Wednesday, February 3, 2016

Re: "The costs of inequality: When a fair shake isn’t" by Alivin Powell

Re: “Inequality, it’s not just about wealth, it’s about power. It isn’t just that somebody has some yachts, it’s the effect on democracy. For me, the big issue is the power problem. … I think we’re in a really scary place.”
— Marshall Ganz

We can trace poor education in ghetto schools down to low pay in the low skill (entry level, e.g., retail clerk) job market. We can trace crime (especially homicides -- e.g., Chicago's daily shoot-em-ups) down low pay in the low skill job market.

Berkeley professor Martín Sánchez-Jankowski learned that ghetto schools don't work because students (and teachers!) didn't see anything remunerative enough waiting for them in the job market to make any extra effort -- while spending nine years on the streets of five poverty stricken neighborhoods in NYC and LA.

100,000 out of my guesstimate 200,000 Chicago, gang-age minority males are in street gangs. My assumption -- based on my and my fellow co-workers parallel experience (below)-- because the kind of jobs easily available pay about half a grown man minimally needs to earn to live like an adult (even with another adult): only about $400 a week.

Noto Bene: Back when Lydon Johnson was president -- and per capita income was only half of today's ($15,000 v. $30,000) the federal minimum wage was $440 a week! !!!

My old (especially "old" -- I'm 71) Chicago taxi drivers "gang" used to make about twice what I guess these guys make today. That was before the fare dropped off 50 cents a mile, while 40% more cabs were added, opened unlimited limos and build subways to both airports. Unlike the former lease system (60/40 split) ALL the fare shortfall now comes out of the drivers' ends.

The money is obviously there for the drivers -- it was there before. $15 an hour is there (without waiting 5 years to sneak up on it) for high labor costs businesses like fast food (uniquely 33%). $20 an hour should be there for 10-15% labor costs businesses. Was before in supermarkets -- before Walmart two-tiered their contracts. Is definitely there for very high skilled regional airline pilots who are making $500 a week hoping to move up to the "big time" while living on food stamps!

The money is there because the consumer has it (two generations after the minimum wage was $11 -- something about economic growth) and is willing to pay it. But, the only way employees can test consumers' willingness to pay (other than a minimum wage at the very bottom) is collective bargaining with the employer (with one eye on how far to push the consumer -- just like when you set the minimum wage).

There's not even that much money involved: about 5% of income shift will pay for $15 min wage -- maybe 10% (pure guess) to get most low skill jobs more in the range of $20 (collective bargaining will keep a sharp eye on the consumer here). Remember, per capita income typically grows 20% over 10 years -- along with the free gifts of technology -- so the consumer will get it back. That is, if the top 1% stops bleeding off all the growth; high labor density (AND ONLY HIGH LABOR DENSITY!) will take care of that -- by hook or by crook.

At one time we had high union density and everything worked fine. The legal mechanism even then didn't say too much more than that if management stole it had to give some of the money back -- meaning if they fired organizers and joiners they had to re-hire. As such labor union law as sort of on the honor system, but because of social consensus it somehow worked ...

... which consensus has long since disappeared and taken the whole nation's economic and political health down system with it.

Union busting is much more pernicious than labor union racketeering. Racketeering only bleeds some of what you've got. Busting steals it all (including your political sinews) before you get it -- but busting is done by the upstanding natural leaders of the community, so we just don't seem to catch on.

To approach perfect competition the monopsony condition of the labor market (one buyer) must be balanced off by the monopoly of a labor union (one seller) -- only way for half the means of production (the labor half) to test the willingness of the (ultimate) consumer to pay.

Management can claim there are many monopsonists in the labor market (therefore many buyers) but that just prevents on super monopsonist from paying computer programmers as much (as little) as burger flippers. That sets up what we have in the US -- what I call a subsistence-plus labor market where labor's price is set according to what it has to offer compared to other labor -- rather than what the consumer market is willing to pay.

The perfectly competitive market is exactly what labor needs -- as long as you know exactly what a perfectly competitive labor market really means.

