Offer to switch public employee pensions to inflation adjusted -- but with much smaller payout

Just an idea off the top of my head:
State employee pensions unlike federal pensions are usually (never?) adjusted for inflation as the years run on -- meaning 20 years out they may not be worth very much; 40 years out forget it (NYC police and fire for instance retire after 20 years, often in early 40s). Suppose localities and states offered retirees the option to switch to inflation adjusted pensions but with a much lower pay outs now.

This could head off the looming public employee pension crisis. Then the push could be on -- plenty of time -- for all pensions, not just government employees, to become the responsibility of the federal government just like in Europe. Just an idea to play with.
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As far as SS future is concerned -- even if in this economically totally illiterate country nobody knows the eighth grade math of SS -- average income doubles at twice the rate of population, meaning that 80 years out when average income has quadrupled and population has doubled our GDP will be pushing $120,000 TRILLION a (as in each and every) YEAR. So much for that $63 trillion or $75 trillion or whatever latest scare figure Republicans bandy about.

The SS trust bonds get cashed with tax money -- income tax -- instead of payroll tax. It's something like the "death tax" the Republicans are always railing about: be you alive or be you dead the IRS has to take just so much bread -- either way.

The real problem is as with everything else is with our incredibly squeezing American labor market. I made $25,000 in 1968 adjusted for inflation. My SS payout is supposed to calculate that $25,000 as if it had grown along with average wages. Since average income (not wages, but per capita income) doubled over that time I expected my 1968 income to count as $50,000 when calculating my benefit. Instead it counted only as $33,000. The wages of the people who pay the FICA tax -- what the adjustment is geared to -- on their entire income (under $100,000) only creeped up even while per capita doubled. From what I can find out that horrible trend is assumed into all the future calculation you hear about.

If America had the kind of legally mandated unionization that exists anywhere in the world where the average person gets their share of the economic pie and political power -- both of which don't exist anywhere they don't have this system -- SS at this point in time would be flooded with money. The system is called S-E-C-T-O-R W-I-D-E labor agreements.

SPONTANEOUS COMBUSTION RECOVERY?

First, get stupid Republican pet tricks out of the way. Recessions here and in Europe's second-rank economies (Ireland, Spain, Portugal) were caused by giving bankers more money than they could responsibly lend (Greece does everything crazy, not just banking). On an individual level a banker knows he is not going to bust the economy all by himself so why miss out on the millions in fees until bubble is bursts? The Republican answer to the bust is of course more tax cuts for the rich to flood the bankers -- and as little regulation of banker behavior as possible.

And don't forget to cut spending and raise taxes to choke the sinking economy. In every time and place inflation is what ends housing gluts and affiliated recessions by cutting prices painlessly (subjectively), bringing demand back in balance with supply. Inflation caused by deficits this year even somewhat ameliorates the long hanging deficit over the years. Zero inflation or deflation can mean a housing glut forever -- ask Japan. So much for stupid economic tricks.

When if and to ever America's Great Recession ends, our Great Wage Depression will carry on like nothing ever happened. Average income should double again over the next 40 years -- will the median wage grow only 20% again while the top tier -- linebackers, TV anchors and CEOs -- become as rich as Saudi princes (presumably the minimum wage wont drop in half in real terms as between 1968 and early 2007 -- it is a dollar below 1956 now!).

There are two kinds of labor markets in the OECD world: the kind that produce adequate political and economic strength for most people and the kind that do not. Wherever legally mandated, sector wide labor agreements are the rule the average person gets what they need because they rule. Where they are not the rule the average person is ruined politically and economically.

Socialism (Republican pet trick)? Keep in mind that sector wide agreements were introduced in Europe after World War II -- actually requiring Europe's welfare state to compensate for sector-wide's original purpose -- which was to keep labor's prices down – so Europe's industrialists could rebuild after the war. Guess what? What avoids the race to the top also prevents the race to the bottom (politically and economically). Again, every modern economy in which the average person does well, sector-wide bargaining is the rule; in everyplace it is not the rule the average person is lost.

In Japan the super secure half of the labor force pays for it with 60 hour work weeks. I got the impression the other half lives more like our illegals from the book "Japan, the System that Soured." Australia which has an odd judicial labor pricing system has seen union membership drop from 40% to 20% over the past 25 years. http://www.amazon.com/Japan-System-That-Soured-Japanese/dp/0765603101

I read in David McWilliams' (Ireland’s amazing popularizer) fabulous book – and elsewhere* – that inflation is what cures all housing bubbles at all times and in all places. Shifting back 15% of income to the "lower" 90% (some mess!) could possibly by my cab driver pure guess cause 30% inflation over X number of years as labor prices bump each other up. http://www.amazon.com/Follow-Money-David-Mcwilliams/dp/0717148076/ref=sr_1_1?ie=UTF8&s=books&qid=1309103892&sr=1-1
* http://www.amazon.com/Bust-Greece-Sovereign-Crisis-Bloomberg/dp/047097611X/ref=sr_1_1?ie=UTF8&s=books&qid=1309104028&sr=1-1

Doubling the minimum wage to $15/hr – giving half the American workforce a raise! – would add less than 3% inflation directly – easily computed. (Half the work force) 70 million X $3.25 average raise X 2000 hours + 7 million at or below the minimum (2009) X $3.25 X 2000 hours = $500.5 billion -- out of a $14 trillion (economy)/$500.5 billion = 2.8% direct inflation. * http://www.bls.gov/cps/minwage2009tbls.htm [This link timing out as I post this.]

