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).

GOP Gives Lie to Their “Small Government” Goal

The GOP has clamored for smaller government, mostly at the federal level, for many decades. “Big Government” was a term said only as a slur. In particular, the GOP has advocated that the federal Department of Education should be dispensed with as education was the responsibility of the states. (I do not argue with that point.)

But, well, times have changed. In particular, the GOP is in power and positioned to do almost anything they want to do. So what do we get? According to a press release from the American Association of School Administrators:
“Alexandria, Va. – May 17, 2017 – Legislation pending in Congress would create new opportunities for corporations and successful investors to earn huge profits by transferring public funding to private schools, according to a report released today by AASA, The School Superintendents Association, and the Institute on Taxation and Economic Policy.
“The legislation—the Educational Opportunities Act—would put two new federal voucher tax shelters within reach for many more Americans and lead to an explosion in funding for private schools. It would also keep in place an existing federal loophole that permits savvy taxpayers to benefit from ‘double dipping’ practices, where they receive a federal deduction and state tax credit on the same donation to a private school entity. At present, high-income taxpayers in nine of the 17 states offering voucher tax credits can turn a profit using this technique.”

So, apparently, federal meddling in the state’s business of educating the next generations is now okay now, because … money.

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.

Dishonesty About Taxes

The Current Administration wants to cut business taxes. They say the current rate, 35%, is too high and a 15% rate would be better for one and all.

Ah, please cut the crap.

When you add up all of the corporate taxes and income for 2016, it turns out that corporations paid about 14% as an effective tax rate. Individuals paid an effective rate of about 13.5%.

The reason these actual tax rates are much lower than the statutory marginal tax rate, is the rate most often stated is the maximum rate which doesn’t kick in until you have made a shitload of money. Even the 28% personal marginal rate doesn’t even begin until you make just under $92,000 dollars in any particular year. On the first bit you pay 10%, the next bit, you pay 15%, after that you pay a 25% on the amount above that amount up to about $91,000, as mentioned. Everybody pays this way. The only way someone can pay close to the maximum rate is to make a shitload of money … and have no deductions.

“‘In each year from 2006 to 2012, at ‘least two-thirds of all active corporations had no federal income tax liability.’ So much for corporations paying their fair share.”

The US Tax Code is a bloated document, not because of statutes that address personal income but because of the myriad tax breaks that sometimes only single companies get. This is why businesses spend money lobbying Congress, it really pays off in tax perks. Somebody recently calculated that for each $1 a company spent in lobbying Washington, it got a return of $28. That is one hell of an investment! According to the GAO “In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability.” So much for corporations paying their fair share.

There used to be a tax principle that said that people who make money by investing money (the “you know who”) should pay more in taxes than people who made money by the sweat of their brow. This has been reversed so that if you work for a living, you pay more in taxes than those who simply move money around (proportionately, not absolutely). Another tax dishonesty: “The rich pay more in taxes that you!” yeah, 10% of 100 million dollars is a lot more money than 10% of $50,000 but it is still 10%.

It used to be the case that companies paid more tax than individuals. That was back before the companies realized that they could buy the government and stack the deck in their favor.

These are same people who back the claim that corporations are people. Now they want to establish that corporations are better than people. (They worship them and want us to also.)

They Are Just Better Than Us … and Getting Betterer

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.

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.

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.

If You Want to Understand Why American Education is Fucked Up—Read This

(Hint: Follow the Money)

https://gadflyonthewallblog.wordpress.com/2017/04/08/standardized-testing-creates-captive-markets/

You May Want the Federal Government Run Like a Business But Do You Want It Run Like One of His Businesses?

A common GOP trope now is that the federal government, all governments really, should be run like businesses. This idea is quite silly but has caught on because of the general dissatisfaction with government, something brought about by a propaganda campaign against the government by the GOP. Interesting gambit that: drum up general discontent creating a climate for the solution you favor. (Can you spell Nazis, boys and girls?) Their solution, by the way, is not running government as a business but running government for business.

As a little experiment, list all of Mr. Trump’s executive orders and then force each of them into one of two categories: 1) good for the people (makes the government better or stronger) or 2) good for business owners. This, of course, is a false dichotomy as many of these things will ultimately prove to be bad for both, but just doing this will take the temperature of the current administrations actions. (Actually, most of the EOs are symbolic in nature and at the beginning of long paths to implementation of anything, but that is another topic.)

Back to my main topic. Mr. Trump runs his businesses by squeezing labor by employing undocumented immigrants, avoiding union contracts, etc. and by squeezing those who are in agreements with him: local governments all the way down to the vendors serving his businesses. He also uses the courts to create advantages for himself: for every bankruptcy he has actually begun, he has threatened many more. He has threatened to sue people so many times that he could be the senior partner in a law firm. When one has considerable capital and can hire lawyers, nuisance lawsuits provide a lot of leverage over people for whom the legal costs are ruinous or at least damaging. And, I do not think he could threaten bankruptcy for the federal government, but he could create economic chaos through government shutdowns, debt defaults, etc. All of these are the high drama, high profile scenarios Mr. Trump favors as his business style.

Businesses owners are often casual at best toward the externalities of their businesses. Externalities are the physical “commons” we all share responsibility for. So, historically, businesses have dumped their wastes into the air, into the water, and onto the land with no thought of taking responsibility for the problems those waste “disposal” processes create. Did businesses lead the charge to clean up our waterways? our air? our waste disposal sites? If you are old enough, you remember that the “business community” fought these actions tooth and nail and are still doing this. It was government that lead the charge. (I remind you the our governments are effectively “us” for the purpose of collective actions.)

