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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99 comments

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Where is the minimum wage hike? Ask Boehner and Bachmann. The tea party leaders have been busy looking for birth certificates instead of solutions.

Posted by AlkalineState | Report as abusive

Why am I not surprised that Ralph Nader again rides into town beating a dead horse?

Owners of businesses that use minimum wage people will spend just so much to get burgers, etc. out the door. Raising the minimum wage without increasing the capability, value or productivity of those workers will result in a reduction of the number “on duty”.

Whether that is called a reduction in employment or a reduction of jobs, or a reduction of opportunity for those who have NEVER worked to “get on the merry-go-round”. It means that tables get cleaned less often and less well, and one or more fewer on the speaker or behind the register during peak periods.

An employment opportunity that functions as an apprenticeship is good for society. The minimum wage is also an “on the job training” wage for something better. Our society does not pay people to educate themselves to the level required to be a productive citizen. It was never meant to be a wage that would support a non-working wife or family in the “American way”.

Employers can not justify paying more and more to train those who are “at the bottom of the pile” in terms of experience, intelligence, motivation and/or capability to be useful. And let’s also be honest as to what is already happening to minimum wage jobs that currently exist.

They are being diluted and “dumbed down” so anyone with an IQ over 50 can learn EVERYTHING needed to perform well by two weeks “on the job”. If that position offers no further “advancement”, there is NO possibility of a raise when there are ten more “out there in the street” who will jump at the chance to replace someone dissatisfied.

Furthermore, more and more full time “minimum wage” positions will be restructured into part-time positions that are worth less to struggling individuals in our economy desperate for ANY employment. These typically have even less opportunity for advancement, have NO benefits (holidays, vacations, sick days or retirement) and require even less “skill” to be done well.

Nader speaks of “studies” other “large Western industrialized countries”, “voters” and how the “economy” would benefit while speculating how more money will enrich the lives of those STILL employed full time at the minimum wage if and when it rises to $9.50/hr. He does NOT speak of those within the current “30 million” that will no longer be employed or of those that will not then be hired. Nader denies the latter even exist in “his world”.

Every increase in the minimum wage at a time that any job at all is in great demand and short supply makes their day to day existence much, much more “challenging”. In today’s world, increasing the minimum world may allow a relative few to grab the “golden ring”; but far, far more will be thrown off the merry-go-round, perhaps forever.

Posted by OneOfTheSheep | Report as abusive

Nader has much credibility as the rating agencies, and as many ulterior motives.

Posted by Greenspan2 | Report as abusive

LOL. Where’d they dig this ole buzzard up? Ralph, Ralph, Ralph…..nobody listens to YOU. Get it?

Posted by krimsonpage | Report as abusive

HISTORY LESSON:
A minimum wage increase is followed by a commensurate increase in consumer prices, leaving unchanged the minimum wage earner’s real buying power and relative position on the economic ladder. Further, the cost of domestic goods/services is increased and our global competitiveness decreased, and it’s a harsh penalty on our youth, unemployed, retired, elderly, and other non-earners. All for the benefit of nobody other than politicians buying votes and dilusional socialists/idealists eager to sell their votes.

Posted by jca | Report as abusive

But people do listen to Ralph Nader – they’re listening right here on Reuters. And when I see him here with an inane article about a non-starter issue, trying to insinuate himself back into the political landscape, I think, “Is this guy getting ready to make another spoiler presidential run?” You never really know with Nader. He took 2.8 million votes away fron Gore in 2000.

Posted by foiegras | Report as abusive

Ralph, you may well be right about this, but I have to say that I lost faith in your judgement back in 2000 when you said “there was not a dime’s worth of difference between George W. Bush and Al Gore.” I believe that history has proven you wrong. That dime must have been a mile thick.

Posted by IntoTheTardis | Report as abusive

Raise the minimum wage? another job killer.

Posted by jambrytay | Report as abusive

You make a number of assertions about how raising minimum wage wouldn’t hurt employment numbers at all. While this has been shown to be generally true, such a statement would have a lot more kick if you offered some numbers on what percent of costs are labor related for businesses that employ minimum wage workers. Generally its such a small percent of total costs that raising them by 3$/hr wouldn’t really affect anything. The only places that get hurt are those that employ armies of minimum wage labor (e.g. McDonalds).

Posted by CapitalismSays | Report as abusive

Personally I’m a fairly moderate college student. However I agree with Ralph on this one. The argument that skill isn’t increasing so wages shouldn’t doesn’t hold up when you look at it. The skill of minimum wage workers hasn’t decreased, many do manual labor and many do things like flipping burgers, and yet real minimum wage is the lowest its been since 1968. The argument of skill begs for the wage to be raised.
The evidence on unemployment is a tricky one, because yes, in the short term businesses lay-off because they think they can’t afford the workers and in the immediate time period after a wage raise there is a raise in unemployment, however in the long term the effect is often employment stays where it was, but living conditions and household spending both go up.
This is all evidenced by Oregon, which has the highest national minimum wage, by San Fransisco, which has the highest minimum wage and all of the states with minimum wage higher than the federal level. From all of these states the evidence is clear that living conditions are better and spending is better and not to long after unemployment goes up, it goes back down.
The issue with minimum wage is not the unemployment rate but the ability of Americans to look at the big picture and the long term. There is more than one person and there is more than one moment. If Americans learned that things don’t change immediately and that waiting is important this country would operate much better. This was seen in the crash. Right after the Lehman Brothers crashed the market only dropped 3 points. What happened after that? There’s a reason congress passed that big bail out and it wasn’t because the system was okay.

Posted by TCS2012 | Report as abusive

What minimum wage? There is no real minimum wage in America.

http://www.dol.gov/elaws/esa/flsa/screen 75.asp

Republicans and democrats are a joke. I am sick of these rigged elections and idiotic media outlets.

Posted by M.C.McBride | Report as abusive

Sounds like Romney has a running mate. If Romney can’t rise above Obama in the polls, he can try to surround him. Nader on the left, himself on the right.

Won’t work, but it’s an interesting approach. Obama = 2-term President.

Posted by AlkalineState | Report as abusive

Try to rise the offshore cost of labor, that can give the US some breathing room, stimulating domestic labor demand.

With unemployment so high and offshore competition, is difficult to see the feasibility of a minimum wage increase at the moment.

Posted by robb1 | Report as abusive

This is addressed to the commenters who think that raising the minimum wage is a bad idea: Are you serious? Have you given this even a moment’s pause? Here’s our current situation: we have such an overflow of investment money with no good place to put it that corporations are sitting on unprecedented mountains of cash and investors buy up government bonds at negative return rates. Meantime, we are woefully underutilizing our productive capacity (plants shuttered, people out of work), but there’s too little consumer demand to justify ramping up. But you think putting some of that corporate cash into wages would do harm?

Do you propose that the minimum wage should not even keep pace with inflation? Should we abandon it altogether? Are you suggesting we’d all be better off with a Chinese wage structure?

You seem to have learned a handful of rules that you think apply to all economies at all times. Different conditions call for different solutions, folks. Try to check your prejudices for a bit and just see where you might end up.

And BTW, someone with the moniker ‘Greenspan2′ should be the last person talking about credibility.

Posted by Sanity-Monger | Report as abusive

Mr. Nader, The terrible problems that we now face relating to the economy and (especially) the climate, are in no small part due to your narcissism and the terrible way that you conducted yourself during the 2000 election. The awful policies of the Bush/Cheney/Nader administration are on your tab and they always will be. Shame on you for what you did and shame on you for having the temerity to speak in a public forum.

Posted by Dogfishbar | Report as abusive

I respect the spirit of Mr Nader’s piece, but most poll respondents have become schizophrenic when asked about social issues (that also involve their net worth). Many Americans waited at least four years for their investment portfolios to approximate anything close to pre-2008 value. Any move that translates to lower profit, and lower stock price – will rattle the retiring boomer demographic considerably. Unsurprisingly, politicians have accounted for this. So long as government can ‘show’ the cpi hasn’t ballooned…

Posted by auger | Report as abusive

Ralph, I think you’ve finally gotten to the point you don’t know what you are talking about. At what point do you think the GOP controlled or blocked congress would ever have permitted anything to happen Obama really wanted without a lot of blackmail going on? I don’t think you have a clue how politics works if you think the president can mandate minimum wage.

Posted by GaryBudd | Report as abusive

Nader please take a vow of silence. You’re embarrassing yourself in your extreme ignorance of everything political and economic. Take a class in how to enhance your charisma, even though you’re decades too late. You might still be able to capture the attention of a few of the residents of a local retirement home.

The dumbest smart person in the country…

Posted by ptiffany | Report as abusive

[...] Reuters: During the 2008 campaign, presidential candidate Barack Obama made a pledge to raise the minimum [...]

