The Caffeinated Penguin

musings of a crackpot hacker

The $15 minimum wage is government pushing people off a cliff.

| December 17, 2015

So, there has been a lot of talk about a $15 minimum wage. Any idea where what number comes from? I have a theory. But first, a graph:

Graph of welfare cliffs. Click graph to open larger in a new tab.

Now, this is for Pennsylvania, and is a few years old, so the numbers have varied slightly. For example, that first big cliff is now about $32,000 as opposed to $29,000.

Now, some math – $15/hr 40 hrs/week 52 weeks a year (aka US full time work) = $31,200. This means that, at best, you are going to be pushed right up to the edge of the cliff and, at worst, over it, which would mean that you won’t be doing nearly as well as you would have if the government hadn’t raised the minimum wage.

Let’s assume, for the sake of argument, that the government pays you $30,000 if you make up to $32,000 and then pays you $25,000 if you make $32,001 (this is loosely extrapolated from the graph, and assumes that the minimum wage WON’T push you over the cliff). So, in the former case, you get $62,000, and in the latter, you only get $57,001.

This gives a few different sequences of events:

  1. If Alice is working for the current minimum wage of, say $8/hr, her current pay is $16,640 and, with benefit, that will go to $46,640. If the minimum wage is raised, she suddenly goes to $61,200. The government can legitimately claim this is helping her (and it is) while costing the government nothing (assuming that her employer can absorb the cost, which we will assume it can). So, she remains getting the same subsidy and the government just forces employers to pay more.
  2. If Alice then gets a raise to $15.50/hr, she will now be making $32,240 and therefore will get $57,240 after her subsidy. In this way, she is made worse off, but the government saves $5,000 annually whilst simultaneously being able to claim that it helped the poor by raising the minimum wage (because, remember, it helped Alice in the above scenario). As long as people never make the connection of the former causing a problem here, they can get away with it. Further, even though Alice has fallen off a cliff, she is still better off than before the minimum wage raise because before she was making $46,640 and now she’s making $57,240.
  3. If, however, Alice is a sharp person, she will realize that she is better off not working full time, and instead dropping back to 51 weeks a year rather than 52 (essentially, taking just the right amount of unpaid leave), which would get her $31,620 in pay ($61,620 after benefit), or cutting back to just 39 hours a week, which would give her $31,434 ($61,434 after benefit). Once you apply this logic to a large enough population, what happens? For every few dozen people who do this, businesses will likely have to hire an extra person to make up the hours. As such, the government won’t have to pay those people unemployment benefit and it will make the unemployment numbers look better. The more raises Alice gets, the less she has to work, and the more people would need to be employed to make up for her reduced hours. Now, this is all assuming it doesn’t push her over the cliff and looks pretty shady. If you tweak the numbers so that the cliff is at $31,000, then she is immediately pushed out of full time work because she’d be making $31,200.

So, is this really about trying to give people a living wage, or about externalizing costs while having the government have to pay less out of its various social welfare programs?

Protectionist tariffs are ultimately self-defeating

| December 17, 2015

So, the whole idea that we’re “losing the trade war” gets trotted out as a populist meme every few elections, and it’s apparently that time again, because I’m hearing it again, this time from a rather loud fellow with bad spray-tan-esque makeup and vastly more hair than I have. At the risk of trying to resist the idea that bravado and follicular fortitude automatically win arguments, allow me to try and offer some logic. Typically, the way you fight in the trade war is to adjust your tariffs to protect domestic industries, which is what I will address here.

So, a parable of what actually happens.

Alice starts a company making widgets. She is an excellent widget maker, and her widgets are top notch. Perhaps they are patented, perhaps not, not really relevant. She makes widgets for years, is renowned for the quality, and her widgets are sold for $500 each.

Now, some time passes, the patent expires, or someone else sees a market opportunity. Enter Bob. He makes widgets similar to Alice’s, but at about half the quality, and he can charge $200 for his (either because of lower cost or lower profit margins, but that’s not really relevant, it’s merely his business model).

Time passes and Alice starts to notice her sales drop, investigates why and finds out that some foreigner, Bob, is making widgets. She does some market research and finds out that the people buying her widgets are willing to pay for quality whereas the people buying Bob’s widgets don’t care that the widgets wear out, because they’re used in more disposable or lower use applications. (This is akin to the whole “if you want a tool that lasts, go to Lowe’s or Home Depot and select said tool from the good/better/best sections. If you want to tool that is cheap, you go to Harbor Freight. The Lowe’s/Home Depot tool will generally be better and last longer, but the Harbor Freight tool is so cheap you can literally throw it away when you’re done with it, and thus build it into the cost of the project.)

