Thursday, July 23, 2015

Rational Expectations

Rational expectations theory holds that people will guide their actions to optimize outcomes for their personal gain  They become increasingly immune to manipulation as they lose their naivete.

This is a riff on Adam Smith's "invisible guiding hand".

Evidence that supports this theory is extremely vexing to central planners and socialists.

Story HERE:  Seattle sees fallout from $15/hr minimum wage

Seattle’s $15 minimum wage law is supposed to lift workers out of poverty and move them off public assistance. But there may be a hitch in the plan.

Despite a booming economy throughout western Washington, the state’s welfare caseload has dropped very little since the higher wage phase began in Seattle in April. In March 130,851 people were enrolled in the Basic Food program. In April, the caseload dropped to 130,376.

At the same time, prices appear to be going up on just about everything.

Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less.  “If they cut down their hours to stay on those (means tested) subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a (additional) burden on the business..."

1 comment:

  1. The full story hasn't been written (or felt) yet on the implementation of Obamacare. Some things still to come, as early as Jan 1st. Talking to accountants, it's going to be painfully expensive for businesses and is truly going to hurt those who need medical insurance subsidies.


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