Myth: Australia has a $16 minimum wage with no adverse effects.

Myth: Australia has a $16 minimum wage with no adverse effects.

First of all, there is a HUGE difference between nominal and real exchange rates. Nominal exchanges rates are the exchange rates people typically think about (the number of currency units of one country it takes to purchase one currency unit of another country). In contrast, the REAL exchange rate is the ratio between the domestic price level and the price level in a different country. Different countries have different domestic prices. The real exchange rate accounts for this difference while the nominal one does not. Thus, one should be skeptical of any claim that Australia has a minimum wage of $16. In terms of nominal exchange rates, the claim is true. However, real exchange rates are what matters since they take the cost of living into account.

Another thing worth noting about Australia’s minimum wage is that there are different minimum wage rates which apply to different age groups. Using the formula Q = P _d/( ε*P _f) to find the real exchange rate between the US dollar and Australian dollar, I was able to find how much the minimum wage is actually worth in Australia in 2013 (when the minimum wage was raised) for varying age groups:

Real Australian Minimum Wage (2013): [Data from citations 1 and 2]

Age 21+: $10.63

Age 18: $7.27

Age 16: $5.03

Under 16: $3.92

For Comparison:

United States real minimum wage (2013): $7.25

It appears as though while the Australian minimum wage in 2013 was greater than the minimum wage in the United States, it is still almost $6 lower than the figure minimum wage proponents cite. To be fair, since 2014 the real minimum wage for people aged 20+ in Australia has risen to $12.61 due to a rapid fall in the cost of living. Australia’s cost of living has changed randomly from year to year.

The unemployment rate in Australia when the minimum wage was raised (July 2013) was 5.7% and since then has risen to 6.0% [3]. Minimum wage proponents cite this relatively low unemployment rate as proof that raising the minimum wage will not increase unemployment. First, we should already expect Australia’s unemployment rate to be low based off the fact that it was one of the few developed countries not to suffer badly from the 2009 recession (their economy contracted 0.2% in contrast to the US economy which contracted 3.7%) [4]. Additionally, there are many reasons to expect that raising the minimum wage wouldn’t affect the overall unemployment rate. For one, most people earn more than the minimum wage. According to one article, only 2% of the workers in Australia are covered by the minimum wage [5].

Also, a low unemployment rate can be maintained simply because people have dropped out of the labor force and thus stopped looking for work. Indeed, a startling but superficial observation is that the labor force participation rate in Australia dropped steadily from 65.3% in June 2013 (the month before the minimum wage increase) to 64.5% in January 2014 (see below) [6]. Since then labor participation has slightly recovered. Was the minimum wage raise the cause of this decline in labor force participation?

As noted earlier, only a small amount of workers are covered by the minimum wage so it’s hard to say for certain (also other factors could be at play). However, as our friends over at Unbiased America have pointed out, minimum wage increases in the US have coincided with significant drops in labor force participation. The fact that the same thing occurred in Australia is intriguing.

In order to measure the effect of the minimum wage, researchers must examine employment and labor participation among low skilled workers and account for numerous other confounding variables. While there is no research on Australia’s current minimum wage to my knowledge, past research from Harvard University on Australia’s minimum wage has stated: “[F]or each 1 percent increase in the minimum wage we can expect... [to lose] 96,000 jobs" in Australia" [7].  

In conclusion, the minimum wage in Australia is much lower than its proponents state, but it is still much higher than the United States’ minimum wage. The low unemployment rate in Australia relative to other countries is due to the fact that it largely escaped the global recession when most developed countries didn’t. Additionally, we can’t expect to deduce the effects of a minimum wage increase on employment by solely looking at the unemployment rate. While more research on this issue is warranted, past research suggests that raising the minimum wage in the past has not benefitted Australia.

This myth is based off the wrong exchange rate and makes deductions based off superficial data. Thus, it shouldn’t even be considered a valid argument.

Parting notes: It’s worth mentioning that Australia has very admirable economic policies. They have relatively low government spending compared to other rich democracies and rank very highly on the Economic Freedom Indices. Their economy is so free in fact, that they are ranked as the third freest economy in the entire world [8]. Any negative effects that their minimum wage imposes on their economy are most definitely outweighed by the positive effects of economic freedom.