50% of our workforce wants to unionize. Supermarket and airline workers would kill for sector-wide agreements. Sector-wide labor contracts seem to be the magic bullet that not only avoids the race to the top (as originally intended) but also ends the race to the bottom (politically and economically) = the perfect labor market -- there seems no other answer. When are our progressive economists going to start talking sector-wide bargaining up?


Best video by Robert Reich (a lawyer): http://www.youtube.com/watch?v=JTzMqm2TwgE&feature=player_embedded
Best article by Harold Myerson (a journalist): http://www.washingtonpost.com/opinions/using-german-ingenuity-to-fix-our-economy/2011/06/14/AGdRJVWH_story.html
Best book by Thomas Geoghegan (a lawyer): http://www.amazon.com/Were-You-Born-Wrong-Continent/dp/159558403X/ref=sr_1_1?ie=UTF8&qid=1309099936&sr=8-1
Check out video version of the book "Coming Collapse of the Middle Class" by Elizabeth Warren (a lawyer): http://economistsview.typepad.com/economistsview/2008/04/the-coming-coll.html


Income Share
Dean Baker (in 18th reply on his blog post -- most important info for America -- only accidentally ran into it years ago!) 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.
Don't forget more family members working more hours for more years still ended in chops.
* http://faculty-web.at.northwestern.edu/economics/gordon/BPEA_Meetingdraft_Complete_051118.pdf

Law enforcement's growing "doctrine of indifference" to sexual privacy?

http://www.youtube.com/watch?v=f7wLEbjnG3Q&feature=related

Could this officer pictured in this short video legally grope his own son in this manner – were there some safe, effective alternative like a wand (so much for the innocuous sounding judicial words “over outer clothing”)? You can also find an object as big as a gun pressing an object instead of your hand.

Why may a TSA employee grope all over your son in the same manner without even any individual cause? Could we constitutionally force 24 million Americans drivers a year to insert a sobriety meter into their mouth (better than genitally groped!) even if that would save 600 lives on the highways, the passenger load of two 747s? And we may be losing 50 lives a month on the highways over people avoiding too much to take airport groping and naked scanning.

Underwear bombers (least dangerous by volume anyway) will certainly try something else. Terrorists already on American soil favor giant truck type bombs – much more satisfying to their mania than a few ounces of explosive maybe only blowing out a window.

http://www.youtube.com/watch?v=YLpOcEtsElI&feature=player_embedded

Could this remote viewer (at 45 seconds) legally watch his own pubescent daughter’s naked scan -- just to be playful at the repair office? Could we constitutionally put 800 million American drivers a year through naked scanning to save 600 lives on the highway (no practical example)?

And why does security grope every square inch of your body if the scanner spot something in one pocket (take it out; go back through)? Even in the widely reported Castle Rock courthouse (should be horror) story (is no one shocked?) – where the pictured remote viewer also has a TV monitor possibly to view folks to be scanned (is he watching old movies?) and where male officers apparently frisk female visitors intimately every day – the male court officer may have only fingered over the left rear pocket of the mother with two small boys to discover the paper backing of a sticker. http://www.ajc.com/news/nation-world/full-body-scanners-popping-752566.html

The official TSA rule is, once a woman enters the security zone she may not leave without being frisked even if only male agents are available (continuing occurrence at small airports): $11,000 fine. They won't actually do that (hopefully). They will actually force her to choose between being grossly violated or not getting on the plane. This is the equivalent of taking a violent beating or not getting on the plane – not a legitimate choice.

We never got flying cars. We did get flying buses. Genitally groping tens of millions of Americans every year and strip searching three quarters of a billion to protect two buses – which probably won't be attacked anyway; if so will now be attacked some other way – turns the Fourth Amendment into toilet paper.

If you touch my wife I should be able to get you arrested:
http://www.youtube.com/watch?v=3NI7JEA4iK4
Leg and breast frisk 1st minute -- released 10th minute:
http://www.youtube.com/watch?v=8RxH1CnYhd8

Could these police officers legally frisk their minor daughters --- whom they presumably have dominion over -- for the sake of literally millions-to-one danger (see eighth-grade math, next paragraph) – or to make a reasonable/probable cause search if a 5 minute ride (or much longer) could reach a female searcher?

