Where is Obama’s promised minimum-wage hike?

By Ralph Nader
July 24, 2012

During the 2008 campaign, presidential candidate Barack Obama made a pledge to raise the minimum wage to $9.50 per hour by 2011. Promises like this one inspired a generation of young voters, excited long-neglected progressive voters and gave hope to millions of his supporters across the country.

President Obama ran a campaign of soaring rhetoric and uplifting ideas. Amidst two unpopular wars, a rapidly deteriorating financial crisis and the wildly unpopular presidency of George W. Bush, Americans were desperate for a change. He was viewed as a “transformational” candidate, a president who would turn the page on the stagnant politics of Washington.

It is now four years later, and there has been no increase to the minimum wage. There has been no congressional vote, much less a whisper from the White House on the minimum wage.

President Obama understood the importance of this issue in 2008. The merits of raising the minimum wage haven’t changed since then, but his political courage has. The inflation-adjusted value of the minimum wage has been in decline since the 1960s, losing over 30 percent of its value and leaving hard-working Americans struggling to get by from paycheck to paycheck. At the same time, the cost of living has continued to rise steadily, further eroding the value of a minimum wage. Had the minimum wage kept pace with inflation since 1968, today it would be at $10.57 per hour, instead of the current federal minimum wage of $7.25.

Studies show that the minimum wage could help jump-start the economy and increase consumer spending. A 2011 study by the Chicago Federal Reserve Bank found that for every dollar increase to the hourly pay of a minimum wage worker, the result is $2,800 in new consumer spending from that worker’s household over the year. And a 2009 study from the Economic Policy Institute estimated that simply by raising the minimum wage to $9.50 per hour, $60 billion in additional spending would be added to the economy over a two-year period.

Opponents of raising the minimum wage claim that it would increase unemployment. In fact, most studies not funded by front groups show that raising the minimum wage has no or little impact on unemployment. Also, small business has already received 17 tax breaks during the Obama presidency.

The Barack Obama of the 2008 campaign would have stood up against these distortions. Instead, President Barack Obama’s absence of leadership on this issue is shameful. Four separate pieces of legislation have been introduced in the current Congress to raise the minimum wage, by Representative Jesse Jackson Jr. (Illinois, 2nd District), Representative Al Green (Texas, 9th), Representative Rosa DeLauro (Connecticut, 3rd), and Senator Tom Harkin (Iowa). The Democratic leadership in Congress and the White House has ignored these bills.

If President Obama is deliberately remaining silent on raising the minimum wage because of a political calculation, it is a calculation based on fuzzy math. A recent poll by John Zogby shows that 70 percent of likely voters support raising the minimum wage. Poll after poll has confirmed that result. On top of its popularity, raising the minimum wage could help turn the economy around, and it is an issue that speaks directly to the 30 million workers stranded between the $7.25 and $10 span of wages.

And why not? The U.S. has the lowest minimum wage by far among large Western industrialized countries.

Poorer voters have notoriously low voter turnout rates. They represent a voter bloc that, because of this fact, is usually written off by political consultants and strategists. But has anyone ever stopped to ask why it is that they don’t vote? Could it be that they don’t feel as though the typical slate of politicians and candidates speaks to the issues they care about? They may not have the money to make campaign contributions, but to write them off so easily in a close election is foolish. With a growing number of individuals below the poverty line, even a slight increase in voter turnout from one election year to the next could make a difference.

In 10 swing states – Colorado, Florida, Iowa, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Pennsylvania and Virginia – more than 6.5 million voting-age individuals are below the federal poverty line. What was President Obama’s combined margin of victory in those 10 states in 2008? Less than 2 million votes. Florida has a total of nearly 1.8 million potential voters below the poverty line. There are 246,000 workers in Florida being paid at or below the minimum wage. What was President Obama’s margin of victory in Florida in 2008? Slightly more than 204,000 votes. Similarly, North Carolina has nearly 1 million potential voters who are below the poverty line. Among North Carolina’s hourly workers, 140,000 are paid at or below the minimum wage. President Obama’s margin of victory in North Carolina in 2008? Less than 14,000 votes.

Both Rick Santorum and Mitt Romney, until he waffled earlier this year, have been clearly on the record as backing a minimum wage that keeps up with inflation. What other issue is as popular with voters, speaks directly to such a large bloc of deserving Americans, could benefit the economy, and – simply put – is the right thing to do?

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98 comments

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There’s nothing wrong with my guts. I have arthritis.

My point is – inflation seems to be a constant in this economy and worldwide. The dollar gradually becomes less valuable over time no matter what happens to its foreign exchange value. People invest money with the inflation rate always in mind. And those aspects of inflation I mentioned do matter but they are not the sole determinant. But I said that.

Please explain why the millionaires like Cornelius Vanderbilt II – the owner of The Breakers, could build and furnish that structure for about 5 million dollars in 1895 while it would cost several billions today if it could be built at all? That figure does not include the cost of the lot and the original mansion that it replaced because that burned after a few seasons.

I have some grasp of the economic history of this country but would like to hear you explain it first.

BTW – There is a reason why there are people who do not climb the corporate ladder. Employers are very concerned that their new hires don’t have opinions about matters they don’t share. They can be quite ruthless if you don’t share every nuance of their peculiar belief systems. There is such a thing as corporate culture and they can be some of the worst characters – one could even say toadies and their competence isn’t nearly as important as their ability to cater to the ego and vanity of their employers or to play along with their political beliefs and do what they are told. My sister has had a good corporate job for over 30 years and I doubt she can write a coherent letter. The only difference between her writing style and that of a high school student is she limits her vocabulary to the jargon most commonly used in the business world. Even my father has called her a walking cliché. So are you for that matter. If I talked like this in the corporate culture my next pay check would very likely be a Pink slip? I never got one so I don’t know what it is called now. As soon as I had a little money saved I would leave. I hate the soap opera nonsense that goes on when people are trapped together in the same building for years on end. Carl Jung used to say that the people who met on the job and married were in fact rather unconscious of life and themselves in general. I would based on those I met.

