The Huge Economic Productivity of Divine Monarchs

Republished from The Unz Review

When I first began investigating the minimum wage a couple of years ago, one of my early surprises was its sharp decline across the decades, having fallen by roughly one-third in real value since its 1968 peak.

This drop was greatly magnified when we considered the economic growth of American society given that our per capita GDP had roughly doubled during that same period, meaning that the minimum wage had declined by almost 70% relative to average income.  A 70% drop in a crucial parameter of our wage structure is quite remarkable and clearly explains why lower wage workers could generally support their families a few decades ago, but today subsist in desperate poverty despite massive government social welfare subsidies.  I emphasized some of these statistics in my December 2013 New York Times piece on the subject, pointing out that even raising the minimum wage to  $12 per hour would merely make up a fraction of this long lost economic ground.

I was hardly the first person to note these remarkable facts, and earlier that same year Sen. Elizabeth Warren had pointed out that if the minimum wage had merely kept pace with the growth in average per capita income, it would have reached a rate close to $22 per hour.  Given such figures, the increases to $9 or $10.10 advocated by the Democratic leadership in Congress stood revealed as the paltry and pusillanimous goals that they were.

The devastating power of this simple economic point is easily apparent to the business lobbyists tasked with blocking an increase, and they have regularly suggested that this argument is totally misleading because it ignores that the gains in national economic output have hardly been uniform across all sectors.  The doubling in real per capita GDP has been driven almost entirely by increases at the high end, in sectors such as computer software, finance, and biotechnology, with little of it due to changes in the value of the work produced by janitors and waitresses.  They argue that wages must follow productivity and if the output of nannies is roughly unchanged from forty years ago, it is absurd to expect their real hourly wages to double or triple.  On the face of it, this rejoinder seems quite telling, and I have never seen an effective rebuttal provided in the numerous articles and columns by liberal wage advocates I have read on the subject. Continue reading

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Raising the National Minimum Wage to (Almost) $12 per Hour

Republished from The Unz Review

Earlier this week unfortunate Americans were shown the advantages of a functioning political system as the German government announced it would establish a minimum wage of $8.50 Euros or almost $12 per hour.

In the past Germany had had a minimum wage, but the extremely high level of labor unionization had ensured very high hourly wages for the overwhelming majority of ordinary workers. However, in recent years, an increasing share of new jobs had not fallen under these agreements, often being low-wage positions in the service-sector, and labor leaders had decided to address this growing problem by establishing a reasonable minimum wage for all workers as their top political priority. Business groups and conservatives initially resisted this proposal, arguing economic damage might result. But after considering the facts and the data, their opposition dissipated, and the cabinet of Germany’s right-leaning government has now adopted the idea, which will soon become law.  Germany has one of the world’s best economies, with unemployment far below the American level and the standard of living well above.

From an American perspective, all sides in this debate behaved in an almost magical manner. On the one hand, the German unions deployed all their political influence to raising the wages of all workers rather than on focus their efforts on further augmenting the dollars and benefits of their own narrow membership. On the other side, business groups objectively considered the facts and decided that any resulting negative effects were too small to be worth waging a major political struggle, leading them to concede the issue. The notion of Capital and Labor cooperating together to advance the interests of society as a whole rather than battle for their own narrow special interests is a very strange idea in modern American society.

Indeed, America’s Democrats had made no effort to raise the minimum wage during the two years that they controlled both houses of Congress and now that they have recently revived the issue, they apparently have little chance of mustering the sixty votes they need to pass a $10.10 minimum wage in the Senate], let alone attracting the majority of Republicans required for a vote in the House. Some Democrats are considering a lower figure, but there is no sign there would be sufficient Republican support for that either. So our own Congress appears likely to remain deadlocked on the issue, while the German minimum wage shoots up to a figure over 60% higher than ours. Continue reading

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Pelosi vs. Boehner on the Minimum Wage?

Republished from The Unz Review

House Speaker John Boehner, the highest ranking Republican in America, has famously declared that he’d rather commit suicide than pass a minimum wage increase.  Meanwhile, California’s own Nancy Pelosi, his opposite number, is a strong supporter of hiking the minimum wage, and her close ally, the retiring Rep. George Miller, is the sponsor of the legislation in the House.

Three months ago, the Democrats announced they would make raising the minimum wage their central political issue for 2014, and with good reason.  Few issues so strongly unite Democrats and draw independents, while splitting GOP voters straight down the middle.  So does that strategy look likely to succeed?

Not really.  Boehner has indicated that unless and until Hell freezes over and the majority of his Republican caucus members back a minimum wage hike, he’ll refuse to bring the bill to the floor for a vote.  No vote on the bill means no pressure on Republicans and no chance of passage.

Business lobbyists are already discounting any realistic possibility of a minimum wage hike, with the national media is reporting that fact and coming to the same conclusion.  Election Day is still over seven months away, and journalists will soon stop reporting on a policy proposal that won’t even come to a vote.  Top Democratic officials and donors everywhere are surely crying: “A Vote, A Vote, Our Kingdom for a Vote.”

But appended below is an important article in yesterday’s Huffington Post providing Democrats a solution to that dilemma.  There’s an easy way for Pelosi and her allies to do an end run around Boehner’s blocking, and get something as good as—or even better than—a simple Congressional vote on the minimum wage.  A quick political strike could turn the tables and make an ongoing Pelosi-Boehner clash on the minimum wage the central issue from now until November.

We’ll soon see whether the national Democrats decide to seize that golden opportunity. Continue reading

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Banquo’s Ghost as a Minimum Wage Initiative

Republished from The Unz Review

In all respects except one, the last week couldn’t have been better for my California initiative to raise the state minimum wage to $12 per hour, the highest in the America.

NPR broadcast a remarkably long 14 minute interview segment on my effort. Although the airing of the show had been delayed a couple of weeks, I couldn’t have been happier with the discussion, which provided me an ideal platform to explain in detail the numerous reasons why both liberals and conservatives should naturally endorse a much higher minimum wage. During the previous week widely syndicated columns by Debra Saunders and Thomas Elias had covered similar ground. And just this morning legendary public advocate Ralph Nader published a major column in USA Today recapitulating those same obvious reasons why America should “give workers a raise.”

