Barack Obama's Speech on the Economy

[4PointOh]

http://thecaucus.blogs.nytimes.com/2008/03/27/obamas-speech-on-the-economy/index.html?hp

[DavidAllred]

Well, that was interesting. I hate that I missed the actual speech. As close as I am to voting for Obama if he wins the primary, these are the sort of sticking points that he'll have to flesh out better to win me over. With regardst to lending and the housing markets, I think companies should have every right to charge a higher interest rate to people with bad credit. I'm not sure that rewarding Americans with cash for not being able to balance a checking account is a very smart thing for any adminstration, including our current one, who is apparently willing to give money to Americans by selling China T-bills.

I do think Obama is 100% dead on correct when he states that we can rebuild America's economic situation by focusing on our infrastructure. Rebuilding our country, re-tooling it for the next century of energy compliance seems to me to be a great way to provide income to working families, cut our national spending on energy, and do something we can all be proud of with regards to our towns and neighborhoods. Heck, use the military, too. They're already building schools a million miles away, let them build a few in rural Appalachia where I live.

I think its somewhat foolish to begin eliminating and exempting some people from paying taxes, even retirees. I think every American should pay exactly the same percentage of their incomes as every other American. It's the only fair way to do it.

[4PointOh]

The video is here:

http://www.msnbc.msn.com/id/21134540/vp/23827413#23827413

[Paul McEnery]

Well, that was interesting. I hate that I missed the actual speech. As close as I am to voting for Obama if he wins the primary, these are the sort of sticking points that he'll have to flesh out better to win me over. With regardst to lending and the housing markets, I think companies should have every right to charge a higher interest rate to people with bad credit. I'm not sure that rewarding Americans with cash for not being able to balance a checking account is a very smart thing for any adminstration, including our current one, who is apparently willing to give money to Americans by selling China T-bills.

I do think Obama is 100% dead on correct when he states that we can rebuild America's economic situation by focusing on our infrastructure. Rebuilding our country, re-tooling it for the next century of energy compliance seems to me to be a great way to provide income to working families, cut our national spending on energy, and do something we can all be proud of with regards to our towns and neighborhoods. Heck, use the military, too. They're already building schools a million miles away, let them build a few in rural Appalachia where I live.

I think its somewhat foolish to begin eliminating and exempting some people from paying taxes, even retirees. I think every American should pay exactly the same percentage of their incomes as every other American. It's the only fair way to do it.

Nit-picking: not all wealth comes in as "income", especially not the big chunks of change that we need to tax most of all. And people at the bottom of the ladder shouldn't be paying jack, because they can't afford to.

[PatrickG]

Sometimes the phone rings at 3 a.m. in the White House and it’s an economic crisis

(Hillary Clinton's response to McCain's plan.)

Why is she bringing up the 3AM thing again? I thought everyone outside Ohio agreed it was a fucking joke. Besides which, I'm not really sure what kind of economic crisis hits at 3AM aside from a few senators running out of ones at the strip club.

The 3AM thing is obviously a national security soundbyte anyway (unless it IS a racist soundbyte too). In any case, we get that you're an insomniac, Hillary. We really do. But any leader who's always up at 3AM might not be the best person to deal with those economic crises that actually hit when the stock market is open....

[Paul McEnery]

(Hillary Clinton's response to McCain's plan.)

Why is she bringing up the 3AM thing again? I thought everyone outside Ohio agreed it was a fucking joke. Besides which, I'm not really sure what kind of economic crisis hits at 3AM aside from a few senators running out of ones at the strip club.

There's always the pregnant wife sending you out for kippers and donuts.

[PatrickG]

There's always the pregnant wife sending you out for kippers and donuts.

Hillary has a pregnant wife?!

OMG! She r a lezbeeann after all!

At least Bill was finally good for something if Hillary's wife is pregnant.

[kingdom2000]

Too lazy to read it all. Only two things I want to hear when it comes to government and the ecomomy: something along the equation of tax less by spending less or tax more because spending more. Also its the middle class, stupid. Without the middle class, our ecomony is no different then any third world country. The goal, without exception, should be to stabilize and grow the middle class. Not grow the upper class.

[Matt Doc Martin]

What? Why must we have a new Barack Obama thread every other day? Is this the new "parody" replacement? I like the guy, but come on.


There is a political thread for a reason.

[4PointOh]

What? Why must we have a new Barack Obama thread every other day? Is this the new "parody" replacement? I like the guy, but come on.


There is a political thread for a reason.

If the threads bother you, why visit them? Seems to me that it's only going to annoy you. Do you WANT to be annoyed?

[The Xenos]

Really, do we want to know about the phone calls at 3AM in the Clinton White House? I'm guessing it's mainly Bill calling out and the number is of the 1-900 variety.
:rolleyes:
What? She used the dumb metaphor.

[Corrina]

Well, we do have a political thread for a reason. The other two Obama threads explore some intense subjects, racism in America and the history of the conflict in the Middle East.

We could use this one to talk about the economy and how it works. For instance, what the HELL is the derivative market? I think it's one speculator buying up something like land at a high risk and then selling the 'risk' to another bank, so the first speculator can show only assets on the bottom line, rather than the 'risks.'

And then the hot potato named RISK gets passed around and around until the real estate market goes down and someone's stuck with it. Apparently, none of this is regulated and investors can lose their shirts because these derivatives never show up as negatives on the bottom line.

My question is: what can the President really do to fix any of it? Oh, sure, we're getting our bread (the stimulus package) and our circuses (reality TV) but I think it's just sleight of hand. What really needs to happen is some regulation of this totally hidden market/accounting trick. But mostly, I just think talking about 'stimulating' the economy is a bunch of bullshit because it's oil prices that are screwing us up all over the place.

What we need is to get off the damn oil. This is a country that came up with an atom bomb in five years. Can't we figure out an oil alternative in the same time frame?

[MacQuarrie]

Nit-picking: not all wealth comes in as "income", especially not the big chunks of change that we need to tax most of all. And people at the bottom of the ladder shouldn't be paying jack, because they can't afford to.

I agree with the first half and disagree with the second.

We do need to close the loophole that allows filthy-rich people to show zero "income" because all their money comes from interest and dividends of investments and trust funds and such.

But I don't buy the logic that says people shouldn't pay their fair share.

Of course, if I had my choice, I'd dramatically cut spending so that taxes would be significantly lower. Start by passing a constitutional amendment forbidding the Fed from doing anything that isn't specifically assigned to them in the Constitution (you know, enforcing the Ninth and Tenth Amendments). Then abolish and nationalize the Federal Reserve, returning its powers to the Treasury Department and instantly eliminating the majority of the national debt. Then go back on the Gold Standard. Within five years we abolish the IRS entirely and have a balanced budget. Congress becomes a part-time job, and the majority of government functions are decentralized and controlled by the city, county, or state, with much more oversight and less opportunity for fraud, corruption and abuse. Local accountability is best.

If it were up to me.

[DavidAllred]

If it were up to me.

You're in fine company:

"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered." -- Thomas Jefferson

[Crowley]

I think that we need to take away the part of the 14th amendment that gives corporations personhood and enforce stronger regulations.

I also read recently that a large reason why our economy is in this crisis is because we desperately need to drastically increase wages (demand) pull the minimum wage up to at least $15 an hour and stop believing in this bullshit supplyside economic theory.

The goverment should not be bailing out Bear Sterns... they should be bailing out the borrowers.

[FalconX2000]

I agree with the first half and disagree with the second.

We do need to close the loophole that allows filthy-rich people to show zero "income" because all their money comes from interest and dividends of investments and trust funds and such.

But I don't buy the logic that says people shouldn't pay their fair share.

Of course, if I had my choice, I'd dramatically cut spending so that taxes would be significantly lower. Start by passing a constitutional amendment forbidding the Fed from doing anything that isn't specifically assigned to them in the Constitution (you know, enforcing the Ninth and Tenth Amendments). Then abolish and nationalize the Federal Reserve, returning its powers to the Treasury Department and instantly eliminating the majority of the national debt. Then go back on the Gold Standard. Within five years we abolish the IRS entirely and have a balanced budget. Congress becomes a part-time job, and the majority of government functions are decentralized and controlled by the city, county, or state, with much more oversight and less opportunity for fraud, corruption and abuse. Local accountability is best.

If it were up to me.

And who's going to maintain the roads, fix the power lines, modernise hospitals, ensure more preventive healthcare rather than emergency healthcare?

I think that we need to take away the part of the 14th amendment that gives corporations personhood and enforce stronger regulations.

I also read recently that a large reason why our economy is in this crisis is because we desperately need to drastically increase wages (demand) pull the minimum wage up to at least $15 an hour and stop believing in this bullshit supplyside economic theory.

The goverment should not be bailing out Bear Sterns... they should be bailing out the borrowers.

As a general rule, hard artificial floors and ceilings are overall very bad for the economy.

Some do need to exist, like a minimum wage. They're there to ensure basic human rights (or in some cases environmental concerns). However, to raise that simply by enforcing a rule that goes against productivity ratings and the demands of the economic situation will backfire horribly.

An abnormally high minimum wage, for example, means that companies can't afford to employ many people. Unemployment would sky rocket and that of course would lead to heavy burdens on welfare, even higher losses of home ownership, and all other kinds of problems.

