Catching the Can’t-Do Spirit

After their roaring two-house victory, the Democrats are squeaking about micro-policies. There’ll be no impeachment, we’re told, though maybe a bit more oversight of Halliburton-style war profiteering. No withdrawal from Iraq, only a “phased redeployment.” And, the New York Times assures us (11/12/06), that the Dems “ have largely dropped … talk of a Canadian-style national health insurance.” Instead, they might try to reverse the Medicare drug plan’s ban on bargaining for drug price discounts.

They’ve caught the can’t-do spirit that hovers over that former malarial swamp, Washington D.C. Well, maybe they caught it long ago, when the Republican congressional sweep of ‘94 sent Bill Clinton into long policy ruminations on school uniforms and midnight basketball. Since then it’s been non-stop can’t-do, with the initial exception of war: Can’t do Social Security, can’t do universal health insurance, can’t do hurricanes. Then it turned out that we couldn’t do war either, at least if that meant whipping the Taliban or finding an honorable way out of Iraq.

Well, here’s a “phased redeployment” plan: First, bus the troops to the nearest functioning airport in Saudi Arabia, then put them on regular commercial flights to the U.S. According to Travelocity, the airfare part would cost about $1500 a person (coach class), or $225 million for 150,000 troops. If the government won’t come up with the ticket price, I’m sure thousands of ordinary citizens would happily dig into their own pockets. Hell, I’d spring for first class.

When it comes to health care, the more cautious Dems trace their can’t-do spirit to the great Hillary health reform debacle of 1993. We tried, they say, and it didn’t work. But what did they try? The Hill health plan would have created a vast new level of bureaucracy to contract for health insurance from the existing health insurance companies, thus tightening their evil grip over American health care. I described that plan in a 1993 essay in Time as “the ultimate medical nightmare:”

You slip under the anesthesia confident that your problem will be solved with some simple procedure -- a polyp excision, for example, or tubal ligation. But when you wake up you find your breasts are missing or your intestine now terminates in a plastic bag.

Look, millions of voters didn’t swing toward the Democrats because they wanted a $15 discount on their statins and beta-blockers. They voted out the can’t-do Republicans in part because health costs are an immediate threat to ordinary Americans’ livelihoods and lives. They want a solution, and they want it now.

How could we do that? The cautious way would be to expand Medicare to cover everyone. No new program would have to be devised, and the fight over whether Medicare would lead to socialism was resolved over 40 years ago. Just extend it to everyone of any age.

The only problem with that is that Medicare is as full of holes as the Bush rationale for the Iraq war. It’s not enough to have Medicare Parts A and B, you need supplementary health insurance to cover the co-payments. As for Part D, aka “Part Doughnut Hole,” no one has as yet been able to comprehend it, though it seems to work fine for people who are willing to substitute shark cartilage and lemon grass tea for prescription drugs.

So the most sensible plan is the one put forward by Anna Burger, head of labor’s Change to Win coalition. She proposes extending the health insurance plan that currently covers Congress to everyone. “If it's good enough for [congress],” she asks, “Why isn't it good enough for every American?''

Hey, we can do it, or at least something very similar. Recall that as of a week ago, raising the minimum wage was another “can’t do” issue: Can’t do it because it might lead to inflation or unemployment, might offend the Chamber of Commerce or, god knows, cause acne. But six states just raised their minimum wages and Nancy Pelosi has promised to raise the federal minimum in her first 100 hours as Speaker of the House.

If the Dems can do that, they can do health care. Just renounce the can’t-do spirit and start echoing the little blue engine: “I think I can, I think I can, I think I can.”
 

Comments

[Anarcissie]

It seems to me that the Democrats won mainly because they could say, "We're not crazy and incompetent, we're not Bush." Otherwise they are all over the place -- James Webb, whose victory was crucial to control of the Senate, is a not very reconstructed Reagan Republican. The Republican Party has become very, very weird, so weird as to have in effect thrust power upon the passive Democrats in the form of a highly variegated collection of voters and candidates. It's all too easy to find people who are put off by latter-day Wilsonian imperialism, domestic repression and pork-barreling, and religious fanaticism. They may not agree on anything else!

Meanwhile, Bush is still president. He may be now incapable of starting yet another war or seizing further power, but he can veto anything the Democrats put forward and almost certainly make it stick.

In effect, no new laws are going to be passed which everyone does not agree to. Raising the minimum wage is trivial (for the elites who will raise it) and some agreement may be possible. Instituting single-payer health insurance will be a major struggle for which the Democrats will need the presidency. What the Democrats _can_ do is investigate and demand answers. Many of these will be to the disadvantage of their opponents.

Big changes, then, will be deferred to 2009 if possible. Meanwhile both parties (and all groups within the parties) will be spending most of their time trying to make themselves look good and the other guys look bad, manoeuvring towards November 2008. I don't think we can expect much more than this from our great leaders.

[barbsright]

Rasing the minimun wage is a waste of time. I have a degree in economics and the national minimun wage never made sense to me. Each state is different so the wage has to be different state to state. Best thing to do would be to let wages have no minimun and instead get rid of FICA and Soc Sec taxes, and taxes in general, on people making below a living wage. Add in a weekly stipend added to paychecks of the working poor and you would have a better system then the minimum wage. As for health care, the real problem is you do not have any way of comparing prices before you get service. Education is almost as bad. Together they are the two most inefficient sectors of the US economy. I have a reform plan for both health care and education that is a hybrid single payer plan. Both the liberals and conservatives should love it. Anyone want to hear it?