Let’s assume that half of the widget buyers in the world want quality, and half of the widget buyers want cheap. Hence, Alice and Bob each control half of the worldwide market.

Now, Alice has a few options:

  1. Compromise on quality, perhaps by introducing a cheaper version to compete with Bob.
  2. Compromise on price, likely either by investing more heavily in automation thus lowering the cost of production, or by cutting profits.
  3. Convince people that they should buy her widgets and not Bob’s due to some motivator (superior quality, “buy local”, etc.). This is essentially advertising.
  4. Lobby the government for protection. Of course, since we’re talking about tariffs, she’s going to lobby for protection.

So, she goes to her friendly local government and convinces them that she is facing unfair competition from that evil foreigner Bob, that her business is vital to the local economy since she provides jobs, and that they should help her by “leveling the playing field” and “making it fair” (two common phrases I hear a lot). The government looks at it and says “well, if Alice sells for $500 and Bob sells for $200, let’s charge a $300 tariff on Bob’s widgets because then people will buy Alice’s widgets because they get superior quality for the same cost”. So, what happens when they do that?

  1. Many people in Alice’s domestic market will switch to buying Alice’s widgets.
  2. Any one who doesn’t will pay $200 to Bob and $300 to the government. This is, of course, the government’s incentive – they get money here. If they were truly clever about it, they might make Bob’s tariff slightly less so that more people would buy Bob’s widgets than if the costs were equal, thus increasing tariff revenue. Meanwhile, Alice can’t complain because some people switched back to buy her widgets, so she is made better off.
  3. Since the tariffs are for domestic sales, worldwide sales are unaffected.
  4. Anyone who had been Bob’s stuff domestically is made worse off because they need to spend $300 more than they used to because Bob’s widgets at $200 are no longer an option. Hence, their costs go up and they have to raise prices or reduce profits. So, we’ll say that Alice now has 90% of the domestic market, with Bob having the remaining 10% and Bob and Alice both still have 50% of the worldwide market. Alice is not as well off as she was before Bob’s competition, because then she had 100% of both markets, but she’s better off than in a truly free market, because the government has effectively subsidized her business for the cost of some amount of lobbying.

Then time passes and there are more entrants into the market. On the worldwide scale, they have to all compete with each other on delivering varying quality for the cost. However, in the domestic market, cost is fixed, so you can only compete on quality. Alice remains strong domestically, because her quality is still the best, but her worldwide sales are gradually eaten by competitors.

Then, however, tragedy strikes. The domestic market slows, if not outright implodes, and Alice now has nearly no domestic revenue and only a very small amount of worldwide revenue. Alice goes out of business.

So, in the end:

  1. Alice is out of business.
  2. Domestic customers had to pay more for widgets for years, thus driving up the cost of their widget-using products which limits their ability to compete on the world stage because their parts cost is higher. Now, if the government had told Alice “no”, what would have happened? She would have either gone out of business right then (which happened eventually anyway) or (more likely) she would have had to actually compete, meaning she would have probably ended up with a greater worldwide market share (because her quality/cost ratio would have been better) and a lesser domestic share and thus have been more insulated from domestic demand fluctuations.

Hopefully this makes sense and explains things a bit for folks.

Comments, as always, are welcome.

A primer on what constitutes “common” firearms in various market segments

| December 8, 2015

So, a fellow blogger posted a suggestion that we limit the types of guns available to the public based on features or mode of operation. To his credit, he laid out the three major uses for firearms, that is:

  • Hunting
  • Sports
  • Personal defense

This is refreshing because I find that many of these conversations start with people immediately assuming that hunting is the only “valid” purpose for owning a firearm.

Anyway, I challenged him to describe what features or mode of operation would make a gun “suitable”, because I don’t really see a way to do that. He said that he didn’t know enough about the specifics of how people use firearms in all of those markets to be able to offer guidelines. Hence, I wrote the following, which I hope other people may find useful:

Hunting

For really small game, you’re generally going to use a rifle in .22 or .223. .223 is good for stuff about coyote sized. There’s probably an even split between semi-auto and non-semi auto rifles in this market. If you’re talking some markets, like folks who shoot prairie dogs, long range ARs in .223 pretty much rule this market segment.