Citations:

[1] Aussie min wage: http://www.fairwork.gov.au/pay/national-minimum-wage/pages/default.aspx

[2] Cost of living data: http://www.numbeo.com/cost-of-living/rankings_by_country.jsp?title=2013

[3] http://www.tradingeconomics.com/australia/unemployment-rate

[4] http://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG

[5] http://truth-out.org/opinion/item/5601

[6] http://www.tradingeconomics.com/australia/labor-force-participation-rate

[7] http://andrewleigh.org/pdf/Minimum%20Wages%20(AER).pdf

[8] http://www.heritage.org/index/country/australia

Myth: The Scandinavian countries are proof socialism works.

Myth: The Scandinavian countries are proof socialism works.

This is a myth that is quite pernicious because no one bothers to fact check it. However, to those who have done their research, the Scandinavian countries are definitely not an example of where socialism works, rather they are an example of market economies with large public sectors. Also, it appears as though their large public sectors have been detrimental to economic growth, not conducive to it.

The Scandinavian countries economies are based off of the Nordic Model. Features of the Nordic Model include:

Welfare state programs such as:
-Universal healthcare and "free" education
-High percentage of workers belonging to unions
-High government spending as a percentage of GDP/ high tax burden

They also have strong free market traits including:
-Strong property rights, contract enforcement, and overall ease of doing business.
-Low barriers to free trade
- Little product market regulation. Nordic countries rank very high in product market freedom according to OECD rankings
- In many aspects of economic freedom, such as business, monetary, and investment freedom, Scandinavian countries are actually more free than the United States.

Indeed, the Scandinavian countries on net are some of the most capitalist countries in the world. In fact, the Scandinavian countries score very highly on the Economic Freedom of the World report 2013 report (10 being the highest and 0 being the lowest scores):

Economic freedom ranking:

-Sweden: 7.58 
-Norway:7.56
-Denmark: 7.78. 
-Finland: 7.98 (7th freest in the world)
-Iceland: 7.37


The research on economic freedom is generally supportive of the idea that more economic freedom leads to higher economic growth rates and the prosperity that comes with those growth rates. [2] From an economic perspective, the Scandinavian countries have excellent trade and monetary policies, but have sub-par labor freedom policies and their governments spend way too much. The economic policies of the Scandinavian countries can only be considered to be socialistic insofar as they have large public sectors. 

Government Spending as a % of GDP by country in 2012 [3]:

Scandinavian countries:

-Denmark: 56%

-Sweden: 51.2%

-Norway: 43.9%
-Finland: 55.1%
-Iceland: 47.3%

For comparison:

-United States: 41.6%
-Canada: 41.9%

-Switzerland: 33.8%

-Australia: 35.3%

-Hong Kong: 18.5%
-Singapore: 17.1%

-United Kingdom: 48.5%

Basic economic theory as well as research and empirical evidence has continuously suggested that high levels of taxation and government debt seriously retard economic growth [4]. More importantly, a survey of the empirical literature on government spending on economic growth has stated: “The most recent studies find a significant negative correlation [between government size and economic growth]: An increase in government size by 10 percentage points is associated with a 0.5 to 1 percent lower annual growth rate.” [5] This suggests that the big governments the Scandinavian countries are famous for are most likely detrimental to their economic well-being and not the cause of it as socialists and progressives like to suggest.

Additionally, the same survey also found that countries with large governments can mitigate the negative effects of government spending on economic growth by implementing market friendly policies in other sectors of the economy (i.e trade and labor freedom) and by having high levels of social trust. Luckily, the Scandinavian countries do in fact have high levels of social trust and have instituted market friendly policies throughout their economies with the exception of labor freedom.  

As the charts below show, the evolution of prosperity in the Scandinavian countries has stagnated significantly in the last few decades, not coincidently with the development of their welfare states. For example, “according to OECD figures, Denmark was the 5th most prosperous economy in the world in 1970, immediately behind Switzerland and the United States. In 2004, Denmark was 10th.” [6]

Additionally, when we look to the graphs below we can note that job creation and worker productivity has also remained stagnant. This could be as a result of the high levels of unionization. Research that has been done in the United States tends to show that unionized industries hire less workers and actually shed jobs more than non-unionized industries [7]. This may be the case in the Scandinavian countries as well.

