The Wire

  • Nation of Islam Birmingham chapter leading Hoover boycott efforts

    Excerpt:

    The Birmingham chapter of the Nation of Islam – which is deemed an “extremist,” “deeply racist, antisemitic” “hate group” by the Southern Poverty Law Center (SPLC) and led nationally by the infamous Louis Farrakhan – is heading up the boycott effort in Hoover in the aftermath of Emantic “E.J.” Bradford, Jr.’s death in an officer-involved shooting at the Riverchase Galleria on Thanksgiving night.

    In a recent Facebook live video posted by Iva Williams, a spokesperson and the vice president for the activist organization led by self-proclaimed Hoover protest leader Carlos Chaverst, Jr., Williams confirmed that Tremon Muhammad, the student minister (pastor) for the Nation of Islam’s Muhammad Mosque No. 69 in Birmingham, is leading the boycott.

    He also detailed that the boycott is specifically meant to harm businesses owned by white people, with the activists planning on finding ways to help black-owned businesses in Hoover until their leases are up, at which time the businesses will be expected to move into majority-black areas of Birmingham.

  • AG Marshall: Prosecution of corruption remains a priority after Matt Hart’s departure

    Excerpt:

    On Friday’s episode of Alabama Public Television’s “Capitol Journal,” Alabama Attorney General Steve Marshall downplayed the departure of now-former Deputy Attorney General Matt Hart.

    Hart formerly led the AG’s Special Prosecutions Division and was perhaps best known for his prosecution of former Speaker of the House Mike Hubbard.

    In the interim, Hart had become somewhat of a media darling, and Marshall’s critics had charged politics was a motivation in Hart’s resignation. Marshall dismissed those claims and touted Hart’s successor, Clark Morris.

  • Women’s clothier raises $4,500 for police, others with ‘#HooverStrong’ T-shirts sales

    Excerpt:

    There’s no question that the last two weeks have been trying for Hoover retailers in the wake of the tragic shooting at the Riverchase Galleria on Thanksgiving night.

    With protests flaring up over dissatisfaction with law enforcement’s handling of the incident’s investigation, the circumstances have been trying for local retailers that were already dealing with the busy shopping season.

    However, one Hoover retailer is making the most of the situation.

1 week ago

Treading water on economic freedom

(YHN)

Economic freedom means the ability of individuals and businesses to contract freely with each other. The Fraser Institute recently released its 2018 Economic Freedom of North America, which rates freedom in the states. Alabama’s economic freedom score remained virtually unchanged from 2017, ranking us 25th among the states.

The state freedom rankings have three equally weighted components, government spending, taxes, and labor market freedom, and complement Fraser’s ratings of the freedom of nations. The scores range from 0 to 10 (the most freedom), and states are graded on a curve for each of the various elements of policy.

Alabama’s score now stands at 6.22, vs. 6.25 in 2017. Florida has the top score in 2018 at 7.87, followed by New Hampshire and Texas; New York brought up the rear (at 3.90), with Kentucky and West Virginia next.

Alabama does best on taxes, thanks to our low income and property taxes, while we trail the national averages for spending and labor market regulation. This year, our score for labor market freedom improved, our spending score declined and taxes remained unchanged.

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Economic freedom indices were developed in response to a challenge by economist Milton Friedman about better measuring all the ways government impacts the economy. They have allowed economists to more thoroughly investigate whether markets deliver the benefits promised by some economists. Dozens of studies now document that economic freedom yields higher standards of living, faster economic growth, higher incomes for the poor, and better environmental quality. The strongest results are found internationally, as freedom varies more between nations than across the U.S. states. Still, the states with the most economic freedom have more entrepreneurs and attract more new residents.

And yet in recent years cities and states have enacted or considered laws curtailing economic freedom. For example, three states and Washington, DC, now have $15 per hour minimum wages. Seattle nearly passed a $275 annual tax per employee on large employers, dubbed the Amazon tax. A November ballot proposal in California nearly lifted a 1995 state prohibition on municipal rent control laws. If economic freedom spurs prosperity so significantly, why are so many states embracing freedom-restricting policies?

A first factor, I think, is our now nearly decade-long recovery. People are more willing to share when they feel prosperous. We see this in charitable contributions, and I think it carries over to politics and, specifically, policies intended to help less fortunate Americans. Forcing Amazon and Starbucks to subsidize housing for low-income Seattle families seems like less of an imposition when the companies are earning profits.

