Buddy, Can You Spare A Bit Of Time?

Once America built a fair economy, made it run, run on a fair and square dime;
Once America built a share and share alike economy, now its gone;
Buddy, can you spare a just a bit of time?

On a 60 minute clock, bottom 20 percentile incomes would represent 1 minute and 20 seconds. Bottom 50 percentile incomes take up all of 8 minutes and 20 seconds. All of which may clear up the mystery of how doubling (!) today's missing-in-action minimum wage could pass potentially unnoticed by those who got neither a minimum ware nor a push up hike. Doubling the minimum wage would shift all of 4.5% income share (3% of GDP cost: about how much the economy grows every few years) to 35% of wage earners -- which would be represented by all of 2 minutes and 45 seconds on an hour clock -- compare to the 20 minutes taken up by top 5 percentile incomes (up from 12 minutes in 1973).

Why Jews behaving badly? For a "Good" reason?

This morning I had a revelation of a sort -- ur, not from an angel; but from my own thimble brain – as to why Jews may be behaving so badly in the occupied territories. As a devout Catholic I assume that Israel finally getting back together has something to do with Divine Providence -- so what explains the "chosen people" coming on like "Israel, Israel, Uber Alles?"

I finally figured out that God is allowing Israelis to descend into committing every worst sin (no holocaust on their victims – isn't that what the nuclear weapons are for – we’ll see) so that they will ultimately be humbled, once they come to their senses and understand what they havoc they have wrought, primarily on their Palestinian next-door neighbors. Thus Jews will realize that being chosen doesn't make them such big shots – even as God brings them back together geographically. God is big on humility -- especially for those who hang around close with Him.

If I may drone on a little further on the same theme: Saint Augustine, the greatest Catholic thinker had an actual angel type revelation before his end leading him to say that all he had written was so much straw (his words). Why did God reveal such to him and not the rest of us? Because we did not need to know such but he did -- to keep his "greatest thinker" self humble.

To legislatively (re)impose a fair and balanced labor market:

To (re)impose a fair and balanced labor market:

First, double the minimum wage to $13/hr over three years (a dollar every six months?) – and – legally guarantee inflation adjustments for incomes under $100,000.

Add 72.5% to the $7.25/hr minimum wage would give approaching 40% of American labor a (still) measly 12.50/hr) – accompanied by an only (easily computed) 2% inflation.

Next, legislatively introduce French-Canadian style (lite) sector-wide labor agreements to the US labor market (airline and supermarket employees would kill for sector-wide contracts) – and – legally mandate union certification and re-certification elections (every four years?) at every work place (periodic re-certification could clean up the most common objections to unions: entrenched, complacent or even corrupt leaderships). direct price increases plus perhaps (?) 3% more after other wages are pushed up – a minimum wage-force multiplier.

Top 10 percentile incomes enjoy 40 percent of the take these days (up from 27.5% in 1973) – plenty of headroom there for the mid 50-90 percentile to rake back more missing share points through higher labor prices – a collective bargaining-force multiplier.

Finally: as the torrent of dollars defying gravity stops pouring towards the top, the "indispensables" (CEOs, ballplayers, news anchors) will have that much less gravy to scoop up -- and (at least temporarily?) hike marginal tax rates (75% over $500,000, $1,000,000?). Folks earning 2500% more than folks doing the same work 25-35 years ago will not return all the way to earth through 12.5-25% price increases – erode their force multiplier.

America’s lower 90 percentile earners never think to impose legislative hegemony to recoup the 12.5% income share they lost to top 3 percentile since 1973 – their unemployed force multiplier.

****************************************

For a follow up discussion of the foregoing see this pose on Angry Bear:

http://angrybear.blogspot.com/2008/09/thoughts-on-labor-day-things-to-do.html

Why -- The Perpetual Sliding -- 75 Year Social Security Balance?

What in the world is with the 75 year Social Security balance?

If you want to keep the FICA rate the same for 75 years you could set it in the middle of what you think it will be half way through that span and it will generate a surplus which you would spend on on-budget items for the first half of that span and drop government owned bonds into the "balance" kitty. Then for the second half you would make up the retirement short fall with income tax by "cashing" government owned bonds from the kitty.

Then what; the world ends?