Any other form of market warping and muscling is quite rightly heavily penalized (try to take a movie in the movies and tell them you were only kidding -- see you in a couple of years). Forget Congressional help for now. Progressive states are beginning to understand that they can set their own labor standards that add but not subtract (federal preemption) from federal law (just as with local minimum wages).

To restore American economic and political health, progressive states can make union busting a felony -- automatically invoking RICO for persistent abusers (which can deter "playing at" union busting -- 33 states have their own RICO statutes).

In Maryland for just one instance Democrats have a 33-17 edge in the State Senate and a 91-50 edge in the House. WA, OR, CA, IL, NY, anybody listening?

Tuesday, February 2, 2016

Collective bargaining is closer to perfect competition

Collective bargaining moves closer to the definition of "perfect competition" -- for whatever that's worth.

Jimmy Hoffa would say that labor owned half the means of production -- the labor half -- and that short of a law requiring labor, ownership and the (ultimate) consumer to get together to set all product prices (an impractical way to sell candy bars), that collective bargaining is the only way to keep labor in the price setting game.

I know the dictionary definition of "perfect competition."  I don't know if economists (or some economists and not others) think that any deviation from such results in lower efficiency.  Seems to me that unblanced market power just rearranges distribution of the "lump of product."  No matter.

What I want to load on the balance in favor of labor union practicality is that, by definition, unions bring the market closer to perfect competition -- by balancing the monopoly power of labor -- one seller (ask any conservative if a labor union is a monopoly) -- against the monopsony power of ownership -- one buyer.

Ownership could counter that there are many "one buyers" in today's labor market.  Which surely moves the market closer to perfect competition than the extreme of one big buyer hiring all labor: which might allow ownership to pay computer programmers the same as burger flippers.  What multiple monopsonists do create (what we do have in the US today) is a subsistence-plus market wherein labor's price is set by subsistence (if that much) plus how ever much more labor is worth compared to other labor -- working up a skill increment ladder -- rather than paying labor by however much the ultimate consumer might have been willing to shell out.

If another definition of perfect competion/efficiency might be the balancing of market satisfactions/dissatisfactions all around -- as is achieved when labor/owner/(ultimate) buyer get together to make a deal -- then collective bargaining is the only known way to achieve that kind of balance. 

US labor market monopsony hits the lower skill labor market three-ways hard: the customary race-to-the-bottom price problem, aggravated by the infinite supply of interchangeable employees, which employees have to sell today or "throw away" (maybe miss meals).  

A subsistence-plus labor market ultimately distorts output in favor of which employees may be manhandled the most/least.  Collective bargaining more structures an economy to produce in accordance with pure consumer preference.

Tuesday, January 26, 2016

My Southern Bronx strategy to down Bloomberg

My Southern Bronx strategy to down a Bloomberg candidacy -- one picture is worth a thousand words (two even better):

My art-deco high school -- opened 1941

Picture when still operating of Bronx County Court House -- opened 1939 -- a ten minute walk north from Cardinal Hayes
Both remain in pristine condition, today. 
In 1977, in response to the national crime wave, the Bronx was forced to open a new $120 million (2016 dollars) courthouse down the hill to catch the overflow.

In 2004, long after the crime wave had diminished 75%, Mayor Bloomberg opened a new $500 million courthouse across the street from the old-new one -- closing down both beautiful courthouses -- nobody knows why.  Giving the Bronx two more derelict structures -- just what we needed.

Bloomberg perpetrated the same financial folly in Brooklyn in the same year to the tune of $750 million.  Don't have personal knowledge of Brooklyn courthouse(s) that existed but I never spotted any dilapidated structures passing through Brooklyn civic center (just the other side of the Brooklyn Bridge).

Before posting the new-new courthouse pictures I should throw in my eighth-grade math take on Bloomberg's stop-and-frisk circus.  Stops went up 7X under Bloomberg -- again -- after crime had subsided 4X = 28 times as many stops per reported crimes.  Thought this funny: if it is a thousand to one that a cop has justification to stop one kid on the way to school, it must be a million to one against two together, a billion, etc. etc. -- but it would be the same four, five kids together over and over again.