Take Australia's wool market as another example. In order to protect wool sellers, the Australian government set an abnormally high minimum price that wool could be sold at.

The idea was that if the price of wool at the time was lower than the minimum, the government would buy the wool from the farmers and sell it later when the price became good enough again.

This backfired horribly, since this never affected the actual market demand for wool. The government ended up buying ludicrous amounts of wool that they could never sell, because how much the market was willing to pay for wool never reached their artificial floor price.

This became even more impossible because wool gained a direct competitor: cheaper synthetic wool. This can be compared to your argument about the minimum wage as foreign workers, who would now be much much cheaper than American workers with only a slight decrease in productivity per person.

In the end the wool scheme collapsed and resulted in a huge oversupply of wool that deeply hurt sheep farmers. Till this day the Australian government is still unable to get rid of that huge stockpile of wool.

This is why the minimum wage cannot be raised to $15 per hour. It's far too high. People who work for jobs offering the minimum wage or close to it don't do work that merits that kind of money. So you'd have a few people being paid more, while the rest would just be let go.

[FalconX2000]

I do, however, agree with those that say the current government bailout policies are very bad and need to be reworked. I think that was the strongest part of Obama's policy speech.

The economic stimulus package's effectiveness described in Clinton and Obama's plan depends on whether the government can quickly identify not just which companies were predatory, but which of their policies were predatory and who was duped into buying those policies.

Then they can target their bailout aid towards those who were victims of those predatory policies, rather than wasting taxpayer money on all those who just took unnecessary risks with their assets.

[Crowley]

And who's going to maintain the roads, fix the power lines, modernise hospitals, ensure more preventive healthcare rather than emergency healthcare?



As a general rule, hard artificial floors and ceilings are overall very bad for the economy.

Some do need to exist, like a minimum wage. They're there to ensure basic human rights (or in some cases environmental concerns). However, to raise that simply by enforcing a rule that goes against productivity ratings and the demands of the economic situation will backfire horribly.

An abnormally high minimum wage, for example, means that companies can't afford to employ many people. Unemployment would sky rocket and that of course would lead to heavy burdens on welfare, even higher losses of home ownership, and all other kinds of problems.

Take Australia's wool market as another example. In order to protect wool sellers, the Australian government set an abnormally high minimum price that wool could be sold at.

The idea was that if the price of wool at the time was lower than the minimum, the government would buy the wool from the farmers and sell it later when the price became good enough again.

This backfired horribly, since this never affected the actual market demand for wool. The government ended up buying ludicrous amounts of wool that they could never sell, because how much the market was willing to pay for wool never reached their artificial floor price.

This became even more impossible because wool gained a direct competitor: cheaper synthetic wool. This can be compared to your argument about the minimum wage as foreign workers, who would now be much much cheaper than American workers with only a slight decrease in productivity per person.

In the end the wool scheme collapsed and resulted in a huge oversupply of wool that deeply hurt sheep farmers. Till this day the Australian government is still unable to get rid of that huge stockpile of wool.

This is why the minimum wage cannot be raised to $15 per hour. It's far too high. People who work for jobs offering the minimum wage or close to it don't do work that merits that kind of money. So you'd have a few people being paid more, while the rest would just be let go.

The wage increase would lead to higher unemployment only short term... long term it would stimulate the economy be demand would start to level out supply and average Americans would be able to pay down debts.

Wages haven't been keeping up with the productivity and are long past due for being increased substantially.

[FalconX2000]

The wage increase would lead to higher unemployment only short term... long term it would stimulate the economy be demand would start to level out supply and average Americans would be able to pay down debts.

Wages haven't been keeping up with the productivity and are long past due for being increased substantially.

Should the minimum wage be increased to meet inflation? Yes.

However, $15 a month means approximately $30000 a year. That is not a low tier wage. That is a lower-mid tier wage.

The people who could keep their jobs would be able to pay for their stuff more easily. However, an unaccetably large number of people would be let go, and how will they find new jobs?

A higher minimum wage doesn't create new jobs. A higher minimum wage doesn't mean there is suddenly more money to pay US workers.

It means there will be fewer people getting a slice of the pie. This will of course also reduce the overall size of the pie, since productivity will decrease due to all the job losses and high unemployment.

The point of artificial walls and freezes on the economy is to ensure absolute minimum standards. It makes sure that if someone works a job, they can at least survive if they're thrifty. But make no mistake, artificial hard walls are bad for the economy. That is why the minimum wage cannot be raised to a mid tier rate.

If you were saying maybe $10 an hour, maybe that would be sustainable. 15? The American economy would crash.

[Alex L]

I agree with the first half and disagree with the second.

We do need to close the loophole that allows filthy-rich people to show zero "income" because all their money comes from interest and dividends of investments and trust funds and such.

But I don't buy the logic that says people shouldn't pay their fair share.

Of course, if I had my choice, I'd dramatically cut spending so that taxes would be significantly lower. Start by passing a constitutional amendment forbidding the Fed from doing anything that isn't specifically assigned to them in the Constitution (you know, enforcing the Ninth and Tenth Amendments). Then abolish and nationalize the Federal Reserve, returning its powers to the Treasury Department and instantly eliminating the majority of the national debt. Then go back on the Gold Standard. Within five years we abolish the IRS entirely and have a balanced budget. Congress becomes a part-time job, and the majority of government functions are decentralized and controlled by the city, county, or state, with much more oversight and less opportunity for fraud, corruption and abuse. Local accountability is best.

If it were up to me.
I'm not sure if I'm a fan of strong state/weak federal.

I see the appeal, but to me the world has shrunk too far -- we have money circling the globe at the speed of a mouse click.

At the time the Constitution was drafted, I'm not sure the Founders envisioned businesses going nationwide -- of people in New York controlling companies in Florida, centralized meat/veggie areas.

A properly working FDA/USDA is easier to deal with, and is more cost effective than working through fifty states' differing standards. (Sadly, this hinges on the assumption of a properly working FDA/USDA.)

Undecided about a finite money supply.

[4PointOh]

I want to write a book:

Gay Marriage: A republican's reason to get you to vote against your economic and educational interests.

[FalconX2000]

I want to write a book:

Gay Marriage: A republican's reason to get you to vote against your economic and educational interests.

I remember this Q&A session where Obama was asked about his position on gay marraige. He gave his established answer that he was in favour of civil unions, with all the rights afforded by marraige.

Then he went on to say that, to be honest, pushing through gay marraige lesgislation isn't going to be near the top of his list of priorities. Troops are dying everyday in Iraq, the economy is in shambles, healthcare is in crisis and people want to argue about gay marraige?

Can't seem to find it again on youtube though.

[Crowley]

Should the minimum wage be increased to meet inflation? Yes.

However, $15 a month means approximately $30000 a year. That is not a low tier wage. That is a lower-mid tier wage.

The people who could keep their jobs would be able to pay for their stuff more easily. However, an unaccetably large number of people would be let go, and how will they find new jobs?

A higher minimum wage doesn't create new jobs. A higher minimum wage doesn't mean there is suddenly more money to pay US workers.

It means there will be fewer people getting a slice of the pie. This will of course also reduce the overall size of the pie, since productivity will decrease due to all the job losses and high unemployment.

The point of artificial walls and freezes on the economy is to ensure absolute minimum standards. It makes sure that if someone works a job, they can at least survive if they're thrifty. But make no mistake, artificial hard walls are bad for the economy. That is why the minimum wage cannot be raised to a mid tier rate.

If you were saying maybe $10 an hour, maybe that would be sustainable. 15? The American economy would crash.

1. it's already crashing... and it's going to get much worse.

2 10 hourly works out to barely 20k a year... that's not enough to buy a car as most Americans don't have public transportation.

3. the 30k a year would go to the people in our economy who spend every dime they earn, thus creating a flood on demand.

The artificial walls you're talking about are the lowering of th interest rates and encouraging average Americans to take out loans on cars, houses etc.

Debt as a way of life in America is the ultimately the artificial wall that needs to collapse.

[Corrina]

I sincerely believe that, right now, the laws are being written to benefit the people who already have the power. That means that we're not going to get real reform through the Federal Reserve--I read that Bush's new regulations wouldn't cover that hot potato game, for instance.

I think government serves a purpose. But there are days when I'm like Mac: let's just tear down the system and start from scratch again.

[FalconX2000]

1. it's already crashing... and it's going to get much worse.

2 10 hourly works out to barely 20k a year... that's not enough to buy a car as most Americans don't have public transportation.

3. the 30k a year would go to the people in our economy who spend every dime they earn, thus creating a flood on demand.

The artificial walls you're talking about are the lowering of th interest rates and encouraging average Americans to take out loans on cars, houses etc.

Debt as a way of life in America is the ultimately the artificial wall that needs to collapse.

Buying alone is not the way an economy recovers. It involves paying for stuff that does not increase production, efficiency or profit with money the market does not have, leading to more money being paid over time.

That's the kind of short term solution that backfired, contributing towards the US economic recession in the first place.

I don't remember talking about lowering or increasing interest rates. The artificial walls I'vebeen talking about are the minimum wage and government imposed price floors/ceilings.