If 10% more police officers got killed every year transporting rear cuffed, strapped down behind a locked cage females fingering for every last tiny taped on razor blade, etc, – that would be 7 more out of 700,000 male LEOs. Tell your daughter you may finger grope her legs and in between and the bottom of her breasts because this one chance 100,000 she might hurt you – or don't tell mine. Couldn’t hurt you hermetically sealed in into cage in any way. Still frightened; bring a wand to work.

Police "cadets" at play (presumably over 18), at 2:00 :
http://www.youtube.com/watch?v=W1-dcSUDPE8&NR=1

Somewhere along the line American law enforcement across the board – not just the TSA – has developed a "doctrine of indifference" to the worst from of personal intrusion, unwelcome groping of females by males – and now at the TSA all day unwanted groping of males by gay acting males*. The interests of the state are not being balanced against popping open a glove compartment here. If it's a sick crime on the bus it's a sicker crime on the job where law enforcement itself is compelling you without the most compelling immediate danger. Until untamed government groping is cleaned out at every level, state and federal, I for one will not feel like a free American again. * http://www.youtube.com/watch?v=LkRPS0pSScQ

LATE LEGAL EQUATION: EVERYBODY SHOULD AGREE THAT IF A POLICE OFFICER PULLED A CAR OVER TO SEARCH WITHOUT REAL JUSTIFICATION, JUST OUT OF BOREDOM (EVERYONE MAY HAVE DONE IT) THAT IF HE FRISKS A WOMAN LIKE A MAN HE IS BREAKING THE SAME FELONY LAW THAT ANYONE ELSE WOULD BE BREAKING FRISKING HER -- EVEN THOUGH IS PLAINLY JUST PLAYING COP, NOT COPPING A FEEL. DITTO FOR ANY MALE FRISKING A FEMALE WITHOUT A GENUINELY COMPELLING MOTIVE --- NOT JUST PIPE "OFFICER SAFETY" WHEN THERE ISN'T A CHANCE A MILLION (SEE ABOVE) THAT HE WILL BE HARMED BRINGING HER TO THE POLICE STATION FOR A FEMALE TO FINISH THE JOB FRISKING LEGS AND LIFTING BREASTS. DITTO FOR TERRY STOPS. GUNS CAN BE DISCOVERED WITHOUT EVEN USING HANDS -- PROBABLE TAPED ON RAZOR BLADES MAY BE CHECKED FOR AT THE STATION. I DON'T SEE HOW ANYONE CAN ARGUE WITH THIS.

WE ARE NOT TALKING ILLEGALLY POPPING OPEN A GLOVE COMPARTMENT, CONSTITUTIONAL PRIVACY -- WE ARE TALKING A MAN GROPING A WOMAN'S SEXUAL AREAS WITHOUT TRUE NEED, RAPE WITHOUT PENETRATION.

Remedy for American Crime: no-lead gas, abortion or rebalancing our labor market?

My comment to Angry Bear post "Get the Lead Out II" at http://www.angrybearblog.com/2011/05/get-lead-out-ii.html#comments:


For those of you who have not spent enough time in New York's slums and other badlands (Times Square was the a**hole of the world in early '70s) here are the origins of crime -- which led paint or abortion may or or may not add to or subtract from -- where it begins.

Five esoteric things in a row on juvenile delinquent boys:
Boys until 18 1/2 are in the emotionally dependent stage -- for all practical purposes -- as much as if they were 12.
This turns off over a week's time in my personal observation -- pure social instinct thing.
THE CORE: If they perceive nobody cares about them (wrong about half the time) they literally wont care about themselves -- no penalty can deter them. Any street temptation at all, they are gone.
This is easy enough to accept with a badly neglected 12 year old -- just as crazily true for an 18 year old who has simply been out of control for a long time -- every bit as hysterically alienated as I call it.
Unlike the decades of positive socialization it takes to wind down the paranoia underlying heavy heroin or alcohol addiction -- only 5 to 6 weeks of normal adult attention (teaching to drive) -- slowly brings the kid into the normal supportive orbit (have to kiss his toes and tell him everything he wants to hear first 7=10 days) -- but the crime doesn't slow one bit until a new kid wakes up one day (invasion of the body snatchers day ???).

Gangs:
Very simply the Crips and the Bloods could not whip a decent paying Ronald McDonald.

While reading When Work Disappears by William Julius Wilson and American Project by Sudhir Alladi Venkatesh side by side I noticed that after Wilson's book ended the project only descended into a completely gang infested hell as the minimum wage dropped in half from LBJ's peak -- as average income doubled.