Unfortunately these positive developments recalled the Banquo’s Ghost scene in MacBeth, when Scottish noblemen drink toasts to honor a delayed guest without realizing that he was longer among the living. On Friday I was still quite hopeful that my minimum wage initiative would win a landslide victory in November and change American history. But by yesterday I was finally forced to send out an announcement that my ballot measure was unlikely to even reach the ballot.

Although people may say that money is the root of all evil, my simple problem was the opposite, namely lack of the funding necessary to qualify the measure. Although exaggerated media accounts had sometimes paired me with Warren Buffett or even explicitly described me as a billionaire, my true financial resources were minuscule by comparison. Therefore, over the last couple of months, I had been urgently seeking the necessary financial backing for the campaign from a wide range of different possible sources. Such financial backing has not materialized, so my effort to raise the California minimum wage to $12 per hour appears dead.

Given the widespread public attention attracted by the effort and the powerful political tide on the issue, this unfortunate outcome is surely shocking to many people, including myself. Last night I spoke to a national journalist who said that he found it difficult to believe that no wealthy and public-spirited citizen would step forward to ensure a November vote on the subject. California alone certainly contains many, many thousands of individuals able to fund the petition drive with a single check and never even notice the cost, and anyone who did that would certainly gain huge national recognition as a consequence. But no such person has yet appeared on the horizon. Continue reading

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Understanding the CBO Analysis of a Minimum Wage Hike

Republished from The Unz Review

Three weeks ago the powerful political momentum favoring a large minimum wage hike received a major setback as the Congressional Budget Office (CBO) released its report indicating that the Democratic goal of raising the minimum wage to $10.10 might lead to the loss of 500,000 jobs.

The CBO is widely respected as non-partisan in its economic analysis, and indeed Douglas Elmendorf, its current head, has a strongly Democratic-leaning background. Republicans and business lobbyists quickly seized upon the conclusions as proof that their longstanding arguments against a minimum wage hike had been correct all along, and that any proposal that risked a half million jobs in these difficult times would be disastrous, amounting to a cynical political effort driven by populist appeal rather than objective economic sense.  Their biting accusation was that desperate Democrats were willing to kill jobs in hopes of winning votes from the gullible.

The immediate Democratic response to the report hardly put these fears to rest. Jason Furman, President Obama’s chief economic advisor, largely dismissed the CBO estimates, suggesting that few if any jobs might be lost if the national wage-floor were raised, and claiming that the estimates were contradicted by numerous academic research studies providing contrary conclusions.  Such an argument is hardly persuasive. All interested parties in the endless minimum wage debate can always cite numerous academic studies to bolster their case, but the CBO is regarded as relatively neutral and impartial, so merely dismissing those official numbers as “wrong” is not reassuring.

Furthermore, any honest advocate of a minimum wage hike must certainly grant that a large increase would surely produce some level of job loss, and raising America’s national wage floor from $7.25 to $10.10—a jump of 40%—is hardly insignificant. The CBO report suggested that somewhere between zero and one million jobs might be lost as a consequence, with the most likely figure being in the 500,000 range. Now I claim no great economic expertise myself and have certainly not reviewed the underlying calculations, but such figures seem perfectly plausible to me. However, I believe that the contending parties and the media have severely misinterpreted their meaning. Continue reading

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A Moderate Democratic Billionaire and a Moderate Republican Billionaire

Republished from The Unz Review

An important story ran Saturday ran in the Los Angeles Times:

Bid to hike L.A. minimum wage gets pair of powerful backers
As the L.A. City Council examines the ‘living wage’ issue, philanthropist Eli Broad and developer Rick Caruso say they support a higher minimum wage.
James Rainey, The Los Angeles Times, March 1, 2014

The debate on whether Los Angeles hotel workers should be paid at least $15.37 an hour opened last week with some less-than-expected allies for a “living wage” and some questions from City Council members about whether the proposal goes too far, or not far enough.

Two of the city’s business titans, billionaire philanthropist Eli Broad and mall developer Rick Caruso, broke from the standard business-versus-labor divide when they said in interviews they support a higher minimum wage.

Broad said he favors a gradual increase to $15 an hour for all workers in the city, not just those at big hotels, as proposed by three members of the Los Angeles City Council. Caruso said he supports a government mandate for higher pay, probably $12 to $15 an hour, though he would prefer the higher wage be imposed by either the state or federal government. [READ MORE]

Two weeks earlier, Which Way L.A.?, the leading Los Angeles public affairs radio program, had devoted its show to discussing the proposal to raise the wages of non-unionized workers at the large Los Angeles hotels.  As one of the guests, I had sharply criticized the idea, arguing that doubling the wages of 1% of the workers in Los Angeles made far less sense than a large minimum wage hike for all of the workers in Los Angeles.  I’m very glad to see that my views are now echoed by individuals of vastly greater financial resources and political influence.

Push for Minimum Wage Increase for Hotel Workers
Which Way L.A.?/KCRW, Warren Olney, February 19, 2014
Curren Price Jr., Stuart Waldman, Ron Unz

Then last week, Which Way L.A.? had me on again, this time participating in a discussion of the broader state and national efforts to raise the minimum wage.  I was particularly glad to see that the sole doubtful voice—Clive Crook of Bloomberg View and formerly of The Economist—had largely came around to the pro-minimum wage position by the end of the discussion.

Is It Time to Increase the Minimum Wage?
Which Way L.A.?/KCRW, Warren Olney, February 24, 2014
Steven Greenhouse, Clive Crook, Arun Ivatury, Ron Unz

Two days afterward, The Los Angeles Times had run a major profile on my own statewide $12 minimum wage initiative effort:

Ron Unz, a Mo’ Money Man on the Minimum Wage
Patt Morrison, The Los Angeles Times, February 26, 2014 Continue reading

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Walmart, Peter Thiel, the Weekly Standard, and Other Dog-Biters

Republished from The Unz Review

Our media naturally tends to cover stories that are surprising or unexpected far more than boringly routine ones, and this has certainly been a central aspect of my ongoing initiative campaign to raise the California minimum wage to $12 per hour, the highest rate in America.

Labor unions and some prominent liberals have promoted minimum wage hikes for many years with mixed success and often scanty coverage, typically breaking into the headlines only when raucous public protests draw television cameras or print photographers. But given my reputation as a conservative Republican, I needed merely to draft my ballot measure on a single sheet of paper and prepare a $200 filing-fee to generate a major story in The New York Times, followed by considerable secondary coverage. Perhaps that might seem unfair, but I suspect that any prominent liberal who launched an effort to totally abolish all capital gains taxes would draw similar attention. Man bites dog trumps dog bites man.

