Class Warfare Blog

July 6, 2017

One Used to Be Able to Assume at Least as Good of a Life than One’s Parents …

Science has the unenviable position of coming along and proving what everyone already knows. I remember reading newspaper stories stating amazement that scientists would even bother proving what everyone already knows. Silly creatures.

But “what everybody knows” doesn’t turn out to be correct all of the time. This is why one constantly checks one’s assumptions, as they can turn up to bite you where it hurts.

So, a new study firmly nails down that the lifetime earnings of Americans are in decline. We are producing new generations that will not do as well as prior one’s. And those results stem not from not working hard, but from the usual culprits, largely wage suppression by the plutocrats.

Read it and weep (Lifetime Incomes in the United States over Six Decades)! (The abstract is free, the article $5.)

And regarding the various claims as to who is waging class war, let it be known far and wide: it is those with the most money.

June 23, 2017

Details of California’s New Single Payer Health Insurance Plan

Filed under: Economics,Politics — Steve Ruis @ 9:32 am
Tags: , ,

My original home state, California, is moving ahead with a plan to create a single-payer, state-run health insurance program for all Californians. If California pulls this off, with over a tenth of the entire population of the U.S.,  it will be a massive demonstration project to use as a model for the whole country. (If it does work, expect the Republicans to drop their line about the states being the laboratories of democracy.”)

The difficulty, so far, is to how pay for this service. According to the Los Angeles Times “How would California cover this $331-billion bill? For the most part, much the same way it covers healthcare spending right now. Roughly 70% of the state’s current spending is paid for through public programs, including Medicare and MediCal. This funding — totaling about $225 billion — would continue, as is required by law. It would simply flow through Healthy California rather than existing programs.
“The state would still need to raise about $106 billion a year to cover the cost of replacing private insurance. This could be done with two new taxes.
“First, California could impose a gross receipts tax of 2.3% on businesses, but with an exemption for the first $2 million of revenue. Through such an exemption, about 80% of all businesses in California — small firms — would pay nothing in gross receipts tax, and medium-sized businesses would pay an effective tax rate of less than 1%.
“Second, the state could institute a sales tax increase of 2.3%. The tax would not apply to housing, utilities, food purchased for the home or a range of services, and it could be offset for low-income families with a 2% income tax credit.

Something doesn’t add up here, but I do not have all of the details. What doesn’t add up for me is the money currently being paid for health care as a “fringe benefit” to workers. In my last job, my health insurance benefit constituted about 7% of my wages. Since employee costs for my company constituted 80% of the total cost of doing business, this means that those benefits cost about 5.5% of the entire enterprise’s budget. If the state supplies health care for a 2.3% tax, businesses are getting a windfall of about 3% of their total expenditures. What happens to that money? Does it go to employees (it is their benefit) or does it revert to employers (as a windfall)?

I know this is a simplistic approach, but my thinking was that employed people were already paying from $6000 to $17,000 per year for their insurance (either as a benefit or out-of-pocket). Note these are rough estimates based upon individual and “family of four” values I have read. Those monies are currently being spent and if those insurance policies became moot and a cheaper state-sponsored policy (cheaper because overhead would be lower, a la Medicare), there would be no need for additional taxes, etc. for those folks, who are still the largest segment of the market. In other words, instead of paying for a business-based fringe benefit or a separate policy, those monies go to the employees and then are paid in taxes to provide the state-run health insurance. There would be no need of a sales tax per se.

Of course, it all depends on the numbers, but I think the drafters of these plans need to provide some information regarding the disposition of the amounts of money currently being paid by employers for health insurance benefits.

Addendum
According to Zane Benefits “In 2015, the average company-provided health insurance policy totaled $6,251 a year for single coverage. On average, employers paid 83 percent of the premium, or $5,179 a year. Employees paid the remaining 17 percent, or $1,071 a year.

“For family coverage, the average policy totaled $17,545 a year with employers contributing, on average, 72 percent or $12,591. Employees paid the remaining 28 percent or $4,955 a year.