[Tim Worstall]

'Recall that as of a week ago, raising the minimum wage was another “can’t do” issue: Can’t do it because it might lead to inflation or unemployment, might offend the Chamber of Commerce or, god knows, cause acne. But six states just raised their minimum wages and Nancy Pelosi has promised to raise the federal minimum in her first 100 hours as Speaker of the House.'

Excellent. Let's use the example of something that hasn't even come into effect yet (Look! We passed the law and there are no bad effects!) to urge more of the same action.

Why not, err, let those wage rises come into effect, study the results and then make a decision as to whether to take it further?

Or is that too scientific?

[Thena in Maine]

What minimum wage opponents don't seem to get is that if you put more money into the hands of a low-income (or even moderate-income) person, they're going to SPEND it. Probably this month. New shoes for the kids, fix that annoying car problem, maybe buy heating oil or restock the pantry or pay off some credit card debit or catch up on the utility bills or see the dentist about that filling or (heaven forfend!) go out and see a movie.

That's money which, by and large, goes into local economies and gets churned round a few times before ending up in the hands of an Investor - at which point it quits circulating and sits around earning interest instead of fuelling local commerce. But that's another story.

[Anarcissie]

Theoretically if people invest money at least some of it becomes capital, which is what creates jobs in a capitalist system so people can earn those minimum and other wages in the first place. So it's not just sitting there.

[Anarcissie]

Tom: "Why not, err, let those wage rises come into effect, study the results and then make a decision as to whether to take it further?"

I've studied past increases in the minimum wage and on a national level they have had no detectable effect on either employment or inflation. That doesn't mean they had no effects, but the noise from other economic activities and conditions drowned them out, if there were any, at least for the modest tools I (and I suspect others) have used. Hence a discussion of the minimum wage tends to be ideological rather than practical.

Remember that minimum wage changes tend to be small, and to directly affect only a small number of wage-earners. This is why people like Bush are willing to go along with them.

[Barbara E]

Minimum wage increases don't just affect the people currently earning the min wage; they exert an upward push on wages for many underpaid people.

[Moira Manion]

Dear Barbara,

I'm very glad I just discovered your blog. I've been a fan of your work ever since I was a minimum wage bookstore clerk and cleaning person, when "Nickel and Dimed" was published. I'm now a regular Commentator for American Public Media's public radio program "Marketplace," and I was recently featured on "Good Morning America," asking representatives of the RNC and DNC about affordable health care. We need lots of strong, powerful, clear voices for the working poor, and I'm happy you're still speaking out.

Moira Manion

[David R]

All of the argument over whether raising the minimum wage will or will not have a financial impact is beside the point. We should raise it because it is fair. Let's start being more concerned about people than about profits.

[Anarcissie]

Barbara E: "Minimum wage increases don't just affect the people currently earning the min wage; they exert an upward push on wages for many underpaid people."

Then we ought to observe inflation, since once the underpaid people start getting more money for their labor, the more powerful classes above them will compensate for their loss of labor-buying power by raising their various prices (rents, fees, salaries, taxes, insurance premiums, fines, etc.) But if you look at the stats you won't see anything detectable. At least I didn't.

[Thena in Maine]

Anarcisse -

That's true of some portion of capital in some applications: the money that goes into construction, equipment upgrades, other infrastructure - think of transportation systems, utilities, public education as part of that, and taxes (at least partially) become investment in public capital. (Which IMO is a good application of taxes.) The money that gets invested in a start-up business (your own or somebody else's) is a useful application of capital.

But when the distribution of excess production value ("profit") tips too far toward accumulation (savings / shareholder profits) and away from distribution (wages and benefits, applied capital in the form of infrastructure improvements, etc), then you have the problems we see here.

[AnonE.Mouse]

Many of the problems in the Democratic party could be easily corrected by excising the corporate minions of the DLC.As Thomas Frank and others have pointed out,when you make your party virtually indistinguishable from the opposition on economic issues,the so-called 'values voters' will ally with the party who give lip service to those values.Democrats need to aggressively pursue a populist economic program to regain their natural base.Wholesale reform of health care is a pipe dream without the presidency,but there are several smaller steps,both real and symbolic,that would improve the lot of the majority of Americans.
Rather than an increase in minimum wage,a living wage should be the opening bid.It's certain to be negotiated down by Bush,but it focuses attention on the problems experienced by people on the very bottom rung(while highlighting the large numbers on that rung).
Next on the agenda could be a fix for Social Security beyond the horizon by simply taxing income above $90K(and if there's concern about it's effect on business,simply cap the employer contribution at $90K).Most Americans will not be affected by nor,I would argue,are even aware of the break accorded relatively high earners.Those lucky enough to be affected are likely to be Republican voters already or identify themselves as Democrats for more highminded reasons than greed.
As I wrote,single payer health care is an issue that needs a more enlightened president,but it would be simple to amend the Medicare drug bill to allow negotiating bulk discounts and equally difficult for Bush and the Republicans to say no without appearing captives of the drug companies.Anything that lowers the cost of drugs,however marginally,represents a victory.

[realpc]

"Minimum wage increases don't just affect the people currently earning the min wage; they exert an upward push on wages for many underpaid people."

Right, it's called wage inflation, which contributes to price inflation and you're back to square one.

Raising the min wage might help some people a little, at least temporarily. In the long run it helps very little and can be harmful in unexpected ways.