No; this system is to be kept in place forever. Leading us to forever raise the "mid-term" rate -- leading to forever paying for a portion on-budget items with regressively raised FICA funds and never "cashing" the government owned bonds in the kitty (I'm not completely sure why FICA is not progressive in the first place, but I'm not that smart).

I (think) I am just beginning to understand this.

In the case of Medicare and Medicaid balances: as future pay out projections climb exponentially with the projected exponential future rise of medical care costs, are we supposed to exponentially raise the "mid-term" rate on today's taxpayer who will neither enjoy the benefit of the future medical miracles nor has the benefit of future multiplied incomes (if not multiplied nearly as fast as medical costs) with which to pay for tomorrows higher costs.

Do I have this all wrong?

Posted by: Denis Drew | August 24, 2008 at 03:40 PM

Mexicos (Africa, Asia and South America) v. Goliath?

Maybe the reason Mexican industry will never take off the way China's has and the way India's wants to is because the Mexican economy exists in too close proximity to the US eoconomy for tariff protection to be able to protect its nascent industries -- while they slowly worked themselves into shape to compete with the best in the world.

Indian motorcyle manufacturers are certainly not producing Harley's but high tarrifs are able to protect them from competition with Harleys and Hondas until they someday become world competitive (which they surely wish to become so they can get really rich in the global market).

But, how can tariffs protect Mexican manufacturing from American competition? Any American product any Mexican wants, he can just buy in Texas and transport across the border. If it isn't drugs or guns, nobody will even ask.

I just read in Ha-Joo Chang's 2008 book Bad Samaratins that neo-liberal have wrecked the growth prospects of many developing economies around the globe by insisting on breaking down their trade protection barriers before their infant industries are capable of competing with the outside world. Do neo-liberals really want to make the developing economies into a world of Mexicos?

Fourth Amendment v. Vehicle Tracking Technology

When I was driving a cab in San Francisco I refused to fill out the trip sheet recording pickup and destination on the constitutional theory that if everybody took a cab everyday, the government could not force us to keep track of where everybody goes...
...figuring that was the killer argument -- in truth I was just too lazy but figured the killer argument would perfectly defend me if I ever got ticketed ("drop it because if you lose with me, you will lose with everybody").

I even wrote to the city council about this, explaining that if I pick somebody up in front of any business they did not wish to be associated with (gay nightclub for the closeted, etc.) and dropped them off in front of their suburban home, and the police had access to that info (since GPS started tracking cab movements that info is permanently preserved on computer), such persons might fear to complain about police or anybody the police worked for.

Councilman (Supervisor) Tom Ammiano actually emailed me back to call him on the phone about it but by that time I was back in Chicago.

Given the ease with which modern equipment sucks in pictures, plates and GPS recordings the only way to protect Fourth Amendment privacy may be to require a judge's order (a warrant) for any police look at so much as a taxi trip sheet. You might even need to place vehicle plate tracking under private auspices -- alarming readouts that might betray terrorist activity (whatever that might be) to be drawn to police attention when circumstances indicated.

Abuse of close relationship with private entities would surely be invited but at an orders of magnitude lesser scale than that invited when police have unchecked access. That way police would also face some kind of penalty if caught taking advantage. With human nature all you can do is keep abuse to a minimum.

I'm normally no big lefty on surveillance. I usually have the attitude towards illegal wiretaps of Mafia and drug dealers that took place in the 60s and 70s that nobody ever died of a little illegal surveillance; but, wholesale info on all citizen movements should definitely not be available at will to the government.

Posted by: Denis Drew | Link to comment | August 21, 2008 at 06:29 AM

Israel's Occupied Territories W/O People -- For A People W/O Territory?

Lately I have been equating the intransigence of the fanatic settlers more and more with 1960s Alabama Gov. George Wallace standing in the doorway, personally blocking the integration of a university -- and have been thinking that the amount of determination it took to overcome segregation in the American south is what it is going to take to clear every last settler out of the West Bank.

It has to come to that (unless somebody can come up with a deal for a lot of rent -- no kidding).

It has to come to that for the safety of the nation of two-thirds of all living Jews (at least at one time): the USA. It has to come to that as long as our 51st state is capable of starting a war with the rest of the world without consulting the rest of us -- which is why we are missing a couple of buildings in downtown NYC.