The old and old-old Bronx courthouses are probably being put to some use by now -- don't know; been gone from the Bronx a long time.

Imagine the Donald (not my favorite person) at debate comparing his building billions of dollars of commercially viable buildings in New York to Mike wasting billions duplicating perfectly functional courthouses.

Friday, January 15, 2016

Re: Is Vast Inequality Necessary?, Paul Krugman, JAN. 15, 2016

If the question is whether cutting rewards at the top will cut incentives for the most able to produce -- here is the final MOTIVATIONAL answer; look no further. The power of incentives are RELATIVE not ABSOLUTE -- in the way human nature works.

Relative, that is, to what we PERCEIVE to be the maximum capability of the economy (of our time and place) to reward us -- for our skill set.

Lately, I've been explaining why two sets of gangs -- Chicago street gangs which have something like half (100,000!) of our young, minority males and my old American born taxi driver gang -- refuse to work at jobs available: because the pay may be half of what they (we) are willing to work for (in our time and place). While we (our two gangs) might enthusiastically have been willing work for HALF OF THAT PAY -- in 1915 (100 years ago) if we perceived that that was the maximum (there's that word) that that much less productive economy was capable of rewarding us with, then.

Ditto for CEOs, QBs and TV anchors who now make 20X what their fellows made two generations ago even though US per capita income only doubled since.
* * * * * *
Meantime (back in the ghetto) the federal minimum wage is almost $4 an hour below what it was in 1968 -- er, uh, double the per capita income since. I personally see $800 a week as the norm for most low skill work (at firms like supermarkets with 10-15% labor costs) -- with the very minimum wage at $600 (for firms like fast food with 33% labor costs).

The beauty of collective bargaining is that we know we have extracted the maximum that the (ultimate) consumer (not the boss) is willing to fork over.

Unless I'm mistaken, labor racketeering does much less harm to the worker than outright union busting. Why is the later subject to no market warping felony? Especially since the latter makes any other form of democratic governance impossible.

Friday, January 8, 2016

Low union density = secular stagnation (and a host of other ills)

What is the core economic difference between Germany and it’s’ economic dynamism — and — the US and our (secular?) stagnation?

Union density. Anybody offer a more important — or even any another — core difference?

Leaving other macro angles aside -- wouldn’t abandoning the vast majority of economic actors in a theoretical economy trapped in unopposed monopsony (one buyer: the employer --  unopposed by one seller: a collective bargaining unit) be expected to result in economic stagnation? Couple the inevitable demand log jam at the top (actors who cannot spend it as fast as they make it) — with — debilitated personal lives (tens of millions) at the bottom (sub-par education, health, job networks, etc., etc. — paired with much economic drag on everybody else trying to partially remedy the symptoms) and what else could be expected of our imaginary economy.

The universal union busting that leaves our (the US’s) working majority in an inescapable monopsony black hole happens to be ipso facto against the laws — both state and federal. So when are Americans simply going to attach felony penalties instead of no penalties to breaking what should be our most important economic empowering and politically enabling laws on our books?

What other form of market muscling is left completely unsanctioned? What other form of market muscling is not treated as a felony? Every form of market muscling except the most important one.

Almost forgot to mention -- for those not in the know (I didn't used to be) -- federal labor law preemption means individual states cannot subtract but they may add. In Maryland for just one instance Democrats have a 33-17 edge in the State Senate and a 91-50 edge in the House. WA, OR, CA, IL, NY, anybody listening?

Tuesday, January 5, 2016

Re: The Closed Marketplace of Economic Ideas - Federico Fubi

 " ... you might wonder what to make of Robert Lucas’s view that rational expectations enable perfectly calculating “agents” to maximize economic utility."