For example, it increases the motivation to automate low-skill jobs. Instead of hiring low-wage students and part-timers for retail check-out, it may become cheaper to buy check-out machines.

The Democrats' focus on raising minimum wage is just one more example of their short-sighted, reductionist, simplistic approach to economics.

The Earned Income Credit is much more helpful and sensible, so of course Democrats don't even mention it.

[Anarcissie]

Thena in Maine: "But when the distribution of excess production value ("profit") tips too far toward accumulation (savings / shareholder profits) and away from distribution (wages and benefits, applied capital in the form of infrastructure improvements, etc), then you have the problems we see here."

In the Adam-Smithian world we would expect to observe a depression -- the workers would not earn enough to buy the products they made, the returns of investment would fall, etc. In the present U.S., though, there is a big federal deficit, a big load of consumer debt, and much money is printed and given to the rich. It's a different world with lots of funny money, some of which trickles down. Nemesis is temporarily averted. Not forever, though.

[Anarcissie]

realpc: "The Earned Income Credit is much more helpful and sensible, so of course Democrats don't even mention it."

bankrate.com: "But there is a drawback to the credit. It is rather complicated, and since eligible taxpayers usually don't have much cash to spare, they generally cannot afford professional help in filing for it."

My suggestion: Don't take the money away from low-wage people in the first place.

[chris]

anarcissie,

Regarding the Earned Income Credit and filing for it, here's something to keep in mind:

Every community offers FREE tax filing for poor residents. And every year, the same idiotic raging liberal reporters who comment on tax issues around April 15 here in New York City are startled to learn how much money is channeled to poor recipients through this program.

They always seemed stunned by the number of tax preparers who assist -- for free -- those who need help.

[chris]

Regarding Minimum Wage:

Wherever possible, technology will replace those who earn minimum wage.

Gas station attendants are almost gone. Why? Because any motorist can pump his own gas. The obstacle was ensuring the customer paid his bill.

With electronic payment now so simple, the critical part of the job is gone. Hence, bye-bye gas jockey.

We're seeing the same thing in supermarkets with new self checkout systems.

There are also much better inventory systems going into supermarkets. They will reduce the need for stock-clerks.

Even subways in New York City are experiencing technical advancement. On one line -- the L train -- only a single conductor is on board. On all other trains there is one motorman and one conductor.

[chris]

anon e mouse wrote:

"...it would be simple to amend the Medicare drug bill to allow negotiating bulk discounts..."

Wrong. There is absolutely no assurance Medicare can negotiate discounts from drug companies.

You make the basic mistake of thinking that because the government is a big buyer, a pharma company selling huge volumes to the gov't would maximize its income by increasing volume while trimming its margins.

Not true. Pharma companies have the option of saying NO to gov't deals. If a pharma company has a patented product for which there is no current substitute, there is no reason that company will sell its product cheap.

To maximize the price Medicare pays, the Pharma company will advertize the drug and tell the population how wonderful it is. Medicare recipients will demand the drug. If Medicare offers too little to the drug company and is unable to provide the drug, senior citizen voters will become very angry and demand that Medicare pay for it.

Guess what? Politicians, being what they are, will find the revenue to pay for it.

Medicare will have very little power to lower drug prices. The idea that Medicare can negotiate lower prices will backfire when it is forced to play hardball with drug companies selling unique products that voters demand.

[T]

How about this?

Why not frame it whether a corporation is patriotic or unpatriotic to the US.

They're the ones sending jobs out of the US to other countries for cheaper wages.

Not supporting the people in this country.

In some cases, corps are incented to send jobs out of the country.

[lc2]

OK, so I guess we're all in agreement .. that raising the minimum wage is a bad idea that will hurt low-wage earners. Or did I miss something?

[realpc]

It just isn't a great idea, it just doesn't matter. Democrats think they're being so compassionate, throwing crumbs to those poor ignorant low-skill workers.

[lc2]

Right. I'll remember to tell all the poor ignorant low-skill workers I know who voted Democratic that they're really only hurting themselves if they're ignorant enough to think their low-skill work should pay more when their companies are making record profits. Or did you forget that most poor ignorant low-skill workers who vote, vote Democratic? Perhaps it's been awhile since you've spent any time among the poor ignorant low-skill workers whose interests you seem to think you understand so well.

[Anarcissie]

I don't think the minimum wage accomplishes very much one way or the other. It sounds great, however, so politicians can raise it by small amounts and posture about their accomplishments. It hurts people only in the sense that once again they are being taken for a ride.

The fastest way to get money into the hands of lower-wage workers would be to stop taxing them. When you put together federal, state and sometimes local income taxes, social security payments, and sales taxes as well, it can be a lot of money for someone living on a low income. I am not sure why no one is interested in this. Holding the money for a year and then giving some of it back to those of the poor who can perform a complicated bureaucratic procedure (or have someone do it for them) does not really alleviate the problem.

In the long run we need to change the power relationships of the society, but that's beyond the scope of a discussion about the minimum wage.

[lc2]

Agreed. But I don't see that lowering taxes on low-income workers and raising the min. wage should be mutually exclusive.

I am not the primary breadwinner in my house but I can tell you that as someone who makes less than $10/hr, I take home almost all my pay.

[realpc]

"In the long run we need to change the power relationships of the society,"

Throw out everyone who is on top now, replace them with those who are powerless. The new leaders will be kind, intelligent and honest, because they remember how it felt to be powerless.