I agree that debt needs to be eliminated, but increasing the minimum wage to $15 an hour worsens the problem, not solves it. As I said, that would raise the unemployment rate and lower productivity, which would in turn mean less money generated.

Ultimately, the way to get and stay out of a recession is the rule restructuring and modernisation of various processes that Obama talked about, to prevent business malpractice and increase efficiency, thus saving money.

Once the economy recovers, prices of all goods drop relative to the buying power of the American dollar. Thus, everyone, including those earning 20k plus a year become richer.

[Corrina]

I think this is what partly ails the economy:

More people are on the lower end of the economic spectrum and can afford less.

So they shop at places with lower prices, such as Wal-Mart.

Wal-Mart manufactures their cheap stuff in places like China, so they don't have to pay workers in the U.S. higher manufacturing wages.

Thus, workers end up taking lower-paying jobs in America, like, oh, working at Wal-Mart.

And then they buy more cheap stuff. Producing the demand for the company to manufacture more cheap stuff somewhere else.

Henry Ford paid his workers an insane amount of money for the times, figuring that it would allow them to pay the cars. And that worked well, though it was a microcosm of the economy, not the entire economy.

But the less we pay people, the less they can afford, the more they want cheap stuff, which is more likely to be made by people making even less money than they are, which tends to be in places like China.

That, and throw in the price of oil, which makes the price of everything go up, and....jeez, who can really exist on $30,000 a year?

$1000 a month for housing.
$400 for groceries.
$100 for electricity.
$100 for oil for heat.
$100 for gas for the car.
$50 phone bill.
$50 cable bill
$200 car payment.

That's $2000 a month. $24,000 a year. Which is about what you have left after taxes. Add in some unexpected expenses like a car repair, or a medical bill or a dentist bill...and you're kinda screwed.

[Crowley]

I don't remember talking about lowering or increasing interest rates. The artificial walls I've been talking about are the minimum wage and government imposed price floors/ceilings.

then you're not paying attention to the economy.

This housing crisis happened because of DEREGULATION which is what Obama talks about. The lack of oversight meant that the banks were able to offer loans to people who's were unable to afford the houses.

Prior to that, former Fed chairman Alan Greenspan dropped the interest rates...
So when the interest rates increased the lenders were unable to pay.
here's a good link illustrating what happened:
http://www.joeydevilla.com/2008/03/20/the-credit-crisis-illustrated/
That, and throw in the price of oil, which makes the price of everything go up, and....jeez, who can really exist on $30,000 a year?

$1000 a month for housing.
$400 for groceries.
$100 for electricity.
$100 for oil for heat.
$100 for gas for the car.
$50 phone bill.
$50 cable bill
$200 car payment.

That's $2000 a month. $24,000 a year. Which is about what you have left after taxes. Add in some unexpected expenses like a car repair, or a medical bill or a dentist bill...and you're kinda screwed.
Precisely right.

[Crowley]

http://static.flickr.com/46/177296346_66924aad7c_o.jpg
here's another good article:
http://www.cbpp.org/6-20-06mw.htm

http://www.cbpp.org/6-20-06mw-f1.jpg
http://www.cbpp.org/6-20-06mw-f2.jpg

[FalconX2000]

then you're not paying attention to the economy.

This housing crisis happened because of DEREGULATION which is what Obama talks about. The lack of oversight meant that the banks were able to offer loans to people who's were unable to afford the houses.

Prior to that, former Fed chairman Alan Greenspan dropped the interest rates...
So when the interest rates increased the lenders were unable to pay.
here's a good link illustrating what happened:
http://www.joeydevilla.com/2008/03/20/the-credit-crisis-illustrated/

Precisely right.

YOU were the one who brought up raising the minimum wage to $15 per hour. I have been arguing that that is too high.

Price floors and ceilings are not the only way a government can regulate the economy, and there are far better options.

This has nothing to do with Obama's regulatory reform proposals.

As for your precisely right, $30000 a year works when the price of oil and other stuff goes down due to the prosperity of the economy. The key is not raising the minimum wage. The country doesn't suddenly have more money to give the workers because the minimum wage has been raised.

The wage costs rise, the cost of production rises, the selling price of goods rises, which means that those poor people are stuck being just as poor despite having their minimum wage raised.

I agree that some degree of raising of the minimum wage is in order. You are proposing to increase it by a horrifying margin That will hurt the economy and ultimately hurt those you're trying to help even more.

[FalconX2000]

http://static.flickr.com/46/177296346_66924aad7c_o.jpg
here's another good article:

etc etc snip.


The minimum wage is reviewed by the US government every 10 years. That is an outmoded way of doing things, and means that the workers gain a boost every 10 years and are left to decline till the next decade.

Of course poverty goes away once the minimum wage is raised. When you let the problem build up for 10 years, poverty becomes a bigger and bigger problem. By the time the government reviews the minimum wage, that pay rise to meet inflation is long overdue.

Take a close look at that article you showed. The democrats want to increase the minimum wage to $16000 a year. Even the liberals who want to raise the minimum wage understand the economy's demands well enough that their proposed new minimum wage is half what you're proposing.

Obama wants to review the minimum wage every year, and I believe that is a sensible idea.

[Crowley]

The minimum wage is reviewed by the US government every 10 years. That is an outmoded way of doing things, and means that the workers gain a boost every 10 years and are left to decline till the next decade.

Of course poverty goes away once the minimum wage is raised. When you let the problem build up for 10 years, poverty becomes a bigger and bigger problem. By the time the government reviews the minimum wage, that pay rise to meet inflation is long overdue.

Take a close look at that article you showed. The democrats want to increase the minimum wage to $16000 a year. Even the liberals who want to raise the minimum wage understand the economy's demands well enough that their proposed new minimum wage is half what you're proposing.

Obama wants to review the minimum wage every year, and I believe that is a sensible idea.

You're correct the amount they want to raise the minimum wage is not enough.

Look I just listened to Ravi Batra explain that we've been in the shit economically because of Greenspan and Reagan's policies in the 80's... they created demand though debt NOT thru wages... THAT's the problem.

Profit can't be supported artificially by debt... increase the wages... then the workers pay off the debt.

The debt goes away and the middle class has more to spend and you then wages and productivity balance out.

You also have to raise taxes on the wealthy.

[Crowley]

The wage costs rise, the cost of production rises, the selling price of goods rises, which means that those poor people are stuck being just as poor despite having their minimum wage raised.

I agree that some degree of raising of the minimum wage is in order. You are proposing to increase it by a horrifying margin That will hurt the economy and ultimately hurt those you're trying to help even more.

What happens when supply is higher than demand by a horrifying margin?

[kingdom2000]

One of the things that annoys me now about the economy is the moronic pay CEO's etc get for doing (or not) their jobs. A company could be posting a crappy quarter, laying off thousands, but these idiots will get millions in pay and bonuses. Start taxing companies for it. Make it so its not in their nor their shareholders best interset to reward incompetence. They can still pay high if the guy does a good job, but the tax hit just means the bonus may only be 5 million instead of 10. I am sure the guy will get over it.

To offset that, use tax incentives to reward companies for truly attempting to better their employee via raises, bonuses and education.

To use the idiotic stimulus check (which will be banked or used on debt), which would be better for the economy and instill more confidence in the average consumer: a $600 check from the government or a $600 bonus from your company?

[FalconX2000]

You're correct the amount they want to raise the minimum wage is not enough.

Look I just listened to Ravi Batra explain that we've been in the shit economically because of Greenspan and Reagan's policies in the 80's... they created demand though debt NOT thru wages... THAT's the problem.

Profit can't be supported artificially by debt... increase the wages... then the workers pay off the debt.

Profit can't be supported artifically by anything. Wages included.

Money is value. Giving more of it to people who aren't giving the necessary production output will help in the short term.

However, as I said before, the higher wages lead to higher costs of production. That translates to higher prices for goods, which thus weakens the buying power of the dollar. So now not only are the poor people back to square one, but the middle class are dragged down and made poorer because their money also buys less.

Thus, your line of reasoning from where I cut off to here:

The debt goes away and the middle class has more to spend and you then wages and productivity balance out.

You also have to raise taxes on the wealthy.

Never occurs. There is a reason why big government is so frowned upon so many economists in the USA. I think they put too much emphasis on small government at the expense of other factors like the environment, poverty, etc, but I think its the opposite for you and the minimum wage.

As for raising taxes for the wealthy, I agree with you. The government needs funds to recoup its national debt and fund the various projects that need to be undertaken. The rich don't need the tax breaks given by the Bush administration.

[MacQuarrie]

And who's going to maintain the roads, fix the power lines, modernise hospitals, ensure more preventive healthcare rather than emergency healthcare?
As I said, the city, county, state, or individual. Government health care is by definition disastrous, because it is by definition rationed. There's no way for a government program to pay for all the medical care that all the citizens need, especially since two fundamental principals will apply:

1. People will get more unnecessary and expensive treatments if they don't see the money coming out of their own wallets (even though it actually does)

2. Parkinson's Law. When you make more money available for something, the cost of that thing invariably goes up so as to absorb all the money available. Government subsidies for expensive things make them less expensive for some people, but a lot more expensive for others. Prior to the invention of medical insurance (as a dodge around wage-freezes during WWII), medical expenses were affordable, because they had to be; they were paid for out of pocket just like other household expenses. All the misguided attempts to control the problem since then have in fact made it worse.