Note that when they say “Employers paid,” this actually constitutes part of an employee’s compensation as agreed or negotiated into the employment contract. The question is: what happens to these negotiated sums when another entity takes over the health insurance function? Should the employers keep the money previously paid for private insurance and pay a tax or should the employees get that money and then pay a tax for the service.

Does this make a difference? Hell, yes. If we get the money and then pay the tax, then we can see how much of our tax money is actually going out in taxes. If the businesses pay it, it is hidden from us, plus the businesses have lobbyists who would be chiseling against that tax continuously.

May 20, 2017

An Argument for a Minimum Wage

There have been myriad studies about the impact of having a minimum wage. Some indicate that there is no particularly strong linkage between creating a higher wage for low wage workers and some indicate that a rise in the min wage causes unemployment.

The politicians arguing against a min wage use a very simplified argument: namely that if employers have to pay their workers more, they will only be able to hire so many workers, mostly fewer. This is way too simple in thinking this. For one, if people are paid more money, they then spend more money (what goes around, comes around) which is good for business. There are many more facets to this issue.

If labor costs go up, and they have myriad times due to labor contracts, etc. how, oh how, do companies cope? (Yes, I am being sarcastic.) The amount of money that goes to labor in any company is not a fixed amount or even a fixed percentage of the company’s budget. There are many, many ways that those increased labor costs can be offset. For one, you can raise prices for the goods created. You could decrease profits. You could find other ways to reduce operating costs (reduce energy costs by going solar, etc.).

Knee jerk responses to these actions abound, of course. “If we raise prices, we will reduce sales!” Really? Companies never raise prices, then? C’mon, get real. Just raising prices alone, of course, is the lazy way to deal with increased labor costs; a combination of actions would be better.

Most of these minimum wage discussions are shallow and politically motivated. Basically, the opponents of min wage increases give minimal arguments and only add to them if we don’t accept (aka we reject vehemently) their overly simplistic argument.

Let me explain a real reason for min wage increases. Minimum wage increases are justified for the simple reason is that business interests (aka the plutocrats) have conspired to suppress wages for a long, long time. This involves bribing politicians to undermine union powers and privileges, delaying minimum wage increases, changing the laws in favor of employers over employees, etc. They have been particularly effective over the past 40 years (see the chart below as to the effectiveness of wage suppression over the past 40 years). The only power source of ordinary people to oppose these powerful business interests is government. The cabal wants wages low (too low) and so government must set a floor on wages. It is not simple but at least that is the political dynamic.

If you want to see this playing out right now, consider the current stance of the GOP. The GOP has been the champion of local rights for a long time. Education, for example, should not be a federal issue, but should reside in the states, with the states deferring to local communities and their school boards. So, what has been the GOP response to cities who have enacted their own min wage increases? GOP dominated states are passing laws to roll back those democratically achieved minimum wage increases and to bar such local increases in the future. Local control doesn’t mean a fig when the GOP’s paymasters issue directives (You will keep wages down, or else).

May 15, 2017

Economists Fail and Fail and Fail …

I could envision a role for economists in modern society except they continue to be willfully blind. They are blind because they have their heads so far up their asses.

Follow me now. Before the Great Depression, economists were only interested in small economic exchanges. But the misery of the Great Depression created the impetus to look at the economies of entire countries, even regions. Macroeconomics was born. (The goal was to prevent depressions, even recessions from ever occurring again.)

Like the “old” economics, microeconomics, certain simplifying assumptions had to be made and like the old economics, the simplifying assumptions lead to completely false conclusions. In microeconomics we ended up with the philosophy that markets were self-correcting and created an optimal economic situation. This dogma is, in truth, a piece of wishful thinking on the part of these academics. They wanted something that seemed directed at keeping the fairy systems they created balanced and whole. This belief that markets are benign and create a natural equilibrium inside of a larger economy still exists today as a political goal of those profiting from that mistaken assumption.

