Browsing Tag: economist

    Is Raising Minimum Wage A Bad Idea?
    Articles, Blog

    Is Raising Minimum Wage A Bad Idea?

    August 22, 2019


    There’s a movement in cities across the
    country to raise the minimum wage to $15 per hour. One of the most prominent advocates
    is former labor secretary Robert Reich who thinks that $15 per
    hour should be the minimum wage for the entire country, this is a bad idea. Here are three reasons why,
    first of all, it would kill jobs. One of the basic lessons of economics is
    that when the price of something goes up, people buy less of it, so, if the price of pumpkin lattes rises you
    can expect consumers to buy fewer of them. This law of demand also
    effects the market for low-skilled workers,
    raising the minimum wage means a higher cost of employing each worker which makes
    workers less affordable than before. Our coffee shop won’t keep a worker at
    a mandated $15 per hour if that worker’s efforts only result in $7.25
    per hour in added revenue. Over the course of the year, a shop
    that keeps such a worker full-time would lose $15,500, so instead,
    it would eliminate that job and evidence shows that employers in fact do
    respond in this way to minimum wage hikes. Recent research by economists
    Jeffrey Clemens and Michael Wither finds that 1.4 million jobs
    were destroyed in the late 2000s when the minimum wage rose across all 50 states
    by an average of nearly 30%, and worse, those job losses were probably suffered
    by the people who need jobs the most. This fact brings us to reason number 2, the minimum wage actually hurts
    the people we most want to help. When the minimum wage rises, the workers
    fired first and the ones hired last are those who employers judge to be
    the least productive, the inner city teen from the lousy school district or
    the immigrant with poor English will be fired before the suburban American
    teen from the excellent school district. So those who are most disadvantaged, tend to suffer the most job losses, this
    reality is compounded by the fact that raising the minimum wage causes
    more competition for jobs. A supermarket job that once paid $8 per
    hour draws more applicants when it pays $15 per hour, applicants who include
    retirees, and people with higher education who reenter the workforce only
    because of the higher wage. Because these people often have more
    skills, they squeeze out immigrants and those from disadvantaged backgrounds who
    are likely more desperate for the jobs, and certainly more desperate
    to gain job experience. The third reason is that minimum
    wage hikes aren’t necessary to give deserving workers raises. 96% of American workers today earn wages
    higher than the current minimum wage, which proves that employers don’t just
    pay the minimum that they’re obliged to pay by law. Employers respond to the value
    that each employee adds, so they can retain the best talent. It’s expensive to train new employees and businesses don’t wanna lose good
    workers to their competitors, so they raise worker pay voluntarily as
    employees gain more skills and experience. But when government imposes such
    raises by hiking the minimum wage, some of the least experienced workers
    will not only lose their current jobs, they’ll find it incredibly
    hard to find other jobs. In essence, the minimum wage cuts off
    the first rung on the employment ladder. And it’s that first, lowest paying rung,
    that provides the skills and experience workers need to
    reach the next rung, and to continue climbing their
    way to a better life.

    Conductor (Episode 95)
    Articles, Blog

    Conductor (Episode 95)

    August 12, 2019


    Our next guest plays a crucial role in railway operations and maintaining safety in and around the train at all times. Let’s meet the train conductor. Hi, I am Viviana. Hi. Chantelle. Nice to meet you. Would you like to take a tour? I would. Let’s go. My name is Chantelle Doucet and I’m a conductor and locomotive engineer in Port Coquitlam. The conductor is responsible for the safe operation of trains. They don’t drive the train, but they’re involved with making sure it gets over the road safely. You’re switching out boxcars, aligning switches, putting cars in different tracks, marshalling them into the proper order for trains that will go to various destinations across the country. When you start, you’re going to meet up with your helper and your engineer. So, there’s two conductors and the engineer. And then the tower. Someone in the tower is going to give you a switch list, which tells you which cars need to be moved from what tracks to another track. And then you’ll go and get your locomotive and go start switching the cars out. I got started with the job because my uncle was an engineer and I had three generations previous to me working as railroaders. I knew I wanted a lifelong career. So what’s in that? That’s for transporting automobiles, but we transport all different types of stuff. All across Canada, right?
    Yeah. We have three types of shifts—there’s yard shifts, which are set schedules usually eight hours. They stay in the yard. And then there’s Road Switchers, they’re also a set schedule five days a week for two days off. And they can be up to ten hours and you’ll take trains about…within 50 miles of your home terminal and you’re delivering cars to customers or interchanges with other railways. And then there’s freight, which is—you’re on call 24/7 and you could be gone for up to 24 hours. So you take the train 100 miles in one direction, and then you trade off with another crew who takes it another hundred miles and this continues on until the train gets to its destination. There’s short college courses available too, to get you ready for the career. Once you’re hired by the company, you’ll be put through six months of training in the classroom and on job training. The advantage of taking these college courses is to make sure it’s something you’re interested in and give you an idea of what the job is all about. The conductor will be on the ground and sometimes they can be up to a mile away from me. So, that’s why radios come into play, but if you can see your locomotive engineer and he can see you, visibly, then we’d like to switch by hand signals. And what’s the favourite part of the job? My favourite part is probably working with all the great people.
    Nice. A lot of conductors, after they’ve been working for a long time, take the promotion of becoming an engineer and then they’ll work as both. To become a locomotive engineer there’s another six months of on job training and classroom work, too. As a conductor, you’re always working with your hands, throwing switches, aligning switches, climbing ladders, applying hand brakes, I have to turn a wheel to tighten up a chain that applies the brakes to the car. When you’re in the train yard, there’s lots of different trains moving around the yard. All the tracks are live. You need to be aware of your surroundings and very alert. So what kind of advice would you give to somebody who’s thinking about becoming a conductor? Well, it’s really great if you like variety— every day is different, but it’s a very different lifestyle— not your average nine to five job, that’s for sure. I can only imagine. Well, thanks so much for showing me around today.
    No problem. Anytime. Once again, this is Career Trek and I’m Viviana reminding you that this career could be yours. See you next time.