As a general rule, hard artificial floors and ceilings are overall very bad for the economy.

Some do need to exist, like a minimum wage. They're there to ensure basic human rights (or in some cases environmental concerns). However, to raise that simply by enforcing a rule that goes against productivity ratings and the demands of the economic situation will backfire horribly.[quote]
The minimum wage is unnecessary and harmful, as it prices a large segment of the population out of entry-level jobs and requires the creation fo an underground economy. Those "Jobs that Americans won't take"? That's the minimum wage at work, because those jobs can't pay minimum wage, so illegal aliens take them and work under the table. Those homeless people who can't find jobs? That's the minimum wage again. If you have to pay a minimum wage, you have to hire experienced people who will do the job faster. Also, the minimum wage is usually a maximum wage. If you tell people they have to pay a certain amount, that' all they have to pay. This creates dead-end jobs for semi-skilled people who don't get to move into a career path at that company, keeping them in poverty until they change their qualifications.

Then there's the fact that only a tiny tiny minority of minimum-wage earners are actually trying to support themselves on that pay; most are part-time workers, students or retired people being supported by parents, children or pensions. They don't need a "living wage", they need supplemental income and something to do a few hours a day. Nobody stays in a minimum wage job for very long. A minimum wage job is what you do while you're preparing to do something else. It's not a career.

Minimum wage and its necessity is a myth.
[QUOTE=FalconX2000;6591954]An abnormally high minimum wage, for example, means that companies can't afford to employ many people. Unemployment would sky rocket and that of course would lead to heavy burdens on welfare, even higher losses of home ownership, and all other kinds of problems.

Take Australia's wool market as another example. In order to protect wool sellers, the Australian government set an abnormally high minimum price that wool could be sold at.

The idea was that if the price of wool at the time was lower than the minimum, the government would buy the wool from the farmers and sell it later when the price became good enough again.

This backfired horribly, since this never affected the actual market demand for wool. The government ended up buying ludicrous amounts of wool that they could never sell, because how much the market was willing to pay for wool never reached their artificial floor price.

This became even more impossible because wool gained a direct competitor: cheaper synthetic wool. This can be compared to your argument about the minimum wage as foreign workers, who would now be much much cheaper than American workers with only a slight decrease in productivity per person.

In the end the wool scheme collapsed and resulted in a huge oversupply of wool that deeply hurt sheep farmers. Till this day the Australian government is still unable to get rid of that huge stockpile of wool.

This is why the minimum wage cannot be raised to $15 per hour. It's far too high. People who work for jobs offering the minimum wage or close to it don't do work that merits that kind of money. So you'd have a few people being paid more, while the rest would just be let go.
Exactly. Now take it a step further. Eliminate the minimum wage entirely. Now the company can hire people with no skills and train them, since they can afford to have the workers take longer to do the jobs. The company can then produce more goods at a better profit and hire more people, creating new opportunities for employees to advance to better-paying positions and also paying more taxes and building the economy. Homeless people and recent parolees from prison will have a better shot at getting back into the workforce.

At the very least, we need to add a "training rate" below the minimum wage for first-time workers, parolees, immigrants and other difficult cases, so that they have a shot at getting a job in the first place. Everyone knows it's easier to get a job when you have one, but nobody will hire any of these people unless it's a cash, off-the-books illegal deal. It would be better for everyone if we just admitted that there are thousands, possibly millions, working illegally for below minimum wage, and made it a legal option with a way to progress out of it. Maybe a time-limit, after x number of months the employee moves up to the minimum wage. It's better than what we have now.

[MacQuarrie]

As for raising taxes for the wealthy, I agree with you. The government needs funds to recoup its national debt and fund the various projects that need to be undertaken. The rich don't need the tax breaks given by the Bush administration.

No matter how much you tax people, the national debt will never go away until the Federal Reserve is abolished.

The Fed tells the Treasury how much money to print. The Treasury prints it and sells it to the Fed for the cost of printing. A $100 bill costs the same as a $1.

the difference between the face value of the money and the cost is then added to the national debt when the Fed turns around and sells the money to its member banks for face value.

Nationalize the Fed and eliminate that middle-man process, and poof, most of the national debt goes away. Then we don't have to raise anybody's taxes.

[MacQuarrie]

then you're not paying attention to the economy.

This housing crisis happened because of DEREGULATION which is what Obama talks about. The lack of oversight meant that the banks were able to offer loans to people who's were unable to afford the houses.

Prior to that, former Fed chairman Alan Greenspan dropped the interest rates...
So when the interest rates increased the lenders were unable to pay.
here's a good link illustrating what happened:
http://www.joeydevilla.com/2008/03/20/the-credit-crisis-illustrated/

Precisely right.
The housing crisis happened because the credit card companies pushed through major changes to bankruptcy laws, so that filing bankruptcy would not allow one to eliminate credit card debt anymore. Once that happened, people who were in subprime loans and in debt way over their head panicked and rushed to file before the new laws took effect. Everythign is connected to everything else.

[FalconX2000]

As I said, the city, county, state, or individual. Government health care is by definition disastrous, because it is by definition rationed. There's no way for a government program to pay for all the medical care that all the citizens need, especially since two fundamental principals will apply:

1. People will get more unnecessary and expensive treatments if they don't see the money coming out of their own wallets (even though it actually does)

2. Parkinson's Law. When you make more money available for something, the cost of that thing invariably goes up so as to absorb all the money available. Government subsidies for expensive things make them less expensive for some people, but a lot more expensive for others. Prior to the invention of medical insurance (as a dodge around wage-freezes during WWII), medical expenses were affordable, because they had to be; they were paid for out of pocket just like other household expenses. All the misguided attempts to control the problem since then have in fact made it worse.

Wait a minute...health insurance completely covers whatever treatments prescribed by a private doctor?

And I believe the main problems with the cost of medicine is

1) the oligopoly of drug companies that work together to charge abnormally high prices.

2) the lack of most preventive care due to the predatory health insurance policies, which trnaslate into expensive emergency care.

3) The obsolete medical archival systems.


The minimum wage is unnecessary and harmful, as it prices a large segment of the population out of entry-level jobs and requires the creation fo an underground economy. Those "Jobs that Americans won't take"? That's the minimum wage at work, because those jobs can't pay minimum wage, so illegal aliens take them and work under the table. Those homeless people who can't find jobs? That's the minimum wage again. If you have to pay a minimum wage, you have to hire experienced people who will do the job faster. Also, the minimum wage is usually a maximum wage. If you tell people they have to pay a certain amount, that' all they have to pay. This creates dead-end jobs for semi-skilled people who don't get to move into a career path at that company, keeping them in poverty until they change their qualifications.

Then there's the fact that only a tiny tiny minority of minimum-wage earners are actually trying to support themselves on that pay; most are part-time workers, students or retired people being supported by parents, children or pensions. They don't need a "living wage", they need supplemental income and something to do a few hours a day. Nobody stays in a minimum wage job for very long. A minimum wage job is what you do while you're preparing to do something else. It's not a career.

Minimum wage and its necessity is a myth.

Exactly. Now take it a step further. Eliminate the minimum wage entirely. Now the company can hire people with no skills and train them, since they can afford to have the workers take longer to do the jobs. The company can then produce more goods at a better profit and hire more people, creating new opportunities for employees to advance to better-paying positions and also paying more taxes and building the economy. Homeless people and recent parolees from prison will have a better shot at getting back into the workforce.

At the very least, we need to add a "training rate" below the minimum wage for first-time workers, parolees, immigrants and other difficult cases, so that they have a shot at getting a job in the first place. Everyone knows it's easier to get a job when you have one, but nobody will hire any of these people unless it's a cash, off-the-books illegal deal. It would be better for everyone if we just admitted that there are thousands, possibly millions, working illegally for below minimum wage, and made it a legal option with a way to progress out of it. Maybe a time-limit, after x number of months the employee moves up to the minimum wage. It's better than what we have now.

The last paragraph sounds great to me. It would also discourage callous job hopping.

However, I believe the minimum wage argument is also shown in the poverty chart displayed by Crowley. Many companies will not raise the wages of their workers unless they are forced to.

Without worker protection, overall GDP may well rise, but all the riches will go to the rich while the poor languish in the same hole forever. That is why things were so bad for workers in the age of Steam, before Unions and worker protection policies came into being.

[MacQuarrie]

Wait a minute...health insurance completely covers whatever treatments prescribed by a private doctor?

And I believe the main problems with the cost of medicine is

1) the oligopoly of drug companies that work together to charge abnormally high prices.

2) the lack of most preventive care due to the predatory health insurance policies, which trnaslate into expensive emergency care.

3) The obsolete medical archival systems.
Read "The Death of Common Sense" by Philip K. Howard. The number one cause, far and away, for the high cost of prescription medications is the absurd level of government scrutiny that every drug is subjected to before it can be released to the market, far more than any other country on earth. The number two reason is that the drug companies then sell the medications in other countries for about the cost of manufacture, leaving US customers to pay for development, the review process, advertising (which ought to be banned again), and administrative costs.