In contrast to the high taxes in Scandinavia, Ireland has had drastic reductions in tax rates with positive results. Additionally, between 1987 and 2005, Ireland’s government spending as a percentage of GDP decreased from over 50% in 1987 to just below 35% in 2005 [6]. It has risen since then unfortunately.  “In barely 18 years Ireland jumped from the 22nd to the 4th place in the OECD prosperity ranking. Ireland did not reduce its social welfare benefits. On the contrary. The unprecedented growth led to an increase of fiscal revenue and social expenditure. It was sufficient to improve the productivity of the government.” [6]

Despite all the praise of "Scandinavian socialism", the only Scandinavian country that makes it into the top ten richest countries (measured by GDP per capita, PPP) is Norway. In contrast, my favorite economies are those of Switzerland, Hong Kong, Singapore, Canada, Australia, and to a lesser extent the United States, which are all within the top ten richest countries. Why do I like them? Because all of these countries have high economic freedom rankings and maintain levels of government spending below 40% of GDP (except Canada and the US). However, even government spending of 40% of GDP is too much. Empirical research suggests that the optimal level of government spending is no greater than 25% of GDP for the average country [8].

Also, when we compare my favorite economies, which are have higher economic freedom scores and lower government spending than the Scandinavian nations, it appears as though the growth rates that the Scandinavian nations have achieved are nothing spectacular or even noteworthy.


Growth rates by country (Real GDP 5- year compound annual economic growth, PPP) [9]:

Scandinavian countries:

-Denmark: -0.9%

-Sweden: 1.0%

-Norway: 0.6%
-Finland: -0.6%
-Iceland: -1.1%

My top picks:

-Australia: 2.5%

-Canada: 1.2%

-United States: 0.6%

-Hong Kong: 2.5%

-Singapore: 4.3%

-Switzerland: 1.2%

The question becomes, why do the Scandinavian countries perform so badly when they have such high economic freedom rankings? I speculate that their large public sectors and lack of labor freedom are the cause. When I extended this hypothesis to James Gwartney, the author of the Economic Freedom Report, he said: "Your speculation makes sense, but I do not know if it is correct.". There could be other factors causing these low growths rates worth exploring. 

In conclusion, the data is clear, the Scandinavian countries are not economic miracles nor are they examples of socialism. Rather they are examples of market economies with large public sectors. Most likely as a result of recent decades of government expansion, the Scandinavian countries have been lagging behind many other countries they once outperformed. Also, they have slower growth rates than countries of similar wealth but have smaller governments. As Dan Mitchell of the Cato Institute has stated:

“Conservative critics correctly condemn the large welfare states, but often overlook the positive results generated by laissez-faire policies in other areas. Liberals, meanwhile, exaggerate the economic performance of Nordic nations in an effort to justify welfare-state policies, while failing to acknowledge the role of free market policies in other areas.” [10]

Citations:

[1] http://www.freetheworld.com/2013/EFW2013-complete.pdf

[2] http://ideas.repec.org/p/dgr/rugccs/199903.html

[3] http://en.wikipedia.org/wiki/Government_spending#As_a_percentage_of_GDP

[4] http://taxfoundation.org/article/what-evidence-taxes-and-growth

[5] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1734206

[6] http://workforall.net/ScandinavianModel.html

[7] http://ime.bg/uploads/335309_OptimalSizeOfGovernment.pdf
[8] http://www.heritage.org/research/reports/2009/05/what-unions-do-how-labor-unions-affect-jobs-and-the-economy

[9] http://www.heritage.org/index/ranking

[10] http://www.cato.org/publications/policy-analysis/what-can-united-states-learn-nordic-model

How much would small government cost?

How much would a small government cost? According to one study, in 2010 funding the following core functions of government would mean that government spending is only 14.33% of GDP [1].

Core functions:
-Police
-Judicial System
-National Defense 
-Education
-Highways
-Sewage sanitation and environmental protection
-Federal Reserve expenses

In 2010, government spending was 40% of GDP and most of that spending is in the form of transfer payments like social security as well as government insurance schemes like medicare and medicaid. We can still have the public goods that the public sector provides without having a big government.