My father lived through the McCarthy era but was not involved. He had defense contracting jobs and was told what party to belong to and how to vote because it was good for their business and his future with those firms depended on it. That did not change during the Vietnam era and I’ll bet it is still alive and kicking. All those white-collar jobs today – all management and all without union protection – must have some very subtle, or not subtle lines to toe. Corporate culture is like life at Versailles. The system makes damned sure none of the well dressed and well fed inmates of the court ever quite notice the gates and bars set around their lives. Even their mail was read. I know it still is today.

Are you sure you were ever able to see beneath the cloths or appearances? It isn’t sour grapes to complain about stagnation. Your attempts at slaps always remind me of the kinds or catty comments one heard from the girls on the bus in high school. They thought they were delivering zingers to each other too. It was always a sweeter and more uplifting morning to avoid the stuffy bus and their constant wise cracking and walk in the fresh air and think through entire Beethoven symphonies from memory. I couldn’t afford and had no skills at playing an instrument so I borrowed a line from the Music Man and Thought music. By college I could do the 9th – all five movements from memory. . Some of those affluent brats had mouths like sailors. I would blush. I was a sweet young and innocent thing back then. I have an extension collection of mental music now. And I don’t have to plug myself in.

I learned how wrong I was about social life in general but the back stabbing, clinging and very controlling world of Versailles lives and is called corporate America. That is also why anyone who can seems to lard up on stock options and golden parachutes so they can escape and set up their own little kingdoms. But even the company pension plans know that most of the retirees don’t tend to live that long after retirement because it requires them to live with their wives at home and they don’t have much of a identity or sense of importance or even usefulness after they leave their desk for the last time. The last company my father worked for estimated that the average retiree lived about two more years and kicked.

I wouldn’t call it sour grapes. I’d call that not trading one’s “soul for a mess of potage” that also has an irritating habit of shrinking due to inflation – no matter how it happens. However it happens – it isn’t answerable to you, you have to race after it.

Posted by paintcan | Report as abusive

@Paintcan,

Would that your path were more satisfying. These few glimpses into your life reveal perceptions that could shrivel anyone’s expectations and motivation.

You seek to lead others with words; and yet the illusion of your “wisdom” is much like the “end of the rainbow”. When one “gets” where it should be, it is somehow always somewhere else.

On more than one occasion I have found that frustrating. For when I have then offended, my apologies. May your personal mental music delight you without end.

Posted by OneOfTheSheep | Report as abusive

@OOTs – I tend to think that applies to the life you claim to live. Many offer riches at the end of rainbows and when you get there – Like Dorothy Parker said – “there’s no there there!”

C Don’t worry about my life – worry about your own. that’s all you really want to do anyway. Don’t pretend concern.

Posted by paintcan | Report as abusive

Surely Mr Nader doesn’t think the CPI has risen?

Posted by REMant | Report as abusive

As I understand it, the consumer price index doesn’t measure taxation as a cost of living issue and I don’t think it measures things like insurance for the car, health insurance or water and sewer fees. It is an issue if you live on a fixed income and want to keep a home. It also doesn’t measure mortgage financing, although that may be dropping for those who refinanced recently.

I just looked at the Bureau of labor Statistics site. It measures the cost of energy, food, rents, airline fares (that’s odd – most consumers don’t fly that often), apparel and other consumer goods and any excise or sales taxes directly associated with them.

It isn’t a very good indicator for the entire cost of living.

Posted by paintcan | Report as abusive

This country, and most places in the developed world, does everything with mortgages or loans now. Almost every structure goes up with a variety of construction and long term financing loans and almost every house has a mortgage or second mortgage. This was not the historic rule. But every period in history charged interest. Until the 19th century most people were engaged in agriculture and were too money poor to have much need for loans or sophisticated money instruments. They did everything in cash. They were essentially human farm animals and lived more or less hand to mouth. They would trade in kind and sell for cash or pay their rent with cash or in kind. A much smaller class of people, the landlords, would be involved with the world of finance. They had a slow pace of life and relatively slow growing economies and there were far fewer people.The rate of inflation was rather low I think and i don;t think it was even noticed most of the time.

If everyone in this country did anything else but buy a house and pay off the mortgage for, say 30 years; at the end of that period, the things those loans built would be older, somewhat more run down and there would be an enormous amount of cash in the bankers or sellers hands. Economists use simplified models like this. Those houses are the asset value of the country, I believe. The physical reality of what the money purchased would have stayed the same but the amount of money that had been created would be the total of the principal with compounded interest. I don’t worry about where the money is coming from just what it is doing to such a conspicuous aspect on an economy.

I pared away every other aspect of the commercial life of the country and momentarily say it doesn’t exist for the purpose of showing the “flow” of money used to create the physical structures.

Historically people tended to use cash and few people had mortgages until the 19th century perhaps. I believe people tended to want to make more for the same type of good sold no matter what period in history. They simply wanted more for the same things and when the entire society wants the same increase – that’s inflation! But today we built it in as I said before.

Unrelated to above: We practice a ruse here in that the CPI doesn’t actually measure all cost of living issues. It doesn’t count income taxes, property taxes and excise taxes or all utilities. In an urban society so tightly bound and intertwined those are cost of living issues. They are undoubtedly a factor in cost of living for everyone in the country. We also practice a ruse with the unemployment figures. We don’t count people who give up looking. A lot of people are shifting from working to collecting disability. I don’t think labor statistics count them

The enormous difference between the cost of building “the Breakers” and the cost to do that today is probably due to a far more active use of money in the form of loans and mortgages. The country became industrialized and money is the lubricant. The country itself incurs enormous debt simply by being alive and especially due to warfare where whatever it builds get destroyed sooner or later. It throws the assets away.

I am not trying to suggest alternative ways of economic life here only trying to make a point. Loans increase the money supply and those loans bare interest. To put it another way – if everyone used credit cards for everything they bought and they all lived in a closed system, and paid them off at the end of the year with interest and did the same thing the next year for all the same purchases, every year the money they used would become debased to the exact amount of the compounded interest because larger amounts of money would be chasing the same goods.