I don’t know where some people get their ideas from. Thinking that raising the minimum wage is bad for business is insanse. I remember that it took our government over 10 years to raise the wage from $3.35 an hour to $4.25 an hour with everyone saying the same thing, “It is bad for business.” How many of you complained when the Senate, if I remember correctly in 1989, voted themselves a $36,000 raise with one sentator saying “We are not second class citizens.”?

Posted by Praetex | Report as abusive

Saw this on CBS News. Sounds vaguely familiar.

Consumer advocate and former presidential candidate Ralph Nader says he sees “far too little difference” between President Obama and presumptive GOP presidential nominee Mitt Romney, arguing that “we deserve more choices in this country.”

Posted by desiderius | Report as abusive

Mr. Nader, leave the president of the United States alone, he is doing a fine job under the economic conditions

Posted by running | Report as abusive

So $9.50 an hour will kick-start the economy and raise the standard of living of all of us? Then why be chintzy? Raise the minimum wage to $15, $20, hell, $50 an hour. Think how that will goose the economy. We’ll all be rich! Write your congressman!

I got a kick out of “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.” $1/hour x 40 hours/week x 52 weeks/year = $2080/year. In other words, raising the guy’s pay a dollar an hour makes him spend $720 a year more than he earns. I’d like to read that study.

And, Ralph, I’d like to point out that the Barack Obama of the 2008 campaign is the same Barack Obama of this Presidency. His lack of leadership is not shameful — it’s characteristic. What makes you think the Obama of the campaign really intended to force through a raise in the minimum wage?

Posted by wagnertinatl | Report as abusive

It seems apparent that Obama will do everything he promised and more AFTER he’s re-elected cause he won’t fear ruining his re-election chances (anymore). I’m really HOPING that he’s planning on doing his real OBAMA STUFF next year. But if not, it’s important to understand that Romney sure won’t raise the minimum wage. Or will he? No he really won’t. So really, do we dems and poor folk have any choice? It’s Obama or bust, no matter if he does what we think he will/should/said.

Posted by byrond2 | Report as abusive

Funny how Ralph Nader’s positions always help Republicans. Thanks to Nader we had 8 years of America’s worst President. Tens, maybe hundred’s, of thousands of people died because Nader allowed his ego to override what was best for the American people. So here we have Nader at it again, this time going after Obama. It’s easy to wage a pea shooter war from the sidelines when you have nothing to lose.

One would think that Nader was smart enough to know the following, but I’m no longer sure. Obama has to be very strategic in every move he makes, or we’ll have Mitt Romney’s puppet masters running our country for 8 years. That’s the reality we’re faced with, which is something Nader can’t seem to grasp: reality. Obama can’t say and do everything he’d like to, or the rightwing propaganda machine will wrap it around his neck and hang him with it. Everything has to be carefully weighed, more so than any President before him. If he didn’t recognize this, he couldn’t get ANYTHING done.

We should have had a single payer healthcare system. The reality is that if Obama fought for a single payer system, not only would he have failed at getting ANYTHING to improve America’s healthcare, but he would have been successfully labeled a radical leftist socialist and he’d have guaranteed America 8 years of a Mitt Romney Presidency. It took me a while to figure this out, but it’s true. The Republicans have made it clear from the moment Obama started running for President that they would use his race against him by painting him as not a real American, something “other”. To Obama’s very impressive credit, he read this from the start. I didn’t vote for Obama, but this realization is what really impressed me about the man and opened my eyes to just how bad things have really gotten here in the US. I will proudly be voting for him this fall. He will get as much done for the American people as anyone can possibly do. Unfortunately, that’s limited and it’s because of the Republicans, which is who Nader should be criticizing, not Obama. It is the environment “conservatives” have created that stands in the way of so many things our government should be doing, and raising the minimum wage is just the tip of the iceberg. Consider our absurdly lax gun control laws. Are you going to blame Obama for that next? You, sir, need to learn how to peel back the layers and get to the real core of the issues.

Obama could be a great President, but it’s unlikely that he’ll have the opportunity to prove it because of what the Republicans have done to us, the political party that Ralph Nader is bound and determined to assist at the most “opportune” times. Obama is not the enemy, Mr. Nader. Unlike you, he’s on the front lines leading the charge in an extremely difficult and complicated war, a war in which he’s representing the American people, and a war in which the American people are at a grave disadvantage. And you’re not helping.

Posted by flashrooster | Report as abusive

1. The minimum wage is a worthless, political opiate and should be abolished in lieu of there ALSO being a Maximum Wage.

2. There will never be a Maximum Wage because by delivering a fair life experience to the masses, America would lose its ability to raise capital for bleeding-edge R & D that serves the military and protects the Constitution from disappearing from the face of the earth.

Of course capitalism isn’t fair.

I didn’t say I liked it either.

Posted by SBotHuBot | Report as abusive

@Sanity-Monger,

You say: “we have such an overflow of investment money with no good place to put it that corporations are sitting on unprecedented mountains of cash and investors buy up government bonds at negative return rates…you think putting some of that corporate cash into wages would do harm?”

Even though the IRS HATES those who look at cash from any source as “their money”, corporate cash and investor cash isn’t the government’s to sieze or direct as they see fit without “due process”. There is harm whenever and wherever the rightful owner of legal assets is deprived of the right to use said assets as THEY see fit.

You say: “…we are woefully underutilizing our productive capacity (plants shuttered, people out of work).” Please explain how this is different from when buggy whip factories were obsoleted by the automobile, or when steel production became economically sustainable when union wage rates were figured in.

Much of today’s idle “productive capacity” is predominately obsolete industrial detrius incapable of competitive operation that will likely cost more for present owners to repurpose than to buy suburban commercial property and develop from scratch (with new streets and modern utilities). YOU have NO SAY in that which you don’t own or otherwise control! Get used to it.

You ask: “Do you propose that the minimum wage should not even keep pace with inflation?”

What’s your point? It is the responsibility of our federal government to protect the purchasing power of our currency. There is no grade low enough to be applicable to our Fed’s “post-war” fiscal performance.

Consider that America has NEVER paid down the national debt incurred during WW II! Instead, the “Fed” has presided over policies that have steadily inflated it into insignificance, along with increasing the dollars people get when they sell long term assets (and then those “added dollars” on NO additional purchasing power are taxed at higher and higher rates).

In 1967 I paid $21,800 (30-year mortgage) for a 1225 sq. ft. new house on the eastern fringes of development in Orange County, California, for. In 1987 I sold it for $179,000, then paying off some $10,000 remaining on the mortgage and some $13,000 closing costs and sales commission.

From the remaining $156,000 I could deduct some $15,000 “improvements” over the years and the $11,800 principal “invested” in payments, leaving $129,200 in 1987 dollars. Tax due on $129,200 (when that amount was added to $35,000 other annual income) would have been considerable (had I not timely reinvested it in real estate), when it would have taken $74,146 in 1987 dollars to buy what $21,800 would have bought in 1967. My “gain” was NOT $129,200, but that amount LESS $74,146, or some $55,000!

So “our” federal government “games” ALL citizens with currency, wage and taxation manipulations worthy of a “shell game”. History strongly suggests that “our” government, whether politician, appointee or bureaucrat, will predictably advance it’s own “best interests” over those of “we, the people” whenever and wherever a choice is necessary.

Posted by OneOfTheSheep | Report as abusive

[...] Nader writes an op-ed at Reuters where he blames Obama … but he points this out HERE: Studies show that the minimum wage could help jump-start the economy and increase consumer [...]

How dareeee you common, working class people demand he orders our cash rich companies(with combined cash in the $tn’s) pay you a livable salary!

Dont you know your place in this world? And your role. The role of Servant, not master?

Obviously Im being sarcastic, but lets be realistic; this is how they see us.

Posted by W-DS | Report as abusive

Hmmm, let’s see… Should I pay an honest and hardworking person employed with three different jobs a living wage? No, I really don’t admire hard work, but I do admire the financial brilliance of the Wall Street bankers the American’s had to bailout to the tune of trillions. If you think paying a few extra cents for a burger is going to bring this economy to its knees, perhaps you have been sitting at the roulette wheel too long.

Posted by JayJay1855 | Report as abusive

@W-DS,

The idea that “common, working class people demand…cash rich companies..pay [them] a livable salary” is a bit of a “reach, considering that the purpose of personnel departments and employment interviews/drug testing is to eliminate those from serious consideration that cannot be “team players”.

There is no shortage of people grateful to live in one of the most prosperous and free nations on earth that WANT to land a steady, full-time job today at the prevailing minimum wage. Professional background screeners are pretty good at THEIR job, so “cash rich companies” likely don’t ever “see” (interview) those who think as YOU do at all.

