15 November 2014

Minimum Wage: No Good Theory & Net Loss to the Poor

Stephen Kershnar
NFL Salaries and the Minimum Wage
Dunkirk-Fredonia Observer
November 11, 2014

A common view is that people in some types of jobs are paid too much and others too little. This view explains why debates over executive pay and the minimum wage take on a moral tone rather than being mere policy judgments. It is as if politicians are talking about sin.

In 2009, President Obama forced a $500,000 cap on corporate executives at firms receiving taxpayer bailout money. He said he wanted to stop federal money to be used to reward failure. He just knew that these corporate fat cats were making too much. On the other hand, four states recently voted to raise the minimum wage. Apparently, the crass politicians in those states just knew that unskilled workers were making too little. 

The problem with all this is that these judgments are arbitrary and indefensible. Simply looking at people’s salaries tells us little about whether the pay is deserved, fair, or a good deal for employers. To see this, consider whether you would want your brother or son to play in the NFL.    

On the benefit side, being a NFL player is well-paid, exciting, prestigious, and can make one famous. Nick Schwartz, writing in USA Today Sports, points out that the average NFL salary in 2013 was $1.9 million. The average play over his NFL career makes roughly $4 million after taxes. It also carries with it validation of one’s sense of masculinity, access to attractive women, and participation in a band of brothers. For young men, prestige, excitement, and access to attractive women are very appealing. Other jobs (for example, factory worker) don’t offer anything like these benefits. 

The costs of trying to make a career in the NFL are significant. NFL football is a dangerous sport with significant chance of an injury that can damage one’s ability to think. NFL players suffer concussions and other types of traumatic brain injury. This can cause memory loss, depression, and dementia. The NFL has acknowledged that many former players are suffering from these problems.

Players who commit to football in college invest a tremendous amount of time and energy and stand very little chance of getting a return on their investment by making it to the NFL.

NFL careers are short. NFL players’ union claims the average career is 3.2 years long. The NFL claims that it is 6 years but its estimate is misleading because it focuses on better-than-average players. On either estimate, an NFL career is short. The job is also stressful, physically demanding, and requires travel. Every day, players fear injury, demotion, termination, and loss of ability to support one’s family.

In 2009, Sports Illustrated reported that 78% of NFL players are bankrupt or facing serious financial stress within two years of retiring from the league. Compare this to the ironclad job security had by teachers, soldiers, and postal workers and the generous retirement benefits had by soldiers and police officers.  

When compared to the jobs held by players’ peers (for example, farmer, factory worker or insurance salesman), the basket of costs and benefits is better for some people and worse for others. Whether the basket is better depends on an individual’s talents and preferences of the person in question. This is similar to the different attitudes people have toward the basket of costs and benefits that accompany specific consumer goods. Consider, for instance, that some people have a strong desire to buy Porsches. Others have no interest or don’t see them as worth the money.

There is no way to decide what NFL players should make. First, the notion that they make too much because they don’t need so much money is unconvincing. None of us need that much money to live. Even people making wages below the minimum wage can live dignified lives, albeit with far less opportunities than the rest of us. A good deal of the third world is doing so now.

Second, the notion that they don’t deserve so much money depends on there being a principled way to pick out what a worker deserves. On one theory, workers deserve money for the effort they make. The problem is that this is implausible. Musicians who put in a lot of effort, but still make terrible music don’t intuitively seem to deserve a lot of money (think of the 80’s big hair bands). The same is true for those teachers who teach poorly and people’s whose skills are unwanted because they are just not good enough in a flooded market (consider, for example, violinists).

Perhaps, instead, workers deserve money for what they contribute to others’ lives. Again, this just isn’t true. Some movie and pornography stars contribute to a lot of people’s lives as judged by the number of people who enjoy their work without working especially hard. Consider Marlon Brando and Linda Lovelace. I don’t see why they deserve a lot of money.

In any case, NFL players contribute a lot to others. In 2014, the Associated Press reports that roughly half of Americans are NFL fans (156 million people). That is a lot of people whom players make happier. The fact that teams pay so much for NFL talent tells us that they think that the players who make it would contribute a lot more than the teams’ next best options (those players who don’t make it).

If we can’t discover what an NFL player should make, because there is no adequate theory, there is similarly no reason to think that we can discover what is the minimum that unskilled workers should make or the maximum that corporate executives should make.

If the case for the minimum wage is not based on what unskilled workers deserve, then it weakens considerably. While there is a controversy over the studies, it is likely that raising the minimum wage results in fewer low-wage workers being employed. If this is so, then it is likely that the costs to such workers via lost jobs outweighs the gains to those who retain their jobs.

Also, most minimum-wage workers do not live in poverty. On one 2007 estimate by economists Richard Burkhauser and Joseph Sabia found that only 13% of the workers who would be affected by it live in poverty. Thus, it is not a particularly effective welfare program. 