Second, the costs of policies restricting economic freedom are often hard to see. Consider the minimum wage. Businesses employ fewer workers in low skilled jobs when the minimum wage rises. But the job losses rarely come in the form of pink slips immediately following an increase. Instead, businesses change their staffing as they typically do, through attrition. Workers never being hired can often go unnoticed.

Finally, the tendency of free-market economists like myself to exaggerate the costs of rent control or the minimum wage contributes. We often claim that ill-advised policies will wreck the economy. Economists have warned that President Trump’s tariffs on imports from China will likely trigger a “crippling” trade war.

Why economists resort to extremes makes sense. News organizations which use alarming headlines to get people to watch or click are more likely to report dire predictions. And perhaps sound bites can only communicate extreme warnings. But dire predictions combined with largely hidden costs make the economy appear impervious to price controls, taxes, and subsidies.

So perhaps it is good news that economic freedom remained basically unchanged in Alabama in 2018. We are largely resisting the temptation to indulge in well-meaning but costly government assistance during a strong economy. When the next recession inevitably occurs, times will be tougher for states not exercising restraint now.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

3 weeks ago

Data shows strong Alabama GDP growth

(Pixabay/YHN)

Alabama’s economy is booming under the leadership of Governor Kay Ivey and the Republicans in the State Legislature, according to the latest data released this month by the U.S. Bureau of Economic Analysis.

The data, which covers quarter two of 2018, showed Alabama with a 3.8 percent GDP growth, which bested the bordering states of Tennessee and Mississippi, along with the state Alabama is most compared with economically, South Carolina, which had a 3.2 percent GDP growth rate in quarter two.

Alabama’s 3.8 percent growth rate was essentially tied with Georgia, as well, which saw 3.9 percent GDP growth.

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Alabama’s growth was driven most by increases in real estate, professional, scientific and technical services, utilities, durable goods manufacturing, information and agricultural sectors. Construction, health care, mining and oil and gas extraction also significantly helped the Yellowhammer State’s GDP growth rate for the quarter.

The Ivey administration has been overseeing record bests in the state for the number of people working and the unemployment rate, hence Ivey’s slogan, “Alabama is working again.”

With the recent surge in Alabama’s economy comes new challenges for the state, as studies have shown that the state’s lagging infrastructure must be addressed for the success to continue down the road.

Ivey and the leaders in the statehouse (Senate Pro Tem Del Marsh and Majority Leader Greg Reed, as well as House Speaker Mac McCutcheon and Majority Leader Nathaniel Ledbetter) are expected to make an infrastructure package a top priority for the 2019 legislative session.

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn

4 weeks ago

Alabama unemployment remains stable at 4.1 percent — Record number of people working for sixth-consecutive month

(YHN/Pixabay)

The state’s seasonally adjusted rate remained at 4.1 percent, while its non-adjusted rate stayed at 3.8 percent for October, identical to September, according to data released by the Alabama Department of Labor on Friday.

Those levels are slightly higher than those from October 2017, at 3.8 percent and 3.6 percent respectively.

However, Alabama’s workforce, the number of people counted as employed, topped a record total workforce, continuing a trend that has lasted for six months.

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That number for October showed 2,122,970 employed, topping the prior month’s number of 2,117,359 and the October 2017′s number by more than 40,000. On the other side of the equation — the number of people counted as unemployed decreased from 90,818 in September to 89,754.

“More than 40,000 Alabamians now have jobs that didn’t last year,” Secretary of Labor Fitzgerald Washington said in a release. “That means that they are contributing to our state’s economy and providing for their families. Our labor force continues to grow, reaching its highest level of 2018, and the vast majority of those are finding jobs, which tells us that people have confidence in our economy.”

Washington also lauded the civilian labor force, which increased to 2,212,724 in October — its highest level of 2018 and a year-over-year increase of 48,254.

“Additionally, we broke the record for the number of jobs our economy is supporting – AGAIN – beating the previous record by more than 12,000 jobs. We’re beginning to see retail hiring pick up in preparation for the holidays, but over-the-year gains in high wage industries like manufacturing and construction are extremely encouraging, with yearly gains of 3.88% and 2.52%, respectively.”

It continued to be the case that the counties topping the overall unemployment levels are the ones that traditionally struggled with high rates, including the Black Belt counties of Wilcox, in at a whopping 8.8 percent, Clarke at 7.1 percent and Lowndes at 6.8 percent.