[lc2]

realpc: Your trivialization of any points of view that aren't straight out of the Milton Friedman reader (may he rest in peace) does not increase the total volume of ideas on this blog. You would do well to realize that American-style capitalism in 2006 is not the end-all-and-be-all of human existence. Most people agree that we can do better even if we support the current form of political economy. What you display is a failure of imagination and an excessively rigid view of human potential.

[Alon Levy]

Wherever possible, technology will replace those who earn minimum wage.

Gas station attendants are almost gone. Why? Because any motorist can pump his own gas. The obstacle was ensuring the customer paid his bill.

With electronic payment now so simple, the critical part of the job is gone. Hence, bye-bye gas jockey.

Except in rural areas, these people can usually find other jobs. Apparently the waves of automation beginning in the 1980s and 90s haven't caused any long-term upward unemployment trend in the US.

To maximize the price Medicare pays, the Pharma company will advertize the drug and tell the population how wonderful it is. Medicare recipients will demand the drug. If Medicare offers too little to the drug company and is unable to provide the drug, senior citizen voters will become very angry and demand that Medicare pay for it.

Actually, that's a good argument for throttling direct-to-consumer advertising of prescription drugs the way most developed countries do.

The fastest way to get money into the hands of lower-wage workers would be to stop taxing them. When you put together federal, state and sometimes local income taxes, social security payments, and sales taxes as well, it can be a lot of money for someone living on a low income.

A single parent with one child who works a full-time minimum-wage job pays about 10% in federal income taxes, 7.65% in FICA, and 2-3% in state income taxes. Eliminating all taxes below the poverty line will cost almost $300 billion a year, but only give minimum wage workers as much money as raising the minimum wage to about $6.50 rather than $7.25.

[chris]

realpc wrote:

"Throw out everyone who is on top now, replace them with those who are powerless. The new leaders will be kind, intelligent and honest, because they remember how it felt to be powerless."

Presumably you were joking.

However, there is good reason to increase the turnover in government. Term limits are a great thing. No government position would suffer from regular changes in staffing.

Senators should serve no longer than three, or possibly four terms. I would grant members of the House an equal number of years in office. Supreme Court justices should face either a maximum number of years on the bench or retirement at a fixed age.

State and local governments should adopt similar practices.

[Alon Levy]

For some reason, my blockquote tags didn't work. The only paragraphs in my post that are mine are those beginning with, "Except in rural areas," "Actually, that's a good argument," and "A single parent with one child."

[chris]

Alon Levy wrote:

"Except in rural areas, these people can usually find other jobs. Apparently the waves of automation beginning in the 1980s and 90s haven't caused any long-term upward unemployment trend in the US."

Your comment implies that taxpayers have a responsibility to subsidize people who choose to live in economically weak parts of the country.

Meanwhile, you're a little off on your estimate of when "automation" began to affect employment. You'd do better citing the Industrial Revolution or the advent of mass production, both of which began long before the 1980s.

Moreover, the pace of automation isn't about to slow down.

I once worked for a financial publishing company in New York City. When I started, the company employed about 330 people, of which about 50 were in the graphic arts department. They put together the pages of our publication.

Then the company acquired a computerized system for creating its publications. The entire graphic arts department got the boot. Today, the employee headcount is about 220.

Computerization enables those 220 people to produce more than the 330 people who were there when I first walked in the door about 20 years ago. Boo-hoo. And NYC unemployment is now at an historic LOW.

Alon Levy wrote:

"Actually, that's a good argument for throttling direct-to-consumer advertising of prescription drugs the way most developed countries do."

Fascinating. You believe in stifling free speech to ensure the government's power to bamboozle the population. You're a firm believer in keeping the population ignorant so they don't know what they're missing. That's great.

Drugs are developed by accident. It takes money and brains. Without sufficient sales -- and profits -- our fabulous drug pipeline would dry up.

It might make sense to shorten the life of a patent by a few years, but unless profits exceed those huge Research & Development budgets, the development process will shrink to the point where the two are in a workable balance.

Alon Levy wrote:
"A single parent with one child who works a full-time minimum-wage job pays about 10% in federal income taxes, 7.65% in FICA, and 2-3% in state income taxes."

Total nonsense. A single parent with one child who works fulltime for minimum wage is eligible for the Earned Income Credit. In other words, that person's tax rate is negative -- not 10%. That person is also eligible for other subsidies.

I'm all for giving a single parent working for minimum wage a tax benefit rather than a tax bill. But let's not pretend that people in that position actually pay taxes other than those they choose to pay.

[Moira]

Out of curiousity, how many of you who have posted work one or more low wage jobs?

[realpc]

"there is good reason to increase the turnover in government. Term limits are a great thing."

chris,

I absolutely agree, and I voted for Democrats this time solely for that reason. I can't imagine why we don't have term limits for congress.

I was joking about putting the powerless in charge, and that is straight from Animal Farm. Sometimes a revolution is justified, but revolutions can be sane or insane. I think all the communist revolutions have been insane (but well-meaning). I think the current far left (and even the not-so-far left) are advocating the insane type of revolution. They should all read Animal Farm and the history of communism.

I am a liberal in that I believe in freedom for the individual, moderated by compassion for the unfortunate. I think freedom for the individual absolutely depends on some degree of economic freedom, and the right to own something. The solidarity of communism and the freedom/diversity of liberalism are at odds.

We are stuck with uneasy compromises and a dynamic balance between solidarity and freedom.

Yes turnover in government is important, and I wish congress had term limits. But I was encouraged to see democracy more or less working in the recent election. The public sent a loud message.