However, in the ninety days since my initiative was filed, men have begun biting dogs at a truly remarkable rate, drawing wonderment from many outside observers.

Soon after I began my effort, I was interviewed by the hosts of several leading conservative talk-radio stations and their initial shock at my idea quickly turned to surprise at the cogency of my conservative arguments for the proposal. Cutting social welfare spending, saving taxpayer dollars, eliminating hidden subsidies, making work pay—those all sound like longstanding conservative policy goals. What sensible conservative could oppose them?

A few weeks later, Phyllis Schlafly, an iconic conservative sometimes regarded as Pat Buchanan’s female counterpart, publicly declared for a higher minimum wage in her syndicated column, citing the same reasons that I had, thereby providing me with my first big-name public ally on the right.

Soon afterward, The Daily Caller, one of America’s most widely read conservative publications interviewed me on the topic, publishing a blistering 2,500 explication of my position, with tone and title of the piece emphasizing my argument that a $12 minimum wage might constitute the “rocket fuel” conservatives needed to revitalize their movement and broaden their political base.

A few days afterward, almost certainly as a consequence of the Dailer Caller article, Bill O’Reilly—the biggest conservative star on television—used his Fox News show to declare his support for big minimum wage hike, endorsing the Democratic Congressional proposal of a $10 figure.

With several dogs now licking their man-bites, the San Francisco Chronicle published a major front-page story and then a quick follow-up on this sudden epidemic of rabid conservatives promoting a minimum wage hike. Continue reading

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Should We Cut the Minimum Wage?

Republished from The Unz Review

The current debate raging over the role of the minimum wage is usually presented as being fought between two choices. On the one side are those who advocate a large wage hike and on the other are those who oppose any change. But in reality, there is a third alternative, namely cutting the minimum wage, and that is the more principled counterpart to the proposal for raising it.

The reasoning is simple. Given all the very serious problems of poverty and unemployment in our society, with the existing minimum wage playing a significant role, no one with a straight face can assert that our current system is ideal, the best of all possible worlds. So if everyone who places principles over political expediency admits that the existing minimum wage is part of the problem and set at a damaging level, the obvious question is whether it should be raised or lowered.

Certainly this is recognized by the leading ideological opponents of a minimum wage hike, who hail from the libertarian camp and have always questioned the existence of a minimum wage on both moral and practical grounds. Several months ago I debated George Mason economics professor Bryan Caplan, a leading figure in that camp, and he explicitly called for the abolition of the minimum wage. His views are totally representative of the hard-core libertarian movement that so dominates the economic thinking of conservative Republicans.

Although this “abolitionist” position is a little too stark and extreme for most participants in the debate, calls for solving our poverty problems by sharply cutting the minimum wage are fairly common in public policy circles. In December, Reagan economic advisor Martin Feldstein advocated reducing the minimum wage to $4 per hour in a major WSJ piece and just a few days ago former business executive Robert G. Strayton took to those same pages to endorse a similar solution to American poverty, proposing adoption of a $5 minimum wage.

Beliefs so widespread in policy circles inevitably leak into the political world as well, and there was a media flurry several months ago when it was discovered that Illinois Republican Gubernatorial candidate Bruce Rauner had suggested his state should reduce its local minimum wage to the federal floor of $7.25. I suspect these sentiments, whether voiced or unvoiced, are very widespread in conservative circles. To these individuals “everyone knows” that the minimum wage is a bad and damaging idea, although a highly popular one, and they are torn between standing up for their beliefs or taking the side of what they regard as economically-ignorant populism. Continue reading

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What’s Good for America Is Good for Wal-Mart, and Vice-Versa

Republished from Forbes

During the 1950s peak of America’s post-war prosperity, Detroit was our wealthiest city, General Motors our biggest employer, and GM CEO “Engine Charlie” Wilson delivered the famously misquoted claim that “what was good for our country was good for General Motors, and vice-versa.”

Times have changed. These days retail giant Wal-Mart is our largest corporation, employing 1 percent of all American workers, but rather than being praised for its achievement is routinely vilified by political activists and the media. In its defense, the company has released studies claiming that its low price approach to consumer goods annually saves American shoppers vast sums of money, with much of those savings going to families of lowest income, and although specific figures have been disputed, the general point is conceded. But if Wal-Mart has been such a great business success and saves its customers at least ten or twenty billion dollars each year, why does it continue to attract such widespread hostility?

The main charge leveled against Wal-Mart is that its wages are too low, and critics have a point. Berkeley’s Labor Research Center has estimated that almost a million of Wal-Mart’s American workers earn less than $12 in hourly pay, with 300,000 averaging only $8.75. Surviving on such low incomes is difficult in America, and a few months ago a local store’s campaign to persuade Wal-Mart workers to donate food to other Wal-Mart workers became a national media scandal. Each year Wal-Mart’s struggling employees receive billions of dollars in government social welfare benefits, with the costs borne by the general taxpayer. Just as General Motors was the national symbol of America’s high-wage manufacturing economy, Wal-Mart has come to represent our low-wage service sector, which many Americans equate with the decline of our middle class society.

So why doesn’t Wal-Mart just improve its public image by raising its wages? Those same Berkeley researchers estimated that the company could boost its pay to a minimum of $12 per hour and cover the additional expense by a one-time price hike of just 1.1%, costing the average Wal-Mart shopper only an extra $12.50 per year. Surely if hundreds of thousands of the company’s lowest-wage employees were given immediate raises of one-third or more, they’d sing Wal-Mart’s praises, while performing their jobs with greater diligence and lower turn-over. One hundred years ago, Henry Ford doubled the wages of his assembly-line workers, providing them incomes high enough to buy the cars they themselves produced and helping to create the great American middle class of the twentieth century. Wal-Mart workers are also Wal-Mart shoppers, and many of the extra dollars they might receive would go right back to the company that paid them.