Counties with the state’s lowest unemployment levels are Shelby at 2.8 percent, a regular at the top of the Alabama Department of Labor’s list for lowest unemployment, Cullman at 3.2 percent, and Marshall and Elmore, each at 3.3 percent.

Birmingham “Over the Mountain” suburbs led the state with the cities with the lowest unemployment rates. Vestavia Hills and Homewood came in at 2.6 percent and Alabaster at 2.7 percent. Madison, near Huntsville, and Northport, near Tuscaloosa, both had levels of 2.8 percent.

The cities with the state’s highest levels continued to be Selma at 7.2 percent, Prichard at 6.8 percent and Anniston and Bessemer, each at 5.2 percent.

@Jeff_Poor is a graduate of Auburn University and is the editor of Breitbart TV.

1 month ago

The cost of employees

(YHN/Flaticon)

Most Americans have to work for a living. We must trade for the goods and services we want to consume, and for most of us, we trade our labor. Conflict over two legal work classifications, employees and independent contractors, illustrate how government’s rules can imperil economic prosperity.

People must work for a living, but people who want a job done, must secure assistance voluntarily through compensation. Difficult, physically demanding, boring, and dangerous tasks will require extra compensation.

Regulation heavily burdens business. According to a U.S. Small Business Administration study, federal regulations cost small businesses over $10,000 per employee. The National Small Business Association found that small businesses face $83,000 in regulatory costs during their first year of operation when owners struggle just to survive. Around 30 percent of a business’ labor cost is for benefits and paperwork.

How much do government rules affect hiring? Rules affecting employees include the minimum wage, overtime pay, workplace safety rules, collective bargaining and the National Labor Relations Act, the Americans with Disabilities Act, the Civil Rights Act, immigration eligibility, worker’s compensation and unemployment compensation. Many regulatory rules do not apply to independent contractors. Furthermore, requirements imposed on larger businesses are generally based on employees, not contractors.

Consumers must eventually pay for a business’ costs of complying with state and federal laws and rules. And costs tied specifically to employment reduce hiring to do tasks which create value in our economy. Half of small businesses report having held off hiring due to regulation.

Why do politicians impose so many rules on employment? In part, because mandates cost the government little; politicians do not spend tax dollars to boost wages or pay insurance premiums. The complexity of employment relations also matters, helping sustain an illusion of significant benefits to workers.

Businesses care about the full cost of an employee, meaning the wage or salary plus the cost of benefits, training, required paperwork, and so forth. When government mandates better terms for employees on one item, businesses can trim back others to contain the cost. For instance, less on-the-job training or flexibility in scheduling can offset the cost of a higher minimum wage.

The adjustments can cancel out mandated benefits. A college student might consider an $8 per hour job with the flexibility to adjust work hours around exams equal to a $10/hour with no flexibility. Raising the minimum wage to $10/hour may lead employers to eliminate flexibility, leaving the college student no better off.

Such offsets of government policies often go unnoticed. Supporters celebrate a hike in the minimum wage, or mandatory overtime pay, or required health insurance. Adjustments like a loss of scheduling flexibility may never get linked back to the policy. The mandate appears like a better deal than in reality.

As rules increased the cost of employment, businesses have not surprisingly tried reclassifying employees as independent contractors. The IRS and state governments enforce rules regarding these classifications, but some employers clearly try to bend the law. Efforts by state and federal regulators to protect traditional employment, however, also frustrate Americans seeking new self-employment options.

Work flexibility will be crucial to realize the full potential of the sharing economy. Exploiting opportunities for sharing will require many people to perform small tasks. Scooter rental companies like Spin and Lime, for instance, need people to charge their electric vehicles left on city sidewalks. Power and gardening tools sit in garages most of the time and could be widely shared. Getting tools to paying users and back to their owners will require on-demand delivery service. Each rental is unlikely to generate enough surplus value to cover employees’ costly regulations.

A market economy enables voluntary action in pursuit of our goals. The labor market forces people to pay for tasks they want performed. Burdensome government rules should not prevent willing parties from agreeing to deals to get work done.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

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2 months ago

Del Marsh releases campaign ad: ‘The government’s job is to stay out of yours’

(Del Marsh/YouTube)

Del Marsh released a new campaign ad on Tuesday.

The ad, titled ‘Government’s Job,’ touts Marsh’s record of job creation as a successful small businessman.