Posted by OneOfTheSheep | Report as abusive

I voted for you in 2008 Ralph, I’m a Libertarian. Face it Obama is a whore for Unions, Banks, Golf or anyone who has cash to grease him. So shed no tears for a street walker but for the children he left at home and abused.
As for the minimum wage, stuff it, and all who support it are whores for the Chinese. The minute you interfere with the right of free citizens to contract freely among themselves is the minute you lost me.

Posted by JP007 | Report as abusive

Lots of economic right-wingers on this page, I’m kind of surprised.

Of course Nader is right about Obama: he never really tried to do many of the things he promised, which is a big part of his problem right now. He just can’t count on all those supporters from 2008, which is why he’s had to go so negative so early.

As far as whether a higher minimum wage will cause more unemployment: if that’s true, it’s also probably true that no minimum wage would increase employment and be a positive thing from the standpoint from a free-market fundamentalist, say people like Alan Greenspan. He’s said he doesn’t believe in the minimum wage, for that very reason.

An increase in the minimum would help the many people today who are forced to work at or near that level, and more immigration enforcement would give workers more negotiating power for their services. This would, of course, upset employers, who tend to be greedy and see dollar signs with a large supply of “flexible” labor.

Posted by Calfri | Report as abusive

I am SURPRISED at the ideologically prejudiced response to this well-informed article from our distinguished guest! Many of the people contributing comments here along the lines of “there’s not enough money to go around in present economic circumstances, we can’t afford to increase the minimum wage”; appear not to understand economics.

NATURALLY, the policy decisions we support depend on the OUTCOMES we desire; but I think we ought to agree on the following KEY PRINCIPLES:
* Money is simply a convenient trade facilitator, and ideally should be regulated so as to help ensure everyone gets their fair share (reflecting merit, hard work etc.) and so that the vast majority of the population is well motivated to work hard improving their country and thereby improving themselves.
* With a fiat currency, the Fed can print as much of it as they think will benefit the U.S. economy. There is no fundamental limit to the “amount of money” available. The main question is NOT therefore, “how much money do people have”, but rather, “how is the money/ cash flow DISTRIBUTED, and how does this relate to the distribution of GOODS and PRODUCTION?”
* There is an unlimited supply of work. No matter how many people are employed 24/7 working like dogs, or however many immigrants arrive in the USA; there will always be more land to cultivate/ improve, more weeds to pull, more mouths to feed, more children to educate, more suffering to alleviate, more medical & scientific innovations to research…
* The more money working-class people have in their pockets, the more they will spend locally (boosting employment as by at least as much as employment rates fall due to sweat-shop layoffs)… The same is not typically true for rich investor-class folks who stash surplus accumulated gold in the tax havens whenever they see trouble ahead (the very times when that money is most badly needed for trade).
* It is bad for people to be unemployed or for their skills to be underutilized. This is neither good for people or the economic situation of their fellows. It is also bad for the economy for some people to have an over-abundance of money (so that they waste all their time seeking pleasure, and waste their talents), while others are effectively held down in slavery, underpaid so they cannot afford the essentials in life or afford to invest in improving themselves & their neighborhoods (thereby wasting their lives & talents too!)
* Economics/ trade has always been about a balance of power between rich and poor. The exchange of money and trust (on which trade & employment based) will only happen if people feel they have something to gain by it. This will only happen if everyone feels like they can earn a fair wage by working hard; that they are not being pushed back by the monetary treadmill despite making their best effort.

Gradually increasing minimum wage to (say) between 1/3 and 1/2 of median hourly wages cannot increase unemployment (particularly not, in the long term). Rather, it will make for a better motivated, better utilised, harder-working, smarter workforce. Sweat-shop jobs will be lost, but the REAL, local economy will improve, quality of life will improve, labor relations and employment practices will improve, the nation’s physical and mental health will improve.

Our forebears from the 1950′s and 1960′s appear to have understood principles we are forgetting. There’s a reason why they did better economically than we are doing…

Posted by matthewslyman | Report as abusive

@Calfri: Totally agree with your remarks. Immigration DOES need to be regulated, in accordance with the consent of the local population at large (and not at the mere behest of “business leaders”); in order to maintain social cohesiveness (the general feeling that the economic game being played is largely fair, meritocratic and winnable; and the feeling that you’re not going to be sold down the river by your neighbor/boss whilst you are busy trying to be a good community player.)

Posted by matthewslyman | Report as abusive

Hopefully for the good of the nation’s economy, there is never another minimum wage hike. Instead all minimum wage laws should be eliminated. This would definitely improve the economy and help with other national problems.

The facts no one wants to read.

Learn to think for yourself.

Censorship is evil.

Posted by ALLSOLUTIONS | Report as abusive

First at that time (2008) one had to assume that the economy would be in shape for business to increase wages (manitory). This would be political suicide for the President. If you think he is against business now, if he imposed a manitory wage increase I will even begin to think he is out to kill business. Fix the economy first.

Posted by uc8tcme | Report as abusive

Where is it ? Why it’s stuck in Gitmo with his other promises.

Posted by Willie12345 | Report as abusive

One of the arguments here is that if a Burger King has to pay 9.50 an hour they will cut staff.

Well then your much touted Capitalism will come into play won’t it? Will YOU stand waiting 10 minutes for a average burger or will your get yours from the faster place with motivated employees that feel they are getting a fair wage for work performed so they put out a product that isn’t angrily mashed into the box with extra EXTRA ketchup?
SO many look down their noses at Fast Food workers, it is a high stress job IF the person _cares_ about their job.
If not well hell it’s a skating rink and the buyer gets the raw end of the deal.
The only way to get people to do a job and CARE about doing it well is to MOTIVATE them and what better motivator than the almighty dollar??

Motivated employees put out a better quality product which HELLO? in turn allows the companies to charge MORE for the higher quality product.

Seems fairly simple to this lowly HS Grad.

Posted by Pawnmasta | Report as abusive

matthewslyman,

Your idealisms should not be confused with free-market economics.

A minimum wage increase, by definition, increases the cost of labor independent of productivity. When that happens – cost up, productivity unchanged (now it’s actually declining in the U.S.) – then a commensurate amount of price inflation will inevitably affect the overall rate of CPI inflation (now and 87 of last 100 years) or deflation (13 of last 100 years) and our global competitiveness.

China and other nations have thrived at our expense thanks to a combination of American political snake oil, including the minimum wage, and union labor wage/benefit intransigence; in other words, job outsourcing that’s encouraged by none other than Obama, Nader, et al.

Posted by jca | Report as abusive

Way too much partisan blabber-jabber going on here, so I’ll keep it brief.

Essentially, all Mr. Nader is talking about is keeping the minimum wage on par with inflation. I don’t see anyting wrong with that, and technically, it’s not an “increase”, since, as he says, the buying power of the min. wage has declined since 1968 due to inflation.

And all Ralph Nader has done over the past 40 years is work for the common good. Shame on all you who trash this guy.

Posted by ZenGalacticore | Report as abusive

I suppose the ever increasing minimum wage will help us compete with china? Come on people, the whole minimum wage idea is stupid. If it were such a great idea, why not set the minimum wage to $250.00 per hour, then we would all be rich right?

Posted by zotdoc | Report as abusive

@jca: if you want the USA to be globally competitive with China etc. in the sweatshop stakes (or otherwise, without reform of the WTO), your comment is absolutely right.

If by “free market economics” you mean a laissez-faire marketplace, then you are right- that’s not what I am advocating. For a market to be truly “free”, people must have options. This doesn’t work when people’s backs are against the wall. Moderate but firmly enforced regulation is required for a truly free market.

My vision is of a world in which every worker (read, every person/ everyone’s mom/dad) has inalienable rights – a world in which every normal hard-working honest person can make a living wage to support a decent family life, by laboring in humane working conditions.

This might not happen for all the world at once. It might require reform of the WTO to stop the race-to-the-bottom (in prices and workers rights), and support a worldwide normalization of rights. It might require a temporary relapse into what Gordon Brown derisively calls “protectionism”. IT MIGHT require the restoration of some of the trade policies that once made America and Europe great (minus the policies that involved exploitation of the “third world”, which never actually did anything good for our reputations or economies in the long term anyway). IT MIGHT EVEN require the restoration of the GOOD EXAMPLE America and Western Europe once gave to the rest of the world, in human rights…

This vision will never happen without the shining light of example (from whichever country is willing to take up that standard, I don’t mind; but note that it did the USA no harm to be that shining light several decades ago). Without the shining light of example from someone, we will all become slaves. But with that light… We can all become free.

@ZenGalacticore: Excellent remarks. Worth reading. Nader’s point is very simple. Let’s not forget that the comparatively high minimum wages of 1968 did America no harm. What can we say for the economists of our time, in comparison? We ought to be asking our seniors to teach us what they did right, and how they did it…

Posted by matthewslyman | Report as abusive

[...] Where is Obama’s promised minimum-wage hike? (blogs.reuters.com) [...]