It was government, especially the federal government, that passed things like the Clear Air Act and other sets of government regulations that have made our air quality far better than it used to be. When I was in the fifth grade on the San Francisco peninsula, I was sent home from school one day because of smog. LA was far worse as the SF peninsula was surrounded by water and had clearing winds. Such smog alerts no longer happen, thanks to government regulations. Then there was the regulation for unleaded gasoline to prevent lead poisoning (opposed by business), the regulation for unleaded paint to prevent lead poisoning, especially of children (opposed by business), the gas mileage standards (opposed by business), the acid rain regulations (opposed by business), … need I go on?

So, has Mr. Trump made us safer or healthier by his diktats? Let’s see, he has made it okay for coal companies to go back to dumping their toxic waster (laced with heavy metals, like mercury, etc.) back into streams, he has set aside higher gas mileage standards, he produced an EO that asks agencies to review any regulations that could “potentially burden the development or use” of oil, natural gas, coal, and nuclear energy resources so that action could be taken to eliminate regulations. So much for wind and solar, who needs them and what’s a little pollution from coal power plants or nuclear ones; we can safely store radioactive waste, somewhere, we’ll figure it out. Doesn’t sound like a promising start, but then he did promise to “do away with burdensome federal regulations,” but not at any time being specific as to whom or what they are a burden.

So, if Mr. Trump’s Administration is being run like a business, who are the workers and who are the customers? If you are a worker, you will continue to be squeezed as that’s what Mr. Trump and his minions do in their businesses. Customers “buy” from a business, that is services or goods. If you pay taxes, then you are a customer. Do you expect better service? Mr. Trump has promised less of it (except military services and Homeland Security services). He has promised better service, but his budget proposal (actually Mr. Trump had almost nothing to do with the current budget proposal but it is traditional to attach the “ultimate cause” label to all presidents, so …), his budget proposal slashes services to “customers” right and left and then slashes the budgets of the agencies that are providing what remaining services there will be. How this equates to “better” is very hard to see.

So, do you think Mr. Trump is running the federal government as a business or for business? What do you think?

I Don’t Get It

The definition of “it” in the title is probably very, very long (very!). In this case it is our current debate about healthcare.

There is continuing support for certain functions of government to be paid by the government. Unlike knuckle-dragging conservatives, I do not see “government” as being some outside agency closely representing a skin cancer (something you want shrunk and or carved out), but as a representative of “us.” We are completely fine with “single payer” K-12 education. Citizens and non-citizens alike can register their children to attend a neighboring school and there the children receive an education with no further costs. (Yes, I do know there are myriad costs associated with a child in school, but those are not directly related to the education they receive.) This is, accurately, not a “single payer” system as multiple government agencies are involved, so maybe a better description is “government paid” for this schooling. We also have many other services that are “government paid.” For one, the military. For another, our government offices. When you go to your local councilman or alderman’s office for information or a complaint, there are no fees associated with those services. In all of those cases, the “government”—remember that means “us”—picks up the full tab.

The argument goes that those services are “essential,” that is we all need them and money should be a barrier to whether or not you receive those services.

Oh, there are also the police, fire services, the courts, etc. There are many things that fall into this category of “things we all pay so everyone can partake equally.” In some cases, this is the “many” protecting itself from the “few.” Many vaccinations are low cost, even free, to avoid the spread of diseases.

I don’t get why health care is not one of those things.

I understand that people, especially politically conservative people, have bought into a capitalistic “pay as you go” culture, uh, well, kinda sorta. The biggest proponents of “individual liberty/individual responsibility” are not all self-made people, many inherited money. If Donald Trump had invested all of the money he inherited in stock market index funds, he would have four times as much money now as he claims to have, according to some accounts. (So much for him being a good businessman, he has managed to lose only three quarters of his potential net worth. He is, at best, a mediocre businessman.) The Koch brothers inherited millions (and built upon those, yes). Mitt Romney, who claims that nobody helped him, was given two million dollars of “seed money” to help him get started as well as being given access to his really well-connected father’s associates. The Walton clan … well, daddy made the big pot for them.

For those without great wealth in this group are people who received help along the way from government (aka “us”) agencies. Help with their educations, help with business loans, help from other government agencies, etc.

But them poor people, they lack drive and ambition. They should go out and start a business. Really, you mean those business startups that have a 90% failure rate after three years? Where would they get the money to take that very risky venture? The banks? Wall Street? Venture Capitalists? (Sorry, laughing so hard my sides are aching.) If you haven’t noticed, over the last 30-40 years, businesses have stopped investing in their own business. They have accumulated trillions of dollars of cash reserves that are just sitting there. So, these are the people poor people are to emulate? (Step 1 Pile up a mountain of money. Step 2 Sit on it. Neoliberal Business Practices 101)

Poor people need to go out an get a job, then? Oh, do they mean the jobs conservatives have suppressed wages on for decades so they do not pay enough to meet a person’s expenses? Those jobs? All of the anti-union, anti-minimum wage rhetoric is not coming from poor people, it is coming from the same conservative ass holes who are insisting that everyone should “pay as you go.”

I do not want single-payer healthcare. (Currently I have Medicare and a Medicare supplement policy, and I pick up the slack those two do not cover, so there are at least three payers there, certainly at least two.) I want government paid health care. It is at least as important as an education for our kids, if not more so.

There’s more but my spleen just gave out.

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Poverty is not due to a lack of character, it is due to a lack of cash. (I don’t know who said this first.)