Macroeconomics, not to be out done, also had to make some “simplifying assumptions,” in its quest to understand how to prevent events like large recessions and depressions. In order to make things “doable” they decided to include the role banks play in our national economy but leave out finance. For reasons strange to a casual observer to understand, they also decided to leave out private debt. So, what has been the role of finance in the last 40-50 years in the U.S.? It has been to “financialize” the economy to the point that Wall Street doesn’t serve businesses in the manner you learned in school (by providing capital for businesses to modernize, expand, etc.) but now businesses exist to serve Wall Street. The money generated through finance has created a class of oligarchs who have captured the mechanisms of government and are now running it for their own benefit. They went on to shift governmental burdens off of businesses and onto private citizens, so that private debt has ballooned mightily, leaving citizens with little to buy anything with after ordinary expenses and debt service.

And what do economists have to say? “Move along, nothing to see here,” like all good Stormtroopers. One has to wonder whether the rich of a hundred years ago, having taken such a financial beating in the Great Depression, didn’t guide the creation of modern economic theory as a way for them to get back to the top and stay there. And this time, they are serious about hanging on, no matter what it does to you, me, or the country as a whole.

May 5, 2017

Egad, Economic Uncertainty is Real!

During the recent Democratic administration, Republicans often ranted about “uncertainty” with regard to investment. You see, the economy tanked in 2008 and the recovery was feeble (still is). Banks were given huge amounts of money at zero interest with the hope they would loan that money, cheaply but profitably, to businesses looking to expand. The key word was “hope” in that the government attached no strings to those zero interest loans. Consequently the banks bought securities with the money, causing the stock market to “recover” rapidly but no one else. When upbraided about this anti-social behavior, the Republicans countered with there was “too much uncertainty” in the market for business to expand. They rather should have stated there is too much bullshit in politics; that would have been closer to the truth.

The real reason businesses did not expand with all that cheap money around, is that they possessed even cheaper money (U.S. businesses had $2+ trillion dollars in cash reserves at one point.) and they weren’t spending that either. The reason? Simple: no demand. This is shockingly self-evident for people who know nothing about economics other than “supply and demand.” If there is no demand, supply is irrelevant (even though some economists tried to claim the opposite—see Say’s law). There was no demand because those business’s customers were broke, still are.

So, when Mr. Trump was elected and the GOP captured both houses of Congress, well … “Happy days are here again, the skies …” uh, no? No. Even though gasoline is quite cheap now, no one is buying much. Retail business are offering lower and lower pricing and still no surge in buying.

People are sitting on the sidelines economically because, well, they are uncertain about the future. When a person’s future is potentially very bad, they hunker down, save their money, and prepare for the worst the best they can.

Mr. Trump’s policies have never been particularly coherent, which was by design. When Mr. Trump claimed he was going to deport 11 million “illegals” from the country, many people translated that into “I will have more job opportunities.” (Right, by picking crops and doing day labor out of the local Wal-Mart?) When Mr. Trump claimed that he was going to transform Obamacare into something better, people applied their own definitions of what “better” meant. But healthcare is a complicated subject (“Who knew?”) and Mr. Trump’s party’s first effort at it was horrifically negative. (Hunker, hunker, hunker,…) Then there was the “tax reform” promised. People thought “my taxes will go down” and “I could use the money.” What they didn’t think of was that rich people’s taxes would go down much more, thus reducing government tax receipts, causing many government programs to be terminated, government programs that ordinary citizens are dependent upon, of course, not the rich. (Hunker, hunker, hunker,…) Then the current administration launches missiles in Syria and threatens nuclear war in North Korea. (Hunker, hunker, hunker,…) and….

The economic uncertainty of businesses as a reason for why they weren’t investing in their own businesses was pure political spin. They were anything but uncertain, in fact they were absolutely sure there was no demand, so no expansions. But the economic uncertainty of individual citizens is palpably real. We are not spending much money right now because we don’t know whether we will have affordable healthcare available, whether Social Security will still exist, or Medicare … all of these have been threatened by the GOP.

All of these threats are coming home to roost. We are in line for another recession, possibly as early as this summer. The ordinary tools used to combat recessions are not available (cut interest rates … why? … how?) and the GOP is dead set against deficit spending (the tool that really works) unless it enriches the rich or the military industrial complex.

Buckle your seat belts, folks. If you think things are uncertain right now, well, winter is coming.

