Monday, July 28, 2008

Living to work; not working to live = rich economy version of poverty

Poverty may sensibly defined in the case of America's doubling every two generations per-capita GDP as: living to work instead of working to live.

Inequality triage in the American labor market should recognize that it cost the least to help those who need help the most: less than 4 percent increase in the cost of GDP output would cover a raise in the minimum wage from $5/hr to $12.50/hr -- about how much we grow every couple of years -- yielding a minimal needs (for one person) raise for 40 percent of our workforce (even Mexicans and Chinese!).

Were the American minimum wage $10/hr in 2008, could it fall to $7/hr by 2048 even as average income doubled? Very easily; as long as low wage workers remained totally ignorant of the maximum ownership (and ultimately consumers) might be willing to pay them (highest willing price gauging true utility value) -- and if they remained utterly helpless institutionally to enforce that price. Nothing remotely resembling "perfect competition" has anything to do with setting America's lower wage levels.

Dean Baker (in 18th reply on his blog post) reproduced what he called "a slightly altered table from Gordon's paper, showing income shares in 1972 and 2001" -- my percentage changes on the right.

0-20_______2.6%, _ 2.0%________- .6%__ -12.3%
20-50____ 16.0%, _ 11.7%_______ -4.3%__ -11.7%
50-80____ 33.7%, _ 27.2%_______-6.5%____ -7.4%
80-90____ 17.0%,_ 16.1%________ - .9%___ -
90-95____ 10.8%,_ 11.3%______ +_ .5% __+
95-99.0___12.2%,_ 14.8%______ +2.6% ___+ 3.1%
99.0-99.9__ 5.7%,__ 9.6%_______+3.9% ___+ 7.0%
99.9 -100__ 1.9%,__ 7.3%_______ +5.4%__ +12.4%

(see p. 84 of Gordon for similar breakdown of wage income)

4.9% loss of overall share meant 26.3% chop of 0-50 percentile share.
6.4% loss of overall share meant 14.5% chop of 50-90 percentile share.
I am adopting Bladerunner replicant leader Roy's desperate plea for America's lower 50 percentile earners: "We want more life, f____r."11:57 pm

Saturday, July 26, 2008

Higher Tech Economy Responsible For Income Shift?

If more education in a higher tech society were responsible for shifting 12.5% of income share from the bottom 90% of earners to the top 3%, then: getting a graduate degree must normally yield MANY MULTIPLES (pardon if I shout) of increased income share to each such "higher tech" earner (CEOs earning 25 times what CEOs of 25 years ago, e.g.) -- or could it possibly be lack of institutional checks and balances to protect the American labor majority's income share (suspect there are lots of graduate degrees among top 20 percentile earners) in our too unfettered free market.

My suggestion for a fairer, more "fettered" labor market: legislation to establish sector-wide labor agreements -- the surest (truly world-wide tested) approach to end American labor's unique among modern economies race to the bottom nightmare.
2:02 pm

Wednesday, July 9, 2008

Overhaul LONG Overdue: American Labor Law

I was struck recently by an economist’s observation that even the safest investing era actually brings on reckless loans because bankers feel safer – meaning that all times require the most stringent reining in of financial misbehavior.

At the same time I was reading Blustein’s 2003 book The Chastening which depicts the need to get the “electronic herd” to stop unnecessarily destabilizing economies (I would simply switch to paying interest-only when the herd runs on short-term loans as long as the debtor is otherwise pristine like Korea – instead of exorbitant bail-outs: cheaper and everybody gets what they really want; why not?).

I was also reading Greenhouse’s 2008 book The Squeeze which depicts the horrendous across the board shake down of American labor and I wondered: Why, if progressive geeks (pro and amateur) understand the need to – endlessly -- design and redesign checks and balances into the financial structures which everyone’s long term prosperity depends on; why oh why don’t they understand the equally critical need to – endlessly -- design and redesign checks and balances into the labor market which at least 90% of everyone’s day to day human existence and day in day out prosperity depend on?

The structure of the American (not European) labor market is at least 35 years overdue for a top to bottom overhaul. It could even be argued that the checks and balances built in decades ago were not that fundamentally adequate of and by themselves – but were helped along by several lucky breaks: the great compression, WWII’s restriction on higher wages leading firms to offer health and pension benefits to attract employees (unfortunately we know what private benefits are worth today), no foreign competition, all combined with decades of continuous high productivity gains (as long as everybody is making money the pressure from the top on the bottom tends to stay off in my life’s observations).

By 1973, productivity gains finally tailed off (and stayed off for 22 years) while the winners and losers post Depression and WWII had sorted themselves: the pressure was on – and by now is full on (Greenhouse’s squeeze).

I was struck recently how – in an attempt to grow prosperity in the poorest third-world economies (whose politics we know little of), progressive economists display monumental creativity, mixing dozens of interacting factors with current studies and historical perspectives –- but how – to rescue ever more underpaid labor in the world's richest economy (whose politics and common knowledge we know all about), it is impossible to get the best progressive minds to pick up off the ground and proselytize the simple, straightforward force multiplier used successfully on every continent (including French Canada, N.A.) to stave off the labor impoverishing race to the bottom: namely, sector-wide labor agreements.