[chris]

realpc,

There's no real turnover in government until voters stop granting some office-holders lifetime positions. Ted Kennedy, Strom Thurmond and others quickly come to mind.

[chris]

moira, you asked:

"Out of curiousity, how many of you who have posted work one or more low wage jobs?

I haven't had a low-wage job since high school. Is there any reason I should have one now?

[realpc]

chris,

It seems like you didn't hear me say I wish we had term limits. But nothing prevents someone from running against Ted Kennedy. If the voters hated him, if he got caught doing something unethical, he would not be in congress for life. I am not a Kennedy supporter, just saying the voters are free to throw him out if they feel like it.

But it's strange how you ignored my entire comment, even the fact that I agreed with you:

"I absolutely agree, and I voted for Democrats this time solely for that reason. I can't imagine why we don't have term limits for congress."

[The Eternal Squire]

realpc,

Replacing powerful people with powerless ones guarantees nothing so far as an increase in compassion is concerned. Consider the life of Imelda Marcos.

The Eternal Squire

[chris]

realpc, I didn't miss any of your commentary.

I was merely making the point that sometimes the system has to do what voters fail to do -- which is to throw out office-holders who have created a fiefdom.

As for Kennedy, well, he did commit negligent homicide. That should have ended his career and proven beyond any voter's doubt that he's not a responsible and decent person worthy of a seat in the Senate.

But MA voters have chosen to overlook his criminal activity every six years. Therefore, to weed out the rascals, we need a system that eventually tosses out everyone. That's the only way to avoid the problems that arise from individual politicians consolidating too much power for too long.

Democracy works because we reshuffle the deck of players. But not quite often enough.

[realpc]

Yes, we need term limits. The problem is congress would have to get the idea and pass the law, which of course they would have no motivation to do.

[Anarcissie]

I wasn't thinking about changing the personnel at the top of the present social order. I was thinking about a different social order in which people have taken back the power which they are now giving over to their great leaders. Obviously this change can't be accomplished just by getting new great leaders, although in the past many people have deceived themselves into believing so.

[Anarcissie]

Moira: "Out of curiousity, how many of you who have posted work one or more low wage jobs?"

Survived on low-end working-class jobs from age 19 until about 25 or 26. A few brief stints after that.

[lc2]

I make less than $10/hr at my present job but live in a household where the major breadwinner makes twice that, more during overtime. But I understand that the majority of Americans make less than $13.50/hr.

[AnonE.Mouse]

Chris,I guess you missed the 'allow' and 'however marginally' in my comment.
And I'm sure that playing 'hardball' would be a PR coup for the drug companies who currently negotiate with the VA.

[chris]

anon e. mouse,

Drug companies would NOT score "hardball" tactics as a "coup".

The facts are simple, and quite the opposite of what most observers believe.

There is no assurance that the gov't can negotiate lower prices from drug companies because the gov't doesn't have the negotiating leverage in this case.

The route to lower drug prices requires some tinkering with the duration of a patent.

Currently, a patent is good for 17 years. Because R&D costs are punishing, the life of a patent must be sufficient for drug companies to recoup the outlay and earn a profit.

A rational analysis would probably show that a 12-14 year patent life would work. I'm not sure what the optimum number is, but I'm sure it's less than 17 years.

[AnonE.Mouse]

While there's no guarantee that negotiations would result in lower drug prices,there's 100% certainty that the government is prohibited from trying under the Medicare plan as it stands.
Another equally simple fact is that drug companies spend considerably more on sales and marketing than they do on either production or research and development.A rational analysis would probably show that reducing their advertising costs as well as reducing their armies of sales reps(who are well compensated to frequently deliver food and trinkets to the large emergency center where I work and no doubt thousands of other hospitals and physicians offices nationwide)would also likely lead to a reduction in drug prices.

[jm]

I'm not sure how I feel about the minimum wage debate. If I lose my current "make-do" job, I MAY have to depend on mininmum wages. But I don't think high-school students with a few spare hours should be making "adult" (LOL)wages just so they can buy the latest nano I-Pod.

And I agree, the healthcare system is in bad shape!!! There is NO way to compare actual costs from one provider to another. (I've tried it.)

And I've also been shopping around for colleges. It's a joke!

So, yes, Barbsright, I'd like to hear your plan.

[lc2]

This is one of the common assumptions about low-wage work -- that the only people who perform it are teenage mall-rats. The majority of Americans make under $13.50/hr which is almost twice the current min. wage in most states and can't begin to meet housing costs in the lowest-rent areas. I know, I know -- people need to get bikes, use crock pots, get a computer science degree, and quit whining. Yawn.

Anarcissie talks about wage inflation driving up housing and other inflation. Well, housing has increased by 85-90% in the 8 years I've lived in this area. And wages went up how much? Oh, they went down. Seems to me that every kind of inflation occurs *despite* stagnant wages, not the other way around.

I'm not going to pretend that there isn't all kinds of stupid and wasteful consumption that go on in all economic strata -- that's definitely part of the problem, as are the predatory lenders that have free reign to lure a new victim every minute. Under current lending guidelines, it's harder to get a car loan than a mortgage. We're programmed to buybuybuybuy from the cradle, and it's a rare person in America who doesn't get in over their head at least once. There's enough blame to go around, just as there're enough profits, unless you consider the Waltons' $80 billion insignificant and forget that they're the biggest employer in 26 states.

