of equal liberty” is, it sure ought to mean that every person is equally entitled to make offers to any other person. It surely cannot mean that any person must be compelled to accept another person’s offer, because that compulsion would violate the former’s “equal liberty.”
Next sentence: “Using financial leverage to compel another human to change their [sic] hair is an initiation of coercive fraud.” (As opposed to voluntary fraud?) By “financial leverage,” the libertarian socialist (we’ll call him LS) means that workers are helpless and without options, and employers wield a kind of coercion over them by threatening not to employ them. This is not really how libertarians view what happens on the market, though it is the way Marxists look at it.
Then LS insists that dreadlocks have no effect on job performance. Irrelevant, of course. People are free to make whatever offers they want, and other people are free to accept or reject those offers. That is the bottom line.
It is not reasonable to expect LS to be able to vet everybody’s job requirements to see if they win his approval. Some requirements have obvious connections to the work involved, and some have more obscure connections that may be more difficult to articulate. But even if the employer should demand that all employees wear a funny hat, that demand is perfectly compatible with libertarianism.
Then we read:
“Libertarians build our viewpoints around maximizing individual liberty, not who holds a magic piece of paper that purports to give them power over others in the name of state-sanctioned economic order. This is a gross violation of the individual and a racist one at that.”
Well, that’s nice: an employment contract is being sniffed at as a “magic piece of paper” that “purports to give [employers] power over others.” Oh, and by “a state-sanctioned economic order” (this is supposed to scare us because the word “state” appears) LS means the state’s occasional defense of private property. So private property and labor contracts are to be viewed as unnatural, and in upholding and defending them the state is violating the natural order (as opposed to doing what would occur anyway in the absence of the state, which is how libertarians look at it).
LS then says a condition for employment involving hair is “a gross violation of the individual.” Forcibly requiring the company to amend its employment requirements, however, would evidently not be a violation, since companies have no rights.
He concludes with this:
“I am sad and embarrassed, but not really surprised to see right-wing ‘libertarians’ celebrating white supremacy openly in the name of markets.”
(Man, what constitutes “white supremacy” sure has come down a few pegs, hasn’t it? It’s almost like hysterical people use the term to refer to just about anything.)
It isn’t “right-wing libertarians” who are “celebrating” this ruling. First, I think the ruling is too wimpy, so “celebrating” is too strong a word. More importantly, all libertarians believe in mutual consent, which means we are all free to offer whatever we like to anyone we’d like to offer it to, and that party is in turn at liberty to accept or reject our offer.
We do not favor threatening people with physical force just because we do not approve of the terms they are offering.
Unfortunately, this is the kind of confusion that so-called “libertarian socialists” are seeking to introduce into more or less everything.
And note well: the word property appears nowhere in the LS complaint. Probably not a coincidence.
Not surprisingly, Judge Napolitano sees the Kavanaugh appointment for what it is — a nod to the DC establishment. On Fox and Friends this morning, Napolitano said:
“The Washington establishment, sometimes known as the swamp, wanted Judge Kavanaugh,” said Napolitano. “I am disappointed in the president because this is not the type of person he said he would pick. Justice [Neil] Gorsuch was. This person is at the heart and soul of the D.C. establishment against whom the president railed.”
See the video:
.@Judgenap: “I am disappointed in the president because this is not the type of person that he said he would pick… this person is at the heart and soul of the DC establishment.” pic.twitter.com/Dygeg4zywi— Fox News (@FoxNews) July 10, 2018
Patrick Newman joined the Tom Woods Show yesterday to talk about the Murray Rothbard book he edited on the Progressive Era.
Check out the episode here.
One of the best stories I've seen recently comes from Irving, New York, where a man has decided to build his own highway off ramp for his tobacco store. This story has it all, tax evasion, Indian tribal sovereignty, and an answer to the question "who will build the road?" The video is worth watching.
Eric White is a member of the Seneca Indian Tribe and owns the “Big Indian Smoke Shop” in Irving, New York.
He is reportedly building the ramp as part of a personal protest after losing a legal battle with the state over allegedly selling untaxed cigarettes.
Through his attorney, Mr. White is defending his move by evoking the sovereignty of tribal land, a point that the Federal Highway Administration doesn't know how to respond to.
Just another reason why tribal sovereignty is so important
For years, people have demanded an update to Henry Hazlitt's 1946 best seller Economics in One Lesson. Now we have one.
In Economics in Three Lessons, Hunter Lewis brings Hazlitt's timeless wisdom to the 21st Century.
Even better, Lewis includes an additional work, One Hundred Economic Laws. Finally, an easy to reference collection of axioms to refute the economic fallacies from either the left or the right.
A complete course in economics, in just one short book.
On Friday, President Trump signed the omnibus spending bill for 2018. The $1.3 trillion bill was so monstrous that it would have made the biggest spender in the Obama Administration blush. The image of leading Congressional Democrats Pelosi and Schumer grinning and gloating over getting everything they wanted — and then some — will likely come back to haunt Republicans at the midterm elections. If so, they will deserve it.
Even President Trump admitted the bill was horrible. As he said in the signing ceremony, “there are a lot of things that we shouldn’t have had in this bill, but we were, in a sense, forced — if we want to build our military…”
This is why I often say: forget about needing a third political party — we need a second political party! Trump is admitting that to fuel the warfare state and enrich the military-industrial complex, it was necessary to dump endless tax dollars into the welfare state.
But no one “forced” President Trump to sign the bill. His party controls both houses of Congress. He knows that no one in Washington cares about deficits so he was more than willing to spread some Fed-created money at home to get his massive war spending boost.
And about the militarism funded by the bill? Defense Secretary James Mattis said at the same press conference that, “As the President noted, today we received the largest military budget in history, reversing many years of decline and unpredictable funding.”
He’s right and wrong at the same time. Yes it is another big increase in military spending. In fact the US continues to spend more than at least the next seven or so largest countries combined. But his statement is misleading. Where are these several years of decline? Did we somehow miss a massive reduction in military spending under President Obama? Did the last Administration close the thousands of military bases in more than 150 countries while we weren’t looking?
Of course not.
On militarism, the Obama Administration was just an extension of the Bush Administration, which was an extension of the militarism of the Clinton Administration. And so on. The military-industrial complex continues to generate record profits from fictitious enemies. The mainstream media continues to play the game, amplifying the war propaganda produced by the think tanks, which are funded by the big defense contractors.
This isn’t a conspiracy theory. This is conspiracy fact. Enemies must be created to keep Washington rich, even as the rest of the country suffers from the destruction of the dollar. That is why the neocons continue to do very well in this Administration.
While Trump and Mattis were celebrating big military spending increases, the president announced that John Bolton, one of the chief architects of the Iraq war debacle, would become his national security advisor. As former CIA analyst Paul Pillar has written, this is a man who, while at the State Department, demanded that intelligence analysts reach pre-determined conclusions about Iraq and WMDs. He cooked the books for war.
Bolton is on the record calling for war with Iran, North Korea, even Cuba! His return to a senior position in government is a return to the unconstitutional, immoral, and failed policies of pre-emptive war.
Make no mistake: the neocons are back and looking for another war. They’ve got the president’s ear. Iran? North Korea? Russia? China? Who’s next for the warmongers?