I’ll be on vacation until 8/4/03! I’m going to the Redneck Riviera (otherwise known as Pensacola Beach). I may check in and post a few items, but probably not. If anyone wants to tell Therapy Sessions why he’s just a greedy bastard out to keep poor folks down, please feel free. Otherwise the dialog will have to wait until I get back.
In the latest round of a dialog with The Therapy Sessions concerning raising the minimum wage, Therapy Sessions makes the point that raising the minimum wage would be like turning up the heat when its hot. I’m not quite sure how that’s analogous, but let’s assume his point is that indexing the minimum wage to inflation would create and unending escalating wage rate that would bankrupt American companies and also cause widespread pestilence and famine (maybe that last part’s an exaggeration).
First of all, inflation is not a problem in the current economy. In case Therapy Sessions hasn’t been paying attention, deflation happens to be the bigger concern at the moment. Here’s a snippet from a June 3, 2003 article on Forbes.com:
Long-dated Treasuries surged on Tuesday after Federal Reserve Chairman Alan Greenspan’s remarks about deflation inspired speculation that the central bank might buy longer-dated Treasuries to pre-empt deflation.
I think Therapy Sessions also missed my point about passive income vs. wage income. I identified capital gains tax cuts, dividend tax cuts, and estate tax cuts as evidence of the Republican party’s favoritism of passive income. I did not say that a tax cut is passive income. The underlying event that is receiving the tax break is the passive activity (asset sale, dividend receipt, inheritance).
I grant Therapy Sessions point about Social Security increases being different from wage increases. However, my point is that nobody opposes the annual cost of living increase for Social Security on the basis that it has an inflationary effect on the economy — even though the Republican party has long argued that government spending is a leading cause of inflation.
Therapy Sessions glossed over my point about Federal wages. Federal wages have a greater dollar impact on the national economy than minimum wages do, yet Therapy Sessions diminished their relevance by citing how small an effect $199 billion has on a $10 trillion economy. I would make the same point back. If minimum wages account for a substantially smaller portion of the national economy (less than $125 billion annually), why worry about the inflationary effect of a cost of living adjustment?
Finally, my reference to James Surowiecki’s article was not for validation of my argument in favor of indexing the minimum wage to inflation. I was referring to his support for the minimum wage as the driver for trickle-up economics. Here is the relevant portion from the article:
One answer to this would be just to let the free market sort it out, to let the tens of millions of negotiating sessions between employers and employees determine the prevailing wage. And in general, of course, that’s the best course and is what we do for everyone above the minimum. But what having a minimum wage does is, in the simplest sense, determine the baseline from which all those other negotiating sessions begin. It therefore has a necessary cascading effect, helping to boost wages across the board.
Contrary to what Therapy Sessions implies, minimum wage jobs aren’t going to go to cheap-labor foreign countries if the wage-rate increases. Minimum wage jobs are predominately service oriented jobs that cannot be exported in the way manufacturing jobs have been. Increasing the minimum wage (and tying future increases to the cost of living) will ensure that those at the bottom of the economy receive some of the benefits they have worked to bestow on everyone else.
In a recent post I took Congressional Republican’s to task for their defeat of an effort to increase the minimum wage. I received a comment from John Rogers, author of The Therapy Sessions that led to a bit of a dialog on the minimum wage. You can see his post on his website here. The main thrust of The Therapy Session’s argument against the minimum wage appears to be that by creating an artificial floor on salaries there is an upward pressure on all wages, and that this is bad. I guess we can just agree to disagree about this point. I personally don’t have a problem with increasing the wages of somebody at the bottom of the economic ladder, even if that leads to an upward pressure on all wages. In fact I think an increase in wage-earned income might actually be a good thing for the economy. I’ve had enough of the Republican Party’s emphasis on trickle-down economics and their favoritism of passive income over wage income (i.e., capital gains tax cuts, estate tax cuts, dividend tax cuts). How about calling an increase in the minimum wage trickle-up economics, then? James Surowiecki, a much brighter fellow than I, reaches essentially the same conclusion in a Slate piece from 1998 on the minimum wage.
Therapy Sessions had a particular problem with my idea of adjusting the national minimum wage to account for inflation. This is the same approach taken for Social Security benefits and Federal government wages, which have a greater overall economic effect than minimum wage income. For example, this year, nearly 47 million Americans will receive approximately $470 billion in Social Security benefits, and in 2002 Federal government wages were $199 billion. Conversely, the annual amount paid to minimum wage workers appears to be a good deal less than $125 billion (this is a rough estimation based on 11.9 million workers each working 40 hours at $5.15 per hour for 52 weeks). Thus, the inflationary effect on the national economy of raising the minimum wage would likely be slight. In addition, a number of states have seen the fairness of this approach and index their minimum wages to inflation — including the liberal bastion of Alaska!