I didn't paint min. wage workers like a bunch of victims, so please don't tell me about minimum wage employers' tales of woe. You watch, they won't be going out of business in droves b'c of a min. wage hike. They'll find a way.

[Anarcissie]

lc2: "Anarcissie talks about wage inflation driving up housing and other inflation."

It's a bit more complicated than that. If you believe in the labor theory of value, as I do, at least in the case of money, then the value of money is simply the amount of labor it represents. If you make it represent less labor then its value falls.

However, if you use force, you can raise the price of something faster than the value of the labor in it. For instance, if the government restricts the number of medical practitioners, it can raise the price of medical care because of the artificial scarcity created. Or, if medical care is paid for through taxes, then the price will be whatever the ruling class dictates (or at least whatever they can put over).

Real estate is governed by a host of regulations, like zoning, which may serve to raise its price. More importantly, I think, in the last decade the federal government has been, in effect, printing money for rich people very busily. That is the result of artificially depressing interest rates; those who buy equities, collectibles, and real estate could borrow money at less than the rate of inflation. Apparently it was believed it was the only way to keep the rather dysfunctional American economy going. Of course this can't go on forever; sooner or later either it will have to be recognized that much more inflation has taken place than was admitted. Or, possibly, the prices of all those equities and real estate parcels will plummet, and we'll have a depression.

As I said previously, I don't think the minimum wage makes much difference to inflation and (un)employment. The effect of other economic forces is much greater and drowns out the small changes in the minimum wage.

[realpc]

"the value of money is simply the amount of labor it represents."

Anarcissie,

You should think again about that old theory. Some things are extremely valuable because of high demand and low supply, although they require very little labor. Some things are extremely valuable because, although they do not require many hours of labor they require highly skilled labor to create.

The value of money is determined by several complex factors. Marx was great at over-simplifying, and his ideas need to be analysed and seriously questioned.

[lc2]

Yeah, I realize it's complicated, Anarcissie, but when you're looking at a household budget it's a pretty simple matter of income vs. expenditures. And it seems to me that the costs of services continue to rise despite the fact that fewer people all the time can afford to pay for them outright on their stagnant wages. Someone wrote here once and it bears repeating: if this economy had to run on cash, it'd crash before I finish submitting this post.

My point is that as long as there are lending outfits that offer their services to anyone and everyone regardless of their credit worthiness, there will be insufficient public outcry over inflation to effect any real change. True advertisement I saw this past summer for a mortgage firm: "No income? No assets? No problem!" In many lower-income areas like decaying inner cities, homebuying has been trumpeted as the solution to high rents. So forget any community organizing to call for controls on the housing market, just give money to borrowers who'll default within years with a run of bad luck, then change the bankruptcy laws so they end up truly penniless. Does not sound like progress to me.

So it might be complicated in a macro sense, but on a household scale all I see is inflation everywhere except wages, particularly low wages. And I'm really supposed to believe that things will be _worse_ with a minimum wage hike? Try telling someone who makes $8/hr and has to buy heating oil from the same supplier as the person making $50,000/yr, that an extra $1/hr _this winter_ will only drive up prices in the long run, like next winter. If our government can't be bothered to care about trillions of dollars of debt to China, why should the average low-income earner care about the fact that ultimately prices will go up, partly because of that extra $1/hr?

[Anarcissie]

In regard to the labor theory of value, Marx did not invent it; he got it from Adam Smith, who may have gotten the idea from someone else. It does not work for individual items or persons but for commodities and large numbers of actors.

Consider that if we doubled everyone's labor-related money -- their wages, salaries, fees, savings and debts -- and allowed all other prices to float, there would be a lot of excitement for a while and then every good and service would most likely cost just about twice what it had before the change. You could see how that would happen: every item would have two times as many dollars (or whatever) bidding for it.

[Anarcissie]

lc2: "So it might be complicated in a macro sense, but on a household scale all I see is inflation everywhere except wages, particularly low wages. And I'm really supposed to believe that things will be _worse_ with a minimum wage hike?"

I don't think things will be worse for the beneficiaries of a minimum wage raise. They might be somewhat better off for a brief period. Ultimately, however, the raise is a fake. The reason real wages are stagnant is because people don't want to organize themselves into unions and workers' cooperatives. The reason they are being destructively exploited by the rich is because they don't want to organize themselves into consumers' cooperatives (among other things). Why is that? I don't really know. Compared to 100 years ago, working people today generally seem very passive. You can't fix this by having the rich pretend to help them through the government. Or maybe you can, but it hasn't worked so far.

[The Eternal Squire]

Anarcissie,

Why are people more passive?

I think there are several reasons why people are more passive today than they were last century:
1) Much longer lifespans resulting in a culture of perpetual adolescence.
2) The constant thread of thermonuclear war makes the prospect of building a legacy of wealth to appear meaningless.
3) Availability of birth control accentuates the psychological adolescence of citizens. People don't need to "grow up" because of the advent of children nearly immediately after marriage.
4) A succession of imperial presidencies leading to reckless adventures abroad eliminates the natural leaders from our gene pool.
5) The reduction of literacy as an important element of our culture. Information is bombarded at us rather than represented as something precious to be hard-won by investigation and research.

The Eternal Squire

[Anarcissie]

Maybe it's television. Although my own observations as a parent lead me to believe that television induces destructive or stupid behavior rather than lack of activity.

[stump]

If you impeach Bush you get Cheney. This is a 2+ year court clobbering fiasco that won't happen in time. Waste of time.
Better to be gracious with the power.