It's not just the looks like a duck, etc. thing; Israel's religion is the religion of America's Christians, even if not the other way around. No question about it; when the settlers dispossess Palestinians they are doing it under our flag (and with our high tech weapons).

If you want to imagine how hot under the collar the Palestinians' (craziest, terrorist) supporters around the Islamic world get when the "state" of Israel moves in next door -- just imagine how hot illegal settlers get when forced out and multiply by ten because the Palestinians are on the victim side of the law!

Posted by: Denis Drew | August 19, 2008 at 11:02 PM

MULTIPLIER EFFECT for labor of minimum wage or union bargaining wage hikes…

A MULTIPLIER EFFECT of minimum wage or union bargaining wage hikes may exist for labor…

…when labor costs are a minority component product price. Since the labor costs of even the highest labor use business, fast food, are but one-third, this multiplier can apply to virtually every labor negotiation -- or minimum wage raise:

If doubling today's $6.55/hr minimum wage (with inflation adjustments guaranteed for incomes under $100,000) hikes the price of a Big Mac from $3 to $4, then – as long as the restaurant barely stays in business – labor has the bargaining potential to double it’s pay at the cost of only a few, high turnover jobs.

Would a 33% price jump for minimum wage made products deduct from overall demand? The Mac purchaser has one dollar less to spend on other things, but some Mac worker somewhere has one dollar more to spend on anything. The direct economic effect is the loss of business to the Mac buyer's fav brands and the gain of business to the Mac maker's fav brands.

Direct inflation from doubling today’s $6.55/hr minimum wage can be reasonably computed at about 3%. Other wages pushed up, to make an un-educated guess, could add another 3% inflation for an overall rise of 6%.

$13/hr being roughly today’s 35 percentile American wage (wont have exact figures until the new State of Working America book comes out), it is safe to estimate that American workers up to the 45-50 percentile wage range could be in for, on the average, a whopping 50% wage boost from a doubling of the minimum wage (counting push ups) while typically adding only 6% to the price of what they produce -- which "multiplier effect" should make any, at worst, smallish unemployment effect -- lower income boost could plausibly boost demand for lower income made products -- easily tolerable in their sights.

Would diverting dollars from a better paid (and probably more skilled) consumers' pockets to low skilled workers' pockets warp labor market incentives in the direction of lower encouragement for training and education?

First, 6% higher prices yielding 50% of the labor force an – on average -- 50% pay boost should make any -- at worst marginal -- pay/education trade off look more than appealing to all.

Second, the highest price consumers are willing to pay -- not the lowest "fire sale" price -- should mark the true utility of labor (or anything else for sale): 6% allowing 50% to earn 50% more with minimal or very plausibly no loss of employment suggests that lower 50 percentile labor's price is extremely warped in the negative direction now (in America's virtually unfettered labor market).

Besides, people by and large are mostly incentivized to get -- or not get -- educated by their own internal compasses – higher income folks, to whom most of the burden of the 6% inflation would (hopefully) be passed along, mostly on the "to get" side.

Best of all, lifting 50% or more of our workforce out of grinding, living-to-work existences would incentivize -- as well as make financially doable for -- much greater numbers to seek education and training that most could not have dreamed of while surviving and not much more, paycheck to paycheck: the genuine ghetto buster.

Neo-liberals (fans of unfettered markets) must see Hitler everywhere

The market is not so much a mechanism as it is a vast collection of interactions among self-interested players (the history of a market is the history of a ball to steal a line from Wellington).

Progressives (fans of regulated markets) blame the most undesirable outcomes of markets on players who behave according to pure self-interest – as opposed to at least a necessary and sufficient level of altruism. What describes the bribe taker, a slumlord, and the pickpocket? Neo-liberals (fans of unfettered markets) attribute the all-efficiency producing outcome of markets to purely selfish motives; ergo, neo-liberals must expect to expect to find pure Hitler outlooks everwhere.

LINKS -- 8/16/08

Best Ever Graph Illustrating "Great Wage Depression"
(A.K.A., "Race To The Bottom")

Best Ever Graph Collection Illustrating Same As Above
(Caveat On Family Quintile Graph In First Comment)

Finally: PROOF one late payment does not a higher credit risk make

Finally: PROOF that one late credit card payment does not a significantly higher credit risk make, justifying credit card companies to jump interest rates from 2-5% all the way to 20-25% for one flub -- and maybe not just on card that was late.