BOTH OF THE ABOVE -- certainly and totally the latter -- CAN BE BLAMED ON AMERICA'S AMAZING, INCREDIBLY SQUEEZING LABOR MARKET. A $15 minimum wage would add about 3% (earlier figuring here *) to the cost of living (not counting other wages pushed up -- good), give half the country a raise and send a lot more low end customers (me ;-]) to McDonalds. Needless to say with a labor market where the median wage grew 20% while average income doubled and left a quarter of the workforce below LBJ's minimum wage by early 2007 (under performing Malthus) many more fatherless homes(massively more in our inner cities) leads to many (massively) more neglected or thinks they are neglected, hysterically alienated kids (for those of you who have not spent enough time in the badlands). * http://ontodayspagelinks.blogspot.com/2008/08/3-cost-of-gdp-output-and-inflation.html

America's great wage depression also leads to schools that don't work because nobody can be bothered trying to excel when they know they are not going to get paid anything like adequately when they leave school to finally go to work -- according to a professor Martín Sánchez-Jankowski who spent 9 years on the street observing in 5 inner city neighborhoods (slums): read his book Cracks in the Pavement.

So to me crime in America all boils down to what to me almost every other problem in America all boils down to: the totally missing bargaining power (or even any awareness of the need to bargain) of down at the heels American labor. And to me the answer is the only answer that has worked all over the better paid world: SECTOR-WIDE LABOR AGREEMENTS. Never, ever hear this spoken anywhere in supposed progressive forums though this answer is the only one guaranteed to work and everything else put together is guaranteed not to work. When are you going to wake up and start discussing legally mandated sector wide agreements progressive so you can wake up everyone else?

Women in combat: my comment in Washington post

My comment to: http://www.washingtonpost.com/opinions/five-myths-about-women-in-combat/2011/05/25/AGAsavCH_story.html

Eighth grade math:
If 10% of the police force doesn't handle 5% of the time -- even if it comprises 50% of the job -- the public will have a difficult time observing this.
If the NYC fire department hires almost 30 women a year for 30 years and there are still only 30 left on the job (half indoors?; 12 of the first 38 ever opted for light duty, e.g., public relations, right out of the academy) the public cannot see them not perform.
If half the prison guards cannot perform the public will never see it. The part of Rikers Island I used to visit weekly -- the 16 to 20 years old -- is now totally out of control (see recent story in "New York Magazine"). http://nymag.com/news/features/70978/
If half the court officers cannot handle the job prisoners must enter the courtroom in chains. In my years of going to court in the Bronx in the '70s they were brought in for arraignments in street clothes. 4 NYC court officers recently injured when judge insisted on removing chains. http://www.worldbookandnews.com/news/crime/44573-Robbery-suspect-injures-four-in-court.html

Of course the rigor and aggression required of a Marine grunt pales compared to that needed to be a big city court officer.

(still in rewrite) MY VERSION OF: The Real Social Security and Medicare Problem (and a Doable Fix)

CUT AND PASTED FROM THE BULK OF BRUCE BARTLETT'S ARTICLE -- "The Real Social Security and Medicare Problem (and a Doable Fix)". THE NUMBERS -- MOST ESPECIALLY IN VIEW OF EVER EXPANDING OUTLET (MALTHUS WAS WRONG BRUCE) -- DON'T LOOK CATASTROPHIC OR EVEN PARTICULARLY THREATENING:

"Looking at Social Security, we see spending rising from 4.8 percent of gross domestic product to 6.2 percent by 2035, an increase of 1.4 percentage points."

"Another way to think about it is that the long term Social Security deficit is 1.2 percent of G.D.P., or 3.6 percent of taxable payrolls."

"Thus we could raise the Social Security tax rate from 12.4 percent, which it has been for the last few years, to 16 percent immediately and forever, or we can assume general revenue financing for the unfunded liability and would have to increase federal income taxes from 6.2 percent of G.D.P. to 7.4 percent, about a 30 percent increase in the amount of income tax revenues the government needs to collect."
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I've always said that if the so-called trust fund peters out (it wont; a 5-year fund needs to be maintained -- all ever needed -- see below) the same tax payer money that was cashing bonds with income tax to feed retirees will simply switch to a higher payroll tax (with accompanying drop in income tax). Instead of 75% payroll tax and 25% income tax, retirees will be paid through 100% payroll tax -- only difference, a bit less progressive.

The only practical effects of the trust fund as far as I can see is that it allowed politicians to set on payroll tax rate for 60 years so they would not have to face endless raises and tax payer wrath which payroll tax surpluses on the front (when average income was lowest) made overall taxes more regressive (capped, flat tax paying for on-budget outlays) and more progressive on the end.

Average income doubles twice as fast as population (over 40 years compared to 80 -- worker-to-population ratio stabilizes after 2050) so there never was any retiree revenue crisis. If there is any funding problem it is cause by the average worker's (median) income growth not keeping even close pace with overall income.

