This Friday, Lee Ohanian and Bill Whalen analyze the “tepid” public support for California’s billionaire wealth tax ballot initiative as indicated in recent polling; David Neumark asks whether minimum-wage laws do anything to help workers in low-income families; and Alan Sykes reviews the successes and shortcomings of the last two global trade paradigms, distilling lessons for those designing a new “economic and security commons”—the focus of a major ongoing effort by the Hoover Institution.
California Policy & Politics
Is the campaign to defeat California’s Proposition 40, which proposes a wealth tax, making the same tactical error that then Governor Arnold Schwarzenegger made in California’s 2005 special election, by featuring too many opposition-aligned measures on the same ballot?
The Big Idea: In the latest California-focused episode of Matters of Policy & Politics, Lee Ohanian and Bill Whalen examine current support for the wealth tax initiative and the conundrums faced by its opposition. They also discuss homelessness spending and the possible relocation of media company Paramount from California to Texas. Watch or listen here.
Economics
In this new research paper published by the National Bureau of Economic Research, Visiting Fellow David Neumark and coauthor Emma Wohl provide the first-ever estimate of “the effects of minimum wages on low-wage workers in families at different points of the distribution of income-to-needs”—in other words, the impact of minimum wages on low-income families. Based on their study of a very large sample, the authors find that minimum wage laws have “adverse effects . . . on the employment, hours, and earnings of low-wage or low-skill workers.” They also show that “higher minimum wages lead to declines in the probability that low-wage workers remain employed.” Neumark and Wohl conclude that nothing in their research “provides any indication that minimum wage impacts are beneficial —or particularly beneficial—for low-wage or low-skill workers in poor or low-income families.” Per the authors, the paper helps to explain why minimum wages do not reduce poverty. Read more here.
In this essay for The Commons Dispatch channel at Freedom Frequency, Stanford Law School professor Alan O. Sykes argues that the World Trade Organization (WTO) structure is unraveling—a shift highlighted by the US departure from negotiated tariff ceilings and the most-favored-nation trade principle. In contrast, Sykes says, the predecessor agreement, known as GATT, now looks like a robust engine for liberalizing global trade over half a century. The difference boils down to several factors: GATT emphasized diplomacy to settle disputes, while the WTO set out to enforce rules with “binding” legal rulings and rigid precedents; the older system facilitated side agreements among like-minded members instead of demanding full “consensus” before obligations could be modified or expanded; and GATT’s success at coordinating trade among market economies did not carry over into an era unprepared for the juggernaut of Chinese state-directed trade. Sykes writes that the lessons from comparing GATT and WTO—each imperfect—include building more flexibility into trade agreements; not letting one state block progress made by smaller coalitions; managing the challenge of China’s government involvement in trade; and refocusing on diplomacy for dispute settlement. Read more here.
What does it mean for the US dollar to be a world reserve currency—and what would it mean for the greenback to lose this status?
The Big Idea: In this interview, Policy Fellow Jon Hartley speaks with American economist Barry Eichengreen about the significance of global dollar dominance. They also discuss why the move away from the dollar has been slower—and less toward the Chinese yuan—than Eichengreen anticipated 15 years ago. Watch or listen here.
Healthcare
What would it take to improve healthcare in the US without sacrificing patient choice, technological innovation, or accountability?
The Big Idea: In this lecture from Hoover’s Summer Policy Boot Camp, Senior Fellow Scott W. Atlas notes common pitfalls when comparing healthcare systems globally and makes the case for market-based reforms to build on strengths—and remedy deficiencies—in the US healthcare system. Watch here.
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