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."