There are also economic reasons for having small government. According to a 2011 survey of the academic literature on the relationship between government spending and economic growth found that, "The most recent studies find a significant negative correlation [between government size and economic growth]: an increase in government size by 10 percentage points is associated with a 0.5% to 1% lower annual growth rate." [2]

Many studies have tried to find the size of government which maximizes economic growth. The findings are almost unanimously within the 15%-25% of GDP range. For example, researchers at the Institute for Market Economics found:

"The evidence indicates that the optimum size of government, e.g. the share of overall government spending that maximizes economic growth, is no greater than 25% of GDP based on data from the OECD countries. In addition, the evidence indicates that the optimum level of government consumption on final goods and services as a share of GDP is 10.4% based on a panel data of 81 countries. However, due to model and data limitations, it is probable that the results are biased upwards, and the “true” optimum government level is even smaller than the existing empirical study indicates." [3]

The evidence appears to suggest that the economy grows faster when government is smaller, thus providing support for the classical liberal viewpoint that government is needed to provide public goods, but is detrimental to growth once it starts crowding out spending and investment in the private sector via borrowing or taxation in order to pay for things like the welfare state.

Citations:

[1] http://www.wheaton.edu/hastertcenter/~/media/Files/Centers-and-Institutes/Hastert-Center/PublicPolicySeries/ScopeofGovernmentFinal08282012.pdf

[2] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1734206

[3] http://ime.bg/uploads/335309_OptimalSizeOfGovernment.pdf

Gun ownership and suicide

I've been doing some research on firearms and suicide rates across states and countries. It appears as though across states in the US, higher gun ownership is strongly correlated with higher overall suicide rates (and gun suicide rates). [1] This would suggest that either the people who own guns tend to be more suicidal (causality) or that suicidal people tend to own guns (reverse causality). 

However, there is no correlation between international gun ownership and international suicide rates. [2] For example, while Canada has a gun ownership rate far lower than that of the US, it has a near identical suicide rate. Additionally, countries like Japan have a suicide rate near twice that of the US despite have virtually no gun ownership. 

These conflicting results certainly are interesting, but the tendency for gun owners to committ suicide more often than non-gun owners could possibly be a correlation without a causation. For example, as (M.P) has noted in his book, 'The Conscience of a Young Conservative", the amount of country music played on the radio is significantly correlated with higher suicide rates even when gun availability, poverty, and other factors are controlled for. [3] Additionally, non-coastal western states have the highest suicide rates in the country. [4] Could it be that geography is driving the correlation? After all, rural living people tend to own guns and listen to country music more often than people living in urban settings. 

Overall, the causal relationship, or lack thereof, between gun ownership and suicide isn't entirely clear. However, even if increased gun ownership was proven to increase the suicide rate, would that be any justification for restricting it? I personally don't think so. If firearms caused people to kill themselves, than it still wouldn't be a public health issue and thus not a problem worthy of government intervention. Moreover, any intervention would necessitate the restriction of firearm ownership, which is inherently a violation of the 2nd amendment of the Bill of Rights and people's right to choose to own a firearm. 

What do you think?

Citations:

[1]http://marginalrevolution.com/marginalrevolution/2013/11/firearms-and-suicides-in-us-states.html
[2]http://www.law.harvard.edu/students/orgs/jlpp/Vol30_No2_KatesMauseronline.pdf
[3] http://www.jstor.org/discover/10.2307/2579974?uid=3739888&uid=2&uid=4&uid=3739256&sid=21103901015353
[4] http://www.cdc.gov/ViolencePrevention/images/suicidestats/USmap_2009_lrg.gif

Myth: Big government is good for the economy.

Nowadays, the media and college classrooms purport that government spending is an elixir which can magically increase a country's economic growth rate or pull an ailing economy out of recession. According to this sort of thinking, cutting excessive government spending will curb the extent to which the economy can grow. However, like most so called "common knowledge", the belief that government spending is good for the economy doesn't hold up under close scrutiny. The following analysis examines how the size of government affects economic growth.