[Graham Strouse]

This is more like it, Barbara. You're starting to behave more like a fully armed & operational Ehrenreich.

The $7.25 minimum wage proposal is not adequate by half, IMHO, nor is the American failure to keep its hardest working citizens healthy.

Hey, is it true you helped build a nuke in three days when you were working as a food critic.

"EHRENREICH HAS THE BOMB!"

That would give the Right a moment to pause & genuflect, wouldn't it?

"Hey, Coulter, you blonde hun, liberals, well, we don't bother shooting right wring bigots who threaten to shoot us."

"We're more into...definite solutions."

"Hasta la vista...bay-bee."

[brynn]

Excellent post, Barbara! You've perfectly nailed the Democrats' fear and loathing of actual governing. I'm convinced they're much more comfortable remaining the permanent party of opposition than actually representing their constituents.

Among commenters, David R said it the best: "All of the argument over whether raising the minimum wage will or will not have a financial impact is beside the point. We should raise it because it is fair. Let's start being more concerned about people than about profits."

In the end, people use economic theories to justify, after-the-fact, their own self-serving agendas. I mean, "trickle down economics"?! Puhleese!! The fact that the mainstream media and politicians were discussing that one with straight faces illustrates how utterly fraudulent the entire field is.

[The Eternal Squire]

I agree with David R. After all, we're all supposed to be human beings, not Ferenghi.

The Eternal Squire.

[realpc]

"All of the argument over whether raising the minimum wage will or will not have a financial impact is beside the point. We should raise it because it is fair. Let's start being more concerned about people than about profits."

This doesn't make sense. The health of the economy affects everyone, including workers and the poor, not just the rich. If raising minimum wage damages the economy, it hurts workers and consumers.

Why is it so hard for progressives to understand that if something is good for business it can also be good for workers? Do you still believe in Marxist class warfare?

I don't know if minimum wage is good or bad for the economy, and economists have differing opinions. But you should not assume that if something is harmful to business it must be good for workers, and vice versa.

[brynn]

realpc,

Speaking for myself, I'm fed up with every political action being analysed first on an "economic" model, then second (if at all!) on a "moral" model. Especially when it seems obvious that the economic models are specious, self-serving speculations, rather than theories verifiable in any real scientific process.

Look at the mess the US is in after 26 (or more, depending on how you measure it) years of putting business first. I honestly don't believe that putting "people before profit," or prioritising human needs before business profits, could do worse.

[lc2]

I guess I missed something b'c I honestly thought that the argument that min. wage increases "hurt the economy" was always tolerated with rolling of the eyes and a knowing chuckle by anyone with half a brain. I really didn't think anyone took those claims seriously, since a min. wage hike is barely a blip on the radar for the larger companies (remember Wal-Mart is the biggest employer in 26 states), and has somehow, against all odds, been absorbed in the past by the mom-and-pop operations after mandated increases as well. I have never in my life read about a small business failure's being chalked up to minimum wage increases. If a company's revenues and profit are that paper-thin then a relatively small payroll hike is the least of their problems, particulary since every other competing small business is in the same boat. After all it's not as if mom-and-pop grocery on the corner can pay $5.50/hr and mom-and-pop grocery one street over is forced to ante up $7/hr.

Of course everyone expects conservatives and small business owners to passionately defend the current minimum wage but this argument should be entertained only as the self-serving baloney it is. They never have any convincing or legitimate economic arguments at their disposal besides the obvious, which is that they don't want to share the gravy. Of course it's in the employees' self-interest for the company to prosper but to my knowledge there's no indication that an increase in the min. wage hurts company profits as a whole. The profits just have a to be shared a little more than they were before. And I remember having been taught in kindergarten that sharing is a good thing.

I'm all for economic debate but it seems to me it's a waste of time and rhetoric to pretend that minimum wage employers can't afford to make these adjustments to their payroll accounts. This is a minimum wage hike, hardly some radical income re-distribution scheme that will in short order put generations-old businesses and their owners on the street.

[realpc]

It's hard to predict exactly how every small business would be affected by a 2 dollar raise in minimum wage, but small businesses are not the only concern. Raising the minimum can be harmful to workers as well. For one thing, employers would be motivated to automate the low-paying jobs if possible, and this would result in lay-offs.

Also, as Barbara pointed out, raising the minimum is actually raising all wages. The guy who makes $5 will get $7, the guy who gets $7 will get $9, and so on. This is wage inflation, which contributes to inflation in general. When businesses pay their workers more, they raise their prices, which harms consumers. Consumers are business owners, workers, and the poor -- inflation harms everyone, not just the rich.

Inflation takes money away from everyone, and devalues what you already have, making everything harder for everyone.

Raising the minimum wage might help certain workers, but it might hurt others. For example, it may become harder to get low-paying part-time work, which many retirees and students depend on.

Most minimum wage earners are not supporting families, or even themselves. Most are supplementing the family income, or their retirement pensions, as part-time workers. Raising the minimum can make it harder for them to find and keep these jobs, and their employers may shorten their hours.

Minimum wage is not the great solution you think it is. It might not harm big or small businesses very much, it might not cause severe inflation. But it's safe to say the benefits will not be greater than the damage.

Economists generally prefer the EIC as a way to help the working poor. It's a great help for people who work hard but don't have the skills to earn an adequate income. It does not penalize businesses and it does not make low-paying jobs harder to find. It's a good use of taxpayers money. The minimum wage can have unexpected adverse affects, but the EIC probably does not.