2 points: if minimum wage was 25% higher and statuatory (as M. Nader is advocating) I can promise you MANY more people in America will be making minimum wage. Secondly, when the economy is barely humming along is NOT the time to pull this kind of manuevre – you do it when the economy is booming and can absorb the short-term hit for the long-term gain. The short-term hit now would mean another recession; coupled together with ‘taxmageddon’ that will come, now we have ourselves a deep recession. But that doesn’t matter to M. Nader, being a millionaire himself…
The private sector has actually been doing reasonably well. It’s govt that has been slashing jobs all across the board. It’s fair to say that govt can’t afford those jobs anymore, but the question is why? Because the tax code is ridiculous and overly dependant on cyclical markets (housing anyone?) and filled with loopholes that only a few could ever exploit or even know about! Simplify! Under half median income: 0%; half to median: 10%; median to 5x median: 20%; 5-10x: 25%; above 10x 30%. Businesses: under $10m in revs: 15%; $10-500m: 20%; above $500m: 25%. 2% Federal VAT + states can set their own VAT. No loopholes, maybe MAYBE a 5yr tax credit for eliminating overseas positions and bringing them back to America. No interest deductions for mortgages; no interest deductions for business UNLESS their R&D or new hire is MORE than the deduction.

Posted by CDN_Rebel | Report as abusive

Haven’t you destroyed enough, Ralph?

Posted by hogsmile | Report as abusive

Would Gore have started the criminal war in Iraq, until Nader apologizes to the world for the big lie that there was no difference between Bush and Gore, I will not listen to or read anything he has to say. Millions have died because of his ego.

Posted by Estacaria | Report as abusive

I vote democrat. Ralph Nader, you’re an idiot.

Posted by Adam_S | Report as abusive

@CDN_Rebel… yes, but please NO VAT.. will be a huge administrative burden, look at Europe now.

Posted by robb1 | Report as abusive

Americans: so ignorant. You guys are hilarious, blaming Nader for “losing Gore the election” Nader’s point, which is pretty elementary political science, is that if Gore (or Obama) made their number one issue a 30% rise in minimum wage, and drove the point home every day, the ~70% of the population that supports it would translate into the largest landslide victory in recent memory for said platform. No candidate dares do this, because of the actual landslide of corporate money that would oppose them. If Gore or Obama had bothered to reach out to working people, they would win. Problem is they couldn’t care less about working people, as they are in bed with the republicans on all but the unimportant (to them) issues: abortion, gun rights etc.

The received wisdom of people who insist on dogmatic “logical solutions” … I am looking at you, OneOfTheSheep and ALLSOLUTIONS, don’t seem to realize that faulty premises will shipwreck your “logic”.

You think you know what you are talking about, but you don’t. It was unions and such measures as minimum wage that enriched this country, ensuring – as they do – that the pie is shared with a large section of society. the middle class drove the consumption in this country, and all our current problems stem from a shrinking consumer/tax base, which forces more layoffs in public sector, deepening the problem. Cry all you want, but rich people do not make a country rich. The Median and Mode wage determines the wealth of this country, because we are so dependent on our internal market.

Also, OneOfTheSheep: who ever said the government should be maintaining buying power? Grow up! Everyone with half a brain knows that the system is no longer based on fixed value currency. Inflation is supposed to occur, how else are we smart people going to stay rich while keeping the majority down? I am amazed that people are still living in the 19th century, believing that they are pulling a fast one on us. Since 1974 it has not not a secret that inflation occurs, it is up to responsible people to stay ahead of the devaluation via investments. THAT is how the rich get richer passively; only they have the knowledge and resources to stay ahead of the curve; but it is no conspiracy, it is in plain sight!

Two quick points, how stupid do you have to be to think McDonald’s will outsource their jobs if we raise the minimum wage? pretty hard to serve burgers from Vietnam and China… of course, McDonalds is exactly the reason why the minimum wage stays low, along with the other service cartel members (BK, Chick-Fil-A, etc etc)

For those asking the stupid question, “why not raise minimum wage to $500 per hour” you guys can get together with those who say Nader caused Bush’s actions. You guys deserve each other.

Posted by Benny27 | Report as abusive

Whoops, I meant inflation is guaranteed since 1971, not 1974. darn typos

Posted by Benny27 | Report as abusive

@CDN_Rebel,

VAT? Europe has one (and European economies are STILL handing out more in benefits than their respective production can sustainably fund), so you believe America should too? That’s like saying that most states have an income tax, so all should (equal taxpayer exploitation); or some pay teachers more so all should (equal taxpayer exploitation). None of these suggestions increase an economy’s efficiency, a state’s efficiency or the effectiveness of the same teachers, who remain the same work force as before.

Giving ANY government MORE tax revenue from ANY source before there is open debate reaching majority consensus as to what the NEEDS of a society are and how to prioritize available revenue to best meet them is like trying to put out a fire with gasoline.

Three simple steps:

1. Have the debate and accept the results, just as we accept the results of our elections.

2. Agree – NO MORE increases in the “debt limit” EVER! The country MUST learn to live within it’s means just as it’s states, localities and citizens must. Think of this as “plugging the leaks” in the “ship of state” before you trying to pump it dry (reduce deficits).

3. Separate NEEDS from WANTS. The finite limits of available revenue should remind us that America is more fortunate than most countries, in that it CAN afford everything it NEEDS. No country in the history of the world has ever been able to afford everything it WANTS.

4. Prioritize and allocate funding of the NEEDS accepting that the budget MUST balance or be less than available revenue and all related debate subsequet can only apply to the NEXT YEAR budget.

Until “we, the people” agree on WHAT we expect of our federal, state and local governments there exists NO LIMIT whatsoever on their size, their power, and the taxes they can AND WILL demand of us.

Posted by OneOfTheSheep | Report as abusive

The government cannot afford to allow the minimum wage to fall too low or the social conditions of this country will create more of the people OOTs despises. Kiss real estate prices goodbye (good buy if you like messier and rougher tenants with an attitude). Start to think dirty and ignorant serfs. After all OOTS, those undeserving aren’t going to be able to afford that much continuing education and it may be pointless to try, as there is so little growth. The minimum wage was a subsidy for the whole country’s standard of living. And although it seems counterintuitive – it is the floor below which only squalor and serious pain waits. It is the kind that doesn’t just wear you out but can destroy your vision and range. The economy seems to need upward pressure from all segments of the society or the prices will not rise considerably. But obviously all the pressure is down now and that could be called “the developing world has drilled a hole in the dingy of our standard of living.” It may never be plugged and the boat will sink.

People who believe in one prime commandment probably make the comments that hate Nader’s suggestion: let nothing diminish the apparent magnificence of my pile. They have the means to adapt to inflation and the amount of so called hard work may be little more to them than turning to the nearest financial shark or helper. The low wage people tend to find the financial sharks. The upper wage people tend to get the better help. But the top gets every level of help with near reverent concern.

Maybe we should weep that Mr. Nader has the optimism that something will work now.

When all arguments lock and neutralize, think of a key and a lock that allows a bolt to fall to a lower level in the mechanism. Call the mechanism the intricacy of political and economic life. The rock bottom of that discourse is sheer violence and fear. It’s amazing how those with the means can forget what that looks like and how threatening that can be.

Maybe that was the neuroscience PHD’s lesson? I still can’t imagine what that man was about. That people are watching the movies and forgetting that the crimes can be real? There is no such thing as long lasting security in the modern world. The permanent valuation of one’s assets is an illusion and seems to happen best when so many others are stripped almost naked. The Romans needed their slaves because they couldn’t live like “human beings” without them. They loved massy wealth and couldn’t skewer and roast enough flesh for their appetites. They didn’t blanch at human flesh either but they didn’t like to eat it. That was, and in many ways, still is the way we like to define ourselves. This country has long identified with them and liked their style. If OOTS hates what he sees now – what will happen when it continues for decades longer? Will his undeserving have grown scales or gills and agree to live under the floorboards and stay out of sight? Or will they have become extinct? No one mentions the extinction rate of species anymore? But I forget this is a business paper.

BTW – Home depot doesn’t even use employees from the looks of it. They have few sales floor assistants. When they and every low-income job has been replaced with automation, THE SOICETY MAY NOT NEED THOSE UNDESIRABLES THAT AREN’T WORTH THEIR KEEP? It’s too bad they couldn’t get jobs working for the Chinese to make the robots and the computer consoles. If you can’t make you’re not going to make it.

Those in favor of the lowest, or at least shrinking, minimum wage want a world were there are graded people and OOTS will give them the grades. He forgets that the lowest levels of society are full of all the diseases and problems that wealth helps to insulate against. They do not sound like they believe God helps those who help themselves but generally look to their discount broker or Goldman Sacks and company.