For the next size up, you’re talking your more medium-sized game, including deer, antelope, and maybe even caribou, and you’re starting at stuff around the various .270 calibers, and probably topping out at your various .30 caliber cartridges. In common use here are: .30-30, .308, .30-06, and various .300 Magnum calibers. Bolt action rifles tend to dominate here, because they’re light and good value for the money. Less common are lever action rifles and semi autos, including the AR-10, essentially an AR-15 chambered in .308. I used to use a semi-auto rifle (AR-15 pattern in .30 Remington AR, which is somewhere between .30-30 and .308 in power level) due to superior ergonomics. The new ban forced me to change it to make it very uncomfortable to shoot in order to remain legal, so I bought a cheap .30-06 bolt action rifle. It’s not as comfortable to shoot as the original configuration of the .30 RAR, but it’s more comfortable than the current configuration. It’s also about 50% more powerful.

The next size up is for your big stuff, like your elk, buffalo, etc. For that, you’re talking really heavy stuff – .30 caliber and bigger, and generally a magnum. So, .30-06 is about the floor here. .300 Winchester Mag and .300 Weatherby Mag are probably the most common, and then there’s more esoteric stuff. Here, boltguns pretty much rule, because there are very few semi-autos which can handle these power levels without being ungodly heavy for the field.

There are also odd specialty cases. For example, Liz had been hunting deer in NY with a 7mm-08 (.308 necked down to .270) with good success, but when she went hunting Dahl’s sheep above the arctic circle, she had to buy a .270 Weatherby Magnum. Essentially, the same bullet, travelling twice as fast. The reason is that your shots in NY are about 300 yards max, but you’re talking 1000 yards when hunting various mountain sheep.

Now, all of the above is for the stuff we consider to be not dangerous. As a general case, they’re far away from you, and are extremely unlikely to charge you. You need power projected at a distance. Dangerous game is generally the opposite. Note that they don’t necessarily need to be carnivorous – just dangerous. There are a lot of territorial herbivores which are likely to charge you if you make them angry (I’m looking at you, Cape Buffalo).

In these markets, double rifles used to rule. It’s like a double-barrelled shotgun, except the barrels are rifled. You got two shots, and if that didn’t drop it, you were likely dead. Risk was somewhat mitigated by hunting in a group, and/or having gun bearers to give you another gun. Key points here were low powered or no scopes and VERY powerful cartridges. Fast target acquisition, with about 100 yards maximum range.

In more modern times, the doubles have ceded ground to large-bore semiautos. They’re accurate enough out to 100 yards and are fast-handling. A common setup for hunting the various feral hog varieties which inflict significant crop damage in the south is an AR in something like .450 Bushmaster with a day/night scope because they often hunt at night and need night vision gear. If the hog charges, you need to shoot it repeatedly until it stops, else it will lay you open with its tusks. Carrying a backup (a 1911 in .45ACP is traditional) with a flashlight which you can transition to in the case of a stoppage or a series of misses is a common practice (where legal to do so – some jurisdictions let you only carry one firearm).

Aside: There are calibers commonly used in Africa that are not commonly by used by Americans even when in Africa, because they we seriously restricted (effectively banned) by the 1934 National Firearms Act.

Aaand, shoguns. If you take it from waterfowl hunting (typically ducks), volume is more important than precision. What I mean by this is that, instead of one well-placed shot dropping a deer, you’re looking at several reasonably well-placed shots (less well-placed because the shot spreads) attempting to drop several ducks. In this market, whatever shoots the fastest has always been king. Double guns, pump guns, and now semi-autos pretty much rule. Semi-autos with pistol grips are increasingly common because of how much more easily they handle and how comfortable they are to shoot.

Aside: Semi-auto rifles and shotguns with pistol grips are banned in NY state. Remove the pistol grip and they’re totally legal.

Now, when you go from ducks to turkeys, you don’t need to shoot that fast, but rather than buy two guns, you’re likely to use the same gun for turkeys as for ducks. As a general case, you might change the barrel, but only if your duck gun barrel is excessively long.

Some folks hunt deer with shotguns with rifled slug barrels, mainly because hunting deer with rifles is banned in their locality.

Oh, almost universally, hunting regulations limit the number of rounds your magazine can hold, typically 4. I think an exception is made when hunting with revolvers (as they can hold 6, and limiting them to 4 is not practical), but can’t say for certain.