However, I believe the minimum wage argument is also shown in the poverty chart displayed by Crowley. Many companies will not raise the wages of their workers unless they are forced to.
Sure. True. But the overwhelming majority of the workers do not stick around long enough to suffer from the lack of wage increases. They graduate from school and move into a career, or they use the experience from the low-paying job to get a higher-paying one elsewhere. or they quit working and go back to being retired. Minimum-wage jobs aren't supposed to be long-term jobs. They aren't supposed to be career choices. They aren't supposed to pay a "living wage." They are supposed to be a way to enter the job market in the first place, to make some supplemental money while maintaining a flexible and/or unusual schedule, or to supplement retirement income. Some people may live on a minimum-wage job, but they do so while sharing living space with other wage-earners, and they don't do so forever.

The reasons behind the minimum wage are spurious at best, and the arguments to support it are emotionally based and manipulative while being light on fact.

If I can hire two kids to paint my fence and pay them $4 an hour each, and it will take them two hours to do it, it costs me $16. If I have to pay a minimum wage of, say, $8, I'll hire an experienced painter who can do it by himself in the same amount of time. So instead of giving two inexperienced kids an opportunity to advance, I maintain one guy who already has his start. I've contributed to unemployment and advanced one guy at the expense of two others.

[FalconX2000]

Read "The Death of Common Sense" by Philip K. Howard. The number one cause, far and away, for the high cost of prescription medications is the absurd level of government scrutiny that every drug is subjected to before it can be released to the market, far more than any other country on earth. The number two reason is that the drug companies then sell the medications in other countries for about the cost of manufacture, leaving US customers to pay for development, the review process, advertising (which ought to be banned again), and administrative costs.

Sounds like they need a more efficient way to scrutinise the drugs. Given that drugs released nowadays still turn out to have harmful side effects, just cutting back won't do.

The second point's answer would be the rules and infrastructure review that Obama's been talking about. What's worse is that the drug companies put down their advertising costs as 'R&D' costs.


Sure. True. But the overwhelming majority of the workers do not stick around long enough to suffer from the lack of wage increases. They graduate from school and move into a career, or they use the experience from the low-paying job to get a higher-paying one elsewhere. or they quit working and go back to being retired. Minimum-wage jobs aren't supposed to be long-term jobs. They aren't supposed to be career choices. They aren't supposed to pay a "living wage." They are supposed to be a way to enter the job market in the first place, to make some supplemental money while maintaining a flexible and/or unusual schedule, or to supplement retirement income. Some people may live on a minimum-wage job, but they do so while sharing living space with other wage-earners, and they don't do so forever.

The reasons behind the minimum wage are spurious at best, and the arguments to support it are emotionally based and manipulative while being light on fact.

If I can hire two kids to paint my fence and pay them $4 an hour each, and it will take them two hours to do it, it costs me $16. If I have to pay a minimum wage of, say, $8, I'll hire an experienced painter who can do it by himself in the same amount of time. So instead of giving two inexperienced kids an opportunity to advance, I maintain one guy who already has his start. I've contributed to unemployment and advanced one guy at the expense of two others.

Alot of those who work the minimum wage jobs don't have a choice. Similar to what you said, either they're students doing part time work to get through school or help support their family in financial straits, or they're workers who've been let go and are in transition from one job to the next, or are old people who've retired but need to supplement their income but can't find another job to do it.

These people need the money, but their worker types are exploited and are paid a wage that is horrendously low. Whether that wage is low or high, the workers still need to be employed. Where do the profits from this exploitation go to? The huge CEO bonuses and padding the pockets of those who can afford not to have it.

Regardless of the minimum wage, the mega-companies that pay these minimum wages will still be able to afford their other necessities to run a successful company, it's just that the people at the top won't be wallowing in a huge pile of money, buying super luxuries while the people at the bottom live from hand to mouth.

[PatrickG]

You're correct the amount they want to raise the minimum wage is not enough.

Look I just listened to Ravi Batra explain that we've been in the shit economically because of Greenspan and Reagan's policies in the 80's... they created demand though debt NOT thru wages... THAT's the problem.

Profit can't be supported artificially by debt... increase the wages... then the workers pay off the debt.

The debt goes away and the middle class has more to spend and you then wages and productivity balance out.

You also have to raise taxes on the wealthy.

My biggest problem here is that wage increases hurt Mom and Pop businesses who already have banks going extra-stringent on them after losing their shirts in the housing crisis.

The archetypal Mom and Pop establishment is financed out of loans, is disproportionately burdened as is, is under constant attack from large chains and often suffer in the event of a minimum wage hike.

I think the ideal solution is NOT a minimum wage hike but to tax businesses progressively (and by assets rather than income, since billion dollar companies can show zero profit in a year and a Mom 'n Pop can have a fluke year where the business earns a million dollars -- money which Mom 'n Pop never actually get to see because they have employees, debt, mortgages, etc.)

By taxing businesses progressively by assets, what amounts to a relief fund could be established for the people who work long hours (at least as long as health permits) and still struggle. And to do this without penalizing people who are trying to MAKE their fortune while placing the burden on the people and corporations who HAVE their fortune.

In place of an increased minimum wage at the expense of ALL employers, many of whom are struggling now, I'd rather see the nigh monopolies and mega corporations subverted into funding their smaller and more fragile competition.

My idea would be, in effect, for the government to pay an extra $1 an hour to part time employees and $3 an hour to employees who work more than 20 hours a week.

Excluded from subsidy this would be:

- Legal dependents. (Only pre-18 year olds who are emancipated would qualify. In theory, the rest are not working to live.)
- The self-employed.
- College students who receive a high amount of federal aid.
- People convicted of serious felonies or in default on student loans.
- Foreign nationals working in the U.S. on a visa.
- Anyone who lives in a household that is in the top 20% of incomes for their state.

The money would come from businesses with assets and holdings exceeding 1-2 million dollars, taxed progressively by assets.

[PatrickG]

If I can hire two kids to paint my fence and pay them $4 an hour each, and it will take them two hours to do it, it costs me $16. If I have to pay a minimum wage of, say, $8, I'll hire an experienced painter who can do it by himself in the same amount of time. So instead of giving two inexperienced kids an opportunity to advance, I maintain one guy who already has his start. I've contributed to unemployment and advanced one guy at the expense of two others.

I think this illustrates one of the faults with the idealism some socialists have.

I'm slowly moving away from a libertarian stance due to what I see as wrongs that private society is too lazy or apathetic to properly fund. (Education being one of them.)

However, I think your point here has undeniable merit.

Furthermore, you may simply decide that you'll paint your own fence when you can (if you have time) or can't afford to have your fence painted.

The result being a shoddy looking fence with chipping paint. Enough of this drives property values down and hurts everyone as there is an increase in desired but optional services that no one can afford to hire because they simply aren't worth minimum wage.

The net result being that poor and working Americans have shoddy looking fences while filthy rich SoBs either keep their own fences up to par (because they can afford to splurge) or use their clout/money to bypass the system, either by covertly paying people less or exploiting illegals.

The minimum wage, in some cases, increases the gap between haves and have nots and deflates the dollar, whose value is simply a measure of productivity. Giving more money for the same work devalues the dollar.

The real issue, IMO, is NOT that minimum wage is too low. The issue is that not enough people are moving beyond minimum wage, are not able to move very much beyond minimum wage or are moving beyond minimum wage too slowly as compared with their rate of fiscal responsibility (kids, car, mortgage).

The ultimate solution is job education, insuring fairer advancement and hiring practices and helping those who are helping themselves but perhaps still not able to make things work, perhaps because the plant or the shop or the restaurant they work at is seriously hurting in the skittish and stagnant economy we have right now. Or because their bank went from being their best friend to being their parole officer overnight. Or because their kids are in Iraq instead of helping out on the farm or around the house or getting educations that would have lead to more money. (Educations that they may later get at the Army's expense but which will be four years delayed, creating a glass ceiling for vets who may also have medical and psychiatric issues, which appear to be an epidemic in this war.)

[PatrickG]

One of the things that annoys me now about the economy is the moronic pay CEO's etc get for doing (or not) their jobs. A company could be posting a crappy quarter, laying off thousands, but these idiots will get millions in pay and bonuses. Start taxing companies for it. Make it so its not in their nor their shareholders best interset to reward incompetence. They can still pay high if the guy does a good job, but the tax hit just means the bonus may only be 5 million instead of 10. I am sure the guy will get over it.

To offset that, use tax incentives to reward companies for truly attempting to better their employee via raises, bonuses and education.

To use the idiotic stimulus check (which will be banked or used on debt), which would be better for the economy and instill more confidence in the average consumer: a $600 check from the government or a $600 bonus from your company?

Just a note:

It's already not in the shareholders' interest to reward incompetence.

Many of these CEOs are screwing over the people on the company retirement plan and the shareholders and the people who've invested in careers in the company, tying their name and life to their work -- all of whom are investors who have everything to lose if the CEO draws an unfair salary.

Shareholders don't have any desire to let shit like this go.

The issue here is one of transparency, loopholes, shelters and ethically questionable tactics by CEOs who are robbing the shareholders and the employees blind either without their knowledge or by essentially falsifying the market's demand and reliance on CEOs, especially mediocre CEOs.