April 25, 2017

They Are Just Better Than Us … and Getting Betterer

Filed under: Economics,Morality — Steve Ruis @ 10:40 am
Tags: , , ,

Notes on How the Class War is Going (Hint: You Are Losing Worse, Much Worse.)

According to an article in Bloomberg News: “… the poorest fifth of 50-year-old American men can now expect to live just past 76, six months shy of the previous generation. The richest 50-year-olds should make it almost to 89, seven years longer than their parents’ generation.

The richest people in the U.S. aren’t just getting several years of extra life, they’re also reaping a financial reward for their longevity – courtesy of the U.S. taxpayer. These trends will be crucial as the new administration and Congress consider any changes to Social Security, Medicare, and other programs. Even tweaks to these programs, from the retirement age to benefit formulas, could affect the rich and poor very differently.

Three decades ago, the richest and poorest retirees could expect about the same amount of benefits out of government programs. The richest generally got larger Social Security payouts, both by qualifying for higher checks and by living longer. The poorest got more out of other programs, such as Medicaid and Social Security disability insurance. Medicare offered about the same benefits to rich and poor.

If you believe that “things just keep getting better,” as I used to, I think you have to expand your thinking to see for whom they are getting better and for whom they are getting betterer, much betterer.

And if you think this is happening by accident, think again. Consider just the attempt to raise the retirement age of Social Security to the age of 70. This would reduce the average number of years of payout for that lower cohort to six years (zero if you are Black) but wouldn’t negatively affect the richer cohort much at all. But it would forestall the most commonsense argument: removing the cap on Social Security wages, currently at $127K and change. So, if you make millions of dollars, you pay SS tax on the first $127K and then nothing on the rest. Removing that cap would dip significantly into the pockets of the rich, something making foregoing five years of SS income pale in comparison. This is why the rich want that solution (age 70 for benefits) rather than the cap removal. So, now you know why such a poor solution to any SS problem gets so much ink. (They own the news media, too, don’t you know.)

If you don’t believe there is a class war going on, it doesn’t matter, you are still losing.

April 23, 2017

There is No Real Anti-Science Movement

There was a March for Science across this country yesterday. It did not draw huge crowds but the participants were enthusiastic. Unfortunately, many of the participants seem to be close to declaring that there is a war on science or some other foolishness. There is not.

To show you this, consider the staunchest climate change denier. If they went to the doctor and were diagnosed with a serious disease and were offered a treatment produced by the finest medical science in the world, do you honestly think they would say “Science? I want none of that. Send for an exorcist.”?

A climate change denying businessman looking to upgrade his IT infrastructure looks at the proposals and decides “We want none of this ‘high tech nonsense,’ we want biblically-inspired computers.” Whadya think?

Photo by Jessica Kourkounis/Getty Images

The opposition to climate change is there because of economic interests that fear that taking it seriously will crimp their ability to make money. All of those politicians who say “the jury is not yet in on climate change” have no idea whether it is or it isn’t, but they are being paid to say it is not. The order President Trump made to have NASA stop studying the climate is not fueled by some “science is a waste of time and money” attitude on the part of the President. His party is being paid to do this.

Similarly, there is no scientific controversy over the Theory of Evolution. It is an established scientific paradigm. The religious have no problem with the theory (actually very few of them seem to even understand the basics); they have a problem with its findings. If the theory of evolution is true, then any creation story that contradicts it is false and, if you are from a religion that paints the Bible as being ultimate truth, you have a problem. The same thing goes for those religiously-minded who claim the earth is only 6000-8000 years old. To believe the scientific findings (the Earth is over 4,000,000,000 years old) is to toss one’s religion’s creation stories in the trash can and the beginning of “if the Bible got that wrong, what else does it get wrong?”

Science is all about living with doubt. Politics and religion are all about being absolutely sure you are right. Hence the conflict.

But do realize, it is the scientific results these people have a problem with, very specific results. On one hand, unborn children’s lives are sacred and on the other the Mother of All Bombs is a really cool outcome of war science. It is not “science” they question, only when science tells a narrative counter to one they cherish that they “oppose the science.” And since they can’t be bothered to learn the science to try to counter it (probably a futile effort anyway), they disparage it emotionally (I ain’t no kin to no monkey!) and politically (it is too expensive to invest a huge amount of money in uncertain science).

