Monthly Archive for December, 2013

On Mexico Opening Up Oil Sector To International Investors

“Mexico has mismanaged its oil to the detriment of us all, said José Luis Luege. Ever since the government proposed opening the oil sector to foreign partners, leftists have been marshaling “pseudo-nationalist arguments” that equate letting foreign oil companies develop Mexican oil fields with stiffing our own citizens. They have it exactly backward. Besides North Korea, Mexico is the only country in the world that doesn’t allow foreign commercial partners in the oil industry—even communist Cuba does. That’s because the industry poses investment risks that only private companies can take. Pure nationalization of our oil hasn’t worked: At the turn of the 20th century, Mexico was a top oil producer, behind only the U.S. and Russia. But since the state nationalized production under Pemex in the 1930s, our oil industry has been “bankrupt and inefficient,” as “terrible corruption” has siphoned off funds that should go to exploration and infrastructure. Pemex has been systematically “looted by a bloated union structure” and corrupt officials, who together have “defrauded the nation.” Only by amending the constitution to allow companies besides Pemex to invest in our oil fields will we be able to reap real profits “for all Mexicans.”” — Via The Week

Indian International Student On The Most Surprising Things About America

A worthwhile post overall, but this one stood out:

An almost-classless society: I’ve noticed that most Americans roughly have the same standard of living. Everybody has access to ample food, everybody shops at the same supermarkets, malls, stores, etc. I’ve seen plumbers, construction workers and janitors driving their own sedans, which was quite difficult for me to digest at first since I came from a country where construction workers and plumbers lived hand to mouth.

Also, (almost) all sections of society are roughly equal. You’ll see service professionals owning iPhones, etc. as well. This may be wrong but part of it has to do with the fact that obtaining credit in this country is extremely easy. Anybody can buy anything, for the most part, except for something like a Maserati, obviously. As a result, most monetary possessions aren’t really status symbols. I believe that the only status symbol in America is your job, and possibly your educational qualifications.

Full post can be found here. This point reminded me of this post from economist Don Boudreaux. Both articles are wothwhile reads.

Question For Supporters Of The Minimum Wage

Given by economist Don Boudreaux:

In the U.S. in 1948, quoting my colleague Walter Williams, “the unemployment rate for white 16-17 year olds was 10.2 percent while that for blacks was 9.4 percent. Among white 18-19 year-olds, unemployment was 9.4 percent and for blacks it was 10.5 percent.” Today (October 2013) the unemployment rate for white 16-19 year olds is 19.4%; the unemployment rate for black 16-19 year olds is 36.0% – nearly double the rate of white teenage unemployment. (In 2006 – the year before the current recession began – the unemployment rate for white 16-19 year olds was 13.2%; the unemployment rate for black 16-19 years olds was 29.0% – slightly more than double the rate of white teenage unemployment.)

That is, the unemployment rate of black teenagers in 1948 was comparable to that of white teenagers, and about 2.5 times higher than the overall unemployment rate of 3.8%. Today, the unemployment rate for black teenagers is much higher than that for white teenagers, and nearly 5 times higher than the overall unemployment rate of 7.3%. (In 2006, the year before the current recession began, the unemployment rate for black teenagers was 6.3 times higher than the overall unemployment rate of 4.6%.)

How do you explain these data? Are American employers more prejudiced in 2013 than in 1948 against teenagers? More importantly, are Americans more racist in 2013 than they were in 1948?

These facts about teenage unemployment are straightforwardly explained by the standard economic theory that predicts that a legislated minimum wage causes the lowest-skilled, most poorly educated, or otherwise least-desirable workers to be the first to be fired and the last to be hired. What is your alternative explanation?

Minimum Wage Study

“new evidence based on methods that let the data identify the appropriate control groups leads to stronger evidence of disemployment effects, with teen employment elasticities near −0.3. We conclude that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others, and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage.” — David Neumark, J.M. Ian Salas, William Wascher, via Greg Mankiw