We don’t live in a closed system but a globalized planet and an interconnected economy could well be one. What would economic life on a space station or ship leaving the earth for another planet be? Think the colonies of Battelstar Gallactica. The space station would relate to earth based economic life but the ship leaving orbit, say for a long distance trip to another planet, might well be a closed system. They would find that everything they were buying on ship would cost more the longer they journeyed just because of the realities of the bookkeeping. The things the money buys on ship have the reality while the money is a creature of the bookkeeping.

Really OOTS – you’re a pompous windbag.

Posted by paintcan | Report as abusive

OOTS,
I am Canadian, and that means you and I are peas in a pod. What happens on your side of the border is my business. You may find it interesting to know that I also believe in having “skin in the game”, and I invest on both side of the border.

Lets put aside the political speculations, which is what they were, and refer to you facts.

You said,”It was Henry Ford, who chose to pay his non-union workers very good wages (so they could afford his cars).”

That is a myth. The Dodge brothers sued ford in Dodge v Ford, and the judicial branch legislated from the bench that corporations have a duty to maximize profit. So much for the altruistic businessman. Ford also happened to be a fascist booster, but that is not directly relevant. As for your diatribe against public unions, you are wrong. just simply wrong. Public employees don’t make widgets, so you can’t figure out why we need them. Perhaps their jobs could be privatized, but the work that they do has a clear benefit to society. Mass transit make cities efficient, roads connect cities for trade, etc etc. They are generally tasked with making our economy run better, and where they fail in that, people need to call for change. But don’t waste our time by pretending that the work done by public employees has no economic benefit. You can argue they do a bad job or are not worth the money, but not that they provide nothing. That would be foolish. It is obvious the shrinking tax base is the problem, as that is the only reason why state and federal government are able to claim they have no money. Maybe you are right and those businesses don’t come back, and the governments need to scale back, but the reason why is constant tax cutting for four decades, not unions. Historically, unions have ensured that large corporations cannot take all the money they earn and leave with it. Unions, like em or hate em, are – i will repeat – directly responsible for the wealth that the USA enjoyed from after the war right up to modern times. By raising the bar for others, and by forcing more of the pie to reach the average workman, thereby creating the consumer market that drove the US economy for the next sixty years. Now the USA has rivals, because the industrialized world has rebuilt after WW2. This means it is losing it’s monopoly. Only a domestic market will sustain the American people, as opposed to American corporations. Are Unions finished in the modern world? I hope not … not because I think union vs management is an ideal system, but because I have read history books on the USA earlier than 100 years ago. It wasn’t pretty. We will shorty return to that state if me manage to eliminate unions. Child labour, 16 hour days, no workplace safety, corrupt bosses. Sounds like the capitalist dream, a dream that is being lived by many in the third world countries that we currently exploit to make cheap products we don’t even need.

It is funny that you dream about American firms Finally coming back to the states now that some americans are as poor as the chinese. the reality is that these firms will move to other impoverished countries before returning to the states. Why overpay for labour? Why indeed. Funny, because the only jobs you can’t outsource – all the retail service sector – are minimum wage jobs. Those companies are rolling in cash. to spend it on employees will not happen on its own. It is still probably the single best stimulus plan anyone could propose … except for the big chain employers, who would see a fraction of a percent shaved off of their profits.

Two last points, one on communism: that system had nothing to do with collective anything, as you dogmatically assert. It was totalitarian ownership by an oligarchy, quite different from the collective propaganda put out on both sides of the cold war: in USA to defame socialism, and in Russia, to claim moral superiority because most people generally want socialism in some form.

Finally,
Not all who invest get rich. That was precisely my point. Only those with the resources and education to take advantage of a system that is tilted against the common man. Inflation is inevitable with token money. Our governments (public and private) think this is great, because they have institutions that they can access to provide them with an ever increasing tide of money (resources). The poor see their savings shrink, and the little retail investor generally doesn’t do that well compared to the more organized elite. That is why I say the system works as they intended, by those that created it.

Finally, OneOfTheSheep, I wanted to thank you for a post you made elsewhere (I believe) on Reuters, regarding the need to come together on common ground. Hard as it is to find sometimes, people like you and I have a lot in common. If we ever want to get out from under our owners(elites/governments) we do need to speak more and broach the issues. If we allow ourselves to be divided, we will surely stay down. So with that in mind, allow me to apologize for trying to provoke you. I think neither of us need apologize for the debate, however :)

Posted by Benny27 | Report as abusive

Also, Labour is hardly free to move under your proposed capitalist panacea, otherwise Mexicans would be allowed in. After all, they couldn’t compete in their hometowns, so they seek better work across the border. I am sure I read somewhere on this site about your staunch belief that they had no right to be in “your” country, something about a state having the right to control immigration? What does that have to do with free market ideas? Please correct me if I read you wrong before…

Posted by Benny27 | Report as abusive

Hi Benny27,

First off, THANKS, CANADA! I agree our countrys have “common interests”. Wish things were going smoother to get your shale oil down through the U.S. (Sigh)

I prefer to consider most of my “speculations” as economic and/or logic-based, but as to the Henry Ford “myth” you are partially correct. While he DID more than double the average wage of his workers early in the 20th century (thus relating to the minimum wage issue), and DID then sell more cars, it seems that his sales and profits increased because his better paid and better motivated work force proved more productive.

If these facts seem an argument in favor of unions at that time of U.S. history, I would have to agree. Unfortunately, it seems that by WW II the pendulum had swung the other way, and union strikes, slowdowns and unreasonable wage demands were increasingly and adversely affecting American businesses, the war effort, and civilian life in general. Those with irresistible power, it seems, inevitably abuse it; and those that the gods would destroy, they must first make great!

I freely admit that America needs “public employees”. I DON’T believe they should be able to effectively control both ends of the bargaining table, as they do today. While I would joyfully consign any and ALL unions to the dustbin of history, I have no doubt whatsoever that the considerable and predictable flaws in man will require their resurrection in some form at some future time to restore “reasonable” balance of interests.

