Playing with Externalities

Why does this article make sense to me? The externalities of City life have been known since early American times. Why has it taken so long to devise a plan of rubberized panels for Sidewalks which can be lifted and tree roots removed? Speculation might center on many concerns; the previously cheaper Cost of Concrete, the greater beauty of Concrete over ground tires, the shortage of sufficient numbers of discarded tires, the fact City budgets could not handle tree root destruction of Streets and tree root destruction of Sidewalks simultaneously, because kids can run too fast to be caught with the added spring of rubber sidewalks, or because Adults found too much bounce in their lives with rubber under their heels. I personally have always favored elevated Sidewalks, where you could meet your girlfriend eye-to-eye when engaging in the practice of Serenading. I worry about the odor of scorched rubber on those hot July days.

Political Calculations has a good piece on Minimum Wage increases (actually quite a number of them–check the bottom of the Post). It doesn’t highlight one of the greatest aspects of a Minimum Wage increase; the effect of Minimum Wage upon Creative Destruction. Millions of Jobs are eliminated and created every Year, Economists calling the process Creative Destruction. The Process purportedly has vast benefit for the economy, redirecting labor assets to their most optimum allocation. It is surprising that most Economists so rapidly abandon this relevant economic theory, as soon as it touches the range of low-Wage unskilled Labor. It again is only a process of Creative Destruction, where cheap labor is being destroyed; business practice will have to advance to greater efficiency, or be eliminated. Will such Jobs losses be permanent to the Market? Will the Business sector be abandoned with the exit of unprofitable firms? The Answer is No in both Cases, and Minimum Wage increase is only increased sharpness of the mechanism of Creative Destruction.

Don Boudreaux comments on the Tyler Cowen article in the NYTimes. The gist of the argument of both men amuse me, because of the externality existent here as well. Don even lays claim to a justification for regressive taxation, though he fails to explore the area. Tyler’s argues that We should continue attempts to advance the opportunity of lower Incomes; why then does he not advocate a Minimum Wage increase to say $12/hour? The Boudreaux argument against Progressive taxation combined with the Cowen argument for Opportunity could only insist on consistent, and massive, increases in the lower Income ranges. I, like these two Economists, believe the only acceptable progressive taxation which is realistic must be increasing Wage scales. Do We have agreement here? lgl