Galbraith proposes 12 dollar minimum wage

[gnk]

Re: Galbraith proposes 12 dollar minimum wage

I want to add one more thing I used to say years ago:

When you trade with nations that produce the same things you do, but have a fraction of your workplace protection laws, minimum wage, environmental laws, etc.. ultimately, you will be importing their poverty as well as their cheap goods.

Traditional global trade/adam smith neoclassical economics dictated that it was in your interest to produce what you do best, and trade with others that produce something different. It's a win win. For example, Northern countries sell Maple Syrup to countries that produce sugar cane. Silk for guns, etc...

But think of the world we live in today. We even have call centers in India assisting us with our computers or credit cards.

Either the water level of wealth eventually evens out world wide and we allow the tsunamis of poverty and wealth to continue to slosh around the world...

Or we end globalization... or engage in "fair trade" We trade goods with trading partners that have similar wage laws, workplace laws, environmental laws, etc...

I see us mostly going the deglobalization route. I just don't see Western societies accepting poverty and filthy environments the way other countries do. We'll still be a lot poorer, but we can still live decent lives. The global wage arbitrage game that funneled inflation into asset values while cheap labor abroad made consumption easy (it kept the cost of goods low) is slowly ending.

[lektrode]

Re: Galbraith proposes 12 dollar minimum wage

+1,
Why doesn't anyone ever discuss the history of the Minimum wage in the United States. The Minimum wage was instituted by Northeast Politicians atempting to prevent the exodus of Textile Mills from the North to the South in the 1920s or 1930s. Well, how effective was that strategy?

Like all Politicians and bureacrats they took a unsuccessful law (the Minimum Wage) and repurposed it to be about a fair living wage.......instead of doing the smart thing that would have been to take the law of the books.
Instead, Politicians get behind taking a good law like the Glass Steagall act off the books - uneducated voters leads to the Politicians give us the Republic we deserve. ;-)

+1
all caused by the ABJECT FAILURE of the lamestream media to keep the electorate informed (while they go on cheerleading/distracting for the latest liberal cause of the moment)

[lektrode]

Re: Galbraith proposes 12 dollar minimum wage

i think the concept of the 'transaction tax' has a lot of merit - esp considering what the quants are doing these daze with all their high-freq trading strategies... and i dont want to hear any BS about how a penny or a 10th of a penny per share traded will "harm investors" - what 'investors' ? - the hedgefunds, as they jump in and out of shares at the clik of a mouse to gain a penny per share?? thats not 'investing' thats gambling, just the same as playing craps.

[Chris Coles]

Re: Galbraith proposes 12 dollar minimum wage

Flintlock that's a very perceptive post.

Not only do I wholeheartedly agree, I also take up the challenge to provide some new thinking.

I live in a minimum wage society here in the UK; it has been a disaster. Why?

Because the entire economy from the application of such a minimum wage tends to follow to the lowest common denominator and almost all business tends towards paying the least to create a baseline. Now at first sight, that is attractive to the small business owner; but in fact, what happens is that the overall economy flattens out to that minimum level. Prosperity steadily declines.

That might sound counter intuitive. That paying more to employees depresses the economy. As we have seen earlier in this thread, raising the minimum wage in the US would add ~2% to the GDP. Which in turn, explains the short term uplift. But it is ALL spending money; none of it is reinvested. So every business raises its prices to suite the new prosperity and that includes all those giant companies that can and do drain the maximum from the nations prosperity.

Each time the poor become a problem, the answer is raise the minimum wage and all that happens is the same short term uplift followed by more of the same thing that created the lack of prosperity; the drain of hidden prosperity into the coffers of the major players.

Neither side can win; so in his way, Raz is correct to rant on about the idea; just as others are right to say it is a solution. A small business owner owns and runs their entire economy and as such stability in a declining market is paramount; or they lose everything. A manager of a large business does not face the same decisions.

It was with that in mind that I set out to describe a new way to look at the function of job creation when I wrote The Road Ahead from a Grass Roots Perspective. May I suggest that you go read Chapter 2, Job Creation; not credit; is the primary driver of prosperity. www.chriscoles.com/page3.html

A minimum wage simply reduces everyone to a bare minimum which is dictated by the major players who drain off the new short term prosperity leaving the whole process to be turned over; again and again.

A good small business owner pays what they can afford and that crucially depends upon the local prosperity of their customers. It is the local prosperity to pay for the product that dictates wages. The only sure fire capitalist way to improve local prosperity to increase equity capital investment into the small business sector.

[c1ue]

Re: Galbraith proposes 12 dollar minimum wage

I think Galbraith means well, and in fact a higher minimum wage might be a step towards a transition to a different economy, but ultimately I cannot say that a high minimum wage is necessarily a good thing.

The problem in the US is cost of living, and the reason for this cost is FIRE and debt. A higher minimum wage does not change this dynamic; until this dynamic is changed then all that will happen with a higher minimum wage is a bit more money to feed the banksters.