When I stated that they MAKE nothing, I was pointing out that that public bureaucracies, which have their counterparts in “for profit” hospitals and insurance companies are NOT “production” in terms of gross national product, but “overhead”. When any organization becomes “top heavy” with too much “overhead” and too little “production” it is in the same TROUBLE I see many governments today.

While we undoubtedly agree that administrative functions are necessary, it is my personal opinion that wages for such jobs should be determined by the number of people willing to perform them and for how much, i.e. supply and demand (until and unless either side gets too far out of balance with the other). After all, they are paid by “we, the people”, who cannot (directly) give ourselves raises!

An excellent example of an “alternate reality” union of today would be the U.S. Postal Service, where both rank and file are unionized and unable or unwilling to restructure with the reality of plummeting demand for the services they render. Last year I went into a post office in Houston, Texas, well after 1pm.

They had a line running clear out of their lobby,, with people in it wanting PASSPORTS and ONE clerk window (of six) manned. After waiting a half hour, I demanded to speak with the person in charge, who “explained” that none of the many other workers wandering around were “clerks” who were ALLOWED to do “clerk work”. Never again will I have appreciation or sympathy for anyone that is so employed. Their attitude is clearly “Public be damned”.

You sound ideologically delusional when you talk of Capitalism “exploiting third world countries…to make cheap products we don’t even need.” Do I prefer China, Mexico, Singapore, the Phillippines, etc. make these other things for their livlihood instead of bombs and other tools of war? You betcha! The Korean Conflict was a perfect lose-lose situation for all.

As an American, separating “needs” from “wants” isn’t easy. I can afford to buy clothes, food, a car, a TV, a VCR, scissors, a coffee pot, a coffee grinder, a computer, a hard drive, an iPod, etc. For the same money I can buy more items of acceptable quality at Walmart than Macy’s, so I do. As an American, the choice of where I shop is MINE! When I chose to buy a Suzuki Swift (with a Chevrolet Metro nameplate) manufactured in Canada, one of the most satisfying vehicles I have owned in my 71 years, MY choice benefitted Canada.

Today the rising costs of wages in China and transporting finished goods from there here is slowly re-writing the economics of domestic production. The jobs that return are MANY fewer than before. Today they will not “make things”, but program and/or supervise efficient production robots that don’t get sick, old, have to tend sick children, take breaks, get vacations, or retire, EVER!

However you embellish Communism, it came down to “top-down directions” to factory managers as to what would be made and how many. There was essentially NONE of the self-regulation of capitalism to direct labor resources and raw material where necessary to put on the shelves that which people need or want.

When it comes to Socialism, I would love to take issue with your belief that “most people generally want socialism in some form”, but must acknowledge that the reason there is no Socialist Party in America today is that every plank in the Socialist Platforms of the early twentieth century is today established U.S. policy! At some point, as world society becomes more and more efficient in terms of energy and robots, “we” may create such “wealth” as will award everyone a certain amount of the perpetual “production pie”, and no one will be a “wage slave. At my age I don’t expect to live to see that.

I don’t believe inflation is inevitable UNLESS I accept that governments are forever beyond the control of the people they theoretically “serve”. I can’t do that AND greet each day with hope in my heart for “the future”.

Thank you for your kind words. Yes, I always seek consensus and common ground wherever and whenever possible. It’s MUCH more efficient to RESOLVE problems than endlessly squabble over the same inequities.

I enjoy honest debate ESPECIALLY with those who honestly hold different views that they can reasonably explain. The mind that ceases to consider and learn is already dead; and when two people never disagree, one of them is unnecessary! An argument is just dead minds engaging.

Ahhh, labor. As an American, I am no less willing to exercise the privileges thus conveyed by an accident of geographical birth than would have a biblical Roman of means. My belief in Capitalism is neither pure nor blind but tempered by pragmatism grounded in reality.

I don’t look at those who would jump our southern fences as “labor”. The economic “cost” to American taxpayers of such economic invaders is far in excess of anything they “bring to the party”.

America offers them free access to our hospitals in sickness, for accidents, for births, free education (they pay little in property taxes, which finance our schools), free breakfasts and lunches (though the summer, if need be), free citizenship for babies born here, and preferential “minority” consideration for scholarships and the financing of small businesses. Most American citizens aren’t eligible for these things. Cheaper nannies, maids, lawn and pool maintenance, fruits, vegetables, chicken, beef, etc. in no way pay inseparable associated costs to American society of illegals, ethnic gangs, violence, drugs, etc. and related trials and jails/incarceration!

Left to me, I’d mine all land a full mile inland from our borders, northern included. This would effectively make the whole world aware of a “change in policy”. From that time on all would understand that Americans are SERIOUS about controlling illegal immigration and stopping foreign invaders with drugs and/or weapons/diseases with the least expensive effective measures available.

Since states in these United States must balance their budgets (can’t print money like the Fed), when our federal government consciouisly and conspicuously abdicates it’s moral and legal responsibility to enforce ALL federal laws and duly adopted regulations “on the books”, YES, states have not only the right but the duty to citizens to enforce such laws so as to “control immigration” and associated STATE costs. In the United States, supreme power is reserved to the people, with states having such OTHER powers as their individual constitutions and subsequent laws, rules and regulations permit.

Our federal government, on the other hand, has only the specific powers over the states as are permitted by our Constitution and such legal subsequent Amendments as have been duly ratified. There seems some reticence on the part of our Supreme Court Justices of the last hundred years to accept the constraints the founding fathers of America placed on them. Their obligations have been substantially diluted, I hope such changes will not be permanent.

Posted by OneOfTheSheep | Report as abusive

Above I said “I don’t believe inflation is inevitable UNLESS I accept that governments are forever beyond the control of the people they theoretically “serve”. I can’t do that AND greet each day with hope in my heart for “the future”.”