29 October 2014

Amnesty Will Lead to Financial, Social, and Political Harm

Stephen Kershnar
Amnesty and Democrats
Dunkirk-Fredonia Observer
October 26, 2014

The election less than a week away is about two issues: amnesty for illegal aliens and Obamacare. The U.S. is at a tipping point on whether or not it will become more socialist than capitalist and whether Constitutional protections will largely fade away. Amnesty will tip us in the wrong direction on both issues.

A vote for Democrat candidates is a vote for amnesty in that almost every Democratic politician (see, for example, Martha Robertson) either has or will support some type of amnesty. The same is true of the many Republicans in name only, but they are more vulnerable to pressure from the Republican base.

Consider an analogy. A community lives in a rural part of Montana and, on average, they are reasonably happy, financially successful, and have strong families and community ties. In short, their town works well for them. The mayor plans to invite people from a variety of third world countries who are poorer, less educated, less intelligent, and less committed to family values. If this happens, taxes will go way up and the town’s poor people will face stiffer competition for jobs and lower wages. The community ties will weaken as people become less interested in communal life and increasingly distrustful of their neighbors. The townspeople should fire the mayor and his cronies and escort them to the door. The American people should do the same. 

The flood of illegal aliens (75% are Latino and 59% come from Mexico) is a bad deal. Compared to current Americans, illegal aliens are poorer, less educated, less intelligent, and less committed to family values. What’s more, these conditions are likely to persist for several generations. None of the comparative claims is controversial.

Consider poverty. According to a 2012 study by Center for Immigration Studies, 30% of illegal aliens and their US-born children live in poverty, more than double the rate of other Americans. Consider education. According to a 2013 study by the Heritage Foundation’s Robert Rector and Jason Richwine, the typical illegal alien has a 10th grade education. Consider intelligence. There is little debate that illegal aliens have lower IQs and that this will persist for at least another generation. The debate focuses on what explains the gap and whether it will disappear with time. Most likely it won’t, but even if it will, this is still a problem for a while. 

Consider family values. Writing in City Journal in 2007, Heather Mac Donald points out that 45% of children born to Hispanic women are out-of-wedlock. Only black women do so with greater frequently. My assumption is that those who have children out of wedlock are, on average, less committed to family values than those who do not. 

The reason for the economic problems with amnestying illegal aliens, according to Rector and Richwine, is that the U.S. government massively redistributes wealth. They point out that well-educated households tend to pay far more in taxes than they get in benefits (specifically, direct and means-tested benefits, education, and population-based services). For example, in 2010, they note that, on average, the average college-educated household (head of household has a college degree) received, $24,839 in government benefits and paid $54,089 in taxes. They thus put in $29,250 more than they took out. 

Other households, Rector and Richwine point out, get far more in benefits than they pay in taxes. The government has to pay for these households by taking money from more successful households or by borrowing it (national debt is now $18 trillion). For example, in 2010, they note, households headed by people without a high school degree received, on average, $46,582 in government benefits and paid out $11,469 in taxes. They thus took out $35,113 more than they put in.

Rector and Richwine argue that the difference between those putting money in and those taking it out matters here because the typical illegal alien has only a 10th-grade education, half of illegal-alien households are headed by an individual with less than a high school degree, and another 25% are headed by an individual with only a high school degree. That is, illegal aliens will take far more out than they’ll put in.

In addition to being bad for taxpayers, the flood of low-skill illegal aliens is bad for the American poor. The estimates here vary. The dean of immigration economics, Harvard University’s George Borjas, in a 2005 study, found that Mexican immigration significantly reduced high school drop-outs (immigrants’ competitors) wages both in the short and long run. Some other economists, although not all, found a similar pattern. 

Current Americans will likely lose out socially as well as economically because Hispanic immigrants are dissimilar to them. Friendships are surprisingly homogeneous. Writing in the Washington Post, Joel Achenbach points out that friends are as genetically close to us as fourth cousins. Marriages are more likely to be successful when the couple is similar. Harvard professor Robert Putnam argues that people in diverse communities have weaker community ties. Specifically, they tend to withdraw from collective life, distrust their neighbors (regardless of the color of their skin), withdraw from even close friends, expect the worst from their community and its leaders, volunteer less, give less to charity, and work on community projects less often.

There is some evidence that Barack Obama is gearing up for a massive executive amnesty. He’s already taken the first step. When Obama asked Congress to exempt certain illegal aliens (particularly children) in his proposed Dream Act, Congress refused to do it. Obama merely proceeded as if the Act had been passed and ordered immigration enforcement agencies to act as if it were in effect.

More recently, roughly 70% of immigrant families the Obama administration had released into the U.S. following the recent surge from Central America never showed up weeks later for follow-up appointments. Also, the Obama administration has supposedly been telling activist groups that after the election it will implement amnesty via executive order.

One can see why Obama and Democrats would welcome amnesty. The recent class of immigrants votes very differently than do natives, especially those of European ancestry. 71% of Hispanics voted for Obama and, on one poll, 75% support bigger government. Philip Klein of the Washington Examiner points out that were the Obama-Romney election to have occurred with the 1980 electorate, Romney would have easily won. The Senate amnesty program would have legalized more than 30 million immigrants, enough to shove the country far to the left.