First of all, how should the size of government be measured? There are two ways to do this, by measuring total government spending per person, or by measuring total government spending as a percentage of Gross Domestic Product (GDP). The latter methodology is essentially measuring the size of government relative to the size of the economy. 

According to the Fraser Institute, “The observation that higher income countries can afford more per capita government spending limits the usefulness of per capita government spending as a measure of public sector size, making government expenditure to GDP a more suitable measure” [1]. 

For example, the US government may spend more per person than the Egyptian government, but that is simply because the US economy is so much larger than the Egyptian economy. Because of this difference, the US government is comparatively richer than the Egyptian government and can afford to spend more per person. How much the government spends per person is not an indicator of the size of government, however, total government spending as a share of the economy is. Thus, nearly all empirical research on the government measures its size as government spending as a percentage of GDP (the economy). 

So, what does the empirical literature say about the size of government’s relationship to economic growth?

Building on the earlier research of James Gwartney et al. , scholars from Duke University and Wheaton college recently produced a study documenting the relationship between government size and economic growth between the years 1960 and 2010. The below graphs display their findings.

See citation #2

It is fairly obvious that the correlation between the size of government and economic growth is negative. However, this correlation does not include other control variables which may effect growth. Thus, the statistician's warning of "correlation does not prove causation" is noted. However, while this study did not include control variables, dozens of other studies have in order to isolate the effects of the size of government on economic growth. Even when controlling for other variables (such as inflation, demography, etc), the majority of research finds a strong negative correlation between the size of government and economic growth. 

According to a recent survey of the academic literature on this subject published by the Research Institute for Industrial Economics:

“The most recent studies [on the relationship between government spending and economic growth] find a significant negative correlation: An increase in government size by 10 percentage points is associated with a 0.5 to 1 percent lower annual growth rate...When we singularly focus on studies that examine the correlation between growth of real gross domestic product (GDP) per capita and total government size over time in rich countries (OECD and equally rich), the research is rather close to a consensus: the correlation is negative.” [3] 

These findings don't prove but do provide evidence in support of the idea that the negative correlation is in fact driven by government spending causing lower economic growth. 

Even facing this evidence, proponents of large government may argue that the benefits of having a large government outweigh the costs of a slower economic growth rate. Here's the thing, the cost of a slower economic growth rate is tremendous and in the long run will determine whether a country is rich or poor. As economists Andreas Bergh and Magnus Henrekson have noted:

"[A]n annual growth rate of 2 percent means that the economic standard of living doubles in thirty-six years. But if the annual growth is instead 3 percent, a doubling of the standard of living takes a

mere twenty-four years." [4] 

In order to emphasize this point, let's examine how family incomes would have grown in the absence of large government. According to a study by Gwartney et al.: "If government expenditures as a share of GDP in the United States had remained at their 1960 level, real GDP in 1996 would have been $9.16 trillion instead of $7.64 trillion, and the average income for a family of four would have been $23,440 higher." [5] 

Based on these findings, one may ask, "what is the proper size of government?". In the economist's eyes, the proper size of government is the one which maximizes economic growth. The Rahn Curve (below) suggests that initially, government spending on public goods such as a legal system, infrastructure, and defense will cause the economy to grow faster. However, once the government starts spending too much, it will take money and resources away from more productive uses in the private sector, leading to slower economic growth. 

Most empirical research finds that for the average country, the optimal size of government is no greater than 25% of GDP. Take for example, a recent study by the Institute for Market Economics, which has stated:

"The evidence indicates that the optimum size of government, e.g. the share of overall government 

spending that maximizes economic growth, is no greater than 25% of GDP based on data from the OECD countries. In addition, the evidence indicates that the optimum level of government consumption on final goods and services as a share of GDP is 10.4% based on a panel data of 81 countries. However, due to model and data limitations, it is probable that the results are biased upwards, and the “true” optimum government level is even smaller than the existing empirical study indicates." [6]

Also, the optimal size of government for the United States may be even smaller. The Economic Inquiry has stated that, "The optimal government size is 23 percent [of GDP]... for the average country. This number, however, masks important differences across regions: estimated optimal sizes range from 14 percent (+/- 4 percent) for the average OECD country to... 16 percent (+/- 6 percent) in North America" [7]. Currently, the size of the US government is 40% of GDP, far larger than what is predicted to be the optimal size. 