Here’s a fascinating analysis of what has happened over the last century with wages, stocks and bonds, together with some logical speculation as to the near future.

http://pimco.com/EN/insights/pages/cult- figures.aspx

Posted by OneOfTheSheep | Report as abusive

OneOfTheSheep,
I had a hunch that we had a lot in common, though I think the solutions we would offer are radically different, as you acknowledge. I should clarify: I think of myself as a left-anarchist, but I am deeply committed to non-violence as a method of getting what I want. The general notion of freely entering into agreements to access our needs and wants being the ideal, and a major goal being to minimize coercion (you can never entirely eliminate it).

I know that many believe that unions are vehicles of coercion, but coercing a few dollars extra for this or that service is not the same order of magnitude as the coercion that is placed on people by unfair work environments. I do not favour regulation for the fun of it, but view it as a temporary and necessary evil to balance out those who have manifestly proven that they cannot be left in control of the cookie jar. In our countries, the biggest threat I see to self-determination and coercion is from transnational and other very large corporations, not government. Government waste is a perpetual problem that must be ever fought by active citizens, but the reason that I favour government in principle (and as a self-described anarchist) is that the governments are answerable to the people, whereas the private sector is generally not at all. If corporations had to pay their way, and clean up after themselves, or did so voluntarily, I would be more open to privatization. In practice, governments do the cleaning up, picking up many costs that companies externalize off of their balance sheets. This must be no small part of the imbalance when it comes to government costs: they cannot just ignore the problems, they are forced to account for everything.

That is why I can also be an investor, and call myself anarchist. I believe that a company that is fair to it’s investors and it’s customers and it’s employees and those affected by it’s operations, should thrive and grow. Those companies that do not take responsibility for their destructive actions should be forced to fix the problems, or should have their right to do business revoked by the people. In our age, that is government, though it could be done by assemblies of freely associated units, be they neighborhoods, or workplaces, or whatever suits real people the most. That is not for me to decide.

So I deal in ideals, then. What should be, and the path that may lead us there. My problem is that I do not see how getting rid of unions, for instance, would result in a more just and prosperous world. Recall the history: every single advancement in working conditions and wages from the eight hour day to weekends to child labour standards that have made our countries what they are, were made available to even those not in unions because of the risk and effort, indeed the struggle, of countless union members in our countries over the past century and more. It is not a coincidence that as union power fades, for many reasons, the average person is becoming poorer and poorer, and our economy is sinking with it. This is because rich people do not create jobs, they hoard the wealth in unproductive uses, such as fancy art, or foreign vacations, or indeed foreign purchases of luxury items. As a proportion of their income, the poor spend 100% of their money locally, whereas the rich… not so much.

This is part of the reason why “wasted” money on fair wages to gov’t employees doesn’t concern me as much. To the extent that a locality has local business, paying gov’t workers is equivalent to putting money into the hands of local business people. This money is recycled directly back into the economy, with perhaps the exception of one small vacation per year by these employees.

I cannot help but wonder, if you would only pay gov’t employees the going rate bassed on the desperation of many, why not just support mass immigration to drive down all wages? It seems the logical way to reduce consumer costs, to just make all illegal immigration into legal immigration. Get them paying tax and helping the system. then also you would allow free movement of labour, so central to the classical economists’ notion of Free Trade. We both know the answer is because then Americans would have to work for a plate of food each day, as the world is full of the unfortunate, when compared to us. This is the fundamental problem I have with the free-trade religion: it empowers the elites of each society at the expense of the common man. Disproportionately, it hurts average people in developed societies. You might say, who are we to arrogate the right to be rich to ourselves, as the developed world. But who are the rich people of the world to arrogate that right to themselves, when they represent a tiny percentage of the populations of the world, whereas working people all over the world represent the mass majority of humanity. To me, a union who donates to political causes – on this principle – is downright democratic, when compared to the spending of the elites in opposition to them. This is for the simple reason, often forgotten in standard political discourse, that union represent large groups of people, by their nature, and owners a tiny group of people.

I know from other posts that you favour a republic, rather than a democracy, so you probably will not agree with me. My point is that if corporations were fair to everyone involved, this would be unnecessary. I also support property rights, with the caveat that hoarding is worse than stealing, and should not be allowed to any degree possible by the powerful. It just happens that this position is also economically sound, rather than simply just and fair.

Also I support a progressive tax, rather than a flat tax, for the same reason. The first fifty thousand one earns (or so at time of writing) is fundamentally different than the last fifty thousand earned by a $1 Million a year earner. They will use this last fifty thousand for whatever luxuries suit them, which in a fair system I would have no problem with. The fifty thousand earned by the middle class all goes to day-to-day life expenditures, which are guaranteed to drive the economy. Note that the million-earner does indeed have an incentive to earn more, as those earnings all go toward any luxury (or investment) they desire, so even at high (50% plus) tax rates, there is always incentive to earn more.

I have just scratched the surface, and from having to skim over so many topics, I am frustrated by being unable to properly articulate my arguments, but I hope you are better able to see the opinion of another, one who is in sharp disagreement, I assume. The way I see it, these invented camps of Left and Right only serve to keep the average man servile to those who profit from the confusion. And those people are never just in administration of the public weal.

Posted by Benny27 | Report as abusive

OOTS,
Funny you mention the Bill Gross article, I read it also. I feel a little vindicated, though I am not sure I agree with his conclusion. Let me explain: he says that the Siegel constant is a freak of the last forty years, and he cites the decline of earnings of labour relative to GDP. I make constant reference to this decline in real wages, and think it is funny that such a well-known figure would include it in his analysis. At the same time, I wonder if Mr. Gross read Jeremy Siegel’s work, because the siegel constant was formulated by looking at over 200 years of stock returns, not just the past forty. In that time much has changed, but return from stocks was not one of them. So I am not sure if I should say his work appears fundamentally flawed, or if I should say it supports my own ideas…

Posted by Benny27 | Report as abusive

@Benny27,

LOL! Not at you but with you. I would sharply disagree with anyone who deems you “unable to properly articulate your arguments”.

You do something very well I wish I could do. I need to better understand and acknowledge my own mental conflicts in the process of evaluating and judging those things in American society that constitute GENUINE injustice. KUDOs!