There is clearly a motivational obstacle here, not an intellectual problem (the economic answer seems unbeatable). I tried a tricky run at it here: postulating that (boy) intellectuals are forever trapped “hunt-on” mode and unable to suggest changes in operation that don’t fit in with how all the other “hunters” are operating at the moment (boy synchronization instinct?). More simply (Occam’s Razor) if progressive economists were fully aware what political and social obstacles they might confront in a poor Third World culture, they might not feel free to work their equations in a perfectly abstract economic mode (which is where every analysis should begin).

If it helps (the boys) my efforts to bring the advantages of sector-wide labor agreements to the attention of Americans far and wide may have – or may eventually have – some people around the nation talking up the possibility (abstractly the idea sells itself [unless you know too much]). Here is line I just happened onto on an Obama web site which is encouraging me to redouble my efforts (email all college newspapers, fax all unions? – I’m sitting around on disability; nothing else to do): He doesn't propose a single-payer health care system or sector-wide labor agreements, making America the last to simply consider what is old everywhere else.” (By David from Las Cruces, NM - Jan 21st, 2008 at 12:21 am EST -- second “fat” paragraph from bottom).

See (American boy geeks), other people are talking about it; now, you can too (without disorganizing the "hunt”).

Monday, July 7, 2008

Suing child-prostitute patronizing using Johns: same as suing abusive teachers and priests

It occurs to me that if priests can be sued for millions for long past child sexual abuse, then, Johns who patronize child prostitutes can be sued for exactly the same amount for exactly the same crime.

Suing Johns for using child prostitutes actually occurred to me about 1985 after watching a film called “Street Wise” about throwaway homeless children in Seattle. I watched skinny strung-out kids being picked up by fat luxury cars and (I don’t know if it was the cab driver or the faux-lawyer in me, probably both) I thought: sue!

The movie had been out for a year before I was willing to watch it (don’t like upsetting stuff). The same kids had been a LIFE magazine issue a few years earlier – I guess they delayed releasing the movie until the kids grew up for whatever protection that might give them.

I phoned and wrote Louis Lee of Children of the Night in California and Greg Loken of Covenant House in New York with the idea. Louis Lee at first got some bad advice that it couldn’t be done but later wrote me that she had hooked up with the head of Loyola Law School to work on it. Greg Loken said on the first phone call: “I wish I had thought of that.” But a month later he said: “The child would never stick around; we do this.” Typical young lawyer crap: making two contradictory statements separated by a (unpronounced) semi-colon.

Don’t know how it worked out with Louis Lee. Sometimes this kind of thing works better with a couple of heavily publicized, even if ineffectual cases than with the best legal work that nobody hears about. Connecting suing child using Johns to the suing of priests might be just what it takes catch the (prurient?) interest of the media – while more strongly pointing the courts to the corner of the abused children (have an idea courts may be too forgiving of such Johns).

I don’t connect suing for sexual abuse to the kind of thing you see on MSNBC’s child predator program. I think such behavior is blown out of proportion. I think those guys should get a misdemeanor and a year in jail – and not be listed for life as sex-offenders (there are so many categories of so-called sex-offenders that it is like the boy crying wolf; you cannot sift out the so-called from the genuinely dangerous).

Child prostitutes essentially suffer criminal rape for their supper. Here, I would even go easy on Johns who patronize homosexual boys who are not homeless but, again, are essentially consensual. The massive damage done to hungry, homeless kids is incomparable to that supposedly done to consensual boys. I don’t ever count girls as consensual. A girl has to be seriously pathological to be out there selling herself.

Again, linking suing child using Johns with suing abusive priests and teachers, etc., might be just the think to bring child prostitution to a sudden end. Might be a good way to put a big dent to the kidnapping of children for prostitution in Eastern Europe – initially by holding the threat over Americans of losing their house for such behavior (lower proof standards and such travelers have to be affluent with much to lose) and eventually by holding the same civil threat over citizens of other (all?) nations as other nations get the idea of how to permanently discourage child raping Johns.

PS. 1 out of 14 priests being serial molesters of children should wise us up that such predators are targeting the priesthood – not created by the priesthood. You could not design any program, religious or otherwise, that would condition 1 out of 14 participants to become serial rapists of children.

Gay catholic males may see the priesthood as an opportunity to stay in the closet (not have to explain…), have a family (“…more sisters and brothers…”) – and if they happen to be of the “four thou shalt nots and six do the best you cans” outlook, then, after prayers they can sneak down to the Castro or Halstead or Christopher Street; this no way leads to serially raping children. Ditto for celibacy for those who cannot handle it – they just do whatever other (most?) Catholics do who cannot handle it; again, no way this leads to serial rape.