For instance, my Social Security payments are supposedly calculated factoring in income growth. But my 1968 income is not credited as double my $25,000 to $50,000. I get credited for only $33,000 because the formula uses average persons' wages instead of overall growth. In the unbalanced US labor market median income only grew 20% as average income doubled! The minimum wage actually halved by early 2007!! Get the American labor market back in balance and payroll taxes will overflow.

BTW, While we are throwing all those trillions of dollars around let's remember that doubled population and quadrupled per capita income 80 years out means GDP looks to be 8 X $15 trillion = $120 trillion EVERY year by then.
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AGAIN -- ESPECIALLY IN VIEW OF NORMAL ECONOMIC GROWTH:

"Part A pays for hospital visits and is financed by the Medicare portion of the payroll tax, which is 2.9 percent. (That leaves the total payroll tax rate, at 15.3 percent, ignoring the temporary cut enacted last year as a stimulus program.)"

"The 2009 report, before passage of the new health care law, had estimated a long-run unfunded liability of $36.4 trillion, which is equivalent to 2.8 percent of G.D.P. forever and would have required a payroll tax increase of 6.5 percent. (Also Table III.B10.)"

"The long term general revenue contribution to Medicare Part B is estimated at $22.4 trillion or 1.5 percent of G.D.P. in perpetuity. (Table III.C15.)"

"The unfunded cost of this program is estimated at $16.1 trillion, or 1.1 percent of G.D.P. in perpetuity. (Table III.C23.)"

"To put these programs on a sound footing, federal income taxes would have to rise from 6.2 percent of G.D.P. to 10 percent, an increase of 61 percent."
************
Doctors' incomes have not DOUBLED in real terms since 1968 while average (per capita) income has. So doctor's incomes cannot be blamed for the doubling and re-doubling and re-redoubling of health care. As one doctor put it to me: in his other career as a Navy helo pilot everyone can see the three engines and the sixty miles of wiring in the "new beast" Black Hawk, but when they go to the hospital all they see is the bed.

Where the money is going to come from is another question. The average person's (median) wage only grew 20% while average income doubled. The minimum wage actually dropped in half by early 2007 (now $3/hr lower than under LBJ after the "big" Demo raise). Meantime, the linebackers and TV news anchors and CEOs who now get paid 25X what they made back when (instead of only 2X) don't have 25X as many livers and bones to mend.

Like most problems in this country it comes down the the totally out of balance -- as in thoroughly de-unionized -- US labor market. Decades old proven answer: legally mandated, sector wide labor agreements -- standard practice all over the better paid OECD world, not to mention the second-world (Argentina), even the third-world (even Indonesia). Supermarket workers and airline workers would kill for sector-wide agreements -- good political place to start.

Doctors fees are 20% of Medicare (not overall economy's). Private insurance costs (whole economy) quoted as high as 30%? Where to start cutting? :-)

The real American "misery indexes" -- my comment on "Angry Bear"

This post on the "misery index" -- seemingly meant to be taken as a realistic comparison of, well, economic misery on this side of the Pond compared to the other side -- is almost enough to make me give up forever on ever getting the slightest bit of common sense out of our economic (supposed?) progressives.

I mean this with all of my heart -- ready to give up on you all.

Please do a graph which shows the doubling of average income as one line on the chart going up at a 45 degree angle contrasted to the 20 percent increase in the median (average person's wage) going up at a 9 degree (?) angle over the same 43 years. Not to mention the complete political disempowerment that goes with a unionless work force (ever hear of legislatively mandated SECTOR-WIDE LABOR AGREEMENTS -- airline and supermarket workers would kill to get them; good place to start, but somebody's got to tell them about the possibility).

Please do a Malthusian chart tracking wages dropping 33% as population increased 50% since 1968 contrasted to the drop in the US federal minimum wage of almost 50% by early 2007. Not to mention the Crips and the Bloods couldn't whip a decent paying Ronald McDonald ($15/hr minimum wage -- mere 50% increase as per capita income doubled -- would raise the price of what in the poorest part of the country?).

Call them the "Nakba" indexes (or the "Great Wage Depression" indexes).

We -- Americans below 90 percentile income are suffering alright. Do you guys know anybody below 90 percentile income? What the deuce is wrong with you?

REPLY TO MYSELF -- RELEVANT "PSYCHOLOGICAL" POINT:

Endless reports of violence and non-performance in Berkeley public schools? Does this concern the Berkeley economic faculty? Not really their world right? Why, then, could anyone expect them to be concerned about poor side of town high schools in Detroit -- though I am sure their interests would perk right up about the goings in any elite high in Detroit -- or France.

I worry about the tragedy of poor side of town schools in New York and Chicago (core problem: nobody will prepare hard for a labor market that offers them nothing now and less for more work later if things keep going on that way on this side of the Pond). You would accordingly expect me to worry about troubles in Berkeley schools -- from thousands of miles away.

Get the "psychological" point. All the learning does no good if you don't know what to care about -- midbrain motivates forebrain to get what midbrain desires; not the other way around.