I believe anyone that believes their view will ever prevail 100% or in any typical partisan “dog and pony show” comprised of the same worn out sound bites is not borderline but mainstream delusional. These will never, in and off themselves, become part of reducing the size or resolution of any problem, even if I agree with them (mostly).

When you say “The general notion of freely entering into agreements to access our needs and wants being the ideal, and a major goal being to minimize coercion (you can never entirely eliminate it)” you and I sing out of the same song book”. We agree. Hard words for some to say ;

Posted by OneOfTheSheep | Report as abusive

(not sure why post incomplete)

You “favour government in principle (and as a self-described anarchist) is that the governments are answerable to the people…”, whereas the private sector is generally not at all”. I, to the contrary, MORE firmly believe that, increasingly, politicians, bureaucrats and the judiciary are less and less “answerable to the people”. Corporations, on the other hand, dare not ignore management, the “market”, their “Board” or stockholders. Each, to some degree, acts as a “check and balance” on excess.

We can’t discuss these things in the depth necessary here, so we’ll have to “agree to disagree” (and that’s OK). Appropriate respect for an adversary’s position is unavoidable if one expects the same in return.

In my opinion and experience, unions AND “management” EACH seek to control both employment and wages from start to finish, history showing neither to have been a fair and proper “steward” of such process when “in control”. So I agree with you, I think, in seeking a reasonable balance for a “living wage” for those offering a genuine and essential skill to the workplace; and NOT something anyone breathing can “pick up” in two weeks “on the job” (or less).

Having been in the military enlisted level, I believe in personal responsibility and personal choices in the context that a wife and children are “luxuries” one must be able to afford (support?) if sitting at home producing nothing else. Accordingly, “minimum wage” should NOT consider these.

When you say “I believe that a company that is fair to it’s investors and it’s customers and it’s employees and those affected by it’s operations, should thrive and grow”, I say “hear, hear! But our agreement ends, I’m sure, when I state that I am a loyal supporter and customer of Walmart.

I think Walmart hits the logical balance between these competing interests under current rules, regulations and laws. I can afford (and will go out of my way) to shop there because anything that is unsatisfactory they will refund or replace, they match competitors prices (so I don’t have to waste my time and gas driving here and there), and they decided (alone, at first, to cut local prescription prices to the level previously only available from Costco via mail order in Everett, WA. No other retailer has show itself to be so consistently “consumer friendly” in the long term. I deem it up to society to elect people to change said rules, regulations and laws if they want any of those changed.

You assert that “rich people do not create jobs, they hoard the wealth in unproductive uses, such as fancy art, or foreign vacations, or indeed foreign purchases of luxury items. As a proportion of their income, the poor spend 100% of their money locally, whereas the rich… not so much.” You ignore the fact that many “working folk” buy luxury items just like the “rich” buy.

Things like a basic wine “collection” of 20-40 bottles, a fast bass boat, jet skis, ski boats, pontoon boats, any boat over 25′ in length (some live in them), any large RV (some live in them), a small airplane, a “vacation place” somewhere (condo, time-share, cabin, whatever), all of these things are typically made in these United States and so such money gets the full 3-5 “bounces” through the economy as money flows from retail dealer to wholesale, manufacturer, component supplier, raw materials suppliers, as well as the marinas, airports, RV parks, condominiums and builders of all and THEIR suppliers, etc.

As to that which America imports not made here…these things are paid for in dollars this country prints for the price of ink and paper at the full 100 cents on the dollar (less the fudging on the yuan value, which is pocket change). Americans still have to have these clothes washed or cleaned here, cars repaired or serviced and filled with oil, gas, oil filters replaced. So there results much MORE in domestic economic activity than “our” cost for that ink and paper.

We also need to agree on what “rich” is. My idea is anything over $75,000 “take-home”, after which there is data suggesting beyond that income each additional dollar has little effect on “a better life” excluding the intangibles of increased savings, insurance coverage, investments and legacies. A factor that is often ignored is that a partnership or sole proprietor may have to earn up to $500,000 (or even more if poorly managed) to “take home” $75,000 (after legitimate and unavoidable business-necessary expenses).

I actually prefer the most radical form of democracy, that of Initative and Referendum. In THAT context I fully understand how the “powers that be” can “rig the wording” such that, verbally, white appears black; and unimited funds can “buy” such elections. Even so, I think THAT system is the most direct and logical route to “fair” government.

You tread a slippery slope if you support “property rights” and personal freedom yet believe that “hoarding is worse than stealing, and should not be allowed to any degree possible”. I “picked up” on the threats of Y2K and H1N1 flu to paralyse our society to the point that trucks quit rolling. If that ever happens in a “just in time” re-supply/delivery “system”, there is perhaps 72 hours to total anarchy as store shelves empty, restaurants close, and hungry people are in the streets.

There are those who would demand that I share with one and all that which I went out in advance and bought with my own money. Nope. The first time I lost 50 lbs. of flour that rats found in the trunk of an unused car on my property, and the last time around I bought 4 boxes of dry mix (to make 80 liquid quarts of) nonfat milk that I still have because I prefer it fresh. But I now know very precisely how much I need of what we normally consume for a six month period, and can grab it quickly and easily and eat it at leisure if it is not needed.

Is such the right of free men? It is but the fable of the ant that prepares for “winter” and the grasshopper that doesn’t…in “real” life”. I also stockpile ammo so as to be able to defend what I “put back” for such emergency. Wish I could afford a semi-automatic rifle, but I’ll follow Patton’s advice to “do what you can, where you are, with what you have”.

We again agree that both left and right are, in the end, addicted to tax revenue. Until “we” can agree as to such “needs” as available tax revenue can sustain over time there will never be ANY limit on the size of government or the amount of money it will take to sustain itself.

I found the Gross article logical and well thought out. I didn’t see any fundamental flaws, only that he took certain things “into consideration” without blindly relying on prior, more “pure” conclusions of others. To me, that adds to the credibility; but, what will be, will be.