One thing I LIKE about Obama is that central to his solutions for government and large corporations is the idea of increased mandatory transparency and opening records and decisions to the public.

[Crowley]

then the workers pay off the debt.

Profit can't be supported artifically by anything. Wages included.

Money is value. Giving more of it to people who aren't giving the necessary production output will help in the short term.

However, as I said before, the higher wages lead to higher costs of production. That translates to higher prices for goods, which thus weakens the buying power of the dollar. So now not only are the poor people back to square one, but the middle class are dragged down and made poorer because their money also buys less.

Thus, your line of reasoning from where I cut off to here:



Never occurs. There is a reason why big government is so frowned upon so many economists in the USA. I think they put too much emphasis on small government at the expense of other factors like the environment, poverty, etc, but I think its the opposite for you and the minimum wage.

As for raising taxes for the wealthy, I agree with you. The government needs funds to recoup its national debt and fund the various projects that need to be undertaken. The rich don't need the tax breaks given by the Bush administration.

excerpts from an interview with Ravi Batra:

The main reason is that we don't have a free enterprise economy. It is touted as a free enterprise economy but we really don't have that. In fact, what we have are regional monopolies or a monopolized economy. Some people call it "Crony Capitalism." The main feature of a monopolized economy is that the fruit of rising productivity goes to owners of capital, not to the employees. So there occurs a rising gap between productivity and wages. Wages are the main source of demand and productivity is the main source of supply so with the rising gap between wages and productivity there is a potential for a gap between demand and supply. And that has been occurring in the U.S. for many years now. So the question is how have we stayed afloat for so long with supply rising faster than demand? The answer is demand has remained artificially high through the creation of debt, either from government, consumers, corporations and foreigners. All this debt has combined to lift up demand to the level of supply. But debt created prosperity cannot last forever. So we have gotten into this mess by: First, allowing wages to lag behind productivity and secondly by artificially bolstering demand by creating a tremendous amount of debt. All we have done is simply postponed the problem. And, since this postponement has been going on for many years, the mess is potentially catastrophic.

No, I do not agree that the Reagan supply side economic policies were desirable because "supply side" was just a euphemism for Keynesian economics. Keynes talked about cutting taxes that would spur demand which in turn will attract production and investment. But both of Reagan's policies of cutting taxes (mostly for the rich) and raising social security taxes, which hit the poor and middle classes the hardest, did not increase demand and hence give a reason to invest. Without consumer demand why would anyone put any money in their business? So when Reagan cut income taxes and raised social security taxes he was in fact hurting business.

The Reagan economic policy was also Keynesian in the sense that the end result was a huge federal budget deficit. That is the main idea behind the Keynesian demand side policy. So in the end, during the 1980's the budget deficit rose sharply and they simply called it supply side to try to distinguish it from Keynesian economics. In reality, it was the same Keynesian policy. But it had a negative bite to it as well. It was a budget deficit on the back of the poor. Demand did not rise fast enough therefore investment did not grow fast. So GDP growth during the 1980's was in fact slower than in the 1970's and certainly the 1960's. Money went into the stock market, but that has not resulted in economic growth.

Yes and that is exactly the way it is all over the world. It takes different forms and shapes in different countries, but in the end it is the power of money over politics that is creating problems. That power has increased sharply from the early 80's as a result of tax cuts fueling the wealthy with extra cash, and then a rising wage gap created even more billionaires. These rich people in turn have had an increased ability to buy off elections. So their power has risen very sharply in the U.S. and also in the rest of the world. So Crony Capitalism, is ruling the world. One result of that we have already seen and that is the Asian turmoil. And it is now stirring up in Latin America as well. I think it is finally going to come to the United States.

See we're so used to almost 30 years of supply side economics... we don't know what we'd do if suddenly there was more demand.

Look government regulation worked with "The New Deal" and our economy reached it's peak in 1968 when the middle class was at it's strongest.

[FalconX2000]

Tell you what, seeing as I'm the moderate fiscal policy thinker here, you and McQuarrie go at each other. I'll check back later to see who's left standing.

[Crowley]

For the last 30 years the economy has been run from the top down and not the bottom up. It's all math... there's nothing really to battle about.

If supply outweighs demand by a huge margin the economy crashes... end of story. Balancing out the two is the only way to stabilize it... that what the Fed did in 2001 when the dropped interest rates. They encouraged borrowing and created false demand.

You increase minimum wage to 30k and you'll see alot of lower income households dropping the second and sometimes even third jobs they take on and putting more of their dollars into the economy. It balances out unemployment, because the void it creates in the workers ditching multiple jobs.

[Samurai]

They just increased minimum state wage in CA as of Jan 1, same as they did in 2007. You know what happened immediately, both times? Some people were fired/let go, and the prices of every good and service that was affected rose. Probably the most visible change was every fast food restaurant increased its prices the 1st week of January, and had fewer people working.

This happens every time the minimum wage increases, like clockwork. The wage went up 50 cents an hour, and the price of every meal went up at least 30 or 40 cents to compensate, along with lots of other prices. Those that managed to keep their jobs end up paying more for the same things they were buying, and don't really get ahead. And those that lost their job not only now have no income, and a tougher job market to compete in, they too are paying more for basic necessities, eating through any savings or unemployment faster than ever.

[Crowley]

that why you have to first strip EVERY corporation of the rights granting them personhood in the 14th amendment first... cut all their tax breaks and then regulate the shit out of them and demand the starting wage per year at 30k.

get rid of the FED.

Then watch real money flow into our own economy.

[PatrickG]

For the last 30 years the economy has been run from the top down and not the bottom up. It's all math... there's nothing really to battle about.

If supply outweighs demand by a huge margin the economy crashes... end of story. Balancing out the two is the only way to stabilize it... that what the Fed did in 2001 when the dropped interest rates. They encouraged borrowing and created false demand.

You increase minimum wage to 30k and you'll see alot of lower income households dropping the second and sometimes even third jobs they take on and putting more of their dollars into the economy. It balances out unemployment, because the void it creates in the workers ditching multiple jobs.

In the process of doing that, you eliminate any small business owners who make under 50k a year and rely on part time help from demographics such as housewives, high school kids, college students, recovering convicts and retired people.

A system like the one you propose turns everyone into employees and makes it so that you have to be rich to be an employer.

[Charles RB]

the majority of government functions are decentralized and controlled by the city, county, or state, with much more oversight and less opportunity for fraud, corruption and abuse.

I wouldn't bank on that. People & groups in city, county and devolved national governments here manage to do fraud, corruption and abuse quite comfortably.


1. People will get more unnecessary and expensive treatments if they don't see the money coming out of their own wallets (even though it actually does)

Is that really a fundamental? I've heard a lot of debate and discussion on healthcare here, but I don't recall that being a major issue getting focus. Haven't heard of it being an issue elsewhere in Europe, though I could be wrong.

[cactusmaac]

Read "The Death of Common Sense" by Philip K. Howard. The number one cause, far and away, for the high cost of prescription medications is the absurd level of government scrutiny that every drug is subjected to before it can be released to the market, far more than any other country on earth. The number two reason is that the drug companies then sell the medications in other countries for about the cost of manufacture, leaving US customers to pay for development, the review process, advertising (which ought to be banned again), and administrative costs.


Really? All the recent economic literature indicates it's mainly because hospitals and doctors are incentivised to perform as many treatments as possible, with little regard to cost and efficacy. Put doctors on fixed salaries, instead of per-service ones, like they do elsewhere in the world and costs will take a big hit.

[cactusmaac]

I agree with the first half and disagree with the second.

We do need to close the loophole that allows filthy-rich people to show zero "income" because all their money comes from interest and dividends of investments and trust funds and such.

That was the typical income profile of the rich in the Depression era. Nowadays the rich earn most of their wealth through income.


Of course, if I had my choice, I'd dramatically cut spending so that taxes would be significantly lower. Start by passing a constitutional amendment forbidding the Fed from doing anything that isn't specifically assigned to them in the Constitution (you know, enforcing the Ninth and Tenth Amendments). Then abolish and nationalize the Federal Reserve, returning its powers to the Treasury Department and instantly eliminating the majority of the national debt. Then go back on the Gold Standard. Within five years we abolish the IRS entirely and have a balanced budget. Congress becomes a part-time job, and the majority of government functions are decentralized and controlled by the city, county, or state, with much more oversight and less opportunity for fraud, corruption and abuse. Local accountability is best.

If it were up to me.

How would you raise taxes? Also I'm not sure how your plan would mean debt gets eliminated. And the Gold Standard is long out-of-date for modern economies. You get the same result with far more flexibility if you just use inflation-targeting.

I think this is what partly ails the economy:

More people are on the lower end of the economic spectrum and can afford less.

So they shop at places with lower prices, such as Wal-Mart.

Wal-Mart manufactures their cheap stuff in places like China, so they don't have to pay workers in the U.S. higher manufacturing wages.

Thus, workers end up taking lower-paying jobs in America, like, oh, working at Wal-Mart.

And then they buy more cheap stuff. Producing the demand for the company to manufacture more cheap stuff somewhere else.

