Wednesday, July 1, 2015

Because the flow of money can be predicted as accurately as the flow of water

Great IBD editorial entitled "The Economic Illiteracy of Obama's Overtime Rule."

It basically reiterates the LITD First Law of Economics: The money has to come from somewhere.

You go employing the government's monopoly on the coercive use of force to make private organizations structure their pay arrangements for staff members a certain way and something will have to give:

With the flick of his magic pen, President Obama will soon grant millions of workers overtime play. At least, that's the fantasy being peddled by the White House and regurgitated by a credulous press.
Currently, businesses that pay salaried workers less than $455 a week have to pay overtime as well. Obama complains that this threshold has been raised only once since 1975. (He conveniently leaves out the fact that the last increase came during President Bush's "jobless recovery.")
As a result, he says, too many companies are "skirting basic overtime laws, calling somebody a manager when they're stocking groceries and getting paid $30,000 a year."
Obama plans to raise the threshold to $50,400, which he says will make 5 million more workers eligible for time-and-a-half pay.
That was enough for most journalists to declare that Obama was being "generous" because he is going to "bring overtime pay to millions."
But that assumes businesses employing these newly overtime-eligible salaried workers won't change anything, and will just start paying them time-and-a-half.
In a free market economy, these workers are already making the market wage. If they were being underpaid, given their skill levels and the work they're doing, they'd get another job.
So what are employers going to do? Since money doesn't grow on trees, some affected companies will tell these workers to put in less overtime, or ban it altogether. Or they'll bring in more part-time workers to avoid the wage hit. Or lay off some people.
The point is, far fewer than 5 million workers will benefit from this change, and many will lose out.
Of course, some companies might raise prices to pay for more overtime, thereby forcing consumers to bear the cost of Obama's "generosity."

There is very little in this world that requires deep, dense and intricate crystal-ball-gazing to discern.  Most of life's rules and lessons are quite simple, and the examples of their applications are all around us.

But our jackbooted, Freedom-Hating overlords work overtime - pun intended - to see that that is not obvious to you.


  1. What money comes from somewhere is really nowhere.

    The Capital Markets Subcommittee Chair, Rep. Paul Kanjorski of Pennsylvania, tells C-Span how the world economy almost collapsed in a matter of hours.

    At 2 minutes, 20 seconds into this C-Span video clip, Kanjorski reports on a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour or two.

    Kanjorski: "The Treasury opened its window to help. They pumped a hundred and five billion dollars into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn't be further panic and there. And that's what actually happened. If they had not done that their estimation was that by two o'clock that afternoon, five-and-a-half trillion dollars would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed."

    "It would have been the end of our political system and our economic systems as we know it."


  2. The kind of thing the Greeks are currently counting on.

    But this is a subject for another post. The point here is that the Most Equal Comrade is once again exhibiting his totalitarian ways: telling private organizations how to conduct their affairs.

  3. And way before the money gets funny, businesses will take measures to keep this overtime mandate from increasing their costs.