Two interesting items in today's Political Diary:
More Kelo Backlash
No Supreme Court decision in recent years has angered Americans quite like last year's 5-4 ruling in Kelo v. New London has. It effectively upheld the right of government entities to take private property to benefit private concerns in the name of economic development. Polls showed over 90% of Americans disagreed with the decision.
Now the market is reacting to the near-universal outrage. BB&T, the nation's ninth largest financial holdings company, announced yesterday that it will no longer lend to commercial developers that use eminent domain to take land from private citizens. "One of the most basic rights of every citizen is to keep what they own." BB&T Chairman and CEO John Allison explained. "We won't help any entity or company that would undermine that mission and threaten the hard-earned American dream of property ownership."
The announcement will encourage property rights advocates, who last year convinced the House of Representatives to approve a bill blocking federal funds from being given to private development projects that benefit from eminent domain. The Senate has yet to vote on companion legislation, but Majority Leader Bill Frist is supportive. The Institute for Justice, the public interest law firm that argued Kelo on behalf of property owners, believes that BB&T's decision will prompt other lending firms to follow their example. "As far as we're concerned, BB&T now stands for Best Bank in Town," says Chip Mellor, the law firm's president.
Economists have long known that only a few people try to support a family on a minimum-wage salary, and that hikes in the minimum wage reduce opportunities for entry-level and unskilled workers. That's why California State Senator Tom McClintock calls the minimum wage the worst tax ever on the "disadvantaged teens of California."
Indeed, fast-food outlets and other businesses may have come up with a way of outflanking state efforts with automation. Some McDonald's franchisees are discovering they can provide better service and shorter waiting times at a lower cost by having call centers in another state take a customer's order through a speaker phone equipped with a digital camera. Thanks to specialization, call center workers are more accurate and faster in filling customer requests such as holding the pickle or the lettuce. They also are skilled at convincing customers to "order up" and spend more, thus making them cheaper overall than on-site teenage workers.
Restaurant analysts expect call center use to spread in California if the minimum wage goes up there. In neighboring Oregon, the minimum wage is $7.25 an hour and automatically indexed for inflation. Not surprisingly, the McDonald's in Hermiston, Oregon, near where my sister lives, outsources its drive-through orders to a call center in North Dakota. Those workers are paid about the same but have much higher productivity.
This is the tragedy of the mininum wage. Increases in it hurt those who it's designed to help. Especially in today's high-tech society, it's easy to move jobs elsewhere is wages get too expensive. The choice isn't really how much do politicans want someone to get paid, it's really do politicans want them to have a job at all?