Not totally on topic but, the rational expectations thing triggers this response from me: Economists as a whole (including too many progressives?) fail to appreciate what can truly be likened (explanation below) to a "black hole" of monopsony that the vast majority of American "economic agents" (a.k.a., employees) are (doubly) sucked into, unable to escape.

A black holes works on a vicious circle of increasing mass which in turn increases gravitational acceleration which in turn increases mass -- it all starts when a neutron star creates gravitational acceleration at a fraction of the speed of light that is able to increases its mass.

Simpler labor market explanation: one buyer (an employer) unopposed by one monopoly (a collective bargaining unit) pays subsistence-plus wages: subsistence plus an increment or increments more depending on added increments of value to be gained from labor -- to be sold as cheaply as possible to the (ultimate) consumer. Unorganized labor for its part cannot escape whatever such wage scale employers lay out without LITERALLY starving to death. Wheels within wheels of monopsony.

To round out the picture: the check on the balance of monopoly v. monopsony should be the (ultimate) consumer of the mutually produced product. First balance off the power to trap and hold labor (which accounts for the vast majority of "economic agents") -- then rational expectations theory might better represent reality.

Saturday, January 2, 2016

Hell for minimum wage "opo researchers"?


I’ve been thinking that minimum wage advocates should launch a national challenge to minimum wage opposition researchers (e.g., Richard Neumark) — daring them to admit that minimum wage hikes very well may (actually) cost job losses in the middle income range.

As I theorize, some money spent on (diverted to) higher prices for low income produced products would have been spent on middle income produced products — had not the minimum wage risen. This is based on the assumption that people in different income ranges tend to spend somewhat disproportionately for products produced by employees in their own income range.

Allow me to cite: from a 1/ll/14, NYT article “The Vicious Circle of Income Inequality” by Professor Robert H. Frank of Cornell:
“… higher incomes of top earners have been shifting consumer demand in favor of goods whose value stems from the talents of other top earners. … as the rich get richer, the talented people they patronize get richer, too. Their spending, in turn, increases the incomes of other elite practitioners, and so on.”

The fun is: if we can get minimum wage “opo researchers” to admit that min wage increases very possibly mean money and jobs are lost to middle income earners, they are forced to admit min wage increase must help low income earners overall. Our position is unassailable (in public debate credibility) because it admits (is based upon!) admitted job loses caused by higher min wage.

What a hell for “opos”?!    :-0

Tuesday, December 8, 2015



LATEST:  It's the labor market, stupid (that's us) -- AND the psychology

Forget monetary and/or fiscal policy — it’s the labor-market policy, stupid (to borrow a familiar phrase from somewhere).

As long as ownership monopsony unopposed by labor union monopoly is able to mercilessly squeeze wages and benefits down …

… squeezing what is squeezed to the top who cannot spend it as fast as we shovel it to them — THINK $100,000,000 QBs, $20,000,000 CEOs, ETC., ACTUALLY REDUCING DEMAND …

… squeezing so much out of the bottom that too many (very many) lives become less well educated, less healthy, LESS PRODUCTIVE, or even so dysfunctional we have to spend heavy on police and jailers to chase some around ...

... or squeezing so much out of wages of former middle class jobs that people end up on the bottom because they refuse to work AT ALL for “chump change” wages: think me, American born former taxi driver (okay I’m too old now — but I wouldn’t if I could) who won’t work for $500 a week (if they do that well today) for a job that used to pay $800 a week for 60 grueling hours.
 * * * * * *
This last takes a little development. Today’s Chicago gang bangers would gladly labor for the equivalent of $200 a week -- in 1915. Because, that would have been all the less productive economy of that era could have paid them. Today’s 100,000 Chicago gang bangers (out of my guesstimate 200,000 Chicago gang age, minority males) wont work for $400 a week for jobs that today’s economy should be able to pay $600 to $800 a week for (e.g., super market clerk).

At my old Teamsters Union local 804 (Gimble’s furniture warehouse) we spent half the day breathing hard and wet with sweat for $800 a week — in 1970; when per capita income was 66% of today’s level. Today’s 804 UPS drivers do $1200 a week, “breathing hard” — the market still demands a lot from them but they at least can demand commensurate pay -- commensurate in 2015.