Marsh, who currently serves as president pro tem of the Alabama Senate, is shown throughout the ad in various industrial settings talking about his philosophy on the role of government in the economy.

Watch:

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Marsh closes the ad saying, “I believe the government’s job is to stay out of yours. I’m Del Marsh. I believe in low taxes and ending nonsense regulations. Because your hard work should pay off.”

Marsh’s use of the industrial imagery in the ad would seem to fit with his background and experience.

Yellowhammer News described Marsh this way in its 2018 Power and Influence 50 feature:

Del Marsh is the kind of public servant for which the current electorate craves and our founding fathers envisioned. Marsh originally ran for office simply because his state senator was not responsive to the needs of small business.

Once elected, Marsh became a tireless advocate for smaller government. He is as comfortable in a tree stand as he is a committee room and feels as much at home in his machine shop fabricating gun parts as he does working in a boardroom.

Marsh represents Senate District 12 in Calhoun and Talladega Counties.

2 months ago

Is Facebook really like Ma Bell?

(Pixabay)

Some commentators and politicians have proposed regulating Facebook, Twitter and Google as public utilities.

To make sense of this proposal, let’s consider the economic role of public utilities.

Today’s social media giants might meet the popular definition of monopoly, namely having a very large market share. Economists, however, use a much stricter definition, and public utility regulation is applied only to the specific type known as a “natural” monopoly. Natural monopoly refers to industries where the cost per unit produced or customer served falls due to a very high first unit cost and a very low cost of serving extra customers.

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Consider the electric grid. Establishing the grid requires generation plants, transmission lines, substations, and finally the power wires in our communities. Once built, the cost of connecting one more home or business to the grid is very low. The same dynamic applies to water and sewer systems, landline telephones and roads and streets.

One large firm will likely dominate such industries. Why? Competition drives price down to the cost of production. Here, the largest firm has a cost advantage and can profitably charge lower prices than its rivals. Smaller firms can either match the leader’s price and lose money or maintain a profitable price and likely lose customers. After the smaller guys go bankrupt, the large firm can raise its price and earn big profits.

We frequently use anti-trust laws to prevent the establishment of or to break up existing monopolies. But breaking up a natural monopoly is unlikely to produce competition for long. The largest firm’s cost advantage doesn’t go away.

What are the alternatives? One is government ownership of the utility, which we rely on for water, sewers, roads, and electricity in communities like Troy. Cooperative ownership by customers – electric and natural gas co-ops – prevents managers from trying to profit at customers’ expense.

Public utilities regulation gives a private, for-profit company an exclusive service territory, albeit with restrictions. Government regulators, in Alabama the Public Service Commission, set prices and other terms of service. And the utility is a common carrier who must provide service to all customers willing to pay the regulated price. Economists and lawyers developed the public utilities doctrine around 1900.

Another way to think about a public utility is that competition between profit-seeking businesses normally best serves customers. But the enormous cost of power grids renders multiple systems and competition unattractive. Perhaps having one grid and economists deliver the benefits of competition through rules makes more sense.

Whether the public utilities doctrine served America well during the 20th Century is a question for another day. How about applying this model to social media today?

Facebook and Google meet the popular definition of monopoly – they dominate their markets. Twitter dominates its unique product, but alternatives exist to push out messages. None of the three has a massive, critical physical infrastructure creating declining cost per customer.

The social media giants do possess an advantage resembling natural monopoly. They have coordination value: the value of being on Facebook increases with the number of other users. Economists call this a network effect. Although many economists fear that network effects might lock us into inferior technology, in practice entrepreneurs can get consumers to switch: we do not still watch VHS movies and listen to cassettes.

The social media companies serve their customers very well. For instance, YouTube’s advertising allows performers to earn money, with some stars earning millions per year. Facebook has offered users innovative features and an easy interface. Market domination due to better service benefits consumers.

Alternatives to Facebook currently exist, like LinkedIn and even MySpace. More significantly, a new rival would not have to duplicate a massively costly physical infrastructure. The economic case for regulating the fast-changing digital world with a model designed for the physical world is weak. Today’s social media giants will likely have a much shorter time on our economic stage than phone and electric utilities unless we cement their positions via regulation.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

2 months ago

Terri Sewell: Trump’s first tax cuts ‘disastrous,’ new plan ‘unconscionable’

(Screenshot / Facebook)

Monday, Representative Terri Sewell (AL-7) gave a fiery speech on the floor of the United States House of Representatives attacking President Donald Trump’s tax cuts that were passed last year and opposing new tax cut legislation.