The difference is that while Ford’s industrial breakthroughs had given his company a near-monopoly on mass-market automobiles, Wal-Mart’s absolutely rock-bottom prices represent its chief selling point, allowing even a small markup to be easily exploited by the company’s able competitors. A general increase in wages and prices across the entire retail sector might greatly benefit companies and workers alike, but any attempt at organizing such collective corporate action would obviously run afoul of America’s strict anti-trust laws. Continue reading

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The Conservative Case for a Higher Minimum Wage

Republished from Fox & Hounds Daily

Over the last couple of months the minimum wage has moved into the political headlines, but most of the arguments for raising it have come from liberals.  That’s fine, but since I’m not a liberal, I’d rather focus on the conservative reasons for supporting a much higher minimum wage, which are just as compelling.

Cutting Social Welfare Spending and Reducing Hidden Government Subsidies

Each year the American government spends over $250 billion on social welfare programs for the working-poor, individuals who have jobs but can’t survive on their wages.  This funding represents a hidden government subsidy to low-wage businesses, allowing them to shift the burden of their low-wage employees over to the taxpayer.

A much higher minimum wage would force these businesses to stand on their own two feet and cover the costs of their own workers.  Once those workers were no longer so poor, they would automatically lose eligibility for many anti-poverty programs, saving the government huge amounts of money.  For example, establishing a $12 per hour minimum wage in California would save American taxpayers billions of dollars each year.

Increasing the value of work, cutting social welfare spending, eliminating hidden government subsidies, and saving taxpayer dollars have always been important goals of conservatives and free market advocates, and a higher minimum wage achieves these. Continue reading

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Higher Minimum Wage Would Help Immigrants, Taxpayers

Republished from The San Jose Mercury News

Millions of California immigrants work in low-wage service industries. They would be among the greatest beneficiaries of our ballot initiative to raise the state minimum wage to $12 per hour.

Latinos, many of whom come from a relatively recent immigrant background, would gain the most. The data shows that around half of all Latino wage-earners would get a pay hike, compared with one-third of non-Latinos. The average gain for a full-time Latino worker would be over $5,500 per year, a life-changing amount of money for a working-poor family.

Asian immigrants are more likely to be affluent, often employed at technology companies. But many Asians are also among the working-poor, and 400,000 low-wage Asian workers in California would directly benefit from raising our state’s minimum wage.

Almost a million blacks and non-Hispanic whites in California, both immigrant and native-born, would also get a wage hike, with their incomes rising an average of over $4,000 per year for a full-time worker.

The total economic gains for lower-wage California workers from all ethnic backgrounds would be around $15 billion per year.

Aside from benefiting working-poor families, a much higher minimum wage would help the rest of us by requiring businesses to cover the costs of their own employees rather than shifting the burden to the ordinary taxpayer.

Because some businesses in California pay their workers such low wages, the government is forced to make up the difference, spending over $35 billion each year on social welfare programs funded by everyone else. This is unfair.

Businesses should stand on their own two feet instead of relying upon billions of dollars in hidden government subsidies. All principled conservatives and free market advocates should support this simple idea. Raising the California minimum wage to $12 per hour would save American taxpayers many billions of dollars each year. Continue reading

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Raising the Minimum Wage Isn’t an “Anti-Immigrant” Idea

Republished from The Unz Review

Simple ideas buoyed by a tidal wave of popular sentiment are difficult to oppose, and subterfuge is one of the favored methods.

National support for raising the minimum wage runs between 70% and 75% in most polls, with close to 90% of Democrats backing the idea. Meanwhile, our initiative to raise the minimum wage in overwhelmingly Democratic California contains just a single operative sentence, providing no target for extraneous political attacks. As a result, some of the most fervent critics of raising the minimum wage been forced to rely on extremely specious arguments.

Doctrinaire libertarians have always opposed minimum wage laws on ideological grounds, and I discovered the extreme nature of their beliefs in late October when I participated in an Intelligence Squared debate, held in New York City and broadcast nationally. The topic was whether America should adopt an “Open Borders” policy and allow anyone to take a job anywhere.

One of my opponents was Bryan Caplan, an economics professor at George Mason University and an adjunct scholar on immigration issues at the Cato Institute. He attacked immigration controls, minimum wage laws, and other restrictions on economic liberty with religious zeal, denouncing such policies as no better than the vile “racism” and “anti-Semitism” that Americans so universally condemn. In his view, if any individual anywhere in the world wanted to come to America and seek employment for a dollar a day, that should be his absolute moral right, so long as he waived any access to medical care or other social welfare benefits as part of the agreement.

An America in which many millions of workers live in hovels and die in the streets if they accidentally injure themselves did not seem desirable to me and the New York City audience overwhelmingly agreed, favoring our position with the widest swing ever recorded in that debate series. Meanwhile, Prof. Vivek Wadha, Caplan’s own debate partner, repeatedly endorsed the idea of raising the minimum wage to $12 per hour, a position that Caplan considered a horrifying betrayal of all free market principles.

With my California minimum wage initiative now getting public attention, I was hardly surprised that I recently drew fire from Alex Nowrasteh, one of Caplan’s closest collaborators. Nowrasteh had studied economics under Caplan at George Mason University and now works alongside him as an immigration policy analyst at Cato. Last Sunday he unleashed a blistering attack on me in the San Jose Mercury News, accusing me of being an “anti-immigrant” zealot and condemning the motives behind my proposed minimum wage hike as “despicable.” Continue reading

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The Minimum Wage and Illegal Immigration

Republished from The Unz Review

Although our school textbooks claim we live in a democracy or a representative republic, a more accurate formulation might label our polity a “mediocracy.” Our views and votes as well as those of our elected representatives are largely shaped by the ambient waves of media emanations that wash over us during so many of our waking moments. The media tells us what is real and what is nonsensical.

So if the best way to change the world is by reshaping its media coverage, I am pleased that our campaign to raise the minimum wage for American workers to a much more reasonable figure of $12 per hour is beginning to make some significant headway.

Even just a few years ago, most respectable thinkers, even those on the progressive Left, were quite doubtful about the benefits of a minimum wage hike, let alone a large one. When leading liberal economists Paul Krugman and Joseph Stiglitz endorsed President Obama’s $9.00 per hour minimum wage proposal of twelve months ago, their public declaration was hailed as a dramatic breakthrough by longtime minimum wage advocates. A couple of years earlier, Krugman had been willing to oppose sharp cuts in the minimum wage or its abolition, but little more than that, while his late 1990s views on the subject were not all that different from those of most present-day Republicans, a fact now eagerly emphasized by his current opponents.