Just how much does one late credit card payment lower your credit in the eyes of regular credit agencies, like Experian, etc? Ten points; five; none? Would the card companies wish the credit rating agencies to drop the bottom out of everyone’s credit score who make one late payment – for the purpose of weighing the worthiness of future applicants they know nothing about?

We all know the answer.

Congress should write a law restricting credit card companies to raising your interest rates only in some coherent scheme compatible with what well established credit rating agencies estimate of your credit worthiness still is. That would adequately cover the legitimate interests of both creditor and debtor – with no crocodile tears about over-protection diminishing the credit opportunities of new or risky debtors.

How Much Added Inflaion NECESSARY to reset income share?

Broad and deep progressive thinker, Thomas Palley, surprisingly seems not to have calculated any specific path at all to escape what I call America's "Great Wage Depression (1973-2008") when he wrote: “…since inflation involves conflict over income distribution, there remains an unsolved policy challenge of how to fairly distribute income at full employment without triggering inflation.”

How can we possibly redistribute the 12.4% of income share that has migrated from the pockets of the bottom 90 percentile of earners to those of the top 3-4 percentile earners, over the past three decades and a half, without adding at least 12.4% price inflation to regular inflation – or even more due to round-robin adjustments as the bottom 90 percentile sort and re-sort their relative shares (shifting income in the same way that inflation shifts wealth from creditors to debtors – and deflation vice-versa)?

The use of inflation to reset overall income share becomes immediately obvious once you begin to work through the most critical steps needed to produce that result: minimum wage doubling (with mandatory inflation adjustments below $100,000/yr?) and sector-wide labor agreements.

The share shift follow up to minimum wage doubling can come only from American labor seriously upgrading its bargaining muscle via modernized labor laws and probably, at least a temporary hefty marginal tax hike. Top 10 percentile incomes now eat up 40 percent of overall income (up from 27.5%, 40 years ago), so there is plenty of buying power in the purses of top 10 percentile folks from which inflation bleed back can recapture bottom 90 percentile income share.

Given that top incomes climb exponentially the bleed-chain (if you will) may be able to extend and restore a good way. Ultimately though, folks now earning 25X more than folks who did similar work 25 years ago are not likely to lose back most of that 2500% gain through 12.4%-25% price inflation (the latter number allowing for some round-robin inflation). An at least a temporary marginal tax hike might need to be thrown in to sufficiently douse decades of overbuilt compensation expectations at the top.

The Fed would need be to brought on board, to understand that this is one-time price inflation regime deliberately calculated to reset 35 years of wage deflation. I just read on p. 150 of Chang’s Bad Samaritans: “…even many neo-liberal economists admit that, below 10% inflation does not seem to have any adverse effect on economic growth.” If necessary, a recession can be induced when it is all over to reduce built-in inflationary expectations – a small price to pay for ending 35 years of wage depression.

What worries me most is that if deep thinking, labor oriented Palley has not thought through some kind of simple concrete steps to a fair economy, then probably, most of the other top progressive thinkers never do either. Maybe it is the seeming impossibility of any immediate income reset while in the grasp of a mentally retarded Washington administration that is choking their imaginations.

I am sure that the top progressive thinkers would eagerly support both minimum wage doubling (w/inflation guarantees?) and sector-wide labor agreements (French-Canadian "lite") as practical paths from living-to-work to working-to-live for the underpaid majority if the two happened to be current big political footballs. Someone ought to tell top progressive thinkers that unless they get real busy and inform the world of the possibilities of what (I take for granted) would be their two most promising programs, that the two (three: temp higher tax?) may never become big political footballs.

http://www.guardian.co.uk/commentisfree/2008/jun/18/useconomicgrowth.economy
Best ever income re-mix graph: http://delong.typepad.com/delongslides/2008/08/income-gains-19.html

Nuclear Leaves Wind Power in the Dust?

clipped from http://tomroeser.com/

[T. Boone Pickens} tells us we now import almost 70% of our oil…that is costing us $700 billion a year, $7 trillion over the next ten years…World oil production has peaked at 85 million barrels a day while demand is still growing. Output may never go up again.” Sounds good but here comes the very simplistic part:

“We now produce 22% of our electricity with natural gas. I want to replace that 22% with wind energy and move the natural gas over to the transport sector where compressed natural gas can replace oil. That will lower our oil imports by 38%. The federal government says it’s possible. It’s right here in this study--`20% Wind Energy by 2030’ put out by the Department of Energy…”

The question I have is this: why isn’t he supporting nuclear power? Well, he tells us he is not happy about uranium supplies and costs. But he’s spending $10 billion on his 4,000 megawatt wind farm about the same as it would cost to build 4,000 MW of nuclear capacity. But when you bring windmills online it will mean building a entirely new cross-country transmission system,; transmitting electricity across the country or even halfway will mean we invest in a totally new infrastructure of 765 k V liknes to cover long distances without losing power. 8/12/2008

60's Liberal "hubris"???

What is it that made Vietnam "hubris", but not Korea -- same casualty to population ratio -- and in 1950 Russia and China were flat on their backs; while by 1965 their common threat was at high tide (only 20 years after the two little countries that almost took over the world could not bite the two big countries off)?

LBJ's war on poverty wasn't "hubris" just because it did not reach effectively into the ghetto. Even though labor got a much better (relative) deak in the 60s (at half today's average income) that would not do you any good if you could not go downtown and get a job because of color -- which is exactly what LBJ (and MLK and the movement) was bringing to an end with the civil rights acts.

Further I would not say LBJ's era was about hope and idealism (was for some of course). Compared to FDR's emergency era where everybody was up in arms for the president to do something, LBJ's era was much more one of complacency. As everybody who was around then knows, all those acts that JFK couldn't push through Congress LBJ pushed through with his bribery/blackmail/cajolery/whatever-it-took steamroller (what Hillary was referring to when she was mistakenly blamed for dissing King) -- the most powerful Senate majority leader of all time at the age of 36 now had the presidency at his disposal.

But as my brother so eloquently put it: "When the blacks finally got on the up [economic] escalator, it started going down for everybody." Black people got to go to work just as work started to pay less and less. The minimum wage eventually dropped from LBJ's $9.90/hr to 2007's $5.35/hr (2008 dollars -- at double the average income).

The latter reflected what LBJ and nobody else could contemplate: that American labor bargaining power was about to drop to zero -- that the checks and balances were about to disappear. If American labor had Europe's awareness of the need to defend itself in the free market (and knowledge of the easy modality: sector-wide labor agreements), nobody black or white would be talking about where liberalism went wrong today.

Posted by: Denis Drew | Link to comment | August 13, 2008 at 07:09 AM

LINKS -- 8/12/08

Putin Had To Respond [?] -- Gorbachev

Should Mandatory Inflation Raises Accompany A Hefty Minimum Wage Hike?

If we mandate inflation raises for incomes up to $100,000 to accompany a hefty minimum wage raise we could reassure minimum wage skeptics that the higher minimum will not cause a drop in demand. Raising the federal minimum wage two dollars a year for the next three years in a row (a dollar every six months?) should add only about 3% [*] to the cost of GDP output (and to direct inflation) -- causing perhaps 6% overall inflation when other wages pushed up are factored in.

Would we really be looking for something for nothing here (a "minimum wage multiplier"!)? [**] Not exactly. Top 3 percentile incomes have seen 12.4% of overall income shift out of the pockets of below 90 percentile incomes and into their own, since 1973. 3 through 10 percentile incomes about kept even in overall income share over the same decades. Doubling the minimum wage -- with inflation guarantees -- would just be the first link in a chain of downward shifts of income share that could eventually pull all that lost 12.4% back from whence it came.

The share shift follow up to minimum wage doubling can come only from American labor seriously upgrading its bargaining muscle via modernized labor laws and probably, at least a temporary hefty marginal tax hike. Top 10 percentile incomes now eat up 40 percent of overall income (up from 27.5%, 40 years ago), so there is plenty of buying power in the purses of top 10 percentile folks from which inflation bleed back can recapture bottom 90 percentile income share.