Unfortunately, the only way the Catholic priesthood may be able to guarantee no serial rapists among its numbers may be to bar homosexual prospects or at least take an extremely close look at same. This is only for the operational reason that it is extremely easy to know who is straight and who is gay (where you expect to see the big – time stops until we straighten out whose territory is whose – ego: in males or in females). I’m no pro but I sense that detecting the serial rapists must not very clear cut or they would have been screened long ago.

Tuesday, July 1, 2008

Richly Taxing the Rich: the Only Way Back to COMPLETE Fairness?

Heavily taxing the rich may be the last step back to 1973's fairer distribution of income in the twenty-first century -- at least until gradually downsized expectations take over the minds of linebackers, CEOs and news anchors -- a twenty-first century minimum wage could be the first step, twenty-first century style reunionization (legislated sector-wide labor agreements) the in-between.

A couple of years back, I figured that jumping the minimum wage from $5.15/hr to $12.50/hr (the latter being all of 25% above LBJ's 1968 minimum wage, adjusted -- 100% increase in average income later) would add less than 4% to the cost of GDP output -- shifting about the same percentage of overall income to the bottom 40 percent of incomes via increased prices for what they produce ($12.50/hr being the 40 percentile wage).

This 4% would be shifted from those who had kept up better if not completely with average income growth over the past 35 years (40 percentile up to 90 percentile incomes -- see chart derived from Robert Gordon below) as well as from those who did better than average growth through that period (top 10 percentile incomes).

Hopefully, 40 through 90 percentile earners could compensate for the proportion of the 4% shifted away from their pockets -- absolutely, if not relatively -- either, through up pressure from the higher minimum wage, or better yet, due to long overdue reunionization of America -- the near 40 percentile making out better percentage wise from the overall upward shifts than the near 90 percentile.

Ultimately, the bottom 90 percentile of incomes would like to use inflation to finish shifting the missing 12.4% of their incomes back from the top 2-3 percentile incomes (90-96 percentile incomes mostly kept even pace with growth since 1973). But alas, 12.4% higher prices for consumer goods and services wont much shrink the 2500% bloated incomes of linebackers, CEOs and news anchors -- 2500% more than what similarly situated folks earned in the same professions 25-35 years ago.

In my non-professional -- hopefully ball park -- way I would be willing to raise the maximum income tax rate to 75% for incomes above $300,000 and to 90% for incomes above $1,000,000 -- if only until top wages began to fall back in line with the distribution patterns of 35 years ago -- if that is the only way to squeeze the last of the toothpaste back into the top of the tube.

But, I just read in Counterpunch an interview with former Wall Street economist Michael Hudson in which he explains how the rich avoid top income tax levels by putting all their eggs into rent seeking baskets, how in 2005 the US created 227,000 NEW millionaires (almost one for every thousand Americas -- in one year!), how America's millionaires now own $30 trillion dollars worth of equity which allows them to keep and live in their own separate economy. So tax may still be needed for the final leveler, but it may take some intelligent structural changes to taxing wealth to accomplish that goal (don't worry folks; economics really ain't rocket science).

In the long run, if the 2500% bloated incomes of the few are a result of the systemic squeezing of the incomes of many-- a result of American labor's, unique in all the First World, collective inattention to the need to bargain collectively -- then, restoration of bargaining balance in the American labor market is the most fundamental path to restoring that 12.4% to the 90%.

Karl Marx identified what American labor needed, when he was a correspondent for a stateside paper: he said America did not need socialism because we had labor unions. Problem with progressive American economists (and all group/hunter-mentality males?) is that: the more desperately we need to do things differently -- like going the modern route of sector-wide labor agreements -- the less likely it is that capable progressives will ever broach the concept in the national conversation precisely because the subject is so unspoken they fear it impractical (for now -- a now that lasts forever) to be the first to bring it up. Meanwhile, 90% of Americans in the unbalanced labor market go on losing the race to the bottom.


Dean Baker (in 18th comment on his blog post) reproduced what he called "a slightly altered table from Gordon's paper, showing income shares in 1972 and 2001" -- my percentage changes on the right.

0-20_______2.6%, _ 2.0%________- .6%__ -12.3%
20-50____ 16.0%, _ 11.7%_______ -4.3%__ -11.7%
50-80____ 33.7%, _ 27.2%_______-6.5%____ -7.4%
80-90____ 17.0%,_ 16.1%________ - .9%___ -
90-95____ 10.8%,_ 11.3%______ +_ .5% __+
95-99.0___12.2%,_ 14.8%______ +2.6% ___+ 3.1%
99.0-99.9__ 5.7%,__ 9.6%_______+3.9% ___+ 7.0%
99.9 -100__ 1.9%,__ 7.3%_______ +5.4%__ +12.4%

4.9% loss of overall share meant 26.3% cut of 0-50 percentile share.
6.4% loss of overall share meant 14.5% cut of 50-90 percentile.

(see p. 84 of Gordon for similar breakdown of wage share)