Welcome to another installment of Swamponomics: Liberty Nation’s dive into the week’s morass of top news stories and the stream of economic fallacies that have been accepted as conventional wisdom by swamp creatures for years.
Will Kamala Harris Pay Up?
To differentiate herself from the growing crowd of social justice warriors, Senator Kamala Harris (D-CA) has a plan to address the debunked gender pay gap, should she become president in 2020. Her presidential campaign recently submitted a proposal that would mandate businesses apply for a written document from the Equal Employment Opportunity Commission (EEOC) that certifies they pay men and women the same. If these firms fail to attain this certification, then these companies will be fined 1% of earnings for every 1% of the difference in pay between the two genders. It’s the only way to “finally hold corporations accountable for pay inequality in America.” Though one is led to wonder just what happens if a portion of the workforce identifies as one of the other 23 genders?
But here’s the twist: A new report reveals that there is a gender pay gap in Senator Harris’s office and her presidential campaign. According to The Washington Free Beacon, Harris would face a fine of at least 6% because her female staffers earn an average of $0.94 for every dollar the male employees earn.
Citing her most recent six-month disclosure, which covers the period from April 2018 to September 2018, the website reported that the median male salary was $34,999 and the median female salary was $32,999. The discrepancy was identical in the previous six-month timeframe; the median male earnings were $27,167 and the median female pay was $25,749.97. It was even worse in February 2019, when women earned 87% as much as their male counterparts, so Harris would be slapped with a 13% fine.
Is Harris purposely discriminating against women? Does the senator hate her own gender? Does the media darling in the 2020 Democratic field think females are inferior to males? Of course not. Since she wants to become president, Harris will be hiring the best candidates for the job. To attract and retain the top talent, she pays them wages that suit their experience, education, skills, and everything else these applicants bring to the table. This might result in – gasp – hiring men!
The gender pay gap is a myth. When feminists, leftists, and the media spout the statistic that women earn 77 cents for ever dollar a man makes, they do not consider a wide variety of factors and circumstances that might explain the earnings disparity, such as job choice, hours worked, college major, or other personal decisions that might affect the person’s career – like having children.
Even in an office where everyone is a lawyer, a man might earn more than a woman. In some situations. Why? Well, he might choose to work weekends, he may opt to travel long distances to meet with clients, and he could be available at all hours of the day. She, however, wants her weekends off, only wants to meet people in the city, and demands flexible hours.
Offices, businesses, and political campaigns – they are not monolithic outlets.
Iceland Economy on Ice
Iceland’s economy has been put on ice for the second time in a decade.
Recently, Wow Air, the budget European airline, filed for bankruptcy. The company could not endure fluctuating fuel costs and succeed with the overcapacity in the industry, suffering the same fate as many other regional carriers. Executives attempted to resuscitate the enterprise by meeting with potential investors, but the talks reportedly fell through.
This would not be a major shock to the U.S. economy if Allegiant Air became insolvent, but Wow Air was integral to the Icelandic recovery. In fact, in the aftermath of the 2008-2011 financial crisis, the airline helped revive the country and contributed to the booming tourism sector.
Wow Air’s demise has now triggered a recession, which comes after a disastrous fishing season, an industry imperative to the island nation. The Central Bank of Iceland revised its economic forecast from 1.8% expansion to a 0.4% contraction and projects the unemployment rate will surge from 3.1% to 3.9%. The krona has plunged nearly 4% so far this year.
And that’s just the tip of the iceberg. The central bank is already springing into action by slashing the main interest rate by half a point to 4%, which is the first European cut this cycle. Based on a recent statement, Icelanders can anticipate additional stimulus measures.
But will Iceland nationalize Wow Air, too? During the economic collapse, the government took over the country’s three largest banks: Kaupthing Bank, Landsbanki, and Glitnir Bank. So, it isn’t entirely out of the realm of possibility, though these financial institutions had a far greater and extending impact – at home and abroad – than the airline.
There are some differences between this steep downturn and the last one. The first is that the state reduced its debt obligations and added to its foreign currency reserves. The second is that it can now rely on the European Union to come to its rescue again – in July 2009, Iceland sold its soul to the trade bloc so it could raise $1 billion in the bond market. The third is that it is unlikely to request a $2.1 billion bailout from the International Monetary Fund (IMF).
Of course, officials cannot allow the liquidation of assets and the correction of malinvestment. In this post-Keynesian world, permitting a recession to wipe out the incompetence is prohibited. Politicians always need to look like they’re doing something, even if it leads to waste and the misallocation of resources.
Curb Your Speculation
Senator Bernie Sanders (I-VT) is reintroducing his plan to tax stocks, bonds, and derivatives. According to Sanders, he wants to impose a 0.5% levy on stock trades, a 0.1% penalty on bond transactions, and a 0.005% fine on derivatives. He contends that it will achieve two things: paying for his ambitious campaign promises and curbing Wall Street speculation.
Everyone knows how ridiculous his demands for free stuff are, but what about speculation? Like nearly everything else that occurs on the New York Stock Exchange, there is a lot of misinformation about this method, resorting to bipartisan condemnation. But this isn’t anything new. For centuries, many men – left and right – have called for the criminalization or the abolishment of the standard practice. John Maynard Keynes wrote:
“The spectacle of modern investment markets has moved me towards the conclusion that to make the purchase of an investment permanent and indissoluble, like marriage, except by reasons of death and other grave cause, might be a useful remedy for our contemporary evils.”
But it does play an important function in the economy. Contrary to popular opinion, speculators do not crash economies; they provide important services that improve efficiency.
The most important role a speculator has is to stabilize prices. Without these men, there would just be producers and consumers, resulting in the distortion of prices and inefficient capital investment. He will also insert liquidity into the market, which is crucial because without buyers and sellers, then you could not convert your investments into cash that reflects market values as fast as you can say “cat in a hat.”
In economics, there are three tenets of human action: Men can behave as gamblers, scientists, or speculators. So, how are these defined? The gambler knows nothing of the future and their wins or losses depend on luck. The scientist understands what their actions will produce in the future. The speculator uses partial knowledge and understanding of results that their actions might create. Put simply, the speculator is constantly on the hunt for more reliable information and hard data to earn a profit.
Legendary economist Murray Rothbard wrote in What Has Government Done to Our Money:
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”
That’s the primary problem in the political arena. The politician and the voter believe they have the solution to every issue in society, while simultaneously misdiagnosing what that hiccup is. Instead of trying to understand why Sally Sue is being paid less than Joey Joe, a feminist will chalk it up to patriarchy. Rather than figuring out why speculation is imperative in a free and open market, a leftist will try to blame the mechanism for recessions and depressions. It’s time to make economics great again.
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