Posted by OneOfTheSheep | Report as abusive

OneOfTheSheep,
I had spent the first few years of what I call my “awakening” to the political and economic world as a hardened radical, and I still think that the best arguments are made by those on the libertarian left (some call it anarchism, some call it left marxism, but it has NOTHING to do with communism as practiced by the bolsheviki usurpers of Russia). This naturally makes it hard for me to communicate with many people here in North America, as words tend to mean different things to those with such differing viewpoints. I chose to become an investor to look out for my family (in the future, I am not even thirty yet), but I chose to begin investing when I did so that I was not talking out of my butt when commenting on business, as so many on the “left” are condemned for. It has broadened my mindset, but not so much that everything has changed. I see many stockholders with similar concerns to my own, regarding overreach on the part of unions (especially corrupt bosses) as well as with arrogant and controlling managers (not to mention incompetent, as so much advancement seems based on patronage in the corporate world – who you know, not who you are). So I am happy to live with contradictions, of a sort. My family has had a few small businesses, and I had spent five years in a labour union (probably not news) while I was working through university.

So enough about me, though it is hard to understand someone without knowing their background. I can’t help but agree with you that government seems to be getting out of hand in the USA, which does everything big. Even in Canada it is very difficult, even for large organizations, to make an impact on public policy: for better or worse. No government is as stable as it seems, however, and everything looks permanent until it changes. It may sound trite, but on the long view, I am sure you know what I mean. Governments change, usually at the urging of large groups of people, as opposed to individual leaders. Just look at the USA in the last sixty years! People from 1950 would have no idea what to make of the differences, and some things that were graven in stone were overturned in a decade or two. Segregation in particular, but also how we fight wars – we just will not tolerate the kind of casualties, even of our enemies, that we would a generation or two ago. I think that these are positive changes in general, and point to a future of more change.

My time at a unionized warehouse showed me that if workers owned and run the place, alongside rather than opposed to management, everything would work much better. This must be differentiated from communism, where the workplaces were owned by a far away, aloof, brutal dictatorship, not by a free association of people. How many times did I see someone sleeping in the dog food aisle, or stealing beef jerky, only to think to myself, “this would almost never happen if that person was convinced that they owned this place.” The adversarial system could and should be replaced by such a system of cooperation. Now that we have the technology, I truly believe there is no reason why front line labourers could not be kept informed enough to run the affairs of the plant by democratic workplace rule. We have only to turn our efforts toward this idea, and it could be achieved. This would be by steps of course, and I only sketch out an idea of the end: ultimately, the people who work or live there would have to decide for themselves. This system formally exists, in part, in Germany, where labour sits on the boards of the companies they work for, though the reality is not exactly a workers paradise. In my mind, there is still higher pay for better and more intense work, and even uneven ownership could be arranged by shares in the workplace or some similar mechanism … it just has to be tried to know what will work best. In history, the few examples of anarchist cooperatives, from Israeli Kibbutz to the Spanish civil war era have produces prodigious productivity, certainly enough to put to bed this sordid notion that “Russia proved that collective ownership cannot work”. Obviously, Russians never owned anything, except in propaganda fairy tales, told by both powers in the cold war.

So I really don’t have a problem with people owning more than others, especially when they are willing to work harder, or improve themselves to offer a specialized service, but I still have a problem with this notion of hoarding, which I should have explained better, as it has a special meaning to me. First, the meaning of rich. I subscribe to a class-based understanding of societies, including the USA. Lower class are working often day-to-day, let alone paycheck to paycheck. Whatever their status, they are vulnerable to any shock. Middle class is larger than most people give credit for, consisting of everything from a receptionist with benefits on the lower end, to highly paid professions such as surgeons and laywers and engineers, as well as small business owners(a few employees only) and mid level managers in most companies. These people earn a lot, but generally spend a lot also, especially at the upper end. Often, they live paycheck-to-paycheck, but generate significant retirement savings (though not so significant all the time), and they drive the economy through their constant spending. These people still must work continually to live. The rich do not have to work, though many do. For my purposes, the similarities between the upper middle class and the poor are more than their differences. Regardless of lifestyle, they must continue to work their entire adult life, though some do retire early at the mid to upper ends of the middle class.

When wealth is largely (2/3) inherited, you no longer have anything resembling a meritocracy (a term originally coined from a dystopian vision of a horrible future, something akin to Brave New World) but rather, an aristocracy. Self-perpetuating, and corrupt largely through technically legal means (made legal often by exerting their influence on the legislative process), the elite in the USA are walking a dangerous path. Historically, when the rich of a society draw back from the society they live in, and ignore the troubles of the common peasantry that they are interdependent with for their wealth, it ends badly for the elite. I think the elite have failed this test now, in America, but also in many other countries of the developed world. They do not share in the pain of hard times (paper losses, reversed in a year or two, do not count), and have no sympathy/solidarity with their countrymen. This serves them well, right up until the pitchforks and torches arrive at their gates to de-throne them. The French Revolution could look like a day at the park compared to what may be brewing, though I do not wish it. Violence, and especially violent revolutions, tend to foster injustice: never do they turn out as the ideals which they set out with, if they ever had any.

This notion of not working brings me back to hoarding, which is fundamentally different than stocking up for a bad time in the forseeable future. Many that I call rich have more than a dozen houses, for one, or a fleet of fifty cars, but especially they like to collect rare artifacts and other things that have no productive value whatsoever. Buying famous art and hanging it on a wall does nothing for the economy, except for the maid who will dust it from time to time. It may sound petty, but these unproductive assets are a prime example of hoarding, let alone the buying up of useful property to be set aside for … well for its own sake. Often these lands and assets are not even used, which makes it all the more bitter for those who have recently lost everything, whoever is to blame. With no ties that bind our people together, why should the poor protect the property of the rich? Economists would predict revolution, as rational actors will eventually get together and topple the leaders from their thrones. (read: country estates and corporate boardrooms). In reality this could go on for a long while before the music stops.