The beauty of collective bargaining -- much the better if under-girded by centralized bargaining to keep the balance between monopsony and monopoly fair --  is that it informs you that you have squeezed out the last penny the ultimate consumer is willing to pay — so you have that natural incentive to give your work all you’ve got.

A lot of it seems to be the psychology too, stupid (just to use a familiar phrase :-] — see snake head) especially on the dysfunctional side of town.
 * * * * * *
Until the American labor market is rescued from it’s pathological union-free condition there will be no change in direction from the gradual descent into more demand stagnation and greater human dysfunction -- and of course progressive political corrosion for the disempowered majority).

Easy-to-rescue: just start in most progressive states, moving to less progressive states of the union, treating labor market muscling and manipulation as seriously as we sanction every other form of unfair market warping: MAKE UNION BUSTING A STATE FELONY, backed by RICO prosecution for persistent abuse.  Could it be easier?

The laws are already in place; the issues presumably long settled; the laws are curiously missing one thing: dentures. :-)

It’s really just a matter of freedom, isn't it — free to chose to collectively bargain? 

Wednesday, November 25, 2015

Taxe hikes on highest incomes -- cover tax cuts on middle incomes -- to cover labor prices increases of lower incomes

A $15 minimum raise hike is more likely to close down jobs in the mid wage category than in the low wage. A hike probably means money will move from the mid incomes to the low incomes because low wage produced goods were probably under priced -- in the sense that the (ultimate) consumer of their production would probably been willing to pay more all along (not "marked to market" due to monopsony).

Think of the 65% of McDonald's customers coming through the drive thru (and maybe half the walk in traffic parked).

Consumers have a definite tendency to purchase more of goods produced by employees at their own wage level. Ergo, when income flows overall from the mid to the low -- the newly flush low may spend a bit disproportionately among themselves. Thus, some mid wage firms may lose business as previously expected sales money goes south and may be forced to lay off workers.

Easy way to make the loss from mid to low as painless as possible: what I call hybrid redistribution via tax hikes for the (really) tops with matching tax cuts for the mids.

I am thinking (just to throw something out) 90% taxes on all income over $2 million dollars. Maybe 50% over $650,000 (the entry to the top 1%?).

I believe that people will enthusiastically work for $200 a week if that is the best their economic place and time can pay for that kind of labor -- while the very same people will not work for $400 a week if their era could and should be paying $800 for that kind.

I'm thinking grossly underpaid Chicago retail clerks (could be $800 a week -- instead of $400 -- marked to market via collective bargaining) which I say explains why Chicago gangs now include an intolerable 100,000 out of my guesstimate 200,000 gang-age, minority males. I'm also thinking long gone American born taxi drivers like myself who wont work 60 grueling hours for today's $500 a week (did for $800). I'm thinking family raising-age adults who no longer show up for two-tier (thanks to Walmart) contract supermarket work.

Come to think of it, back in 1970, $800 a week was the contract my Teamsters Union local 804 had at Gimble's furniture warehouse in Long Island City (Ron Carey local president).  We spent half the day breathing hard and wet (not just beads) with sweat.  Nobody had to watch us.  US per capita income was $18,000 back then -- $30,000 now.  804's UPS drivers now (only figure I know): $1200 a week.

Today's- time and place US CEOs, professional athletes (who basically just possess feral animal level skills), TV news anchors and movie stars earn 20 times what their 50s and 60s predecessors did -- they can certainly pay similarly high tax rates (though not from as low a starting point -- double per capita income later). They will work just as hard once they get used to the new (hybrid) redistribution regime representing the most anybody like them can squeeze out of their era.

Tuesday, November 24, 2015

Milton Friedman backs no unions - or all unions!?

Milton Friedman said (in 1980) that unions added 14% to the wages of their members but reduced wages 4% for everybody else. He might have added that unions raise the wages of employees in similar non-unionized firms by threat of expanding unionization -- which of course results in even more union (informally) empowered employees squeezing everybody else.