[ocelotl]

Re: Galbraith proposes 12 dollar minimum wage

As the mexican around here... I'm asking. What protections would you consider would help any producer to keep production local instead of outsource it? I've seen it as a fad, outsourcing any job that is not related to management/sales. While outsourcing seeking an affordable cost benefit relationship is the base of modern economy by now, work bargaining has been a limiting factor that has kept unemployment high all over the world. Why is that today is very difficult for individuals to become self employed and for governments worldwide to support such moves? Is it that we all have been too instructed to become servants/serfs instead of just self supporting individuals?

There is still a lot of preconditioning that we have to get rid off as individuals before embracing a better economic model that supersedes a debt based one like the one we have by now...

P.S. ¿Can I have a PM about the conditions of the outsourcing to see if my abilities can fit into? Just chutzpah...

[rjwjr]

Re: Galbraith proposes 12 dollar minimum wage

My apologies for being mostly absent from the discussion after having created much of the passion of the responses via my initial post. Obviously, there are differing, even opposite opinions and input on the concept of the minimum wage, but I still think it comes down to one fact.

If I have a job for which I am willing to pay $10/hour, and if there are more people willing to fill that job than I could ever utilize, then why should some 3rd party tell me I have to pay $12/hour?

I still feel that this is an area were the government, unions, and any other outsider should simply butt out. I didn't lobby the Government for a maximum wage law when my wage rates were increasing at about 7%/year from 2004-2008; I paid what the market required. All I'm asking is that I now have the ability to pay the current market rate (as dictated by plenty of interested workers) versus someone's personal opinion about a living wage. It really doesn't matter what YOU think about that person not being able to live on $10/hour. Maybe they are 18 and looking to build a resume, maybe they are not the primary bread winner and the monetary aspect is not their primary decision criteria, etc.

The bottom line, again, is that I'm wiliing to pay $10/hour and plenty of potential workers will freely fill that job at that rate. Anything else is opinion and complication in my mind.

[jiimbergin]

Re: Galbraith proposes 12 dollar minimum wage

My apologies for being mostly absent from the discussion after having created much of the passion of the responses via my initial post. Obviously, there are differing, even opposite opinions and input on the concept of the minimum wage, but I still think it comes down to one fact.

If I have a job for which I am willing to pay $10/hour, and if there are more people willing to fill that job than I could ever utilize, then why should some 3rd party tell me I have to pay $12/hour?

I still feel that this is an area were the government, unions, and any other outsider should simply butt out. I didn't lobby the Government for a maximum wage law when my wage rates were increasing at about 7%/year from 2004-2008; I paid what the market required. All I'm asking is that I now have the ability to pay the current market rate (as dictated by plenty of interested workers) versus someone's personal opinion about a living wage. It really doesn't matter what YOU think about that person not being able to live on $10/hour. Maybe they are 18 and looking to build a resume, maybe they are not the primary bread winner and the monetary aspect is not their primary decision criteria, etc.

The bottom line, again, is that I'm wiliing to pay $10/hour and plenty of potential workers will freely fill that job at that rate. Anything else is opinion and complication in my mind.

+1

[thriftyandboringinohio]

Re: Galbraith proposes 12 dollar minimum wage

My apologies for being mostly absent from the discussion after having created much of the passion of the responses via my initial post. Obviously, there are differing, even opposite opinions and input on the concept of the minimum wage, but I still think it comes down to one fact.

If I have a job for which I am willing to pay $10/hour, and if there are more people willing to fill that job than I could ever utilize, then why should some 3rd party tell me I have to pay $12/hour?

I still feel that this is an area were the government, unions, and any other outsider should simply butt out. I didn't lobby the Government for a maximum wage law when my wage rates were increasing at about 7%/year from 2004-2008; I paid what the market required. All I'm asking is that I now have the ability to pay the current market rate (as dictated by plenty of interested workers) versus someone's personal opinion about a living wage. It really doesn't matter what YOU think about that person not being able to live on $10/hour. Maybe they are 18 and looking to build a resume, maybe they are not the primary bread winner and the monetary aspect is not their primary decision criteria, etc.

The bottom line, again, is that I'm wiliing to pay $10/hour and plenty of potential workers will freely fill that job at that rate. Anything else is opinion and complication in my mind.

Thanks for the thoughtful reply rjwjr.

The central argument on the other side is that desperate people facing starvation and homelessness will bid wages down towards zero, and it's darn tough to operate an economy if huge numbers of people have no wages to spend beyond a hovel and a bowl of rice. Some minimum wage is useful to all to avoid this.

[Chris Coles]

Re: Galbraith proposes 12 dollar minimum wage

Thanks for the thoughtful reply rjwjr.