Indeed, many prominent liberals used to regard a minimum wage hike as ignorant populist nonsense, but today the tide is flowing  in exactly the opposite direction. Last week, the front-page headlines on the SF Chronicle described the surprising shift of conservative sentiment toward the pro-minimum wage direction, citing my own views and those of Phyllis Schlafly. No sooner had the story run than Bill O’Reilly—one of the biggest conservative voices in America—gave his blessing to the proposed Democratic minimum wage hike, making that statement on his own top-rated FoxNews television show.

So during the past twelve months, public reversals on the minimum wage question have encompassed such names as Joseph Stiglitz, Paul Krugman, Phyllis Schlafly, and Bill O’Reilly.  How’s that for ideological bipartisanship?

Although the O’Reilly Declaration was considered absolutely stunning in mainstream media circles, I strongly suspect that its origins lay in an article that ran a few days earlier in The Daily Caller, one of the most widely read and influential mainstream conservative publications in America. Prominent media figures such as O’Reilly tend to rely upon their research staffs to help formulate and guide their policy positions, and The Caller is high up on the reading lists of those latter individuals. When Neil Munro, The Caller’s White House Correspondent, penned a piece provocatively entitled “$12 an Hour is Conservative Rocket Fuel, Says Ron Unz,” they surely took notice. Indeed, the article constituted a 2,500 word nuclear strike against the entrenched Republican Establishment on that issue, and O’Reilly may merely be the first of many prominent conservatives swayed by that powerful piece of expository journalism, aimed with pitch-perfect effectiveness at its strongly conservative audience. Continue reading

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Rightwingers for Higher Wages

Republished from The Unz Review

In my last column I had noted that the national debate over poverty and inequality had drawn a peculiar response from mainstream conservatives. Whereas liberals advocated making work pay by raising the minimum wage, their conservative counterparts proposed raising welfare payments instead.

Sometimes this position was explicit, as when economist Martin Feldstein took to the pages of The Wall Street Journal to argue that American wages and welfare should be merged into a single, seamless system able to provide a decent living for everyone in our country. More often, conservative critics of raising the minimum wage have been far less candid, touting the benefits of the EITC, without admitting that it constitutes America’s largest cash-welfare system in thin disguise, whereby the government renders working-poor households somewhat less poor by sending them annual checks based on a complex formula.

The notion of individuals and businesses carrying their own weight seems just as alien to the sort of present-day Republicans whose perspectives are welcome within the confines of the elite media. For example, a long New York Times column by Prof. Gregory Mankiw, a former top economic advisor to President George W. Bush, suggested that it was unfair and morally wrong to expect businesses to cover the costs of their own employees since the responsibility was obviously that of our society as a whole. Whereas Hillary Clinton famously declared that “It Takes a Village to Raise a Child,” the sort of thinkers who will probably be advising her Republican opponent in 2016 are suggesting that “It Takes an Entire Country to Run a Business” (or at least to pay the business’s employees). Back when I was younger, I think this notion was called “Communism,” but these days it’s considered Mainstream Republicanism.

Under Ronald Reagan, the Republican Party praised the benefits of working for wages and denounced collecting welfare checks, but his lobbyist-ridden epigones have completely reversed that popular message, then wondered why their popularity has sharply declined.

Some of the claims made by the more fervent opponents of the minimum wage are simply bizarre.  On FoxNews, economist Art Laffer suggested that minimum wage laws were a direct attack against black American workers and urged that they be abolished.  Indeed, doctrinaire libertarians have even suggested that minimum wage laws are inherently “racist” and morally repugnant regardless of their actual economic impact.  The vast majority of ordinary Americans might regard these views as bordering on insanity, but they represent a substantial and highly influential element within today’s Republican Party. Continue reading

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How California Can Raise All Boats

Republished from The Los Angeles Times

California is home to both Silicon Valley and Hollywood, two of the world’s greatest wealth-producing engines, and much of the state enjoys tremendous affluence. By some estimates, my own town of Palo Alto has the world’s highest per capita concentration of billionaires.

But California also has pockets of enormous poverty. The U.S. Census recently estimated that when both income and living costs are taken into account, 24% of Californians live in poverty, the highest poverty rate of any state. Using similar methods, Stanford University and the Public Policy Institute of California have concluded that Los Angeles County has California’s highest poverty rate, at 27%.

Such extreme contrasts of wealth and poverty are not only morally troubling; they might also eventually lead to the sort of social conflict and political instability that could destroy the state.

A few months ago, the Legislature passed a minimum-wage hike that will raise the rate to $10 an hour by 2016. That’s commendable, but it’s not enough. In 1968, at the height of California’s postwar prosperity, the minimum wage was the equivalent of more than $10.50 in today’s dollars, and worker productivity has doubled since then.

MIT’s Living Wage Project has estimated that an adult in California today must earn one-third more to achieve the same living standard as someone in Mississippi or Alabama. Given these realities, even a boost to $10 an hour will barely raise the incomes of minimum-wage workers in California to the level of their counterparts in the poorest parts of the Deep South. California can do better than Mississippi.

That’s why I’m working to place the “Higher Wages for California Workers” initiative on the November 2014 ballot, a proposal to raise the state’s minimum wage to $12 an hour.

This isn’t an outrageous figure. Many other developed countries around the world, including France and Canada, have national minimum wages far above America’s, and Australians enjoy a minimum wage of about $16 an hour, along with 5.8% unemployment.

A $12 minimum wage would boost the incomes of one-third of California’s wage earners, with the average increase being in the $5,000 range for a single full-time worker, or $10,000 for a couple. These dollar amounts are large enough to lift millions of working families out of poverty. Continue reading

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Conservatives for More Welfare

Republished from The Unz Review

As economic inequality and the plight of the working-poor have suddenly erupted as leading topics in the national debate, the proposed solution of a big minimum wage hike has evoked many varied reactions.

On the Democratic side, the responses have been pretty much what one might expect. In recent decades, liberals had shied away from focusing on the minimum wage as a central economic tool, fearful that there might be widespread job loss among the very workers who were the intended beneficiaries. Just a couple of years ago, prominent liberal pundits denounced proposals to hike the minimum wage hike as evidence of economic ignorance, and even such leading luminaries as Paul Krugman and Joseph Stiglitz had been reluctant to embrace the idea.