The already-passed tax cuts, entitled the Tax Cuts and Jobs Act, have been widely praised as aiding the booming national economy. Now, Republicans want to build on this progress through “Tax Reform 2.0,” a series of bills that would modify and build upon this legislation.

While Alabama’s Republican members of the House all are on board, including recent supportive, public editorials by Rep. Bradley Byrne (AL-1) and Rep. Martha Roby (AL-2), the state’s lone Democrat in the House is adamantly against more tax cuts, on top of continued frustration over the 2017 legislation passing.

“Less than a year after the first disastrous tax bill, we are voting on another bill that would double this betrayal and put hardworking families that are working every day to make ends meet, even further into debt,” Sewell asserted.

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“It is unconscionable that Republicans are trying to pass another batch of tax cuts that will add another $650 billion to the $2.3 trillion that they’ve already spent through the tax code … vote no on this reckless tax cut,” she added.

Read about Tax Reform 2.0, which passed the House Thursday and Friday and now awaits committee action in the Senate, from Byrne here and Roby here.

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn

3 months ago

Paying for checked bags

(Pixabay)

United and Jet Blue recently increased their checked bag fee to $30. Nobody likes paying for things we didn’t pay for in the past, like checked luggage. A bill in the U.S. Senate would limit airlines’ checked bag and other fees, which topped $7 billion in 2016. But economics suggests that bag fees can make air travel more efficient, not merely extract money from travelers.

American was the major airline to charge for checked bags in 2008. The fee rose from $15 initially to $25, and almost all airlines except Southwest use this fee, while some regional airlines even charge for carry-on bags. Airline credit cards and frequent flier programs often allow free bags.

It is tempting but inaccurate to say that until 2008 passengers did not pay for checked bags. Carrying luggage is costly: airlines need larger planes with cargo space and must hire baggage handlers, while extra weight requires extra jet fuel. U.S. airlines are businesses and cannot lose money for too long. Revenue must at least cover costs, with or without bag fees.

Prior to 2008, the price of tickets covered the cost of carrying bags, averaged across all fliers. If passengers checked on average one bag each, perhaps $25 of the ticket price would have covered baggage costs. Fliers with many bags would prefer paying a ticket price covering the average number of checked bags, while passengers without bags effectively paid for others’ luggage.

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Travelers now must pay for checked luggage. This should make air travel more efficient overall. Previously passengers might have checked a bag with contents providing only $10 or $20 of value to them. If the $25 bag fee approximately equals the airlines’ cost of transporting bags, a bag valued at $10 will no longer fly, which is good because it was not worth the cost.

My points about bags apply to other airline services like meals and beverages. If airlines do not charge for alcoholic beverages or meals, ticket prices must cover these costs. First class passengers still receive such “freebies” but their expensive tickets certainly cover the costs.

Should airlines then charge for everything, including the reading light or the lavatory? Two factors limit charging for everything. One is the cost of restricting access and collecting money from willing users. Electronic payments make collecting fees easier, but lavatories would need to be accessible only after paying. Negative reactions from passengers also matter. People do not like being nickel-and-dimed for every little thing; losing a frequent flyer due to a $3 fee is bad business. Social media now amplifies customer complaints.

Until 1978, the Civil Aeronautics Board (CAB) regulated U.S. airlines, including the routes airlines could fly and fares. Forty years of deregulation have reduced fares by 50 percent in exchange for few extra services. Today, most Americans can fly at least occasionally; under government regulation, flying was primarily for business travelers and the well-to-do.

Senators Markey of Massachusetts and Blumenthal of Connecticut have introduced the Forbid Airlines from Imposing Ridiculous Fees, or FAIR, Act to limit fees of any sort, including for changes or cancellation. Rebooking fees run from $75 to $300 plus the difference in price of the flights. Cancellations can result in seats going unused on high demand flights and thus cost airlines. While these fees seem high to me, airlines know much more about their operations and costs than I do.

Competition between airlines for passengers is a better way to keep fees reasonable, fares low, and service quality high. Southwest advertises that bags fly free, and airlines seeking competitive advantage will undercut any excessive fees. If the Senators want to assist the flying public, they should address access to gates at our nation’s airports, a factor which economists find limits competition.

Travelers will pay for checked luggage, either through fees for each bag or higher ticket prices. While it is nice when someone pays for us, air travel is more efficient when we each pay our own way.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.