The answer to the American labor "Disaster" is not a floor under inadequate incomes

TODAY'S COMMENT ON THOMA'S ECONOMIST'S VIEW: http://economistsview.typepad.com/economistsview/2011/05/links-for-2011-05-01.html#tpe-action-posted-6a00d83451b33869e201543212b890970c


Re: Economics Principals

Here we go again. David Warsh -- a commentator whose breadth of understanding normally dazzles me -- quoting this as a good summary of what to do about so called "inequality": “The only things that can possibly address inequality of a magnitude that will soon be judged to be unacceptable in this country are much higher levels of taxation on the well-to-do and a negative income tax for the poor.”

If, first, our progressive elite understood that it is not about wan "inequality" but more like what the Palestinians call the "Disaster", they would understand that what American workers need is not a guaranteed floor under inadequate incomes but the median wage to double over time whenever average income doubles, not grow only 25%, for the minimum wage not to drop in half (by early 2007) over the same doubling per capita span.

We, American workers, would like to earn $25/hr on the average with a $15/hr minimum wage in the poorest parts of the country (the latter with all of 2% direct inflation*). We American (Chicago) cab drivers do not want the mile rate on our meters to get one (1!) 30 cent increase over the course of 16 years (81-97) period, at which mid point the city began adding 40% more cabs while cutting the business nearly in half with subways to both airports, unlimited limos and (the coup de grace) free trolleys between all the hot spots downtown (fine transportation progress, but what's with 40% more cabs?!).
* http://ontodayspagelinks.blogspot.com/2008/08/3-cost-of-gdp-output-and-inflation.html

What American workers need is the power to protect themselves in the market place -- and in the legislature. Of course nobody in America from cab drivers to dazzling progressives has any idea anything is so fundamentally out of whack.

I caught the answer to the Disaster (A.K.A., Great Wage Depression) -- assuming anybody in apparently brain isolated America knows there is a question -- the first time I saw it; wondered why I never thought of it myself, so obvious from the purely theoretical point: legally mandated, sector-wide labor agreements. The one and only answer to the race to the bottom. Canada has a lite version right next door: is Canada like the South Pole?

See these two books for how it works so well in Germany, undoubtedly the leading example of a successful capitalist economy:
"Were You Born on the Wrong Continent?: How the European Model Can Help You Get a Life" by Thomas Geoghegan. http://www.amazon.com/Were-You-Born-Wrong-Continen/dp/159558403X
Union of Parts: Labor Politics in Postwar Germany (Cornell Studies in Political Economy) by Kathleen Ann Thelen
http://www.amazon.com/Union-Parts-Politics-Postwar-Political/dp/0801425867/ref=sr_1_3?s=books&ie=UTF8&qid=1304343097&sr=1-3

*********************
Reply to myself -- just another insight of a sort, not yet sorted out itself:

The presumably (supposedly?) avant guarde Berkeley economics faculty feels no personal responsibility at all (as far as I know) for the violent goings on at their public schools. If they don't feel any personal responsibility for making Berkeley public schools safe (attended mostly by poor minorities?) -- especially safe -- good learning places we cannot in the least expect them to take serious responsibility for the poor side of town(s) across America.

OTW, if you are from the poor side of town where you live we can expect you to be seriously anxious about what is going bad in Berkeley public schools thousands of miles away.

It's not what you know -- that makes you useful -- it's apparently who you identify with -- that makes you useful -- think LBJ v. Obama. As I would say midbrain outflanks forebrain (no matter how dazzling) again and again.

My comments on Thoma's Economist's View blog today

My comments on Thoma's Economist's View blog today: http://economistsview.typepad.com/economistsview/2011/04/paul-krugman-the-intimidated-fed.html#tpe-action-replied-6a00d83451b33869e201538e34ff2c970b


Last I heard inflation is the cheap way to pay down enormous debt -- and isn't inflation the way to "painlessly" reduce the real price of real estate; the classic way severe housing slumps (caused by burst bubbles) end?

What exactly is the big need for under 2% inflation anyway? Most of my long life until recently inflation has run between 3% and 5% a year -- except for the double digit inflation of the late 70s. What's the big harm?

******

First and foremost is inflation the cheaper and quicker way out of federal (Chinese) debt and out of our busted housing bubble (historical average time to get out I just read in one of David McWilliams' books: 5-7 years)? Which busted bubble is threatening us with a lost decade or two. Is it or is it not; let's get the giant positive(s, plural) established before we weigh the trade offs.

Is it or isn't it?

Second, if we had an adequate safety net we would only have to worry about some retired people living a little less enjoyably versus pulling out of two economic tailspins that threaten to crash us fatally. But since as a country we never worried about adequate safety nets before why start now?