But with new research indicating that job losses would be far less severe than previously believed, such positions have naturally evolved, and earlier this year both Krugman and Stiglitz endorsed a much higher minimum wage. Reassured by backers of such intellectual heft, rank-and-file liberals have eagerly signed on to the idea of helping low-wage workers simply by raising their wages.

The huge popularity of the issue certainly hasn’t hurt in this regard. In November a Gallup poll put popular support for a minimum wage hike at 76%, up five points from March and in December, a Reason Foundation poll reported very similar numbers. The Reason Foundation is a libertarian thinktank strongly opposed to minimum wage laws and most other government regulations and if they say that public support for a higher minimum wage is absolutely overwhelming, then it probably is.

Persuading Democrats to back a policy that benefits the underprivileged while also being popular enough to get them victories at the polls isn’t a difficult sell, and the entire Democratic Party apparatus has begun buying into a minimum wage hike as a winning issue for the 2014 elections, especially since it serves as an effective means of deflecting public attention away from the Obamacare debacle. More money for the poor and more votes for Democrats sounds awfully nice to political operatives on the left and the candidates they control, and the fact that the proposal might even make sense as public policy is an added bonus. Continue reading

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Raise the Minimum Wage to $12 an Hour

From Making Low Wages Livable – A Symposium  in The New York Times

Tens of millions of low-wage workers in the United States are trapped in lives of poverty. Many suggestions have been put forth to improve their difficult situation, ranging from new social welfare programs to enhanced adult education to greater unionization. But I think the easiest solution is also the simplest: just raise their wages.

The current federal minimum wage is $7.25 per hour and hiking it to $12 would solve many of our economic problems at a single stroke.

A $12 minimum wage is hardly extreme or ridiculous. At the 1968 height of our post-war economic prosperity, the American minimum wage was over$10.50 in current dollars, and setting the rate at $12 today would represent a real rise of merely 11 percent over a 45-year period, which seems reasonable since worker productivity has grown by over 115 percent during the same period. The minimum wage in France is almost $13 while Australian workers benefit from an hourly minimum wage of around $15, together withunemployment of just 5.7 percent.

Walmart is America’s largest private employer and 300,000 of its workers have average wages of just $8.75 per hour, forcing many of them to receive food stamps and other government welfare benefits to survive. But if a minimum wage hike boosted their pay to at least $12 per hour, Walmart could cover the costs by a one-time price rise of just 1.1 percent, and the average Walmart shopper would only pay an extra $12.50 per year. Meanwhile, a $12 minimum wage would increase the incomes of America’s lower-wage work force by a total of over $150 billion each year, shifting those huge sums from the pockets of the sort of people who don’t shop at Walmart to those who do. A minimum wage of $12 per hour would be very good for Walmart’s business.

And not just Walmart. America’s low-wage families tend to spend every dollar they earn, so a large minimum wage hike would constitute an enormous, permanent economic stimulus package, but one funded entirely by the private sector. Since wages would be rising nationwide, businesses could raise their prices to cover much or most of the added costs. Low-wage workers tend to be employed in the non-tradeable service sector, making their jobs relatively safe from foreign competition or automation. They’d keep their jobs, but their incomes would rise by 30 or 40 percent.

The impact on U.S. households would be enormous and bipartisan. Some 42 percent of American wage-workers would benefit from a $12 minimum wage and their average annual gain would be $5,000 per worker, $10,000 per couple, which is very serious money for a working-poor family. White Southerners are the base of today’s Republican Party, and 40 percent of them would gain, seeing their annual incomes rise by an average $4,500 per worker. If Rush Limbaugh – who earns over $70 million per year – denounced the proposal, they’d stop listening to him. Hispanics would gain the most, with 55 percent of their wage-workers getting a big raise and the benefits probably touching the vast majority of Latino families.

Ordinary taxpayers would be the other great beneficiaries, saving many tens of billions of dollars each year in payments for Food Stamps, the Earned Income Tax Credit, housing subsidies, and other social welfare programs. Businesses should pay their own employees rather than quietly shifting the burden to government programs and the American taxpayer. Conservatives and free-market supporters should endorse this simple idea.

The best way to help low-wage workers is to raise their wages.

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A $12 Minimum Wage: Transforming Policy Idea into Political Reality

Republished from The Unz Review

As most readers have no doubt already heard, early last week I filed the text of an initiative that would raise California’s minimum wage to $12.00 per hour, a figure far higher than that of any state or city in America. The heavy resulting coverage in The New York Times and numerous other major media outlets demonstrates the timeliness and public resonance of the issue, which taken to a national level should boost the incomes of America’s lower-wage workers by well over $150 billion each year, a very sizeable amount.

The idea was hardly a new one to me, given that I’d first proposed it in a 12,000 cover story published during late summer 2011 and subsequently advocated it in a long series of articles and columns, notably including a major 2012 paper published by The New America Foundation.  In February of this year, I’d spoken about the idea at an Aspen Institute panel in DC, and more recently it had repeatedly come up during a televised late October Intelligence Squared debate in NYC while I’d made a presentation advocating a $12 minimum wage two weeks afterward at a DC economics conference organized by Economists for Peace and Security.

But who’d paid attention to all my writings and speeches over the last couple of years? Almost nobody.

Well, that’s not entirely correct. Quite a number of prominent policy experts, opinion journalists, and political activists had been intrigued by my unorthodox arguments, leading to those aforementioned speaking engagements. Economist James Galbraith and the late Alex Cockburn had extensively discussed my lengthy original article, as had blogger Steve Sailer, and National Review’s Reihan Salam actually published a five-part series analyzing my views.  A few months ago, progressive activist T.A. Frank writing in the New Republic had explicitly endorsed the immigration aspects of my proposed $12 per hour minimum wage hike, and—much more remarkably—so had Andrew Stuttaford of National Review. Two weeks ago a Michael Tomasky column in The Daily Beast had explored my counter-intuitive argument that a larger minimum wage hike would actually have much greater political viability than the $9.00 figure advocated by President Obama.

However, all these discussions were restricted to the tiny gilded ghetto of opinion journalism and policy presentations, never reaching the news headlines providing most normal Americans with their knowledge of the world between their devouring focus on the latest antics of the Kardashians and Miley Cyrus. Frankly, I doubt if more than one American in ten thousand had ever encountered my proposal of a $12 minimum wage. Continue reading

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Open Borders, American Elites, and the Minimum Wage

Read at The Unz Review

Last week I took a brief break from two months of concentrated software development effort on my new publication The Unz Review to travel to NYC for a debate on a hypothetical “Open Borders” proposal for private employment, one in a long series of such public events produced by Intelligence Squared. The event was carried on NPR and rebroadcast on some television outlets, but may most easily be watched online at their website, with the organizers also making available a convenient transcript.