Given that top incomes climb exponentially the bleed-chain (if you will) may be able to extend and restore a good way up. Ultimately though, folks now earning 25X more than folks who did similar work 25 years ago are not likely to lose back most of that 2500% gain through 12.4%-25% price inflation (the latter number allowing for some round-robin inflation). An at least a temporary marginal tax hike might need to be thrown in to sufficiently douse decades of overbuilt compensation expectations at the top.

On a 60 minute clock, bottom 20 percentile incomes represent 1 minute and 20 seconds; bottom 50 percentile incomes add up to 8 minutes and 20 seconds. All of which may clear up the mystery of how doubling (!) today's missing-in-action minimum wage could pass potentially unnoticed by those who got neither a minimum ware nor a push up hike. Doubling the minimum wage would shift all of 4.5% income share (3% of GDP cost: about how much the economy grows every few years) to 35% of wage earners -- which would be represented by all of 2 minutes and 45 seconds on an hour clock -- compares piteously to the 20 minutes representing top 5 percentile incomes (up from 12 minutes in 1973).

Buddy, can you spare a few minutes?

My personal breakthrough on unfettered v. regulated free market theory?

What the central planner is unable to do -- at all -- is duplicate the zillions to the zillionth power different rational decisions that need to efficiently operate a market. What the central planner (in the broadest, most general sense of the term) is able to do -- very efficiently -- is to interfere with or substitute any individual decisions that he can be personally aware of -- like deciding what the minimum price per hour of labor should be.

What any one of the millions of individual decision makers are not usually doing -- at all -- is seeking an outcome that the overall consensus of millions of decision makers would see as useful.

Fans of the unfettered free market believe its outcomes are perfectly proportional and that interfering with it is inherently inefficient. Actually, whether 80% of the profit of a fast food enterprise goes to labor and 20% to ownership -- or vice-versa -- has no direct effect on the consumer at all -- only affects what the profit will ultimately buy: perhaps better educated because better paid labor or perhaps more business investment because more profitable; both of which are within the realm of reasonable predictability to central planners.

Ditto for labor upping the price of a burger through minimum wage hike (or collective bargaining) to the highest price consumers are willing to pay (even it means selling fewer burgers for more labor profit per burger). "Natural" utility, if you will, should be seen as the highest price a product or service can command, not the lowest.

If a piece of land is sold at a fire-sale price because the owner is destitute and on the verge of starvation, that price probably wont fully reflect the utility the land might have to the purchaser. Unorganized labor is often in the same fire-sale position, since necessity may force it to accept whatever price will barely sustain it. There is nothing "naturally" efficient about sale of anything below the price which reflects its full utility to the purchaser. (There is something very naturally inefficient about keeping people too poor to reach the natural potential of their personal talents.)

First bites into the animal, anyway...

LINKS -- 8/04/08

Palestinians Face Home Demolitions Spree by Israel
By Jonathan Cook

Why We May Never Need to Build Another Power Plant
by Joseph Romm

Israeli Strip Searches -- letting AP in on the secret
Alison Weir

What's Driving the Jerusalem Attacks
by Uri Avnery

Ramos-Compean blogspot
from Official http://www.usbc.org/nuhome.html Website

Federal courts since border guards' case: the new criminals-can-do-no-wrong club?

Ramos and Compean were charged with violating the civil rights of a suspect based on a 1985 Supreme Court ruling that a fleeing suspect may not be shot unless the suspect presents a danger to the officer. (Tennessee v. Garner, 471 US 1, 1985).

Given their conviction by the testimony of a fleeing drug dealer who had already done violence one officer and could be virtually presumed armed delivering a giant load of drugs (the violence against the officer was enough in the real world to warn both officers that this was no illegal seeking honest work): no police officer in the nation may now defend themselves against a fleeing suspect believed to have an gun in their hand – not just on their person – even if same has already attacked a fellow officer on the spot, even if presumably in fear of a decades-long sentence if captured.

It may only be a matter of time before an officer is killed holding fire thinking of the fate of Ramos and Compean or before another officer is put at hazard in a similarly misbegotten prosecution following the example of this one: further driving home that officers would be better off hanging back anytime a potentially armed suspect is fleeing.

The situation faced by Ramos and Compean are faced by officers every day – except perhaps for the unusually high number of threatening factors in the border guards’ case.