Target Shooting

For this, I’m going to include all shooting sports, because you may not be familiar with them.

For general plinking, anything goes. You use whatever you feel like.

IDPA/IPSCC are shooting games designed around handgunnery. IDPA is based off production guns (like weekend car races where you race your daily driver) and IPSCC is based off the same thing.. kind of like NASCAR is. They guns bear a vague resemblance to something factory, but are otherwise super optimized and slicked up. Anyway, these are pretty well dominated by semi-autos in 9mm and .45 ACP., typically with as large magazines as can be fitted.

3-Gun is typically a pistol/rifle/shotgun competition. Pistols are as per IDPA, shotguns are generally semiautos (like the duck guns), but with extended magazines (so you need to reload less) or AK pattern SAIGA shotguns. Rifles are almost exclusively ARs. You could try to use a non-semi-auto, but you’d never even place because it’s a timed event.

Cowboy action shooting are like 3-Gun but based off cowboy guns. Revolvers, lever action rifles, and pump or lever actions shotguns. No semi-autos because they hadn’t been in common use yet (Magnificent Seven notwithstanding).

Long range shooting – here you’re talking heavy calibers (.338 Lapua and .50 BMG) at 1000 – 1500m. No particular action of rifle rules here, just caliber, quality, and accuracy.

Protection

When you’re not at home, your best strategy is to carry the most powerful gun, holding the most ammo, that you can. Pragmatism rules here, because it depends on what you’re worried about. In someplace like Alaska, you want a very heavy revolver (we’re talking about twice as powerful as Dirty Harry) because, you know, bears. In someplace a bit more civilized, a 9mm, .38Spl, or .45 ACP will work just fine. These are all over the place. I’d say semi-autos have a pretty hefty majority these days, and some folks carry lighter calibers than mentioned above, and a few carry heavier. I have a revolver in .38 Spl and a semi-auto in .45 ACP, but my license is restricted, so I basically am only allowed only carry to and from the range (lest someone try to jump me and take my firearms which are locked up in a box in the car, so I can’t stop them from doing so).

When at home, and portability isn’t really a problem, then it becomes an exercise in engineering tradeoffs. Firstly, handguns and handgun ammo sucks. A common axiom is that “handgun bullets are like aspirin – it takes several to do the job and they take awhile to work”. An overwhelming majority of people shot with handguns survive because, aside from the aforementioned nutty Dirty Harry calibers, they’re all pretty anemic.

Now, that said, irrespective of all laws, what I would say would be the best home defense gun pattern was a pistol-caliber short-barreled rifle. Think the old Tommy Gun, but semi-auto only (I’ll have notes on machineguns below). The issue with this is that the barrel is too short and therefore that one has been heavily controlled since the 1934 National Firearms Act. So, they had to extend the barrel by like 6″, which makes it not as handy for close combat.

The reason for choosing pistol ammo for home defense is because, as I said, it’s pretty weak. If you get hollow point or, even better, frangible rounds, it’s less likely to go through walls if you miss. You need lots of ammo because, when you have bag guys, you need to shoot them a lot. It’s more controllable and easier to shoot well than a pistol.

The next best thing is likely a shotgun, either pump or semi-auto. This is still less likely to penetrate (like pistol ammo), but is more powerful, and therefore a little harder to control. You also will get very few shots as compared to a pistol caliber carbine or rifle, unless you’re talking something exotic (and likely unreliable).

The final thing, which is actually the best thing if you don’t have any neighbors, but the most likely to send rounds sailing through all your walls and off into the night, is a semi-automatic rifle (aka an “assault rifle”). It’s rifle caliber, and therefore powerful, and you can generally get a lot of rounds in the magazine. A short-barreled version would be best, but, again, they’re heavily restricted after 1934.

For what it’s worth, my primary home defense gun is an AR-15 in .300 Blackout, which is better out of a 16″ gun than .223, and hits harder at sub 100m (and if you need longer range than that, it’s not really a home defense gun). But, then again, I don’t have neighbors nearby.

I should also note that pretty much all of the above, but especially home defense guns, are better off suppressed, because otherwise you’re going to have a hell of a ringing in your ears, and no one will be able to hear you. Rifle discharges in an enclosed space are no fun. Of course, suppressors are, you guessed it, restricted by the 1934 National Firearms Act.