In the end, it appears as though libertarians and classical liberals are right in believing that small government is much more conducive to economic growth than large ones. Additionally, these findings cast doubt on the claim that larger government is the salvation of the economy as well as of poor and working class Americans. The evidence indicates that larger government is in fact what is holding them back. While "progressives" see large government as the answer to America's problems, the reality is just the opposite. it is time to reverse the trend of growing government and restore it back to a size more in line with the intentions of the founders of our country. 

Citations: 

[1] https://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/measuring-government-in-the-21st-century.pdf

[2] http://www.wheaton.edu/hastertcenter/~/media/Files/Centers-and-Institutes/Hastert-Center/PublicPolicySeries/ScopeofGovernmentFinal08282012.pdf

[3] http://journalistsresource.org/wp-content/uploads/2011/08/Govt-Size-and-Growth.pdf

[4] http://www.aei.org/book/economics/government-size-and-implications-for-economic-growth-book/

[5] http://frihetspartiet.net/function.pdf

[6] http://ime.bg/uploads/335309_OptimalSizeOfGovernment.pdf

[7] Georgios Karras, "The Optimal Government Size: Further International Evidence on the Productivity of Government Ser­vices," Economic Inquiry, Vol. 34, (April 1996), p. 2.

Should we ban "assault weapons"?

Would an assault weapons ban reduce the number of homicides?

The best way to figure out whether or not a ban on "assault weapons" and "high capacity magazines" would reduce crime is to examine how such a ban worked in 1994-2004 when the US banned both. A 2004 review on the research on the effects of the "assault weapons" ban found that academic studies "did not reveal any clear impacts on gun violence outcomes" [1]. 

The University of Pennsylvania found no statistically significant evidence that either the ban on "assault weapons" or the ban on high cap magazines holding more than 10 rounds had any effect on reducing gun murders [2]. Also, Economist John Lott studied the effects of the "assault weapons" ban and came to the same conclusion [3].

But then again, why would we expect gun murders to decrease in response to the "assault weapons" ban? According to the 2004 study submitted to the Department of Justice cited earlier:

"AWs [assault weapons] were used in only a small fraction of gun crimes prior to the ban: about 2%  according to most studies and no more than 8%. Most of the AWs used in crime are assault pistols rather than assault rifles" Additionally, "The AW provision [of the gun control legislation] targets a relatively small number of weapons based on features that have little to do with the weapons operation, and removing those features is sufficient to make the weapons legal." [1]

The DOJ study notes that crime with "Assault weapons" decreased following the ban but states that this effect was outweighed by criminals substituting banned firearms with non-banned firearms. This isn't surprising seeing as the non-banned firearms only differ from the banned firearms in cosmetics, not in function:

"Although the ban has been successful in reducing crimes with assault weapons, any benefits from this reduction are likely to have been outweighed by steady or rising use of non-banned semi automatics with large capacity magazines, which are used more frequently in crime than assault weapons. Therefore, we cannot clearly credit the ban with any of the nation’s recent drop in gun violence." [1]

This is unsurprising seeing as crimes with "assault weapons" are extremely rare. It's also worth noting that ALL rifles are only used to murder around 322 people in 2012, which is an extremely small number [4]. It's even smaller when you take into account justifiable killings by police and private citizens, which reduces it to 266 homicides in 2012. Also, most murderers don't need high cap magazines if their goal is to kill one person, never mind the fact that they could could get one illegally if they wanted. 

In fact, according to a Department of Justice report listed on Dianne Feinstein's (the creator of the last ban) website , “Specific data ... suggest[s] that relatively few attacks involve more than 10 shots fired" [5]. The report also notes, “the few available studies on shots fired show that assailants fire less than four shots on average, a number well within the 10-round magazine limit” [5]. Thus, banning magazines over 10 bullets isn't likely to effect crime much at all, even if criminals adhered to the law. Unsurprisingly, the DOJ study reports exactly that:

"Despite a doubling of handgun LCM [large capacity magazine] prices between 1993 and 1995 and a 40%  increase in rifle LCM prices from 1993 to 1994, criminal use of LCMs was rising or steady through at least the latter 1990s, based on police recovery data from four jurisdictions studied in this chapter. Post-2000 data, though more limited and inconsistent, suggest that LCM use may be dropping from peak levels of the late 1990s but provide no definitive evidence of a drop below pre-ban levels. These trends have been driven primarily by LCM handguns, which are used in crime roughly three times as often as LCM rifles. Nonetheless, there has been no consistent reduction in the use of LCM rifles either...the consistent failure to find clear evidence of a pre-post drop in LCM use across these geographically diverse locations strengthens the inference that the findings are indicative of a national pattern. " [1]

Overall, not only does a ban on "assault weapons" and high cap mags not do anything to deter murder, it infringes on tens of millions of gun owner's constitutionally guaranteed rights.

Citations:

[1] http://books.nap.edu/openbook.php?record_id=10881&page=97
[2] https://www.ncjrs.gov/pdffiles1/nij/grants/204431.pdf
[3] http://books.google.com/books?id=ZPAHlwEACAAJ
[4] http://www.fbi.gov/about-us/cjis/ucr/crime-in-the-u.s/2012/crime-in-the-u.s.-2012/offenses-known-to-law-enforcement/expanded-homicide/expanded_homicide_data_table_8_murder_victims_by_weapon_2008-2012.xls
[5] https://www.ncjrs.gov/pdffiles1/nij/grants/204431.pdf

EDIT: The study also finds that the percent of firearms collected by police that are considered "assault weapons" decreased following the ban. However, the study also notes, "it is worth noting the ban has not completely eliminated the use of AWs, and, despite large relative reductions, the share of gun crimes involving AWs is similar to that before the ban. Based on year 2000 or more recent data, the most common AWs continue to be used in up to 1.7% of gun crimes." [1] 

Later in the study the authors write: "there has been no discernible reduction in the lethality and 

injuriousness of gun violence, based on indicators like the percentage of gun crimes 

resulting in death or the share of gunfire incidents resulting in injury, as we might have 

expected had the ban reduced crimes with both AWs and LCMs." This kind of contradicts their earlier statement that gun crime with AWs was reduced after the ban. 

Clinton vs. Bush

People love to compare how the economy performed under the Clinton and Bush administrations. There are a number of things both administrations did right and wrong.

Economic freedom: Clinton vs. Bush

Both changes in economic freedom and the overall Economic freedom ranking have been associated with faster economic growth. For example, De Haan et al. find:

"There are strong indications that liberalization, i.e. an increase in the EF index, stimulates economic growth." [1] 

Additionally, John Dawson uses Granger Causality tests to see whether economic freedom causes economic growth and concludes:

"The results [of the Granger tests] suggest that the overall level of economic freedom appears to cause growth, while changes in freedom are jointly determined with growth. Among the underlying areas of economic freedom, levels of freedom relating to use of markets and property rights appear to be driving the causal relationship between economic freedom and growth. These results emphasize the importance of economic freedom, in general, and the role of free markets and property rights, in particular, in fostering long-run economic prosperity." [2]

It is clear that economic freedom is important in fostering economic growth. Judging by these findings one would expect the Clinton Administration (1993-2001)to have higher economic growth rates. However, there are other factors that come into play which effect growth rates.

The Price of Gas: 

When the price of gas is cheap, people and businesses tend to consume more of it. This means that economic activities reliant on the price of gas will increase. Additionally, as gas becomes cheaper, people and businesses have more money to spend and invest elsewhere, expanding output in other industries. Low energy prices are great for the economy. So what was the price of gas under the Clinton and Bush administrations?

It is clear that the price of gas was at historic lows under the Clinton administration. Unfortunately for President Bush, the price of gas rose exponentially to near all time highs during his time in office. It appears as though President Obama is facing the same problem, which is probably a contributor to the slow growth recovery following the recent recession. These findings suggest that the Clinton Administration had the advantage of low energy prices in comparison to the Bush administration. 