Although the debate was a useful discussion of an interesting issue and went well, I believe its greatest value were some of the ancillary aspects, including the important insights it provided into the unchallenged assumptions of America’s insular ruling elites.

Under the regular operating rules, the organizers held before and after votes of the large New York City audience, regarding the winning side as being the team that shifted the margin in their direction. Given my two decades of past writing on immigration issues, I found it quite ironic and amusing that I had been selected for the “anti-immigration” side of the debate, together with Kathleen Newland, co-founder of the eminently pro-immigrant Migration Policy Center. This indicates how yesterday’s fringe ideas have now become the accepted mainstream views of the American elites. The resolution under consideration was certainly as extreme and radical a formulation of the views of economic libertarians as might be imagined: “Let Anyone Take A Job Anywhere.”

Under the literal interpretation of such a proposal, one can easily imagine twenty or thirty million of the world’s desperate poor coming to America within the first few years of enactment, drawn from a global pool numbering in the billions. The resulting social and economic changes would be on a scale unprecedented in human history let alone America’s past, and the potential for an utterly destructive outcome leading to the collapse of our society seems completely obvious.

Nonetheless, at the pre-debate vote the supporters of this proposal outnumbered opponents by a landslide margin of some twenty-five points, 46% to 21%, while one-third of the audience remained undecided. Indeed, during the televised pre-debate discussion between the moderator and the Intelligence Squared chairman, some doubts were expressed that any intelligent person could oppose such a sensible free market policy in labor mobility.


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Announcing The Unz Review

Following over two months of concentrated development effort, I’m very pleased to finally release my new webzine, The Unz Review, intended to provide a convenient platform for many of those important and controversial perspectives regularly ignored by our mainstream media outlets.

The nature of this website and my reasons for establishing it are extensively discussed in the Mission Statement.

During this development process several prominent writers and intellectuals have authorized me to republish their extensive collections of writings, providing me with almost 6,000 articles and columns in my current archives, and good prospects for rapid further increases in the near future.

Since the website is currently a work-in-progress, not all features have yet been completed or enabled.  For example, the commenting has not yet been enabled, the Twitter and Facebook operations are minimal, the RSS feed are not yet fully operational, and so forth.  Furthermore, during this initial period the publication of original writing will be minimal, with the bulk of new material being the syndicated output of various columnists and bloggers.  I am also sure that many small problems or undiscovered software bugs will have to be fixed, perhaps requiring episodic temporary shutdowns of the website.

However, I am generally pleased with the relatively rapid launch of this new media outlet and hope that many of the readers share my opinion.  As a famous Chinese philosopher observed, a journey of a thousand miles begins with a single step.

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Race and Crime in America

Now read “Race and Crime in America” at The Unz Review

ViewAsPDF2The noted science fiction writer Philip K. Dick once declared that “Reality is what continues to exist whether you believe in it or not.”  Such an observation should be kept in mind when we consider some of the touchier aspects of American society.

Recall the notorious case of Daniel Patrick Moynihan, whose 1965 report on the terrible deterioration in the condition of the black American family aroused such a firestorm of denunciation and outrage in liberal circles that the topic was rendered totally radioactive for the better part of a generation.  Eventually the continuing deterioration reached such massive proportions that the subject was taken up again by prominent liberals in the 1980s, who then declared Moynihan a prophetic voice, unjustly condemned.

This contentious history of racially-charged social analysis was certainly in the back of my mind when I began my quantitative research into Hispanic crime rates in late 2009.  One traditional difficulty in producing such estimates had been the problematical nature of the data.  Although the FBI Uniform Crime Reports readily show the annual totals of black and Asian criminal perpetrators, Hispanics are generally grouped together with whites and no separate figures are provided, thereby allowing all sorts of extreme speculation by those so inclined.

In order to distinguish reality from vivid imagination, a major section of my analysis focused on the data from America’s larger cities, exploring the correlations between their FBI-reported crime rates and their Census-reported ethnic proportions.  If urban crime rates had little relation to the relative size of the local Hispanic population, this would indicate that Hispanics did not have unusually high rates of criminality.  Furthermore, densely populated urban centers have almost always had far more crime than rural areas or suburbs, so restricting the analysis to cities would reduce the impact of that extraneous variable, which might otherwise artificially inflate the national crime statistics for a heavily urbanized population group such as Hispanics.

My expectations proved entirely correct, and the correlations between Hispanic percentages and local crime rates were usually quite close to the same figures for whites, strongly supporting my hypothesis that the two groups had fairly similar rates of urban criminality despite their huge differences in socio-economic status.  But that same simple calculation yielded a remarkably strong correlation between black numbers and crime, fully confirming the implications of the FBI racial data on perpetrators.

This presented me with an obvious quandary. The topic of my article was “Hispanic crime” and my research findings were original and potentially an important addition to the public policy debate.  Yet the black crime figures in my charts and graphs were so striking that I realized they might easily overshadow my other results, becoming the focus of an explosive debate that would inevitably deflect attention away from my central conclusion.  Therefore, I chose to excise the black results, perhaps improperly elevating political prudence over intellectual candor.

I further justified this decision by noting that black crime in America had been an important topic of public discussion for at least the last half-century.  I reasoned that my findings must surely have been quietly known for decades to most social scientists in the relevant fields, and hence would add little to existing knowledge.  However, since that time a few private discussions have led me to seriously question that assumption, as has the emotion-laden but vacuous media firestorm surrounding the George Zimmerman trial.  I have therefore now decided to publish an expanded and unexpurgated version of my analysis, which I believe may have important explanatory value as well as some interesting policy implications. Continue reading

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NR on TNR on Unz on Minimum Wage/Immigration

Over the weekend, a leading financial voice at National Review—central ideological pillar of the mainstream American Right—gingerly endorsed my suggestion that a $12.00 per hour minimum wage be required as part of any Congressional immigration legislation. Perhaps miracles do indeed sometimes happen in real life.

My same proposal had also been endorsed a couple of days earlier in The New Republic, and since economic issues have never been my primary focus, perhaps I should recapitulate a little of the history.