The central argument on the other side is that desperate people facing starvation and homelessness will bid wages down towards zero, and it's darn tough to operate an economy if huge numbers of people have no wages to spend beyond a hovel and a bowl of rice. Some minimum wage is useful to all to avoid this.

In one sense, this is correct; but in another, it is not. BBC Newsnight last week broadcast an edition showing that almost all of the near 1 million supermarket employees were unable to pay their way on their meagre incomes at minimum wage and that the State was subsidising their incomes with welfare while still earning £2 Billion pa profits.

http://news.bbc.co.uk/1/hi/programme...ht/9695214.stm
When you do your supermarket shopping at the likes of Tesco, Asda, Morrisons and Sainsbury's you are not only paying for your goods, your taxes are subsidising their huge profits and the remuneration packages for their CEOs.
Newsnight's Economics editor Paul Mason reports on the way workers' wages are being supplemented by state benefits.
Broadcast on Thursday 9 February 2012.

In normal times, wages are a product of the competition between employers for the use of employees. No employees, no mechanism to create new turnover and thus income for the business.

However, today, there is such a large discontinuity and lack of employment opportunity, wages inevitably follow the market for their use down to the minimum. The question becomes; is it advantageous for the NATION, to have a large proportion of the citizens earning insufficient to pay their way and thus having their income supplemented with welfare that again, inevitably, adds to the tax cost of running the nation?

Surely, the best solution is to ensure sufficient investment into new employment, new private sector businesses; to ensure that the level of competition for the employee reaches such to enable the majority to live full lives and prosper?

We also recently had another report of homeless people in the USA living in tent cities all over the nation.

Surely the role of business is more than pure survival for the business owner, (Not disregarded when times are harsh as now), and that there is a need for recognition of a wider role for private business than heretofore?

Without prosperous customers, no one makes a profit.

[oddlots]

Re: Galbraith proposes 12 dollar minimum wage

+ 1

[Chris Coles]

Re: Galbraith proposes 12 dollar minimum wage

I would like to add another point here.

Where this has all gone wrong is that it is unreasonable to expect the ordinary, (not that they are in any way "ordinary"), small or medium business to have to care for the quality of the whole nation's prosperity. A simile might be that we do not expect the individual to take responsibility for the overall compliance of the rule of the law. In that case, we have several layers, local police, regional authorities and ultimately, a fully integrated national set of institutions leading right up to a Supreme Court.

Yes, we can and do argue they too are not exactly operating perfectly; however, the point is, we do not have any PRIVATE investment institutions that are taking that remit to heart.

What is missing is the overall structure and agreed ethos of the financial institutions, (supposedly there to lead the nation; indeed, any nation), towards the prosperity we must have embedded into place; to permit the majority of the citizens to prosper and live full and successful lives.

It is this that has brought me to the conclusion that we all live in a feudal economy today.

We must accept that we need to create a new infrastructure of institutions that have, as their underlying ethos; the greater prosperity of the wider nation.

It is simply the lack of that structure, that accepted ethos, a higher ethic if you like, that is causing most, if not all of our problems.

[Thailandnotes]

Re: Galbraith proposes 12 dollar minimum wage

When you do your supermarket shopping at the likes of Tesco, Asda, Morrisons and Sainsbury's you are not only paying for your goods, your taxes are subsidizing their huge profits and the remuneration packages for their CEOs.

It’s hard for people to wrap their heads around the idea that their tax dollars are subsidizing large corporations and how much corporate profits depend on this constant bailout.

“The House Committee on Education and the Workforce estimated the breakdown of costs for one 200-employee Wal-Mart store:

* $36,000 a year for free or reduced school lunches, assuming that 50 families of employees qualify.

* $42,000 a year for Section 8 rental assistance, assuming that 3% of the store employees qualify.

* $125,000 a year for federal tax credits and deductions for low-income families, assuming that 50 employees are heads of households with a child, and 50 employees are married with two children.

* $108,000 a year for the additional federal contribution to state children's health insurance programs, assuming
that 30 employees with an average of two children qualify.

* $100,000 a year for additional Title I expenses, assuming 50 families with two children qualify.

* $9,750 a year for the additional costs of low-income energy assistance.

Overall, the committee estimates that one 200-person Wal-Mart store may result in an excess cost of $420,750 a year for federal taxpayers.
__________________________

A 2011 study estimated a 12 dollar minimum wage for Walmart workers passed on 100 % to shoppers would add 12 dollars/year to the average shopper’s bill.

[Chris Coles]

Re: Galbraith proposes 12 dollar minimum wage

Just one small point, the words credited to me above came straight off the BBC web page as per the link provided.

[Chris Coles]

Re: Galbraith proposes 12 dollar minimum wage

Overall, the committee estimates that one 200-person Wal-Mart store may result in an excess cost of $420,750 a year for federal taxpayers.

And then add the overall cost of the government employees passing on the welfare. Likely just as much again.