We work people for less and less and less every year for the same work even as average outputs doubles (since 1968 -- back when the minimum wage was $10/hr adjusted and the median wage was but 20% lower than today's average person's wage) and then we set them out to pasture -- or should I say to sleep in the street. Minimum SS and maximum food stamps together come to about $900/mo -- eat or stay indoors, your choice.

Why start worrying about the elderly now? ???

******

What the great majority of workers in the American labor market -- not the European -- suffer is a total collapse of economic bargaining power along with the necessarily concomitant loss of political muscle -- Americans not Europeans.

Which has left in its wake a federal minimum wage that is now $1/hr below Eisenhower's (really senate majority leader LBJ's) 1956 minimum wage and $3/hr below LBJ's 1968 minimum wage -- following the "big" 2007 raise! !!! Meantime the median (average person's) wage has grown 25% since 1968. All the above while average income grew 100%! !!!

15% of income share shifted from the bottom 90% to the top largely 1% -- disproportionately to the top 1/10 of 1%. I think we can agree that the doubling of per capita output over two generations is brought about by (maturing not brand new) technologies (what tripped up Malthus) and not by 25X better paid linebackers, TV news readers or even CEOs. Just my amateur guess but shifting that 15% back could cause 30% inflation over whatever time period with the back and forth adjustments: a perfect place to start, killing every bad bird with one stone?

Across the better paid OECD world and even in the second (Argentina) and third (Indonesia) worlds there is a DECADES OLD answer to America's race-to-the-bottom: legally mandated sector-wide labor agreements -- an elegant theory that unarguably works.

Ask your favorite progressive economist about sector-wide as the answer to the race-to-the-bottom. You will have to ask I am afraid; they will not volunteer the knowledge. They have understood the benefits and hopefully the absolute necessity of sector-wide agreements all their professional lives (started in post-war Germany to moderate a potential labor race-to-the-top -- works just as well opposite polarity) but they will never tell anybody -- too lost in diagnosing today's symptoms, they never ponder or at least never mention out loud the easy cure.

You know, 10 MLKs would not have gotten the 1964 Federal Civil Rights Law past the murderous US Senate of the time with JFK or Obama president. LBJ (not known as a giant intellectual policy wonk) got it through because he had the fire in his belly -- he told Senate nothing else was ever going to happen until that bill passed and he meant it -- he out waited the filibuster 84 days (also passed Medicaid, Medicare, $10/hr minimum wage, etc., etc.).

Supermarket and airline employees would kill for sector-wide agreements: good place to start (try German heavy or Canadian lite).

MORE FROM THE SAME THREAD:

"i am not so fond of "inflating our way out" myself. i prefer "taxing our way out" and paying our bills."

Not when the overseas debt becomes so large it is building a vicious cycle-potential tail spin from which we may not be able to recover -- we are said to be approaching that trap; ask a Republican.

Not when the economy may be stuck in doldrums for another 5-7 years if our housing over-supply/prices-stuck-too-high trap is not resolved (by inflation one way or the other -- slow or fast); people have to get back to work. I'm not worried about paying back the Chinese in discounted dollars -- the Chinese have been pegging the yuan artificially low to increase their exports forever. Manipulating currency is standard operational procedure for all nations.

Must be noted here that the first $4 trillion of recent deficits were Bush II tax cuts for the rich -- which bankers who got the trillions from people who couldn't even spend it used it fuel the housing bubble -- all the while Republicans rashly deregulated banks so they would have no trouble at all getting all that cash out of deposits to people who could not even pay back. Whence the burst bubble forced Democrats to go more trillions into national debt to avoid a depression.

Inflation caused by shifting 15% of income share back to the lower 90 percentile earners (causing price rises from pay raises) could end up killing all three giant birds (great wage depression is number three) with one stone.

Play money, real money, online poker and the First Amendment

Play money poker should be covered by the First Amendment -- like passing jokes around -- like any board game -- recreational speech?

If so -- big if?; but could they outlaw Monopoly? -- then poker is covered by the First Amendment per se -- including real money poker. Once a constitutional right is involved the legislature may no long outlaw something just because they feel like it is reasonable. Once a constitutional right is involved the legislature must be able to present a "compelling" reason to outweigh the right.

The snuck-by Congress legislation bars online poker for moral reasons. They waited too long to enforce it. By the time tens of millions from every continent are playing the game online -- with no reports of massive (or any) moral collapse -- the idea of infringing freedom of speech to protect our morals is not merely arguable, it is universally laughable.

Internet poker US cashout problem solved with overseas cash payouts?

Say Pokerstars had a cash window (like a racetrack) in England where you could travel to to pick up your payouts. Sounds perfectly legal for you to pick up your own payout outside the US. Matter of fact you could pick up a Pokerstars money order in England and cash it in in the English bank it was drawn or check cashing store (if they have such) -- and reconvert the cash into a money order to send to yourself in the US. No foreign bank account needed -- just you in person. No gambling enterprise would be sending a financial instrument to a US bank -- that is all the law prohibits AFAIK.

