Wednesday, October 17, 2012

The low minimum wage reduces to a subsidy to businesses

By Marc Jampole
The statistic has been around for a few months now, but I just stumbled upon it and was amazed: Wal-Mart workers collectively receive $2.66 billion a year in food stamps, or $420,000 per Wal-Mart store in food stamps.  Year after year, low Wal-Mart wages lead to the government providing food stamps and other assistance to their workers and thus indirectly subsidizing Wal-Mart’s profit.

What would happen if Wal-Mart raised the wages it pays its workers to a level that prevented them from qualifying for food stamps? In asking the question, I assume that Wal-Mart, like most companies, does not carry excess labor and so could not lay off masses of people to keep their profit margin stable. So the company would be forced to raise prices.  But if Wal-Mart raises prices too much, people will start shopping elsewhere. After all, the main reason people shop at Wal-Mart is price.

To remain viable as a business, Wal-Mart would eventually have to take the money to pay workers a decent wage out of profit and executive salaries.

That means that there would be less money for the multi-billionaire Walton family and the executives who make millions, starting with $35 million a year for the chief executive officer. Maybe the CEO would have to settle for making 42 times what the average worker makes, which is what the average manufacturing CEO in the United States made in 1960. By the way, the average U.S. manufacturing CEO now makes 344 times what the average worker makes, compared to 25 times the average worker for European CEOs. Wal-Mart’s CEO currently makes more than 2,000 times what an entry-level Wal-Mart employee does.

It amazes me that Republicans like Mitt Romney, Paul Ryan, Newt Gingrich, Rick Santorum and the other good old boys and girls don’t complain about the corporate giveaway that takes place every time someone with a minimum or low wage job files for food stamps.

During the past 30 years, one way that income has been transferred from the poor and middle class is through the deterioration of the purchasing power of the minimum wage. Since the late 1960’s the minimum wage has lost 40% of its value. Most people who lose 40% of their purchasing power would be in real trouble—so imagine what it means to those at the lowest end of the wage spectrum.

It’s been a boon to employers who now can pay a de facto 40% less to get minimum wage jobs done. Since the minimum wage sets the bar for wages and salaries at all levels, it’s no wonder that on average, employees make less than they did 30 years ago, when inflation is figured into the equation.

My proposal is to set the minimum wage at a level so that 40 hours of it would bring a worker above the maximum level for receiving food stamps. That would result in an increase in all wages. It would also take money out of the pockets of the rich folk who save a significant part of their income and put that money into the hands of the poor, near poor and middle class, who would spend more of it, thus creating more jobs. Don’t worry, the rich and upper middle class would still do pretty well.

The fly in the ointment is the possibility that Wal-Mart and other large companies would offshore even more jobs to Asia than they do now. Which brings us to the second part of my proposal: that no good or service be allowed to be imported into the United States unless the producer/seller both paid its workers the prevailing U.S. wage and provided a similar level of safety and environmental protections.

My two proposals would lead to a more equitable distribution of wealth, in the United States and probably worldwide. Studies of 20th century America, 14th century Europe and 16th century Spain demonstrate that a more equitable distribution of wealth leads to a stronger economy.

The alternative is to continue on the path we are on and end up having an economy and society that look like those of a third world nation.   

Tuesday, October 16, 2012

Right-wing group thinks that program to have school children have lunch with new friends may turn kids gay

By Marc Jampole
What could be more innocent and more reflective of basic American values than a program that encourages school children to have lunch with kids with whom they usually don’t associate?  It’s a wonderful way to encourage children to learn about people outside their small circle of friends, who might from a different ethnic or economic background, or maybe even have a disability.

This national program is called Mix It Up at Lunch Day and is sponsored by the Southern Poverty Law Center (SPLC), a long-time civil rights organization known primarily for its work on behalf of African-Americans, but which in recent years has gotten involved in rights issues for gays, immigrants and others.  According to SPLC, Mix It Up “encourages students across the nation to challenge and cross social and racial boundaries by sitting with someone new in the cafeteria for just one day.” SPLC says that more than one million students across the nation took part in Mix It Up last year.

It reminds me of the middle school my son attended, which assigned kids to lunch tables and changed the assignments every six weeks. By the end of the year, every child had sat at lunch with every other child in his or her grade, a great way to slow down the formation of cliques. 

Mix it Up at Lunch Day sounds like an idea that everyone from all points of the political spectrum can get behind.

But not the ultra- right-wing American Family Association (AFA), which has launched a campaign to have parents keep their children home from school on this year’s Mix It Up day, set for October 30.

What could AFA’s objection possibly be?

As reported in the New York Times, AFA claims that the event is “a nationwide push to promote the homosexual lifestyle in America.” 

The Times gives us this quote from Bryan Fisher, who works for AFA: “Anti-bullying legislation is exactly the same,” Mr. Fischer said. “It’s just another thinly veiled attempt to promote the homosexual agenda. No one is in favor of anyone getting bullied for any reason, but these anti-bullying policies become a mechanism for punishing Christian students who believe that homosexual behavior is not something that should be normalized.”

The only way that this statement makes any sense is if Fisher is saying that AFA dislikes Mix It Up and anti-bullying policies because both discourage kids from beating up gays. What else could AFA possibly mean by “punishing Christian students who believe that homosexual behavior shouldn't be normalized” in the context of anti-bullying initiatives?