Machineguns

These aren’t really super useful. Oh, they’re a load of fun, but even the military has been moving away from fully-automatic modes on general infantry rifles, because they waste ammo and you are sending more shots less accurately down range. Semi-auto rifles are emerging as the best balance, and automatic fire modes are being saved for dedicated squad automatic weapons and submachine guns. Personally, I have no issue with machine guns, or even with people owning machine guns (also heavily regulated by the 1934 National Firearms Act), but you’re only good with the guns with which you train, and I can’t afford the ammo bill of training with machine guns. So, a semi-auto gun is really the best balance, I think.

So, that’s the state of all the “market segments” (for lack of a better term) at the moment. I look forward to learning what of the above designs you would approve and what of them you would deny.

Oh, and as an aside, for all the “high powered” rifle talk on the news, they’re not. They’re actually about the LEAST powerful centerfire rifle cartridge in common use. The real heavy stuff is used for hunting.

On toddlers and property rights

| December 4, 2015

So, as most of you know, I have twin sons who turn two in a week. As is normal for children, they tend to fight over toys. However, I’ve observed the following, which I find very interesting:

Private property

They share a bedroom, but within this bedroom they have their own beds. Ownership was presumably established by the fact that they’ve always slept in the same beds (they convert from cribs to beds). I expect if we were to switch their positions in the rooms, they would continue to sleep in the bed in the same position, since the beds are otherwise identical. (This would be an interesting experiment, come to think of it).

In addition to the beds, they each have the following items over which clear ownership has been established1:

  • a baby blanket
  • a small stuffed animal (child A has an elephant, child B has a lamb)
  • a large stuffed tiger (child A has a Bengal tiger, child B has a Siberian tiger) The ownership of these items has never been in dispute. They do not need to be told to share these items and, in fact, A will often bring B B’s blanket (and the converse). They do not fight over them, and they do not share them. A taking of one of the above by the other does not even seem to be considered – it just doesn’t happen. In fact, if we do something like switch the large tigers so they are in opposite beds, the children will either cry and complain that the tigers are in the wrong beds or, more recently, will fix it themselves, as they now have the strength to do so (these stuffed tigers are the size of a Labrador).

1 I have no idea how this was established. This was emergent behavior. No one said “this is yours”. If I had to hazard a guess, I would speculate that ownership was established out of chance, because we tossed one animal in one bed and another in another bed.

The Commons

By contrast, when dealing with what is essentially “communal” property (toy cars, blocks, stuffed animals and the like), all of the standard clich├ęs of learning to “take turns” and “share” apply. They will fight over a much-desired toy, in many cases even when there are multiples of the same toy! Two toy cars, exactly the same, one child will have both, and the other child will have neither and be upset by this. There is a theory that shared property encourages overconsumption and/or hoarding in order to ensure the ability to utilize the property when you wish to do so – and that the children seem to intuitively realize this!

My part in teaching them

Of course, all of the above touches on how do you teach children about property rights, sharing, and their expectations. While I try to impress upon my children that it is nice to share, I also tell them that it is not required, and I never take toys from them to facilitate sharing. I do intervene in order to stop one child from taking a toy from the other (essentially acting as an enforcer of property rights), but that is the limit.

I do, however, encourage the child who who wants the toy to offer something in trade. Sometimes, this works well. The child with the desired toy likes what is being offered, and they engage in trade in which both are made better off. If the trade is not made, I tell the one offering the trade good that he needs to find something better, but I’m not going to make the other child give him something when he doesn’t want to. I then reassure the child who has retained the toy that he has done nothing wrong even though his brother is upset by not having the toy. If he wants to be nice, he may share it, but he doesn’t have to.

Another common trope (at least in my upbringing) was the “if you’re going to fight over it, nobody gets it”, which I absolutely abhor and have had to stop both grandmothers from instituting. After all, if you were sitting minding your own business playing with your phone, and someone came up and said “I want your phone”, and you said “no”, and then a fight ensued, and, when the police showed up, they took away your phone because “you’re fighting over it, so no one gets it”, you’d be retaining the services of a civil rights lawyer as soon as you can get to a phone (civil asset forfeiture laws notwithstanding). So, how is it suddenly acceptable to use this disciplinary logic on children? (I expect the answer is “lazy parenting” because the parents simply want the children to shut up and leave them alone so they can do whatever it is they’re trying to get done, but I’d be speculating).