Posted by paintcan | Report as abusive

@Oneofthesheep,

Companies/Corps dont give a damn how many people want a full time job, minimum wage or not, their loyalty isnt to the workforce, its to the shareholders.

Aslong as those dividends roll in, the shareholders will be happy. Aslong as those part-timers turn up, and produce as much as possible for as little wage as possible, its acceptable.

Personally, I dont agree with it at all. But it does seem to be the new global standard for big companies/corps.

Is it morally correct? No. Is it fair? No.

Does ANY president/politician have the balls to take them on and force them to start taking on more full-timers, as opposed to dirt cheap temps?

Id be willing to put a wager betting on them forgetting their pledges/previous statements, just like Obama “forgot” about his promise once in a position to do something about it.

Posted by W-DS | Report as abusive

@Paintcan,

I don’t pretend to understand your overall message if, in fact, there is one. I will respond to some of your fascinating statements and inferences you make or would attribute to me.

To not choose to hire or socialize with a given person or group of apparently similar people is quite different from despising them. To me, if not to you.

“The minimum wage was a subsidy for the whole country’s standard of living”? Novel idea. Please identify a time and a place where enough people were employed full time at minimum wage that this was true.

You suggest that prices rise as a result of “upward pressure from all segments of the society”. No. Prices rise when supply is less than demand, or when costs of production increase. Perhaps you meant wages? Supply and demand for associated skills is what determines pay.

“There is no such thing as long lasting security in the modern world”. If that’s the answer, what was the question”. Most of us are sufficient pragmatists to do our best to achieve sustainable security for ourselves and our families, insofar as is possible; but there are NO guarantees, I agree.

You purport to reject those you see above your own station in life as being in some way morally corrupt. Let’s put this in more specific perspective.

I read recently that if one is not in jail or being pursued, has a roof over their head, clothes and shoes to wear, adequate clean water to drink, effective and sanitary human waste disposal, adequate food, money in their pocket, and sufficient assets that none of the above is likely to change for a month or so, that one is among the richest of world citizens; that “1%” that many in America profess to revile.

I hope this context makes that manner of thinking sound as stupid as it actually is. The America I grew up in and would preserve admires success and is NOT jealous of it.

Notice I didn’t mention owning personal transportation or one’s own living quarters, or designer clothes/shoes, computer, iPod, iPad, wide screen TV or computer game consoles, many such additional assets are to be found in America’s public housing where our “less fortunate” live. America is one of the very few nations where the “poor” DRIVE!

Happiness is not so much getting what you want, but wanting what you get. You, like all too many Americans, are unhappy primarily because you do not apprreciate what you have. Your problem, not mine.

Not only America, but numerous societies financially encourage their underclass to breed such that the unintelligent, the uneducated, the unruly and disruptive who have NO place in productive society (and likely never will) increasingly outnumber those who actually produce the goods and services that are measured by Gross National Product. Are “we, the people” smart enough to turn this sad state of affairs around before our “engine of prosperity” is overwhelmed by the sheer mass of dead weight it has to carry?

People grade themselves. Cover yourself with tattos and/or piercings or don’t bathe regularly and don’t expect success in any endeavor involving interfacing with the “average American”. Such choices say, in a direct and clear way to others, “up yours”. Is it any great surprise that those others are not “there for you” in your time of need? That which is sown, is reaped.

If you cannot communicate effectively in English, spoken, written or by email, you’re not worth much in the labor market. Same thing if you can’t balance a checkbook or manually count out change (even if you’re a drug dealer). Those who aspire to a good-paying job have to bring something to the party!

We’re not debating “Lifestyles of the Rich and Famous” here, we’re talking about the ability of ordinary Americans going aout their day-to-day lives. Those who can’t or won’t be part of that, I agree, are likely to live shorter, meaner lives.

We don’t need a fortune teller to see the future for, say those single females who have one or more babies out of wedlock and no skill, steady income, or prospects for same. Choices have consequences, and it isn’t up to “society” to “make it all better’ for those who make bad choices again and again. All societies have winners and losers, and always have. Get used to it.

Posted by OneOfTheSheep | Report as abusive

Brilliant. Lets raise the minimum wage, increase regulations, taxes, add more entitlements, and add a dollop of Obamacare on the top, put it in a blender, and what do you have? Greece. Drink up, If this guy gets in office again thats where we will be. And Ralph? You lost your relevance

Posted by Dietzamerk | Report as abusive

OneOfTheSheep….beautiful. Copy and paste in response to so many posts like @paintcan. Says it all. Thank you

Posted by Dietzamerk | Report as abusive

I am kind of short but perhaps you all guys can see my point that is not so philosophical, left or right, I think is just common sense:

Minimum wage is tied to low level low skilled mainly manufacturing labor or for an initial training period. Until we let all the manufactured goods come in with no import tariffs, or we allow off shore outsourcing, from places where labor cost 1/3 to 1/4 of our federal minimum wage, there will be no chance to raise it without harming our economy.

We should be proud to protect our boundaries, our people and our domestic interests.

Posted by robb1 | Report as abusive

Nature abhors a vacuum and isn’t too fond of great imbalances either. When the upper crust gets too far removed from the floor sweeper class political unrest and social chaos always follow. Lets forget about the minimum wage laws that were instituted so southern states with newly freed slaves would not have an unfair advantage over the white unionized northern manufacturers.

A much better approach is to increase the tax rates on businesses that over compensate the executive suites and management stables. BTW: all poorly run companies and countries eventually fail. As long as 5% of a population lays claim to 25% of its resources/profit while turning the remaining people into virtual debt slaves world peace and economic prosperity will remain a dream

Posted by GLsword | Report as abusive

[...] گزارش خبرگزاری مهر نیدر در مقاله خود می نویسد در طول کمپین انتخاباتی سال ۲۰۰۸ باراک [...]

[...] “Where is Obama’s promised minimum-wage hike?,” Reuters, Ralph Nader oped, July 24, 2012 [...]

@OOTS – You are a comfortable and rather smug “success”. As you noted before in an earlier post – you were willing to pass bribes to the government of the Shah of Iran for business thrown to you or your company. You apparently had a good deal of disposable wealth to start. But I am quite sure, that if any of those “undeserving” minimum wage folks tried that they would likely be thrown into jail. In fact, there have been cases where people in very vulnerable positions and low wages have had to pay their employer, or the job finder, a cut from their meager wages. This is a world that still employs sex worker slaves and child indentured labor.

Are you trying to convince us that you hold the key to happiness or that bribery and your “the rest be dammed” mentality is good thinking? Or that “it’s their own damned fault for being weak or vulnerable” is a legitimate way of “wanting what you get? With your rational you get and they give. We should all learn to be happy with your success and leave it at that?

You are a stinking fraud and you homilies about good values are the stuff for hypocrites and liars.

Actually – I think I wrote the book on “liking what I get” I find it simplifies my appetite. I find that the business world is not about liking what you get and that so much social conditioning is actually about making lucrative dissatisfaction or the product manufactures and advertisers would be out of business.

Posted by paintcan | Report as abusive

Add that to the long list of OWEbama lies.

Let’s remember OWEbama’s famous quote and compare it with his all time record breaking almost $6 Trillion dollars added to our national debt in less than 4 years in office:

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills,” OWEbama said.

Posted by CountryPride | Report as abusive

[...] Questions Nobody Is Asking “Where Is Obama’s Promised Minimum-Wage Hike?”–headline, Reuters, July 24 [...]

I am all for policy that empowers the poor and improves their standard of living. I consider myself to be very left socially and most would call me a liberal unless we talked about economics. But I cannot support legislation that creates inefficiencies in our economy that only hurt everyone, rich or poor.

The economy operates most efficiently, like most things, when in equilibrium. Equilibrium is achieved only when things are bought and sold at a price that reflects their inherent value. The beauty of the market is that, if left alone, it achieves equilibrium on its own. If prices are too high people won’t buy the good and prices will fall to the good’s inherent value. If prices are too low then more vendors or manufacturers will pop up to capture the value, and prices will rise. Take, for example, a small town that loves apples.

Fruit City has five apple farmers who sell their apples directly to the public. Demand is high, and apples are too expensive for Fruit City’s poorest inhabitants. Pretend Fruit City tells the apple vendors they must charge lower prices(below their inherent value) so that everyone can afford apples. Microeconomics dictate that prices will go down and demand will increase, BUT supply will fall. The reason supply will fall is apple vendors will be able to make less money. If apple vendors are making less money than at least one of them will be able to make more money by switching to a new crop or even find a better use for his land than farming, resulting in a drop in supply. Then net effect is less apples for all of Fruit City.