NEXT STEP: Say a player's personal rep goes and does the same thing for him: same legal payout process. Or, suppose, instead, some smart cookie opens a business in the US where they charge players (plural) a fee to travel to Pokerstars cash payougt window in England -- or just as legally open the same business in England to act as player pickup rep -- to pick up our winnings in cash for us -- not working for Pokerstars; working for us -- and then send checks or money orders to us in the US. No gambling enterprise would be sending a financial instrument to a US bank -- that is all the law prohibits AFAIK.

NEXT STEP: Say Pokerstars sends cash to US players. When I worked as a truckers helper for a Wall Street Bank in the early 1970s we took tons of mail to the Post Office some of which was registered mail containing cash going to South America. I was told that Registered mail must to be signed for by every person whose hands it passes through all the way to the recipient. Pokerstars could send small to medium payouts by registered mail right now. Really large deliveries could be done by armed insured messenger (you might want to make an appointment to meet the messenger in a bank). No gambling enterprise would be sending a financial instrument to a US bank -- that is all the law prohibits AFAIK.

Problem solved? I hope this looks as good in the morning as it does at 4AM. :-)

[PS. See the following legal essay on the unlikelihood of anyone ever standing trial -- not talking about copping out either: http://www.gamblingandthelaw.com/blog/299-federal-poker-indictments-revisiting-prohibition.html]

The Settler State -- Uri Avnery

"Some weeks ago I wrote that the problem may not be the annexation of the West Bank by Israel, but the annexation of Israel by the West Bank settlers."


The Settler State
http://avnery-news.co.il/english/index.html
You-u-ul have to look for the Headline (after the first week out: 4/17).

Medical insurance double and redouble and re-redouble -- while doctors income's have not even kept up with average income gains

AFAIK Doctors' income have not even kept up with average income gains -- the latgter doubled since 1968. AFAIK average income for doctors was $150,000 before Medicare and Medicaid, after which the average rose to $180,000. AFAIK, today, $360,000 is the average income for the highest paying specialty, radiology.

Medical insurance double and doubles and redoubles -- what is with focusing on doctor's incomes?

A doctor in my cab told me that in his other career as a Navy helo pilot the new beast (Blackhawk) has three engines and 60 miles of wiring -- everybody can see the difference between that and the Huey. When people go to the hospital all they see is the bed.

Ever think unions are unrealistic not wanting management to count the ever increasing cost of medical insurance in negotiations? Isn't the whole country like that? Do we really expect to pay the same for more and more and more medical advances?

How to get the cost down to European costs level -- half? Simple; govern ourselves like Europe. Govern ourselves -- instead of left and right elites taking turns governing us. RE-UNIONIZE THE ONLY WAY THAT ACTUALLY WORKS: SECTOR-WIDE LABOR AGREEMENTS. Cut the Gordian knot at the heart of almost every other poliltical issue -- re-balance the labor market -- and simultaneously the political forum -- so the labor market actually works to insure fair prices -- automatically -- just like Republicans say markets do. Then all the common sense reforms will be absorbed (automatically?).

Say the words: S-E-C-T-O-R W-I-D-E L-A-B-0-R A-G-R-E-E-M-E-N-T-S.

My comment on Open Salon to: Carry a big stick -- when I was ordered to paddle students

My comment on Open Salon to: http://open.salon.com/blog/jlw1/2011/03/30/carry_a_big_stick--when_i_was_ordered_to_paddle_students

The same principal who smashes away on kids for being late (not usually an animal) might feel unable to beat an adult the same way for breaking into school, breaking into lockers and spray painting cars in the parking lot all at the same time. Something goes missing when we are not beating social equals or something (we are talking dumb social instinct here).

If the principal's boss paddled him for the above mentioned crimes the principal would not hate him. If the principal's boss paddled him for being late the principal would hate him -- a violent assault over efficiency, mere office management.

Let principals contemplate these contradictions (and why some kids hate them forever).

There is a hole in the law against violent assault. There is provably no justification for the hole -- provably by the common policy in the worst hitting states (where 90% of the beating of girls and 75% of the beating of boys is for tardies) : it is often optional for the student -- take detention or suspension or a beating. If the school lets the student decide how can the school tell the courts that it is so necessary the court should allow a hole in the law against violent assault with a weapon?

Unfathomable social instinct can be at work on students here: if everyone else chose a beating over an hour's detention so would I. Instinctively must accept the same danger as the rest of the hunting pack? ??? Sometimes like in the famous YouTube video the student will miss a days work as with the boy or as with the class president girl miss the prom if they do not take a tardy bend over for a behind beating by the (male) principal. Sometimes a student fears even a tardy suspension may affect college admission. None constitutionally justifies a hole in the prohibition against violent assault -- especially on children.