Just to quickly mention WalMart, and my comparison to a company that I respect. Wal mart has done well for its customers, but certainly not for it’s employees. This is a problem becaseu without the nanny state, a company like Wal mart could never exist. The meager pay (sometimes supplemented by food stamps), and practically non-existant benfits (supplemented by government health programs) are fundamentally unsustainable. The cheap prices you pay are supplemented by the taxes you pay, it is a s simple as that. I don’t want companies who outsource the costs of their business to everyone else. It is not fair or sustainable, in my opinion, and that is all I will say about it. I am glad you mentioned the top-heaviness of some businesses, as I think this is a key problem in society. Management has become a way to wealth for many, with the business being used to prop up the managers’ moneymaking scams, rather than returning wealth to the risk-taking investors. Management sucks up so much productive value that there are business models that would be better managed by the government(!). Arguable though it is, I think I could make a good case for a few industries in particular that should be nationalized, for the sake of increased productivity almost exclusively. I will not bother with that essay yet!

Compare this with a statement ona company that I invest with, Kinder Morgan Inc. from the company website:

“What makes us different? It starts at the top with Chairman and CEO Richard D. Kinder, who earns a salary of $1 per year and does not receive a bonus, stock options or restricted stock grants. We like to say that Kinder Morgan is a company run by shareholders for shareholders. Additionally, we eliminate unnecessary corporate overhead expenses such as corporate aircraft, sponsorships, sports tickets and executive perks. In addition, we cap senior executives’ base salaries below industry standards. Their financial incentives, such as bonuses, are tied directly to the performance of the company and their own personal performances.

Kinder Morgan does not have a Political Action Committee (PAC), nor do we make any political contributions. Any political contributions made by executives or employees are made individually as private citizens with their own personal money. ”

Here is a business where people are getting rich, (CEO owns a quarter of the company) and in a visibly fair way. Aside from having what I think is a great business model in a enviable industry, it has policies which I can agree are in the best interest of the most important people: all of them! There are many businesses who do right by everyone, rather than having to rely on trickery and abuse of power to make their money.

Thanks for reading, and best wishes

Posted by Benny27 | Report as abusive

@Benny27,

“words tend to mean different things to those with such differing viewpoints”. You got it!

And, interestingly enough, all by adult life I have always accepted the “label” of “Conservative” wondering why I took exception with so many “conservative values” and the people espousing them. This exchange with you has opened my eyes, at 71 years of age, to a different “truth”. At long last I can perceive my “values” as most consistent with the “libertarian right”!

While in most countries the terms “libertarian” and “libertarianism” are synonymous with left anarchism, in the U.S. we apply this label to those of economically conservative and socially liberal views. Finally I can be “pro-choice”, believe absolutely in the unique benefits offered by Capitalism, advocate the direct democracy ideals of Inititive and Referendum, and appear philosophically consistent!

Consequentialist libertarians argue that a free market and strong private property rights bring about beneficial consequences, such as wealth creation or efficiency, rather than subscribing to a theory of rights or justice. Is not such “definition” as self-contradicting?

How is it possible to establish meaningful long term markets and property rights without concurrent and common definition and acceptance of inseparable associated “rights”? Is not a “justice system” comprised of an unbiased judiciary administering ultimately defining laws and/or regulation that are ever-increasingly clear/predictable and, ultimately, fair in both application and effect absolutely necessary?

You say: “Walmart has done well for its customers, but certainly not for it’s employees.” I would point out that companies are “shapeshifters” responsive to the tax and regulatory system each is subject to. If you don’t fault the individual who pays no more in taxes than is required, how can you hold a “for-profit” company to a higher standard?

Walmart is merely the most visible large company increasingly replacing low wage full time “positions” with much more “flexible” (i.e. replaceable) part time or “contract workers” that, under current work rules and regulations get no overtime, no company insurance, no sick days, no vacation, and no retirement benefits. Until Congress sees fit to change existing tax and regulatory realities, this is the future of low skill, low wage employment in America for the foreseeable future.

While I, too, applaud Kinder Morgan as you depict it, the U.S. can point with pride to Southwest Airlines, largely “employee owned and managed, non-union; with the highest profitability of any U.S. airline and most popular with the flying public. Their “union” rivals are increasingly headed for bankruptcy!

In terms of “dollars at risk”, inefficiency and poor level of satisfaction, the “market” tends to separate the “wheat from the chaff” of both industries and businesses. Government (i.e. politicians, appointees, bureaucrats and bureaucratic management), unfortunately, receives substantially the same amount of tax revenue whether it is efficient, inefficient, or obscenely “top-heavy”. Government, like our “educational “establishment” needs to be redefined for greater efficiency at lower expense. “We, the people” need measurable “accountability”!

That’s why I deem it unwise in the extreme to allow government MORE tax revenue until these incompetent bunglers can show that they understand tax revenue is NOT unlimited (and NEITHER is the “debt limit). When they show us they have learned to prioritize the SUSTAINABLE income available such that said expenditures accomplish the RIGHT things in the RIGHT order, I will “trust them” with more, just as a “rich man” of old tested his slaves as to which was the best steward of his money.

We agree that there are many businesses who do right by everyone. These, like me, prefer the “win-win” scenario.

Posted by OneOfTheSheep | Report as abusive

Do these people do any math? OK – if you raise min wage by $1 you get $2800 of spending by the household. That would require over 70 hours of work per week. – Lets look at the number a little differently, ignore TAXES and overtime, $2,800 divided by 52 (weeks) works out to 53.84 hours where you get $1 more. So you say that they are talking about 2 bread winners, well, they state that a family of 4 would be $7000 below the poverty line if they work at min wage. That is at 30 hours for 50 weeks for a single bread winner. You can not say that a family of 4 has only one person working to show one stat and use two working to show the additional income….. Also, left out is the loss of jobs (everytime min wage has gone up, there has been a significant reduction in min wage positions and overall loss of jobs for 12 months or more), the increase in the cost are also not shown. You can not pay someone 1, 2, or 3 dollars more per hour without raising prices. That defeats the reasons.

Posted by mgrady | Report as abusive

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