The same logic applies to the labor market. Unskilled labor simply is not worth $7+ per hour. Since the going rate for labor is too high there is an excess of supply(people willing to work for $7+) and a deficit of people willing to pay those job-seekers(employers willing to pay $7+). The net effect is artificially inflated unemployment.

Unfortunately, there is another negative effect. Businesses, because they are overpaying for unskilled labor, have to raise prices. When prices are raised the purchasing power of $1 is diminished, this is also known as inflation. That makes the $7+ worth less than it was before the price increase and eliminates at least some of the good the wage increase does.

Math and science do not care about politics or who is right or who is wrong. They only provide crude facts to be interpreted by us. The idea that a minimum wage is damaging is how I, and almost all of my colleagues in the economic world, interpret these facts. But more important than policy I support being enacted is the democratic process. An informed public should make these decisions for themselves. In so, I ask everyone to become informed from an unbiased source(or at least two polar biased sources) and make these decisions for on their own before they vote.

Now I will get up on my high horse and point out how dumb this article is.

A drop in the bucket.

“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”

$60 billion? Is that a joke? That is .4% of our GDP. That’s not even 15% of Wal-Mart’s yearly revenues. (http://investors.walmartstores.com/phoe nix.zhtml?c=112761&p=irol-reportsannual)

“Poll after poll has confirmed that result. On top of its popularity, raising the minimum wage could help turn the economy around”

Well I’m glad were asking the president to determine the effectiveness of a proposed economic policy based on a poll of the public. As an example of the of average persons understanding of the economy here are some facts:
“In 2011, when the S&P 500 had a total return of about 2%, the average equity mutual fund investor lost 5.73%. In 2010, when the S&P 500 rose 9.14%, the average equity investor experienced an annual return of 3.83%. Sometimes, investors have trailed the benchmark by as much as 10%” (The Good Investor Rule: Focus on How Not to Lose Money, AAII.com, July 2012)

Posted by cxc4atcornell | Report as abusive

I am all for policy that empowers the poor and improves their standard of living. I consider myself to be very left socially and most would call me a liberal unless we talked about economics. But I cannot support legislation that creates inefficiencies in our economy that only hurt everyone, rich or poor.

The economy operates most efficiently, like most things, when in equilibrium. Equilibrium is achieved only when things are bought and sold at a price that reflects their inherent value. The beauty of the market is that, if left alone, it achieves equilibrium on its own. If prices are too high people won’t buy the good and prices will fall to the good’s inherent value. If prices are too low then more vendors or manufacturers will pop up to capture the value, and prices will rise. Take, for example, a small town that loves apples.

Fruit City has five apple farmers who sell their apples directly to the public. Demand is high, and apples are too expensive for Fruit City’s poorest inhabitants. Pretend Fruit City tells the apple vendors they must charge lower prices(below their inherent value) so that everyone can afford apples. Microeconomics dictate that prices will go down and demand will increase, BUT supply will fall. The reason supply will fall is apple vendors will be able to make less money. If apple vendors are making less money than at least one of them will be able to make more money by switching to a new crop or even find a better use for his land than farming, resulting in a drop in supply. Then net effect is less apples for all of Fruit City.

The same logic applies to the labor market. Unskilled labor simply is not worth $7+ per hour. Since the going rate for labor is too high there is an excess of supply(people willing to work for $7+) and a deficit of people willing to pay those job-seekers(employers willing to pay $7+). The net effect is artificially inflated unemployment.

Unfortunately, there is another negative effect. Businesses, because they are overpaying for unskilled labor, have to raise prices. When prices are raised the purchasing power of $1 is diminished, this is also known as inflation. That makes the $7+ worth less than it was before the price increase and eliminates at least some of the good the wage increase does.

Math and science do not care about politics or who is right or who is wrong. They only provide crude facts to be interpreted by us. The idea that a minimum wage is damaging is how I, and many of my colleagues in the economic world, interpret these facts. But more important than policy I support being enacted is the democratic process. An informed public should make these decisions for themselves. In so, I ask everyone to become informed from an unbiased source(or at least two polar biased sources) and make these decisions for on their own before they vote.

Now I will get up on my high horse and point out how dumb this article is.

A drop in the bucket.
“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”

$60 billion? Is that a joke? That is .4% of our GDP. That’s not even 15% of Wal-Mart’s yearly revenues. (http://investors.walmartstores.com/phoe nix.zhtml?c=112761&p=irol-reportsannual)

“Poll after poll has confirmed that result. On top of its popularity, raising the minimum wage could help turn the economy around”

Well I’m glad were asking the president to determine the effectiveness of a proposed economic policy based on a poll of the public. As an example of the of average persons understanding of the economy here are some facts:
“In 2011, when the S&P 500 had a total return of about 2%, the average equity mutual fund investor lost 5.73%. In 2010, when the S&P 500 rose 9.14%, the average equity investor experienced an annual return of 3.83%. Sometimes, investors have trailed the benchmark by as much as 10%” (The Good Investor Rule: Focus on How Not to Lose Money, AAII.com, July 2012)

Posted by cxc4atcornell | Report as abusive

I am all for policy that empowers the poor and improves their standard of living. I consider myself to be very left socially and most would call me a liberal unless we talked about economics. But I cannot support legislation that creates inefficiencies in our economy that only hurt everyone, rich or poor.

The economy operates most efficiently, like most things, when in equilibrium. Equilibrium is achieved only when things are bought and sold at a price that reflects their inherent value. The beauty of the market is that, if left alone, it achieves equilibrium on its own. If prices are too high people won’t buy the good and prices will fall to the good’s inherent value. If prices are too low then more vendors or manufacturers will pop up to capture the value, and prices will rise. Take, for example, a small town that loves apples.

Fruit City has five apple farmers who sell their apples directly to the public. Demand is high, and apples are too expensive for Fruit City’s poorest inhabitants. Pretend Fruit City tells the apple vendors they must charge lower prices(below their inherent value) so that everyone can afford apples. Microeconomics dictate that prices will go down and demand will increase, BUT supply will fall. The reason supply will fall is apple vendors will be able to make less money. If apple vendors are making less money than at least one of them will be able to make more money by switching to a new crop or even find a better use for his land than farming, resulting in a drop in supply. Then net effect is less apples for all of Fruit City.

The same logic applies to the labor market. Unskilled labor simply is not worth $7+ per hour. Since the going rate for labor is too high there is an excess of supply(people willing to work for $7+) and a deficit of people willing to pay those job-seekers(employers willing to pay $7+). The net effect is artificially inflated unemployment.

Unfortunately, there is another negative effect. Businesses, because they are overpaying for unskilled labor, have to raise prices. When prices are raised the purchasing power of $1 is diminished, this is also known as inflation. That makes the $7+ worth less than it was before the price increase and eliminates at least some of the good the wage increase does.

Math and science do not care about politics or who is right or who is wrong. They only provide crude facts to be interpreted by us. The idea that a minimum wage is damaging is how I, and many of my colleagues in the economic world, interpret these facts. But more important than policy I support being enacted is the democratic process. An informed public should make these decisions for themselves. In so, I ask everyone to become informed from an unbiased source(or at least two polar biased sources) and make these decisions for on their own before they vote.

Now I will get up on my high horse and point out how dumb this article is.

A drop in the bucket.
“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”

$60 billion? Is that a joke? That is .4% of our GDP. That’s not even 15% of Wal-Mart’s yearly revenues.

“Poll after poll has confirmed that result. On top of its popularity, raising the minimum wage could help turn the economy around”

Well I’m glad were asking the president to determine the effectiveness of a proposed economic policy based on a poll of the public. As an example of the average person’s understanding of the economy here are some facts:
“In 2011, when the S&P 500 had a total return of about 2%, the average equity mutual fund investor lost 5.73%. In 2010, when the S&P 500 rose 9.14%, the average equity investor experienced an annual return of 3.83%. Sometimes, investors have trailed the benchmark by as much as 10%” (The Good Investor Rule: Focus on How Not to Lose Money, July 2012)

Posted by cxc4atcornell | Report as abusive

Deafening silence from OneOfTheSheep re: my post

Posted by Benny27 | Report as abusive

@Paintcan,

I am content, and need not divert my eyes from the image in my bathroom mirror each morning. At one point long ago I was thrilled to land a job assembling electrical meters for the “minimum wage” of $1.00/hr.

It enabled me from the beginning to pay ALL my living expenses, and I quickly received several raises for the quality and quantity of my work. That would not have been possible in a “union environment”

While there I also purchased a $300 used car (and paid it off in 3 months). If that’s “a good deal of disposable wealth to start”, then I’m guilty as charged.

You attack me by your repeated and incorrect speculations. During 1976 I worked in a design capacity for a hospital management company’s Facilities division. This company was somehow “picked” to present an “American” proposal to build four 200-bed American quality hospitals in remote regions of Iran that lacked meaningful medical care. As I recall, the British, French and Swiss also were preparing proposals.