Raising the minimum wage is mainly a way for progressives to punish big business. But it really punishes everyone, especially small businesses and the minimum wage earners themselves.

[lc2]

It's simply foolish to say that "raising the minimum wage is mainly a way for progressives to punish big business." If that's the case, why did Wal-Mart itself call for a minimum wage hike just last year? Perhaps you are so steeped in the delusion that employers don't have an interest in their employees' pursuit of happiness (which includes the ability to purchase the company's products and services) and vice versa, that you fail to notice most businesses begrudgingly accept payroll increases as the cost of doing business, same as with any other operating expense. They might not like it but it's inevitable, particulary as employees gain tenure and skills and become more valuable to the company.

My spouse works for a big box retailer and it does not espouse the anti-worker rhetoric you seem to think big businesses do, nor do the employees spend their free time rallying progressives to their cause to destroy their employers.

Perhaps you are the one who needs to see beyond the lens of business vs. worker and talk to some real progressives -- or did you forget that there are real progressives who do minimum wage work? You enjoy skewering liberals' values here on this blog but in fact are woefully uninformed about the diversity of politics and lifestyles that is represented in low-wage work. I think you honestly believe that there are no liberals to be found off college campuses or people in business who want to share the wealth. Time to stop looking the world through a comic book lens of good vs. evil view and face the reality of our mutual interests as employers and employees. I realize none other than our commander-in-chief has employed this pseudo-populist argument to great success, but it's a little stale. And rings remarkably false.

Finally, to claim that a minimum wage hike "hurts" min. wage earners on any level, particularly after you just stated that they don't rely on the income in any substantial sense anyway, is laughable. People pay their monthly bills with their wages, not the EIC (which I support and don't care whether it was a conservative or progressive initiative). The EIC is used to pay off the bills that have accrued over the year (mainly medical) that don't result in repossessions/evictions and utility shut-offs. Or perhaps you'd care to locate and share the stories of some people who bank their EIC and make it last the fiscal year. Good luck!

[chris]

lc2 wrote:

"It's simply foolish to say that "raising the minimum wage is mainly a way for progressives to punish big business." If that's the case, why did Wal-Mart itself call for a minimum wage hike just last year?"

First, anyone who thinks "Big Business" employs millions of people earning minimum wage is in the dark.

McDonalds might employ a few, but in New York City, McDs pays more than minimum wage. Meanwhile, I'm pretty sure Microsoft and IBM employ almost no one earning minimum wage.

Second, as much as I like WalMart and its business model, I also know the boys from Bentonville are pretty smart.

WalMart already pays pretty much all of its employees more than minimum wage. But many of its smaller competitors do employ a meaningful number of minimum-wage earners.

Therefore, legislation that increases the operating costs of WalMart's competitors is good for WalMart.

Meanwhile, WalMart can look like one of the good guys by asking Congress to raise the minimum wage, a change that won't hurt WalMart a bit.

As I've stated before, raising the minimum wage contributes to the disappearance of low-wage jobs. ATMs replace bank tellers, gas-station customers themselves pump their own gas and submit their payments at the pump, thereby almost completely eliminating the job of gas jockey in the US.

The internet has eliminated entire stores. Amazon.com has reshaped the retail experience. Dell Computer changed computer buying.

In New York City there's a food business called Fresh Direct. It's basically an internet supermarket. No stores. Order online and Fresh Direct delivers.

We will never see the end of minimum-wage jobs, but the jobs will constantly change.

[lc2]

Sorry to break this to you, chris, but retail is the fastest growing sector of the economy. WM specifically is the largest employer in 26 states. We all know IBM and Microsoft are not min. wage employers. What does that have to do with this discussion? Do you have any data to suggest that IBM and Microsoft combined employ as many people in the U.S. as WM? Or any data to support your claim that WM pays more than min. wage? We all know they don't pay long-term employees min. wage. But is it simply a given that if someone is a relatively new hire, they don't count? Also, your point about WM's outpaying competitors is not rooted in fact. Compare WM wages to Costco and smaller chains for comparison.

You've mentioned many, many times that you once pumped gas, a monkey could do it, and so there are virtually no human gas pumpers anymore. If only all the world were so easily automated. So what about nursing home attendants? Unless you can get a robot to lift the elderly out of their beds and change their diapers, you're left with low-wage humans with strong backs. What about hotel cleaners? There might be robot vacuums but no improvement yet on hardworking humans for bathroom scrubbing duty. What about restaurant dishwashers? What about stockers at WM, who by the way do start just about everywhere outside of urban areas at min. wage? Unlike you, I am actually personally acquainted with more than a few and believe me, they are not working to make money to download itunes. But then, I guess that more or less sums up the futility of this whole thread -- no real light will be shed on this subject unless we hear from min. or low-wage workers themselves. Otherwise people are free to post ignorant assumptions about what low-wage workers do with their incomes.

[Graham Strouse]

I really think the Build-Your-Own-Nuke option is the way to go.

Sort of like the 'ol Bastille, y'know, but more, well, Americano.

Speaking of, anyone who has a chance, nuke a Starbucks. Worst $4 cup of coffee in the history of...history.

Set of lots of nukes & I think you'll find that the world will (eventually) sort itself out.

Planet Earth is pretty practical when it comes to noisome dominant species. Also, radiation is, well, bad for the short run--the next couple billion years, say. But in the long term, intense radiated energy tends to advance the cause of life on Earth.

Not our's necessarily, but life on Earth.

And it doesn't care about the minimum wage one way or the other.

[Naeva]

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