Targeted opposition to specific scientific findings is, however, feeding an anti-science attitude among those who do not want to get involved enough to see for themselves. I can’t see how this is helpful.

But, then, these are the same people who promoted an anti-government attitude (The government is tyrannical!) before they decided to run the government for their own benefit. I do not think they even bother thinking about the long term effects of their actions. There is too much money to be made in the short-term.

April 22, 2017

Through a Glass Darkly, Dirty and Distorted, Too

We are treated with a view of education from the privatizing crowd that is bizarre. They see a child sitting in front of a computer, learning their ABC’s and whatnot. They see robotic teachers teaching from scripts and then subjecting their charges to standardized tests. They see, well, profits mostly.

I am not as concerned that these people see this as “a good idea,” but that others, not “on the take” as it were, agree.

What this whole approach misses is that education is a social process. It doesn’t take place in a closet, but in a crowd. We do, though, have societal icons; one is of the lone wolf academic who studies on his/her own and does great things, such as portrayed in the movie “Good Will Hunting.” Because these are themes we enjoy seeing and hearing about (a little like winning the lottery: if it could happen to them, it might happen to me!), we see and hear about them a great deal (the lone scientist, the lone crime investigator, etc. against all odds blah, blah, blah). But they are not the norm.

Currently scientists are seeing that we tend to think better in groups, that no individual has all of the puzzle pieces but in communication with others, clusters of puzzle pieces get formed, and then clusters combine to make larger clusters.

It is not an accident that communication is a cornerstone of the scientific method. No, not the method that you were taught in school, that was a convenient fiction. You have to look between the lines. Just one person doesn’t have access to all of the facts. They also don’t have access to all of the imagination. Who creates the hypotheses, just individuals? And who creates the theories? Creationists seem to think Darwin created the entire theory of evolution. The truth of the matter is Darwin created a structural framework, that literally thousands and thousands of scientists have built, rebuilt and filled in. There are so many fingerprints on the theory of evolution now, that saying “Darwin was wrong” is irrelevant. The portion of the theory of evolution that is Darwin’s is but a small part of the whole now.

Education is not limited to human beings, but it is a social activity. While “students” can go away for a time and in solitude, consult educational technology (the most successful ed-tech so far is something called “books”), they must come back and interact with other human beings to clarify understandings, compare opinions, and justify arguments. Students are learning how to learn and participate and think in groups. They learn to write so other humans, not in their locality in either space and time, will understand them.

The problem with the voucher faddists, the charter school purveyors, and the ed-tech peddlers is that they think education is something that can be analyzed using a spreadsheet, with the most important column being “profit.” If you compare their approach with what is being done in, say, Finland, you will see what is wrong. In Finland, they are working to improve the ability of teachers and students to interact as directly as possible. Their classrooms have almost no “tech” in them. Children get out and play between classes because play is important, it is important to learning how to work with other human beings.

Everybody I know went to school. If they think about it for just a minute, they will recognize what I claim above is true. Which makes it even more shocking that so many of these “reforms” are being supported around the country. Are we that venal? Or are we that distracted (Oh, Facebook!)?

I do not know about you, but I have just deleted my Facebook account. The reason? No social ROI, just distraction, distraction, distraction.

April 12, 2017

That Light at the End of the Tunnel …

Filed under: Economics — Steve Ruis @ 8:15 am
Tags: ,

…  is either a bit of light in the darkness … or an oncoming train. There is a glimmer of hope for the former over the latter. I strongly recommend the following: Finally, a Breakthrough Alternative to Growth Economics

 

 

March 13, 2017

We Have Met the Enemy … and It Isn’t Us

We have met the enemy and it is … our corporations. Consider first a couple of examples:

You have heard, I am sure, of the so-called “skills gap,” which is that American workers just do not have the skills needed for “today’s marketplace,” so we need to issue more foreign worker visas to fill the necessary jobs. One of the fields clamoring for more of these visas has been Information Technology (IT). IBM, a quintessential American IT company, hid the facts for many years but now it is clear. Between 2003 and 2010, IBM fired so many American IT professionals and hired so many engineers and computer programmers in India that the workforce of IBM India is now larger than that of IBM USA. IBM India had a mere 6,000 workers in 2003 but by 2010 had somewhere in the range of 100,000-130,000 workers. How did IBM manage this into the teeth of the worst global recession ever? It did it by firing over 30,000 workers here in the U.S.