Government Spending: 

Numerous studies have found a negative relationship between the size of government (measured as a % of GDP) and economic growth. According to Economists Andreas Bergh and Magnus Henrekson:

"When we focus on studies that examine growth of real GDP per capita over long time periods, the research is actually close to consensus: In rich countries, there is a negative correlation between total size of government and growth...[when controlling for numerous variables most studies find] that an increase in ten percentage points in tax revenue [or expenditure] is associated with annual growth between  one-half and one percentage point lower" [3] 

This is significant because a lower growth rate means that it takes much longer for a country to become more wealthy. Bergh and Henrekson note:

"An annual growth rate of 2% means that the economic standard of living doubles in thirty-six years. But if the annual growth rate is instead 3%, a doubling of the standard of living takes a mere twenty-four years" [3] 

[This graph shows a simple correlation between the size of government and economic growth- see citation #4]

How does this relate to the Clinton and Bush presidencies? Well, as you can see below, Clinton (1993-2001) shrunk the size of government (measured as a % of GDP) whereas Bush (2001-2009) increased it a few percentage points. If the empirical research cited earlier is correct, then one would expect the Bush administration to have a slightly slower economic growth rate holding other variables constant. 

Taxes: 

According to the Heritage Foundation, the economic growth rates under Clinton improved after congress cut the capital gains and other taxes.

"Business investment skyrocketed after the tax cut, and the economy grew at an annualized rate of 4.4 percent (33 percent faster than after the Clinton tax hike) from 1997 through the end of the Clinton presidency. Real wages reversed their downward trend and grew 1.7 percent per year during the same time." [5]

However, it's worth noting that the NASDAQ Bubble was inflating during this time, and that Clinton's high growth rates could be attributed to that.

The Heritage Foundation continues, praising the Bush Tax cuts:

"In June 2001, President Bush signed into law the first wave of tax cuts. The relief included reductions of marginal income tax rates and tax relief for families, for example, doubling the child tax credit from $500 to $1,000. To reduce the budgetary impact, Congress phased in the tax cuts over several years.

Since the tax cuts were slow to go into effect, they were slow to help the economy. In fact, the economy continued to lose jobs after the tax cuts even though the recession officially ended in November 2001.

Realizing the error of its ways, in May 2003 Congress accelerated the tax cuts to make them effective immediately. In addition to reducing marginal income tax rates, Congress also lowered the tax rates on capital gains and dividends." [5]

There's no doubt that Clinton's economy created more jobs than Bush's economy did. However, Bush started his term with a recession brought about by the crashing of the NASDAQ Bubble. It is apparent that the economy was losing jobs until the second Bush Tax cuts occurred, at which point employment growth exploded. The Heritage Foundation also notes that there was a 24% increase in taxable income during Clinton's time in office in comparison to a 44% increase in taxable income under the Bush administration despite the tax cuts. Then again, who knows how much of Bush's success is attributed to the Housing Bubble? Credit bubbles are the equivalent of economic IEDs so one shouldn't be too hast to dismiss the gains made during the Clinton and Bush presidencies by attributing them solely to credit bubbles. 

Conclusion: 

In the end, Clinton did have a better economic record than Bush, but he also had the advantage of low energy prices and came into office during a strong economic expansion. However, Clinton shrunk the size of government and presided over a time period where American economic freedom was very high. Bush on the other hand, presided over a time where economic freedom declined substantially in the US and energy prices soared. While these are not the only factors that contribute to economic growth, they may explain the differences between the economic performance records of the Clinton and Bush economies. 

Citations:

[1]http://scholar.google.com/scholar_url?hl=en&q=http://www.researchgate.net/publication/4991841_Market-oriented_institutions_and_policies_and_economic_growth_A_critical_survey/file/50463529e023bd8a20.pdf&sa=X&scisig=AAGBfm2YcGeAO6yMaXl5VaJzBBVT7x9xBQ&oi=scholarr

[2] http://webcache.googleusercontent.com/search?q=cache:xs1e6MPoZs4J:www.researchgate.net/publication/222674979_Causality_in_the_freedomgrowth_relationship/file/79e4150991d3adc52c.pdf+&cd=1&hl=en&ct=clnk&gl=us

[3] http://www.aei.org/book/economics/government-size-and-implications-for-economic-growth-book/

[4] http://frihetspartiet.net/function.pdf

[5] http://www.heritage.org/research/reports/2011/09/setting-the-tax-record-straight-clinton-hikes-slowed-growth-bush-cuts-promoted-recovery