The LA Times (registration required) is running a story about the Bush administration’s ‘victory’ in Congress yesterday. The Administration was heavily promoting the restoration of Snowmobiles to Yellowstone and Grand Teton National Parks.
While allowing motorized recreation in National Parks is pretty bad. The article buries some of the other environmental shenanigans the House Republicans pulled off. Here is some of the article:
Snowmobile use in the parks would have been phased out by next winter under a Clinton administration plan. But the Bush administration proposed new rules allowing the vehicles to enter the parks daily but setting standards for noise and pollution and limiting them to park trails.
And in another victory for President Bush, the chamber voted to uphold administration plans to allow development on some of the 58 million acres of federal forests where road building has been banned since the closing days of the Clinton administration.
The votes were among several triumphs for the White House as the Republican-led House debated a bill providing $19.6 billion for the Interior Department and other federal land and cultural programs next year. The overall measure was approved Thursday night by a vote of 268 to 152.
The House also rejected efforts to ban bear baiting — luring bears with food so they can be shot — on public lands, and to forbid federal funds from being used to kill bison that leave Yellowstone.
The Washington Post ran one of those “news” stories about the deficit today. Here’s some of it:
Federal Reserve Chairman Alan Greenspan warned yesterday that continuing large federal budget deficits eventually would cause long-term interest rates to rise and damage U.S. economic growth.
“There is no question that if you run substantial and excessive deficits over time, you are draining savings from the private sector, and other things equal, you do clearly undercut the growth rate of the economy,” Greenspan told the Senate Banking Committee.
On Tuesday, the Bush administration forecast that the deficit will reach $455 billion in fiscal 2003 and rise to $475 billion next year . . .
The Boston Globe Online runs a Washington Post story about a scientific critique of the administration’s missile defense program. In case you’ve forgotten, this is the Republican spending initiative to funnel government money to defense contractors.
The APS report said interceptor rockets would have to be ‘’substantially” faster and larger more agile than any developed so far.
They also would need to be very agile, the report said. Further, to stand any chance of catching up with an enemy missile, the interceptors would need to be positioned generally within 400 to 1,000 kilometers of an enemy’s launch pad. And after detecting a launch, US authorities would have only about a half-minute or so to decide whether to fire, risking confusion between peaceful space launches and missile attacks, the report said.
So, basically the report is saying that 1) we need better rockets to have any hope of ever making the system work, and 2) even if we can develop better rockets we need to know ahead of time where a missile will be fired from. Sounds like a great way to waste a few hundred billion dollars!
ESPN is announcing today that Rush Limbaugh will join their NFL pregame show to spark debate. I can’t believe it. It’s hard enough to watch television news these days and stomach the creeping influence of radical conservatism there. Now we have to put up with Rush Limbaugh on ESPN? Sports programming should not be politicized! It’s the one thing everyone, regardless of political affiliation, should be able to watch in peace.
Want to complain? Write an email to ESPN.
Bravo is debuting a new show starting Tuesday night at 9pm called Queer Eye for the Straight Guy. Here’s the premise:
Five gay men, out to make over the world one straight guy at time.
They are the Fab Five: an elite team of gay men who have dedicated their lives to extolling the simple virtues of style, taste and class. Each week their mission is to transform a style-deficient and culture-deprived straight man from drab to fab in each of their respective categories: fashion, food and wine, interior design, grooming and culture.
The New Orleans Times Picayune has a short (positive) review of it here. In the ever more crowded field of reality television this one stands out as a potential laugh riot. I can’t wait for Tuesday night!
The Washington Post carries a story today about the Republican Party’s spiking of an effort to increase the minimum wage
The minimum wage was last increased in 1997 under a two-step process approved by Congress in 1996.
In a speech to the Senate, Kennedy said that minimum wage employees working 40 hours a week, 52 weeks a year, earn $10,700 a year, or $4,500 below the poverty line for a family of three. The value of the increase that Congress approved seven years ago has eroded to the point that their wages are worth less now than they were before the last increase, he added.
During those seven years, members of Congress have raised their own pay by $21,000, Kennedy said.
The Washington Post runs numbers showing that President Bush’s approval rating is down to 59% having dropped 9 points in the last 18 days. As the story notes: That decline exactly mirrored the slide in public support for Bush’s handling of the situation in Iraq, which now stands at 58 percent. The rapid decline is pretty interesting. The story is short on the kind of details, however, that would provide some context. How does this approval rating compare to other presidents’ ratings at this point in their terms, for example? Inquiring minds want to know!