Henry Ford paid his workers an insane amount of money for the times, figuring that it would allow them to pay the cars. And that worked well, though it was a microcosm of the economy, not the entire economy.

But the less we pay people, the less they can afford, the more they want cheap stuff, which is more likely to be made by people making even less money than they are, which tends to be in places like China.

That, and throw in the price of oil, which makes the price of everything go up, and....jeez, who can really exist on $30,000 a year?

$1000 a month for housing.
$400 for groceries.
$100 for electricity.
$100 for oil for heat.
$100 for gas for the car.
$50 phone bill.
$50 cable bill
$200 car payment.

That's $2000 a month. $24,000 a year. Which is about what you have left after taxes. Add in some unexpected expenses like a car repair, or a medical bill or a dentist bill...and you're kinda screwed.

Outsourcing of jobs simply hasn't happened at that kind of scale. A much bigger factor is technology improvements which mean far fewer workers are necessary for the same level of output.

[Corrina]

Outsourcing of jobs has happened on that kind of scale.

Who do you talk to when you call customer service? The last ten times I've called about something, everything from computers to credit cards, I've gotten somebody in India or a similar country.

And there are manufacturing jobs. They're just not in the US anymore.

All I know is this: the people setting the rules are the one at the top of the food chain. I don't trust them to set the rules to do anything more than get as much money from me, as fast as possible, all the while paying me as little as possible. I don't think they give a damn, mostly, about anything long term, so long as in the short-term, they're pocketing lots of money.

And the people in gov't who should be looking out for the long-term health of the economy....are probably in bed with the ones with the money.

[Samurai]

that why you have to first strip EVERY corporation of the rights granting them personhood in the 14th amendment first... cut all their tax breaks and then regulate the shit out of them and demand the starting wage per year at 30k.

get rid of the FED.

Then watch real money flow into our own economy.

Do you support central planning and price controls on everything too? Because if you raise a companies costs by increasing what they have to pay employees, that's the only way you'll prevent them from passing that cost on to customers. You're talking about nearly doubling the minimum wage as it is in CA (currently $8), and forcing companies to eat 100% of that increase out of their profits (or some other area, like cutting the quality of goods and supplies, or reducing hours of operation/number of employees, etc).

[Crowley]

In the process of doing that, you eliminate any small business owners who make under 50k a year and rely on part time help from demographics such as housewives, high school kids, college students, recovering convicts and retired people.

A system like the one you propose turns everyone into employees and makes it so that you have to be rich to be an employer.

Are you under the impression that people who aren't rich or in the upper middle class employ?

Because if you raise a companies costs by increasing what they have to pay employees, that's the only way you'll prevent them from passing that cost on to customers. What's stopping them right now from jacking up costs anyway? You're aware that "Sales" and "Discounts" are manufactured right?

Furthermore, with higher wages among the lower income classes would they be buying more or less, Sam?

Lower income families spend nearly 100% of their income.
True or False?

[FalconX2000]

Outsourcing of jobs has happened on that kind of scale.

Who do you talk to when you call customer service? The last ten times I've called about something, everything from computers to credit cards, I've gotten somebody in India or a similar country.

And there are manufacturing jobs. They're just not in the US anymore.

All I know is this: the people setting the rules are the one at the top of the food chain. I don't trust them to set the rules to do anything more than get as much money from me, as fast as possible, all the while paying me as little as possible. I don't think they give a damn, mostly, about anything long term, so long as in the short-term, they're pocketing lots of money.

And the people in gov't who should be looking out for the long-term health of the economy....are probably in bed with the ones with the money.

That's why all the ethics reform Obama's been pushing through has been so important. Lobbyists aren't allowed to give gifts, meals, etc to Senators now.

[Samurai]

Are you under the impression that people who aren't rich or in the upper middle class employ?

What's stopping them right now from jacking up costs anyway? You're aware that "Sales" and "Discounts" are manufactured right?

Furthermore, with higher wages among the lower income classes would they be buying more or less, Sam?

Lower income families spend nearly 100% of their income.
True or False?

Competition prevents rampant and unjustifiable price increases most of the time. If McDonalds decides to double the price of their burgers, people will stop going there and instead eat at the competition. However, if all burger places have their costs increase due to paying their employees at least $7 more per hour, all of them will increase their prices knowing that their competition will have to do the same. That's what always happens after a minimum wage hike.

And it depends upon the family/person. I made about $20,000 last year, and I saved as much as I could, I have over $10,000 in savings right now. On the other hand, I know people that made almost $100,000 last year and they are many thousands of dollars in debt and living well beyond their means with BMWs, fancy trips, etc. In general, though, people are going to spend a certain base amount just to have a roof over their head and food to eat. Beyond that, it's a matter of self-control, priorities, and money management. If I made double what I did last year, I guarantee that at least 75-80% of the extra money would have gone into savings. And I just know the guy that earns 6 figures would have blown every cent...

[MacQuarrie]

that why you have to first strip EVERY corporation of the rights granting them personhood in the 14th amendment first... cut all their tax breaks and then regulate the shit out of them and demand the starting wage per year at 30k.

get rid of the FED.

Then watch real money flow into our own economy.

This is where I absolutely agree with you.

Theodore Roosevelt was very pro-business and very anti-corporation, and I agree with him. Businesses, real businesses, run by real people, need every advantage government can permit. Corporations need constant oversight and strict boundaries.

The argument that a corporation is a legal person with the same rights as regular people is absurd on its face. A corporation is a "person" that doesn't age, never sleeps, can be in more than one place at a time, has no physical limitations, and most importantly, no conscience.

Edit: Except for the starting wage thing. It really doesn't work that way.

[MacQuarrie]

Are you under the impression that people who aren't rich or in the upper middle class employ?
Yes. A lot of them do. There are lots of little shops and such whose owners are barely breaking even, and they employ a lot of people. I know for a fact that the screenprinting industry is full of such businesses. I know guys who literally live in their shops or work out of their garages (in one case, out of his living room), and they employ people. There are little taco stands all over my neighborhood, owned by people who don't clear much more than I do, and they employ people. Raise the minimum wage, and you'll either put them out of business or force them to hire illegally and pay cash.

[MacQuarrie]

Really? All the recent economic literature indicates it's mainly because hospitals and doctors are incentivised to perform as many treatments as possible, with little regard to cost and efficacy. Put doctors on fixed salaries, instead of per-service ones, like they do elsewhere in the world and costs will take a big hit.
Yes, doctors are incentivized to perform as many treatments as possible. And advertising directly panders to hypochondriacs. But putting doctors on fixed salaries is not the answer, unless you want to drive doctors out of the field and discourage students from going to medical school. The answer is to go back to what worked in the past. Make the medical profession deal with the real world and market forces. Doctors used to charge what their patients could afford, back when patients paid for their own medical care, prior to the shell game of medical insurance.

Encourage the medical savings plans that a lot of companies are offering now. Give employees the money that's currently being directed toward their insurance and let them pay their own bills. A big part of the current medical cost crisis is the effect of Parkinson's Law: Costs rise to meet the resources available.

But back to the subject of the cost of medical research....

From "The Death of Common Sense", 1994 (Chapter II, "The Buck Never Stops"):
The FDA will not take the chance that it might be criticized for approving a drug that has an unknown side effect. Administrators believe, perhaps correctly at this point, that American citizens will tolerate no risk. But in the meantime people are dying because they don't have the benefits of the new drugs. "To the patient," one observer has noted, "the impact may be the same if you deny good technology as if you allow bad Technology on the market.

The average cost of every new drug, two-thirds of which goes to meeting FDA requirements, is $230 million (not a typographical error). One pharmaceutical company calculated that it spent more on forms and paperwork than it did on all research for cancer and other diseases. American citizens might be better served if all these funds were diverted to research in Japan and Germany, where more research would get accomplished and eventually trickle back to help cure disease in America.

We're not talking about testing and verifying the safety of the drugs, we're talking about spending huge amounts of money to make sure that a lot of papers are filled out properly, which nobody will ever look at. Mayor Richard Daley of Chicago says that his staff spends four thousand hours a year (the equivalent of two full-time jobs) just signing his name to forms. Everything is documented and visible to a mythical central power, but in reality, nobody is personally responsible for anything. The people who review and fill out the forms sign the Mayor's name to them, so they aren't accountable, and the Mayor never sees the forms, so he isn't either. Meanwhile the salaries of two well-paid civil service staffers is squandered on this useless exercise in Covering Your Ass.

All of American government is rife with this nonsense, and it's crippling us and killing people.

[MacQuarrie]

You increase minimum wage to 30k and you'll see alot of lower income households dropping the second and sometimes even third jobs they take on and putting more of their dollars into the economy. It balances out unemployment, because the void it creates in the workers ditching multiple jobs.
An analogy:

A decade or so ago, the city of New York decided that it was inhuman and offensive to have people living in single-room occupancy buildings, so they passed new housing laws mandating a minimum floor-space size for rental units. Every apartment had to have its own bathroom. They felt that this would improve the quality of life for the people and make for a better city.

What happened? Massive increases in homelessness, because people couldn't afford the new larger apartments and couldn't legally live in the rented rooms they had previously occupied. The intended improvement actually harmed them.