Back in 1999 I had published a major cover story for Commentary entitled “California and the End of White America,” analyzing the implications of the massive racial transformation that my own state had recently undergone. During most of the 2000s, I was preoccupied with software projects and did almost no writing, despite having meanwhile become owner and publisher of The American Conservative. But in late 2011 I finally decided to produce a sequel to my Commentary piece, an updated analysis of those same demographic changes, which were now well on their way to transforming American society as a whole.

I had accumulated many additional ideas over the previous dozen years, and as might be expected, my text grew and grew, eventually exceeding 12,000 words. “Immigration, Republicans, and the End of White America” came to cover a great deal of ground, discussing the political, social, and economic aspects of America’s ongoing demographic revolution. Continue reading

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Race/IQ Revised

TAC-RaceIQLast year I published Race, IQ, and Wealth, presenting the overwhelming evidence that group IQs were far more malleable and shaped by social influences than is widely acknowledged in many quarters. The result was a lengthy and ferocious Internet debate, including an overwhelmingly negative and even hostile response to my suggestions, mostly by bloggers who had long specialized in that forbidden topic.

As the dozen or so rounds of the debate played out, some of my critics, including the most scholarly, began to acknowledge that my arguments actually had quite a bit of merit, and these “second thoughts” continued after the controversy had died down.

For example, late last year an erstwhile blogger-critic informed me that he had discovered the precise details of the huge but hotly-disputed 1972 IQ study in Ireland that I had repeatedly cited, and the methodology seemed exceptionally well-designed and sound. Therefore, I think it can not longer be seriously disputed that just forty years the population of Ireland did indeed have a mean IQ of only 87.

The recent defenestration of the unfortunate Dr. Jason Richwine has brought these issues once again back to the fore, and apparently sparked renewed interest. During the previous debate, one of my earliest and strongest quantitative critics had been someone styling himself “The Occidentalist” and running a blog of a similar name. But a few days ago, he published an extremely detailed 5,000 word article entitled “The Argument Ron Should Have Made” in which he now grudgingly acknowledges that many of my central arguments seem to have been correct after all.  This is a welcome change from his original response last year, which had characterized me as “egregiously dishonest” and my views as “laughable commentary.” Continue reading

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American Pravda: “Liberal Bias”

When a small publication such as The American Conservative publishes a sharp attack against the mainstream media as I recently did in American Pravda, the ultimate result largely depends upon whether that selfsame media will take any notice. Many tens or even low hundreds of thousands may read a highly popular article online, but such totals are negligible in a nation of over three hundred million, and those readers might anyway question the credibility of the charges. After all, one of my central arguments had been that our media decides what is real and what is nonsense.

With the media serving as gatekeeper to its own criticism, the impact of my efforts remained in substantial doubt over the last month, but early Monday morning the ground shifted as the venerable Atlantic—one of America’s oldest publications and still among the most influential—published a very thoughtful 2,000 word discussion of my piece, under the noteworthy heading “Why Does the American Media Get Big Stories Wrong?”.  Agreeing with me on some particulars and disagreeing on others, author Conor Friedersdorf helpfully summarized my critique while also providing several suggested answers to his own title-question, something that I had not treated in detail.

The article certainly seemed to strike a nerve, reaching #2 on the The Atlantic’s most read list, and the piece has now been tweeted out well over 500 times, with perhaps a hundred of those tweeters ranked as “influential” and often themselves being members of the journalistic community. Based on the a quick sampling of particular tweets, I’d estimate that over one million individuals and possibly as many as two or three million have now been alerted to the topic. Most Americans—especially most American journalists—realize perfectly well that our media ecosystem is broken, and are very concerned about the depth of the problem. The crucial question is whether others will now continue moving the story forward by taking advantage of the opening so helpfully produced by this important Atlantic article. Continue reading

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American Pravda: ZeroHedge

For years futurists have been regularly prophesizing that the power of the Internet will level the playing field between the mighty and the weak, and one more nugget of evidence that this day is finally dawning has now come to my attention.

A few days ago my regular Google sweeps discovered that a website called ZeroHedge had picked up and reprinted my recent article American Pravda, and although I had never heard of the source, I clicked a link and casually investigated. The website seems absolutely bare-bones in style, posts long essays one after the other, is apparently run on a quasi-volunteer basis by several pseudonymous editors, and focuses on financial or political issues, especially of a controversial or scandalous nature. That description would easily apply to a hundred or a thousand other webzines, but a crucial difference is ZeroHedge’s traffic, which seems to be absolutely enormous.

Although my article was just one of many posted that day, the running total of readers quickly reached ten or twenty thousand, while tweets went out to a vast multitude of recipients. In just a couple of days it accumulated as much readership as my original version had received in a week or two, and once I investigate the website’s traffic with the Alexa tool, I soon discovered why. This self-operated webzine, apparently run on a shoestring, seems to be almost as popular as the entire Atlantic website, with all of its archives, major feature stories by prominent journalists, and popular bloggers. Put another way, ZeroHedge’s traffic is several times larger than the combined total of National Review, The Nation, and The New Republic. And I’d never even known it existed until last week.

How did ZeroHedge become aware of my piece? While I can’t be sure, I strongly suspect that the lead came a few days earlier, when Tyler Cowen, a prominent professor of economics at George Mason University, had highlighted my piece at his popular Marginal Revolution blogsite under the attention-getting title “The Most Provocative, Fascinating, and Bizarre Piece I Read Today”. His posting generated a long thread containing hundreds of comments, a major outpouring of tweets, and a huge increase of traffic back to the original article. And since ZeroHedge seems to glory in shocking stories inadequately covered by our timorous mainstream media, they probably decided my material was right up their alley.

In any event, the combination of these new discussions and republications along with the Forbes column of the week before quickly tripled or quadrupled the total pageviews of my piece, which although still well behind my Meritocracy article, is now running almost three times ahead of my next most successful article.

And who knows what the future may bring? Sydney Schanberg ranks as one of the most renowned American journalists of his generation, many of today’s 50ish top MSM editors may have originally been inspired to become reporters by his film The Killing Fields, and he has uncovered what surely ranks as “the Scandal of the Century.” It would take just one curious MSM editor to assign one MSM reporter to interview him and publish the results to produce such an explosive MSM chain-reaction that surely “all the walls would start tumbling down.” Continue reading

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