IBM calls this “cross border job shifting,” which sounds ever so much more like a transfer than people getting fired here and others getting hired there. And IBM is not alone in doing this, so how can there be a shortage of IT workers in the US when there are so many Americans who used to hold the very same jobs that are claimed are “going wanting?” What is the real rationale for the demand to be issuing more visas for foreign workers? There is no shortage of highly qualified IT workers. This is simply a classic wage-suppression tactic. Bring in foreign workers and pay them less than you would American workers with the same qualifications. This makes it very much harder for Americans to get wage increases here and also harder to form unions that would look into such practices. Foreign workers do not want to anger their employers because if they lose their job, they lose their job sponsor, and it is back to India for them. They will not join a union, period.

Now, consider another quintessential American company, Ford. Can there be a more American story involving business that the creation of the Ford Motor Company from scratch? But in the late 1990’s, Alex Trotman, Ford’s then CEO, admitted “Ford isn’t even an American company, strictly speaking; we’re global.”

And if American companies like these do not consider themselves “American companies,” how much can we expect them to act on our behalf? When I was a young man, many corporations had multiple stakeholders. These corporations considered their customers to be one, along with their workers as another, and their communities, too. And, of course, also their shareholders. Modern business practices, spurred along by quack economists like Milton Friedman, had reduced the number of corporate stakeholders to one: the shareholders. Well, just one stakeholder if you do not count the executive’s self-interest in their own remuneration, which has skyrocketed while worker wages have been experiencing trickle-up growth.

As a union officer in the 1980’s and 90’s I participated in an experiment with management of our enterprise ($150 million annual budget) on creating a more cooperative governance structure. Part of that effort was coming to an understanding of relationships between and among the two groups. One facet of that learning was that “workers” (we all worked for the company) we all tended to imbue our work relationship with trust, that is we put our trust into our employer to some extent. This was not earned trust but, basically, we trusted our employer because we wanted to have a job in which we could trust our employer. This wishful thinking trust usually had no repercussions, but when something happen that a worker or workers did not like, they felt betrayed by someone they had trusted (trusted to do what was never specific, usually it was “the right thing”). Such “betrayals” existed in collective memory for decades. (I know this as when I was hired into this company I heard “stories” from other employees. I found out later that some of them were almost 30 years old.)

We are making that mistake now. We are told by representatives of these “American companies” that we should “trust the marketplace” and “trust them.” But their actions indicate that not only are they untrustworthy but they are not even American companies. Imagine how you would feel if a foreign company, say from China, wanted to come into your community and build a plant, one with a bit of pollution associated with it. Then think how you would view that intention were is an American company? Would your response be the same? Yet, these American companies no longer consider themselves to be American, and have acted accordingly for decades now, but we still “trust” them more than we do others.

These companies have no issue with firing you and hiring a replacement from overseas and ask you to train your cheaper replacement (happens all the time, happened to my ex-wife). These companies have no problem with going through bankruptcy to eliminate their obligation to pay into their worker’s pensions. These companies have no problem with manipulating our tax laws so that they pay no taxes, with the burden to make up the difference shifted to you and me. These companies have no problem in bribing our public officials to do their bidding instead of the people’s. And if you want to know why our recovery from the Mother of all Recessions was so weak, with employment struggling to get back to anything approximating normal, realize that business leaders see every crisis as an opportunity and in this crisis they used the opportunity to outsource even more jobs. They were hiring, just not in the U.S. That is how much loyalty they have to their bottom line and how much they have to you and me.

Ironically, we have just elected a corporate businessman President to fix this mess (drain the swamp). If this were not so ironic, so funny, I would be crying. When are we going to wake up? When are we going to invest our passion and our votes in organizations, like labor unions, that have proven track records for countering these un-American corporate interests?

Wake up people! It is very close to “too late.”

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