Going by Uncle Milty, we either need no unions at all or all unions. The (virtual) effect of the latter can be achieved by centralized bargaining (everybody working similar jobs under one contract with all firms) --  practiced in such “inefficient” economies as Germany (which manufactures eight times as many motor vehicles per capita as the US) -- and practiced all over continental Europe and all over the world from French Canada to Argentina to Indonesia.

Bernie rarely shouts about unions. Why is it that upper middle class progressives lose sight of the main counterweight, the average person’s economic and political mainspring: labor unions?

What are we prepared to do?

How about an all out effort to make union busting a felony -- starting with the most progressive states? Not only is unfairly strangling the labor market the most economically -- and socially -- damaging species of market warping -- but firing folks who want to collectively bargain is the most pernicious way of achieving this most pernicious result.

The legislation can be sold as a simple matter of freedom: once folks in an old fashioned union Hell states see freedom-to-bargain in a nearby healthy labor market states (last poll I saw said 50% wanted to join a union) they will wake up and ask why they cannot enjoy the same non-loaded-against-them labor market for themselves.

Thursday, November 12, 2015

High union density = balanced satisfaction for labor, owner and consumer -- almost by definition

Labor is almost by definition able to reach a subjectively satisfactory wage level by collectively bargaining with ownership and of course with the ultimate arbiter of price, the consumer. Almost by definition because all three gravitate to similar satisfactory/unsatisfactory human emotional results – not ideal by their lights, but similar enough to other participants’.

High union density was how the “Great Compression” ran this kind of relative satisfaction regime sort of on autopilot in the late 40s, the 50s and 60s in the US (if you were white).

Relative satisfaction regime almost by definition disappears when the labor market reverts to what I call subsistence-plus wages, in which labor is paid subsistence plus whatever extra it just barely takes to procure additional increments of skill and/or effort from it – instead of paid the max the consumer is willing to up.

One (partially made up) example of relative expectations: in the 50s, $500 a week would have kept American born cab drivers satisfied for their grueling 60 hour work week – and on the job. By the late 70s, early 80s the needed incentive had become $750 (I can attest).

Minimum wage example (why don’t we see peak to peak comparisons instead of trough to peak?): in 1968, $11 an hour was satisfactory at half today’s per capita income. The US wasn’t yet flooded with SUVs, up-to-date kitchens and $4000 a month two-bed room apartments for the top 10% (what’s an up-to-date kitchen?). See many American born fast food workers lately (as in decades)?

Today, 100,000 out of my guesstimate 200,000 Chicago, gang-age males are in drug dealing street gangs. Getting the minimum wage up to $15 and the median wage (via collective bargaining) up to $20 – would in total add something like an average $10,000 a year to 500,000 Chicago low wages (by extremely rough guesstimate, but puts the multipliers in place), adding all of $5 billion to the cost of Chicago’s $170 billion (figuring 1% of national) economic output.

Clean up Chicago street gangs by making an offense that is not even a ticket now into a big felony (persistent abuses triggering RICO prosecutions) …

… by making union busting a felony (like every other form of market gouging) and allow, by then (at last!), unfettered-labor to do its best in the truly unfettered market. If nothing else it should be a question of freedom – people should simply be free to collectively bargain with their employer (and inherently with the consumer) if they please – that’s a form of economic satisfaction in itself.

Monday, November 9, 2015

Despair, American style ? -- ask Jimmy Hoffa :-)

Paul Krugman:  "At this point you probably expect me to offer a solution. But while universal health care, higher minimum wages, aid to education, and so on would do a lot to help Americans in trouble, I’m not sure whether they’re enough to cure existential despair."  

Unionized and (therefore shall we say) politicized: you are in control of your narrative -- win or lose. Can it get any more hopeful than that? And you will probably win.