Voters face the following issues: do they want amnesty and, if not, is this an important issue? If you answer no and yes, it becomes harder to vote for the Democrats. 

15 October 2014

Atonement Theory Does Not Work

Stephen Kershnar
Atonement Theory and Atheism
Dunkirk-Fredonia Observer
September 28, 2014

Today, religion is in retreat and atheism on the rise.

A Gallup poll found that, worldwide, 13% of people are atheists and another 23% are non-religious. People are leaving religion in droves. 9% fewer people see themselves as religious today (2012 poll) than did so seven years earlier. This is especially true for Jews. Less than 40% see themselves as religious.

Writing in The Christian Science Monitor, Rieke Havertz points out that in the U.S. religion is 
declining. The same Gallup poll found that one out of three Americans don’t consider themselves religious. The number who are religious has dropped sharply (73% to 60% in the last seven years) and atheists, while still rare, rose from 1 to 5%. This pattern will continue. A recent poll by the Pew Research Center found that young adults (people under age 30) are far less likely to be religiously affiliated than others.

One reason for people losing their religion is that religious doctrines don’t withstand scrutiny. One example of a flawed doctrine is Christianity’s atonement theory. The theory asserts that the suffering and death of Jesus explains why God forgives or pardons people for their sins. The Bible repeatedly asserts this. See, for example, 1 Peter 2:24 and 1 Peter 3:18. There are, roughly, four theories that explain how atonement works and none succeed. I should mention that some of the ideas for this column come from an outstanding colleague, Dale Tuggy, although he undoubtedly disagrees with this column.

One of the earliest theories (Ransom Theory) held that Jesus gave his own life as a sacrifice to buy mankind from Satan (that is, he paid ransom for them). See Mathew 20:28. Even if one believes Satan exists, St. Anselm demolished this argument by pointing out that it is nonsensical to see God as having a debt to him. In addition, God is powerful enough and morally permitted to limit Satan’s powers or make him a better person. Perhaps he could have made Satan’s heart grow three times larger, as happened to the Grinch. A related theory (Christus Victor) sees Jesus’ suffering and death as part of God’s defeat of Satan. Again, God could simply have taken away Satan’s powers.

St. Anselm and St. Aquinas adopted a second theory (satisfaction theory) that holds that human beings are so full of evil and sin that they owe a debt to God. The debt might be one of honor or justice. On this theory, the debt was paid off via Jesus’ suffering and death. The problem with this theory is that it is hard to see why human beings owe a debt to God. If they’ve injured each other, then it is to each other that debts are owed.

Even if the debt were owed to God, it is unclear why God wouldn’t merely forgive it. Creditors forgive debtors all the time. This is especially true when a creditor (for example, a father) loves the debtor (for example, a son). A loving deity would do so unless he wanted to teach his debtors a lesson and this is a different theory.

This theory makes even less sense if one believes in the trinity, that is, God exists in three people (three distinct people each wholly and entirely identical to God). If so, it is odd that God had to sacrifice himself to himself to pay off someone else’s debt. He could have just forgiven them in a straightforward manner.

A third theory, penal substitution, is a distinctly Protestant theory and was defended by Martin Luther and John Calvin. This theory holds that God punished Jesus, who didn’t sin, instead of punishing people who did. Again, it’s hard to see to why God has a right to punish people for what they do to each other. Murder, rape, and robbery victimize fellow human beings and it is they, or their loved ones, who have a right to punish the evildoer. Under some conditions, the state has a right to do so if the victims transferred their right to it. Even if God has such a right to punish sinners, he still can and should forgive or pardon them.

Even if he can’t pardon or forgive them, it is unjust for God to severely punish one person for what another did. For example, Ted Bundy raped and killed innocent women. Justice doesn’t allow the state to torture and hang his mother. This is true even if she wants to be substituted in for her son.

This theory is plagued by additional problems. If one person’s suffering can satisfy the demands of justice ahead of time, then people’s sins are pre-paid and they may not punished or even given demerits for sinning in the future. The sins would have been paid for ahead of time similar to how some people used to have pre-paid phone cards.

In any case, Jesus’ suffering was finite and, on some accounts, people’s sins are infinite (which is why some deserve hell) and so, on this theory, Jesus didn’t suffer nearly enough.

If we assume the trinity is true, then God punishes himself in order to forgive or pardon others. Would it have made sense for the Central Park jogger who was beaten and raped to punish herself as a way of forgiving or pardoning her attacker? Obviously not.

A fourth theory asserts that Jesus’ suffering was a means of leading humanity to change itself morally and is associated with one of the most significant philosophers of the Middle Ages, Peter Abelard. Surely, there have to be better ways to teach people to love one other than to torture and kill an innocent.

Even if there weren’t, it is hard to see why this would be the right thing to do. If the best way to get human beings to love one another were to torture and kill Miley Cyrus, this still wouldn’t be okay. 

And if the trinity is true, God tortures himself in order to instruct others on loving their neighbor. This is just weird.

Despite being put forth by world-class intellectuals, none of these theories work. This failure and ones like it are forcing religion into retreat.