Each knew, if their proposal were accepted that in order for construction to gain necessary approvals they would have to accept Iranian “partners” and create “joint venture” contractors and subcontractors.The only thing the Iranians would “bring to the party” would be to “handle” the local bureaucrats and political structure such that we and our subcontractors would only have to design, coordinate and oversee the actual construction, equipping and staffing procedures to accomplish the intended purpose.

It was also “understood”” that we would be expected to “turn over” ownership of such materials and equipment “left over” to our Iranian “partners”. No problem. Everyoone knows thiis “up front” and each puts associated cost into their bids. Such is more common than not in that part of the world.

The Iranians, or Persians, I spoke or worked with were generally polite and capable people. That said, I was not a “big enough fish” in the process to ever meet anyone who might ask for or expect a bribe of any kind, nor did I handle “company money” in any capacity. For the record, the Shah was deposed before the contract was finalized and today there is still no meaningful medical care in those areas of Iran (but plenty of centrifuges).

While it’s all but impossible to perceive whatever your “point” is, it seems forever and inseparably entwined with your personal overall disillusionment and dissatisfaction with your life. Hope you work that out someday.

Posted by OneOfTheSheep | Report as abusive

The economists tend to live with good incomes and security. And it’s amazing how many comments in these pages not very long ago doubted the validity of economic reasoning at all.

A reduced minimum wage in real terms will mean a reduced standard of living over all. One could expect that even if one never read a economics text. Numbers don’t tell the whole story and conveniently leave out facts or issues that don’t fit the models. The market knows the importance of emotional well being on the financial markets. So many investors have the tenacity and stick to-it-tiveness of buzzing flies around their dinner (actually it might be their bassinet). Rats deserting a sinking ship could become a leitmotif of the next presidential term.

One can get a sense of cold comfort in that those with a great deal of wealth will find that their lives become so much more expensive and dangerous. Their overhead costs, trying to keep their heads over all, may rise dramatically. The rising minimum wage may look like a luxury good to many but we may find the atmosphere very disagreeable when grinding poverty starts to show its face here again.

My only hope in Romney is that he was the Governor of one of the most liberal, and even enlightened, states in the nation and he isn’t likely to turn the nation in a dramatically new direction. The wheel may be rusted in place actually and the tub’s taking on too much water with that hole in the hull (the low standards of living in developing countries). But it is a big boat and takes a long time to shift directions. I will probably be dead and gone before the destination is ever reached but I don’t think I’d want to get off the boat when it comes to port.

Of course the terrible stench of human decay coming from the hold could be more than enough to make me change my mind.

Adhering to “the true faith” on any matter seems to be most popular when it is the other guy who has to do the converting and endure the shrinking of expectations.

Ruth may follow Naomi but never ever shall Naomi follow Ruth? Naomi might only be a “nice” bigot with friends in the editorial department. As Ruth gets poorer and more raggedy, Naomi isn’t gonna want to look at the b___h. Ruth believes in caste systems actually.

I have a strong hunch that a shrinking minimum wage is going to translate into a lot more very expensive repairs to apartments by tenants too busy making ends meet to clean and handle them with care while, very likely, hating their landlords for the blood sucking leaches they can beocme. And you might want to make sure those very expensive cars never see the light of day. I don’t think the new destitute are going to be very comforted by economic theory, do you? They will find education off limits to them and will be able to be nothing more than OOTS describes them.

It is very difficult to have middle class values without a middle class income.

N’est pas? OOTS – the very wealthy are seldom very happy with what they get. They always want so much more or, at the very least, the newest model to impress their friends. Are they still building charming mega priced houses in the Hamptons? They are very eager to do so – it was the douceur de vivre – and they miss it so. But the next bunch may want to chain the au pairs in the basement and feed them from a dog dish and they can time share with Shi Tzu.

Beware – if the scene at the bottom becomes too terrible to look at – those at the top start to look obscene. It’s not too flattering to anyone in the middle either. It’s going to be downright terrible when India starts to look like it has it’s economic and social act together while we start to live in our fading glory. That sounds like a pair of jeans that are a bargain at $150.00. And the sweatshop that makes them is delighted to get $10.00 per.
Isn’t everyone going to be so happy in the land of not-so well-off-anymore as the money pools even more at the top.

I don’t think Romney or Obama are going to be able to re-inflate the hull. BTW, I think that Costa Concordia is still lying on it’s side. The last time I looked, I think they were hoping to have it towed next month.

Posted by paintcan | Report as abusive

I see why OOTS prefers to answer the arcane writing of paintcan to myself. It allows for more self-righteous posturing, and non-sequitors about other countries.

The USA, like other countries in history, supports free-trade economic policies as it suits them. Of course, free movement of labour was essential to Adam Smith’s outline in the wealth of nations, but that would be too much for OOTS to do – hold two ideas in his head at once. He is too busy looking in the mirror and congratulating himself.

Posted by Benny27 | Report as abusive

to see in perspective:

minimum wage in California = ~17K/year. In Italy a newly college graduate salary is ~ Euro 1050 or ~$16K at current exchange rate.

Bottom line is:

we make more flipping burgers in the US than performing a college degree job in Europe.

Now think about this:

compare the price of gas in the US and Europe just for start. Our $ still buy a lot more.

So our standard of living is still quite high even at minimum wage.

Posted by robb1 | Report as abusive

Robb1,
Not true, because in the USA, you pay for much more out of pocket. My country of comparison is England, where health care is paid via taxes, so minimum wage job earns much more, due to the lowest income brackets being taxed at a lower rate. Comparisons are not so simple between US and Europe.

Posted by Benny27 | Report as abusive

Reagan has been mentioned by other commenters. One of the best things he did was to inflation-link individual income-tax parameters. He pushed this wise tax code amendment through early in his presidency.

Why should we not inflation-link the minimum wage?

Posted by matthewslyman | Report as abusive

@Benny27,

I don’t usually read much of a post that starts out “Americans: so ignorant. You guys…”. If you’re not an American, why do YOU presume the right to influence the thinking of Americans? We likely aren’t dependent on YOUR country or economy for future prosperity. That said, let’s consider some of what you had to say.

[It] “…is pretty elementary political science…if Gore (or Obama)… “had bothered to reach out to working people…” [and] “…made their number one issue a 30% rise in minimum wage…, and drove the point home every day, the ~70% of the population that supports it would translate into the largest landslide victory in recent memory for said platform.” Wild speculation utterly without factual basis. “Working people” aren’t as stupid as you seem to think. Many actually vote for what they think best for the country when that may NOT be best for THEM.

“It was unions and such measures as minimum wage that enriched this country…”. I agree that there was a time unions were necessary to get workers more than a dollar a day, but the pendulum long ago swung the other way. It was Henry Ford, who chose to pay his non-union workers very good wages (so they could afford his cars). It was unionized British Transportation workers that came up with the brilliant idea of going on strike as the British Olympics were to begin, an “in your face” insult to every Olympic visitor and an intentional display of basic contempt for the best onterests of their own country. Here in America legislated employment preferences for public works (infrastructure) makes the majority of Americans that do NOT earn “union scale” pay MORE to benefit union workers so they can sport bumper stickers bragging “live better, work Union”.

“…all our current problems stem from a shrinking consumer/tax base, which forces more layoffs in public sector, deepening the problem.” You’re not alone in thinking this, and you’re not alone in being TOTALLY wrong. In any Capitalist society, those who make products that can’t be sold at a profitable price get laid off and must find another way to put beans on the table. Market fluctuations are self-correcting, in that labor moves from where it is not needed to where it is. Public sector employment has been overstaffed and overcompensated for far too long. While some are necessary, they “produce” nothing. When individuals can’t “move” or can’t (or won’t) retrain for new opportunities they get left behind. This has ever been so.

Where the collective mind rules, government dictates what is made and how. Such nations wind up like the old Soviet Union, with shelves filled with products no one wants or will buy, and associated resources of raw materials and labor utterly wasted. They eventually collapse inward upon themselves because their economic structure is hollow and incapable of even supporting itself.

“…who ever said the government should be maintaining buying power? Everyone…knows that the system is no longer based on fixed value currency. Inflation is supposed to occur, how else are we smart people going to stay rich while keeping the majority down?” Guess I missed that economic theory (and you flatter yourself).

“…it is up to responsible people to stay ahead of the devaluation via investments. THAT is how the rich get richer passively; only they have the knowledge and resources to stay ahead of the curve…”. Fascinating. Are you suggesting that all “responsible people” that invest are rich and getting richer? There are many, many “working people” who invest in stocks, bond, land, buildings. Among these there are winners and losers. How do you EVER hope to retire if you haven’t a clue what your money will be worth or how much of it you will need at “that unknown time” in the future?