Winning being defined as labor eeking out equally emotionally satisfying/dissatisfying market results -- equal that is with the satisfaction of ownership and the consumer. That's what happens when all three interface in the market -- labor interfacing indirectly through collective bargaining.

(Labor's monopoly neutralizes ownership's monopsony -- the consumers' willingness to pay providing the checks and balances on labor's monopoly.)

If you feel you've done well relative to the standards of your own economic era you will feel you've done well subjectively.

For instance, my generation of (American born) cab drivers earned about $750 for a 60 hour (grueling) work week up to the early 80s. With multiples strip-offs I won't detail here (will on request -- diff for diff cities) that has been reduced to about $500 a week I believe (at best I suspect!) and that is just not enough to get guys like me out there for that grueling work.

Let's take the minimum wage comparison from peak-to-peak instead of from trough-to-peak: $11 and hour in 1968 -- at half today's per capita income (economic output) -- to $7.25 today. How many American born workers are going to show up for $7.25 in the day of SUVs and "up-to-date kitchens" all around us. $8.75 was perfectly enticing for Americans working in 1956 ($8.75 thanks to the "Master of the Senate"). The recent raise to $10 is not good enough for Chicago's 100,000 gang members (out of my estimate 200,000 gang age minority males). Can hustle that much on the street w/o the subjective feeling of wage slavery.

Ditto middle class hiring results for two-tier supermarket contracts after Walmart undercut the unions.

Centralized bargaining is the gold standard: only thing that fends off Walmart type contract muscling. Done that way since 1966 with the Teamsters Union's National Master Freight Agreement; the long practiced law or custom from continental Europe to French Canada to Argentina to Indonesia.

It occurred to me this morning that if the quintessential example of centralized bargaining Germany has 25% or our population and produces 200% as many vehicles as we do, meaning Germans produces 8X as many vehicles per capita!

And thoroughly union organized Germans feel very much in control of the narrative of their lives.


Very rough figures: half a million Chicago employees may make less than $800 a week -- almost everybody should earn $800 ...

... putative minimum wage? -- might allow some slippage in high labor businesses like fast food restaurants; 33% labor costs! -- sort of like the Teamsters will allow exceptions when needed from the Nation Master Freight Agreement if you open up your books, they need your working business too, consumer ultimately sets limits.

Average raise of $200 a week -- $10,000 a year equals $5 billion shift in income -- out of a $170 billion Chicago GDP (1% of national) -- not too shabby to bring an end to gang wars and Despair American Style.

Merely make union busting a felony like every other form of unfair market muscling (even taking a movie in the movies). The body of laws are there -- the issues presumably settled -- the enforcement just needs "dentures."

Saturday, October 31, 2015

Only way to clear multi-cultural American market (especially labor market): high union density

Re:  Check Your Economic Bias  --  Noah Smith

" ... some measure of welfare will lead [some] economists to oppose redistribution taxation, which makes the economy somewhat less efficient ... "

Does any rearranging economic flows make the economy less efficient or productive: even adding or subtracting rentiers and monopolists -- or just rearrange the same overall distribution?  The perfectly free market people may be right that, if left alone, the market will achieve max efficiency and productivity.  Ideology blinds them to the same eff and prod reached under almost any market configuration, e.g., no unions, half unions, all unions (equivalent of all co-ops).  Unless some human factor intervenes, e.g., the rich slow down the velocity of spending, the poor are much less productive because ill educated, etc.

" ... how much taxes discourage work ... "

Low pay (in relation to the productivity of the era) can discourage work.  I'm too old now (71) but you wouldn't find me (American born ) driving a taxi today -- as I did for 28 years in NYC, Chi and SF.  Used to make some thing like $12 an hour in Chicago, more like $18 in SF in 2004. 

Would guess they make more like $8 now in Chicago only because I cannot imagine them working for less (but don't quite see how they make that with 40% more cabs, meter 50 cents a mile lower than when I started in 1981, since when the city put on trains to both airports and unlimited limos.  SF doubled number of cabs since I left in 2004. 

In Chi new supermarket employees are much more likely below child raising age since Walmart forced two-tier contracts.