Raising the minimum wage to $30k will do only one thing; dramatically increase the number of people working under the table for less than minimum wage. Probably for less than they were making before. Companies that don't hire on a cash basis will cut their staff or go out of business.

There's no law that says people have to stay in their business. If you tell a shopkeeper that he has to double his employees' pay, he may very well say to hell with it, close down and go back to the job in corporate America that he quit to open the business. Or he may do what a previous boss of mine did when I asked for a raise; he gave it to me, continued to pay salaries by juggling cash advances from his credit cards and home equity line, didn't pay the taxes that he deducted from my check, and one fine day the state came out and locked the door, putting me out of work two weeks before Christmas with a month-old baby.

Your proposal will destroy the middle class.

[PatrickG]

Are you under the impression that people who aren't rich or in the upper middle class employ?


I'm under the impression that my parents employ 15 people, have never made over $50k or so a year and, when you factor their 14 hour day, 6 day weeks, they already make less than minimum wage.

[PatrickG]

The argument that a corporation is a legal person with the same rights as regular people is absurd on its face. A corporation is a "person" that doesn't age, never sleeps, can be in more than one place at a time, has no physical limitations, and most importantly, no conscience.


I agree with this and it's why I said somewhere on these boards that I consider mega-corps to be the closest thing to bloodsucking mutant parasites we'll ever see. (If we ever see any REAL bloodsucking mutant parasite, it would probably be developed by a mega-corp.)

If it's fair to tax PEOPLE progressively (and I think there needs to be more sense applied in how this is done as I know people who entered a new tax bracket by a thousand dollars or so and had to pay more than a thousand extra in taxes, discouraging them for acheiving), then I think it's fair to tax CORPORATIONS progressively, placing the burden of things like wage hikes on more profitible/larger/greater asset holding companies.

The guy who runs the hotdog cart or the small town flower shop is the little guy. The guy who runs the nice little local restaurant with table service (geek referral: check out Mona Lisa's in Little Italy in San Diego; the owner is 27 and it's been a family business for decades) is NOT Applebee's. He or she generally wouldn't stay in business peddling the schlock that most chains sell, has higher expenses, less purchasing power and lives off the margins of a single business.

Put the burden on the people who can afford it if you believe a policy like this is necessary.

Otherwise, you can all the borderline profitable small timers who do what they do because they believe in it and leave the market to a bunch of greedy SoBs who'd sell human excrement on a plate to make a profit, the megacorps who run dozens or hundreds of locations at a LOSS just to amp up their brand image, while making a killing overall.

[Loren]

That, and throw in the price of oil, which makes the price of everything go up, and....jeez, who can really exist on $30,000 a year?

$1000 a month for housing.
$400 for groceries.
$100 for electricity.
$100 for oil for heat.
$100 for gas for the car.
$50 phone bill.
$50 cable bill
$200 car payment.

That's $2000 a month. $24,000 a year. Which is about what you have left after taxes. Add in some unexpected expenses like a car repair, or a medical bill or a dentist bill...and you're kinda screwed.

If these estimates are for a single person, I think you're overestimating a bit. I'm a single guy renting a place in one of Atlanta's higher-end communities, and my expenses don't run that high:

$700 for rent
$300 for food
$50 for electricity
$50 for natural gas
$100 for gas
$50 for phone AND internet
$0 cable

I don't have a car payment, but assuming I did spend $200 a month on that, I'd still total only $17,400, rather than $24K. If I had an apartment with a roommate, my total would be even less.

[Loren]

that why you have to first strip EVERY corporation of the rights granting them personhood in the 14th amendment first...

I more or less agree on the specific personhood aspect, but I'm curious...what exactly do you anticipate that reversal affecting? What particular benefits are you hoping that the lack of 14th Amendment protection will bring?

[cactusmaac]

Outsourcing of jobs has happened on that kind of scale.

Who do you talk to when you call customer service? The last ten times I've called about something, everything from computers to credit cards, I've gotten somebody in India or a similar country.

Well, you also need to factor in that number of customer service jobs has exploded. Twenty years ago, how many times would you phone one?


And there are manufacturing jobs. They're just not in the US anymore.


Manufacturing employment is declining in a lot of places, not just the US. Even China has seen the number of workers employed in manufacturing decrease as they shift to more efficient production methods.

http://www.bchinab.com/images/WSJ102803.gif

It's similar to the huge decline in agricultural employment. At the turn of the 20th century, up to a third of the population in a Western country was working on a farm.

Read this for more:

http://www.reason.com/news/show/29200.html

[MacQuarrie]

More on that 30k minimum wage....

I've got 30 years of experience in my field, and I make about $45k, roughly 3x minimum wage. I used to make $50k, but after my former employer (a sole proprietorship) closed down, I had to take what I could get and accept a pay cut that I still haven't recovered from. My current employer is celebrating its 20th year in business, and up till 3 years ago, it was also a sole proprietorship, starting out in the founder's college dorm room and gradually growing until he sold to a big corporation. In the dozen or more places I've worked, either on staff or as a freelancer, over the last three decades, I've worked for exactly two big corporations. All the other places I worked were family-owned businesses or partnerships where the company owner worked the same hours I did, frequently doing the same sorts of tasks.

The majority of jobs in the US are just like this. The big faceless corporations employ a lot of people, but not all of them. This minimum wage proposition would devastate them.

My company is a manufacturer. Most of our stuff is made in China because if we made it here we'd have to sell it for a lot more money, a lot more than it's worth. But we have a couple of warehouses. We have a lot of warehouse workers. Let's say they all start at minimum wage. Let's say that one of the warehouses currently has ten minimum-wage workers. Let's say we raise the minimum wage to $30,000 a year. That's $14.42 an hour, an increase of $6.42 an hour over the new CA minimum of $8.00 per hour, or a 44.52% raise.

Now, they could cut four workers and reduce one more to part-time to keep the labor costs the same, but then they won't be able to get the products shipped in a timely manner. So they aren't going to do that. But if they fire me, my department only loses one person, but the warehouse gets to keep three of their people. So I get cut. If they then cut one guy from customer service or tech support, they've covered the budget for the warehouse.

And now that minimum wage pays what college graduates used to earn, people will demand higher levels of experience and education for these unskilled positions. Demand for college classes will increase, resulting in further increased cost. Since the cost of all goods and services just went up by 44%, prices will also go up, resulting in a stagnant economy. And so on.

Meanwhile, now that employers have to practically double their labor costs for employees in entry-level jobs, those in the mid-range positions will be denied raises, because there simply isn't enough money to pay them. And of course all the jobs that weren't worth outsourcing to China or Mexico are now viable candidates for that. One fast-food company is already experimenting with the idea of using people in India to take orders at the drive-thru window over the telephone.

My son is 17. He's a senior in high school. He lives at home, rent-free. He has no bills or financial obligations at all, except to pay for dates with his girlfriend and the occasional set of guitar strings or random video game. He doesn't need $30,000 a year. He needs a couple hundred dollars a month. He needs a part-time job. Raising the minimum wage to $30,000 a year will shut him out of the job market, because he has no work experience and no high school diploma. The few minimum wage jobs left in this country will be taken by the people who were downsized to pay for the increase. We will have a highly-trained and experienced bottom-rung work force, a huge increase in unemployment, a bigger increase in people working under the table, and Apu taking our burger orders over the internet.

Exactly who does this proposal help, other than making misguided do-gooders feel better about themselves for being so compassionate?

[cactusmaac]

Exactly. Raising the minimum wage hurts small businesses the most. If you want to benefit the poor, campaign for an increase in the EITC.

[MacQuarrie]

Are you under the impression that people who aren't rich or in the upper middle class employ?

What's stopping them right now from jacking up costs anyway? You're aware that "Sales" and "Discounts" are manufactured right?

Furthermore, with higher wages among the lower income classes would they be buying more or less, Sam?

Lower income families spend nearly 100% of their income.
True or False?
False.

Read The Millionaire Next Door (http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/dp/0671015206/ref=sid_dp_dp)
The majority of America's wealthy are working stiffs who lived frugally, worked hard, saved, invested and did well. Half of America's top 5% started out in the bottom 5%. Half of them are immigrants.

People seldom stay in the same economic bracket for their entire lives. The majority of people will pass through several brackets in their lifetimes. The people working for minimum wage today are not the same ones who worked those jobs five years ago.

In 1978, I was a minimum wage worker with a part-time job. I was living in an abandoned car. Today I own a home appraised at $900k, a three-unit rental property appraised at $400k, and three cars, I'm paying for my daughter's college education without student loans or financial aid, and I have never come remotely close to earning the top end of the pay scale for my profession.

[Loren]

Exactly. Raising the minimum wage hurts small businesses the most.

Freakonomics (http://freakonomics.blogs.nytimes.com/2008/03/28/using-the-minimum-wage-to-beat-the-competition/) reported on just this phenomenon the other day. Germany's huge private postal service is pushing for a new minimum wage for postal employees.

Why would they lobby for a new minimum wage for their own workers? Because they have new competition from smaller upstart postal services, who don't yet pay their workers as much. And they may not be able to afford the proposed new legal minimum. So by pushing for a law mandating a higher wage, the German post office costs itself a little bit, but has the benefit of driving its competitors out of business.