“…how stupid do you have to be to think McDonald’s will outsource their jobs if we raise the minimum wage? pretty hard to serve burgers from Vietnam and China…”. Please re-read my original post (second in this thread, above). This straw man argument is of your origin, not mine. You answer it.

Posted by OneOfTheSheep | Report as abusive

@Benny27 – If u earn minimum wage here in California, you might as well qualify for MediCal and even food stamps. And still the purchasing power of your $ are far greater for anything compared to the EU: cars, tv, telephone, food etc.

Bottom line is that the US minimum wage is not so bad, even though, of course, we could set some parameters to increase it as I stated in some of my previous posts.

Posted by robb1 | Report as abusive

My hat is off to Ralph Nader, but there are two points why I can’t agree on this one:
1. I believe that right now a job vs. wages choice in US is like this: take what is being offered while it is STILL being offered… otherwise your job goes to China, Mexico, India, you name it.
2. Simple math shows that $9.50 would amount to a 31% wage increase vs. current $7.25. How many of us folks have gotten a one-time 31% wage/salary increase lately?..

Posted by UauS | Report as abusive

Ralph, do you still believe there’s not a dime’s worth of difference between George Bush and Al Gore?

Posted by borisjimbo | Report as abusive

Pass an increase in minimum wages through today’s Congress? Between Republikans, Kool Aid Party and Blue Dog cowardice – you couldn’t get the Bill of Rights, today.

Posted by Eideard | Report as abusive

There will be no choice but to raise the minimum wage and wages overall for most sectors of manufacturing in America. China, still in its developmental stages, will predicably follow the exact same pattern that America did. As they develop, their people will no longer accept the wage standards currently in place. When the Chinese workers will no longer work for such low wages, manufacturers will be forced to move operations back stateside. May not be for several years, but it’s going to happen. People of China will not tolerate such low wages for long. That is the way stages go as nations develop.

Posted by QuidProQuo | Report as abusive

I like Ralph. He is doing more here to help Romney though, and maybe he should. It is not until we have had a complete economic melt down, as Romney would supply, that we will be able to see the falicies in both parties. Obama will only slowly degrade our existence. So, for the future of the country it is probably best to get the inevitable total failure over with, by electing Romney, so that we sooner get to really coming up with fixes.

Posted by brotherkenny4 | Report as abusive

@OOTS – A non-American has every right to try to influence the thinking of Americans – as long as they aren’t buying access to the legal process or the media. But we have to get used to the idea that the media is global. But now a day, who knows what information has been bought? We have been trying to influence the thinking of other countries for years and don’t blanch at bribing access. They used to claim it was illegal but that didn’t sound like the story under Bush Jr. Bush II all but shouted “come and get it” when he launched the “Coalition of the Willing”.

And your complaint about benny’s comment [“who ever said the government should be maintaining buying power? Everyone…knows that the system is no longer based on fixed value currency. Inflation is supposed to occur, how else are we smart people going to stay rich while keeping the majority down?” Guess I missed that economic theory (and you flatter yourself).]

The business world is more than willing to write off the less valuable but it also means that the less valuable get less and the downward spiral continues. Horatio Alger or Dick Whittington stories are for the gullible. There is no clear dividing line between the valuable and the undeserving. The categories can shrink or expand depending on conditions.

I didn’t get much of the economic theory in school. They didn’t offer economics in HS and I was in a different field in College. But I was fully engrossed by Fernand Braudel’s History of Capitalism trilogy. I know benny is correct. That was/is the case. COLA guarantees and other long tern financial instruments bearing interest almost guarantee that there will be more “cash” at the end of the period while the assets hasn’t changed one bit and in fact may have decayed in that time: e.g. houses. That’s called inflation when all of the forces at work devalue the currency. But we accept that as the necessity or there would be no point to doing business. Inflation does appear to be tied to the interest rate. It may be low and the rate of inflation may be softened by lack of cash (a fed tool) or lack of demand but it never stops. Inflation has been a problem with money supplies since the ancient world. Costs creep up no matter the medium of exchange or even how unsophisticated the economy might be. Even those people who use Rau – the big stone wheels – knew how to keep the Dutch from devaluing their currency. They treated the Dutch manufactured stones as “pocket change”.
The difficulty of getting the wheels made them valuable and the bankers knew their history.

I think benny is correct in the first part of the paragraph and a little too like the thinking that was starting during the Great Depression in the second. And I know I’m catching it too. Stagnation is hard on one’s attitude.

The ideas about how populations and governments cope with change spread fast and always have. The country that can invest itself in every other place on the planet is going to get rashes from time to time and some of those people even have tattos and don’t always wear the quaint and not so practical western businessman’s suit. The cloths make the man, not the mind. But anyone who falls for the suit alone is a fool and can’t see below the surface. A lot of frauds and sharks can look very slick and polished.

I don’t think my comments are arcane. Business types don’t like literature and the humanities until they’re retired and think it’s time to get a little Culture. Than you go out and buy a library or some works of art to while your hours away and claim you “got class”. I’ve been pondering them my whole life. I’ve slowly assembled mine and am growing another one on the hard drive. The hard drive stuff is for when I can’t afford the internet anymore because I’m sure inflation is going to make those rates rise too and it probably won’t be due to demand.

@quidprquo – they can move them to India and Africa. Over 3 billion people are very eager to be “improving themselves”. The people in steerage don’t like being locked up. And we really don’t have the option of splitting the ship horizontally and jettisoning them.
The discriminators will simple fill the lowest levels of what’s left with the new unworthies.

Posted by paintcan | Report as abusive

@QuidProQuo,

Read UauS again.

“China, still in its developmental stages, will predicably follow the exact same pattern that America did. As they develop, their people will no longer accept the wage standards currently in place.” I agree completely.

When the Chinese workers will no longer work for such low wages, manufacturers will be forced to move operations back stateside. I disagree. U.S. manufactures will then have the OPPORTUNITY to bring some manufacturing jobs back to the U.S., but the choice of whether and which will remain theirs. Hint: It WON’T be jobs that unions killed before with their unsustainable demands, and they WON’T be in states that favor unionization.

“May not be for several years, but it’s going to happen. People of China will not tolerate such low wages for long. That is the way stages go as nations develop.” Once again, I agree completely, but so what?

What’s important here in WHEN! Those who would reject the current minimum wage by staying out of the work force will starve LONG before there is a meaningful increase here in these United States (unless someone else pays their bills).

Posted by OneOfTheSheep | Report as abusive

@paintcan,

You’re certainly free to give equal weight to the opinions of non-U.S. commenters. I am not, being of the opinion that only those with “skin in the game”, i.e. live in and under a given economic “system” should have a voice in it. Remember, America’s founding fathers didn’t let everyone that was warm and breathing vote in elections… worthy wisdom left behind in the last century.

You say: “COLA guarantees and other long tern financial instruments bearing interest almost guarantee that there will be more “cash” at the end of the period while the assets hasn’t changed one bit and in fact may have decayed in that time: e.g. houses. That’s called inflation when all of the forces at work devalue the currency.” You cast your net too wide. Yes, COLAS purport to even out the effect of inflation, but tend to guarantee even more inflation in the long run.

Inflation is, with one exception, utterly unrelated to financial instruments bearing interest. Interest is the value (“rate”?) paid for the use of another’s “money” to purchase today (at today’s prices) that which otherwise could not be purchased (except by some form of exchange, or barter). It is a fee that may or may not be a “good deal” for all concerned. Some deals are “win-win”, others not so much. Taxpayers usually lose.

“…we accept that as the necessity or there would be no point to doing business.” Utterly wrong. The “point of business, or commerce, is profit; NOT inflation. Only governments, who reap all the benefits, view inflation as, in the long run, “acceptable” or desirable. Inflation is the direct and inseparable indicator of the lack of good faith of a government and their disregard of the financial well being of those governed.

Stagnation is “hard” ON all economic theories who deem “growth” as more and more people instead of more and more produced, bought and sold (commerce). The latter is quite possible when the same number of people are more and more affluent. Unfortunately, this is increasingly unlikely in a world where literacy, accuracy of perception, profession competence, financial prudence and the individual desire to be productive are simultaneously racing in the wrong direction worldwide.

I fear all those sour grapes in your gut will ultimately produce a fatal ulcer. You take care, now.

Posted by OneOfTheSheep | Report as abusive

In the third paragraph above, I intended to explain the “one exception”. The rate of interest consistent with the perceived risk of a given loan and the period of repayment specified is typically then increased to include the rate of inflation anticipated over said period.

Posted by OneOfTheSheep | Report as abusive

If Gore would have won, but he did not, thanks to u Ralph, would u thing minimum wage would be higher now?

Posted by robb1 | Report as abusive

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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