In Chi 100,000 out of I guesstimate 200,000 gang-age, minority males are in street gangs.

In 1956 folks were very happy to work for a minimum wage of $8.75 an hour because the overall productivity of their society (40% today's) led them to feel they were doing relatively well.  Ditto for 1968's $11 an hour.

Did anybody see the movie Bye, Bye Braverman (1968)?  View a bunch of upper-middle class Manhattanites.  Their small apartments would make most people today feel very constricted.  They never heard of an "up to date" kitchen.  They didn't know the difference.

Market configuration and clearing conclusion: If you have no to almost no unions (also possible with half unions but politics might ameliorate much of the clearing gap then) -- and -- you have  two segments of the work force with very different ideas about what makes at least minimally satisfactory employment  (economist call that a reserve wage I think) then you can have a huge dropout of people looking for work.

Bottom line: in a two-tier expectations workforce -- if the consumer is not being tested by labor (via collective bargaining -- especially centralized bargaining) to discover the max said consumer will pay -- if instead labor is paid according to what I call subsistence-plus (want a little more; pay a little more); according only to how much labor is worth in reference to other labor: a big drop out from the workforce is likely to happen  ...

... with all the attendant loss of efficiency (including police chasing people around) and productivity.

Upshot to all this: the only way to clear the labor market (or just the market) in a multi-cultural, endlessly inundated with immigrants labor market like America's is to reach very high union density (Continental European-like).  Testing the consumer's willingness to pay to the max across the board, everywhere much shrinks the range of income from top to bottom.  It is thus in America the only market oriented answer to so-called "inequality" -- I prefer "Great Wage Depression". 

Tuesday, October 20, 2015

Is market structure a zero-sum game?

I'm working up a concept to take all the umph out of the unregulated market fetish: the concept recognizes that which particular way markets are structured (e.g., union/non-union) can be just a zero-sum game -- as far as overall output results.  And that is even assuming that a more equitably power-balanced market is not for NON-MATHEMATICAL (social reality) reasons actually much more productive (and healthy).

Leaving us perfectly free to structure markets with the greatest good for the greatest number in mind.

In a high union density (or a high co-op, that is employee owned) market consumers will pay more for less goods from firm "A" -- causing some of firm "A"employees to lose jobs; and because consumers who continued to patronize firm "A" in spite of higher prices now have less money to spend over at firm "B", some employees will be laid of fat firm "B" also.  If the employees of "A" now hide their new pay raises under their mattresses that will be the end of the economic effects.

But I'm guessing that the employees of firm "A" will have a propensity to spend their new incomes at firms "X", "Y" and "Z" and don't forget "B" and don't forget even "A" -- making jobs for the formerly laid off employees of "A" and "B."  And the prepetual motion dollars just keep going round and round -- as long as they keep circulating among people with the same (middle class?) propensity to spend. 

I would plead that the more prices are set on the maximum the consumer is willing to pay labor -- and less on the Iron Law of labor -- the more equitably production will be shared around.  It is more like consumer preferences v. consumer preferences doing the market clearing.

Of course, in the real world if you squeeze too much income to the top, then, you will IMMEDIATELY (as opposed to the LONG RUN; we'll get to that) slow down the economy unless the most of the beneficiaries of the squeezing have the propensity to spend of Larry Ellison.  Sort of like QE doesn't work well if the banks don't lend all that liquidity the Fed is forcing down their throats.

The long run is the real story -- even if more equal distribution meant less efficiency; even if not a zero-sum game.  

Just as import substitution, etc. by underdeveloped economies would lower world output on ONE DAY -- but -- AFTER a couple of decades of hiding behind tariffs, etc. the now more productive economy will raise overall world output ...

... even if more equal distribution made our domestic economy less productive on ONE DAY -- after a couple of decades of better education, better food, better lives for the previously poorly paid employees the economy will be more productive overall (but it really is a zero-sum game) -- and life will be better all around (e.g., much more crime free).

That's what I'm working up.