    What If There Were No Prices? The Railroad Thought Experiment
    Articles, Blog

    What If There Were No Prices? The Railroad Thought Experiment

    August 11, 2019


    To appreciate why market prices are essential to human well-being, consider what a fix we
    would be in without them. Suppose you were the commissar of
    railroads in the old Soviet Union. Markets and prices have been banished. You and your comrades. Passionate communists all. Now, directly plan how to
    use available resources. You want a railroad from city A to city B,
    but between the cities is a mountain range. Suppose somehow you know that
    the railroad once built. Will serve the nation equally well. Whether it goes through the mountains or
    around. If you build through the mountains,
    you’ll use much less steel for the tracks. Because that route is shorter. But you’ll use a great deal of
    engineering to design the trestles and tunnels needed to cross the rough terrain. That matters because engineering is also
    needed to design irrigation systems, mines, harbor installations and
    other structures. And you don’t want to tie up
    engineering on your railroad if it would be more valuable designing
    those other structures instead. You can save engineering for
    other projects. If you build around
    the mountains on level ground. But that way you’ll use much more steel
    rail to go the longer distance and steel is also needed for other purposes. For vehicles, girders, ships, pots and
    pans and thousands of other things. Which route should you choose for
    the good of the nation? To answer, you would need to
    determine which bundle of resources is less urgently needed for
    other purposes. The large amount of engineering and
    small amount of steel for the route through the mountains,
    where the small amount of engineering and large amount of steel for
    the roundabout route. But how could you find out the urgency
    of need for engineering and steel in other uses? Just one way engineering is used
    is to build irrigation systems. To assess the importance of a particular
    irrigation system, you would need to know what the farmers know about how irrigation
    would increase the yield of their fields. And to know the value of that increased
    yield, you’d need to know what grocers know about their customers eagerness for
    that produce. That in turn depends on what customers
    know about the better meals they could fix with that produce. How would you find all this out? Just one way to use steel
    is to build new trucks. To assess the importance of a particular
    new truck, you would need to know what the trucker knows about the capacity
    of his current truck, and how much more quickly he could make the deliveries his
    customers want with a new bigger truck. To know the importance of those
    deliveries, you would need to know what his customers know about the value
    of getting goods delivered. That in turn depends on what still others
    know about the uses of those goods at their destinations. To reason about where
    to route the railroad, you need this kind of information for all
    possible uses of engineering and steel. That’s a massive amount of knowledge, held
    by millions of people throughout society. How might you get it? You might try surveys, but think how
    many people you would need to survey. All those who prepare meals with produce,
    and all those who take delivery by truck for
    starters. The numbers would be staggering. And often people don’t even know what they
    prefer until they face an actual choice. So they might not be able to answer
    survey questions accurately. Even if they could,
    by the time the surveys were returned and processed, much of the information
    would be out of date. And even if you could get complete and
    timely information about what everyone knows, that’s relevant
    to every use of steel in engineering, you would still need to deduce from
    it where to build the railroad. How would you begin to make
    sense of that mountain of data? In the words of Ludwig von Mises,
    you would be groping in the dark. You would face what is known as
    the knowledge problem of central planning. The reason why comprehensive
    socialism inevitably fails. Central planners cannot get the knowledge
    they need in order to plan effectively. You, commissar, simply cannot know on what
    projects scarce resources should be used for the good of the nation. But now change the thought experiment. Imagine that somewhere in the market
    economy part of the world, you are the chief operating
    officer of a railroad company. You work not for the good of the nation,
    but to generate profits for your firm. You want to run a railroad
    line from city C to city D. Again, there’s a mountain
    range between them. Now, how do you decide on the route? You choose what’s cheapest. You would calculate the total
    cost of each route for each one, multiplying the amount of engineering
    required by the price of engineering, and adding that to the amount of steel
    required times the price of steel. Then, you would choose whichever
    cost your company less. You might give no thought at all to the
    good of the nation or society as a whole. But, and here’s the marvel,
    by choosing the route that is cheapest for your company you would thereby choose
    the route that’s best for society. You would use the bundle of resources
    that’s least urgently needed for other purposes. Why? Because those market prices you calculate
    with reflects the urgency of need for engineering and
    steel in all their alternative uses. For example, suppose customers wanting
    to taste your meals, would buy better, more expensive produce, if it were
    on the shelf of their local grocery. In effect,
    they’re offering grocers more for produce. So the grocers will offer farmers more for
    produce. So the farmers who feels would be
    sufficiently improved by irrigation will offer more for irrigation systems. And those who build irrigation systems
    will offer engineers more to design them. Now that designing irrigation
    systems pays engineers better, people who want to hire engineers for
    other projects, such as railroads, will have to offer them at least as
    much to make it worth their while. The higher price tells everyone who
    uses engineering that it’s become, for some reason, more valuable so
    maybe they should use less. In this way, the market prices of
    resources represent the particular knowledge and preferences of
    millions of people who directly or indirectly use those resources. And the prices communicate
    that knowledge and those preferences to everyone interested. Only with market prices to communicate
    this vast amount of human knowledge to us. Can we calculate the least costly
    ways of producing the things we want, coordinator activities with the activities
    of others, use resources where society values the most, and thereby satisfy
    as many human wants as possible?