Beyond this convoluted justification for literally bashing GLBT students, is the illogical inference that Mix It Up has a special gay agenda. There is no special mention of GLBT as a group in the Mix It Up material I saw, and quite a lot about racial and ethnic groups like African-Americans and Latinos. I also saw an emphasis on encouraging kids from different socioeconomic groups to get together. There can be no doubt that Mix It Up is meant to include people of differing sexual orientations (as it should), but their inclusion is not explicitly stated. To say that the program has a special gay orientation is nothing more than a lie.

Moreover, Mix It Up promotes tolerance for differences—be it racial, social, sexual, whatever—does nothing to promote any given lifestyle or ethnic group.

What’s more, most people would only connect SPLC with the civil rights movement for African-Americans.   I understand that the AFA boycott may partially be in retaliation for SPLC putting the right-wing group on its list of hate groups. So maybe, all we have here is a tit-for-tat maneuver that is unfortunately based on a big lie and AFA’s ugly viewpoint regarding sexual minorities. 

That’s pretty bad in and of itself, but I keep having this gnawing feeling that something else is going on.  Let’s add one and one together: The first one is the fact that Mix It Up Day focuses on race and ethnicity. The second one is the fact that SPLC is known for its stand on race issues. When I add those two “ones” together, the two I get is that behind the attack on gays by AFA is a veiled racist attack against minorities.

Monday, October 15, 2012

“Cap & trade” too complex. Why not just create more rigorous emissions standards & fine polluters?

By Marc Jampole
Let’s take a break from the presidential election campaign to discuss a topic that both candidates seem to be largely ignoring: the environment - specifically the enormous amount of carbon wastes that humans are spewing into the environment by burning fossil fuels. The funny thing is that in long term, the rapid warming of the planet through human action is the most single important issue we face, and the candidates want to run away from the discussion.

California is not taking the head-in-the-sand approach of our national leaders when it comes to pollution emissions.  As the New York Times reported today, California is set to introduce a cap-and-trade plan which charges industries money for the greenhouse gases they produce. The California plan seems to be the preferred mode of economists and governments to address pollution control.  A similar cap-and-trade plan never made it through the U.S. Congress. The European Union has had a cap-and-trade program in place since 2005.

But just what is cap-and-trade? The Times gives a good overview of what will happen in California. After I read it, I was scratching my head at its complexity:

“…the state will set an overall ceiling on those emissions and assign allowable emission amounts for individual polluters. A portion of these so-called allowances will be allocated to utilities, manufacturers and others; the remainder will be auctioned off.

Over time, the number of allowances issued by the state will be reduced, which should force a reduction in emissions.

To obtain the allowances needed to account for their emissions, companies can buy them at auction or on the carbon market. They can secure offset credits, as they are known, either by buying leftover allowances from emitters that have met their targets or by purchasing them from projects that remove carbon dioxide or other greenhouse gases from the atmosphere…”

I like the part of it that involves gradually lowering the amount of emissions that are allowed.

But the idea of trading emissions credits is overly complex and therefore almost by definition easy to abuse.  Cap-and-trade creates a marketplace in which pollution credits are bought and sold.  Theoretically it enables a major polluter to continue to spew poison into the air merely by buying pollution credits from companies that don’t pollute or don’t pollute as much. As with all markets, even the theoretical “free market,” the altar at which most Republicans pray, the cap-and-trade marketplace runs by rules and regulations that lend both additional complexity and the possibility of nefarious manipulation.

In some ways, cap-and-trade reminds me of the securitization of home mortgages. It used to be that banks loaned people money to buy a home and then patiently waited until the consumer paid the loan back. With securitization, the banks made the loan and then sold it to someone else, who lumped together many loans and sold them as an investment that could be traded on the market.  Creating a market for mortgage-based financial instruments was supposed to spread the risk and lead to safer investments, which in turn would help consumers.  We all know how that worked out: Because banks were selling off the loans, their lending standards fell, people who couldn’t afford loans got them, those loans were buried in the financial vehicles that were sold, and when the loans went south, the entire house of cards of the mortgage market crumbled, taking the U.S. economy with it.

I don’t think that cap-and-trade will lead to another financial meltdown (although trading in a triviality—the tulip bulb—took down the Dutch economy in the 17th century). What it does is interject a level of complexity that is both unnecessary and open to abuse.

Cap-and-trade is the type of plan that Rube Goldberg might build.  Rube Goldberg was an American cartoonist who drew a series of popular cartoons depicting complex gadgets performing very simple tasks in convoluted ways.

The simple way to deal with emissions is to set regulations and make polluters follow them or suffer stiff fines. The argument against this approach is that it will be too expensive for companies or that the companies will pass on the costs of consumers, hurting everyone, but especially poor people.

These arguments are bogus: First of all, society is already paying the additional cost of pollution through higher healthcare costs and cleanup of natural disasters. These “hidden” costs, often called “social costs” are paid collectively by all of us. We pay and the company doesn’t, meaning that besides allowing our environment to be fouled, we as a community are subsidizing the income of the polluting company’s senior management and shareholders.  It’s a classic “pay me now or pay me later,” except instead of the companies paying now, we all pay later.

Keep in mind, too, that the money that the polluting companies shell out to put scrubbers on coal-burning plants, introduce a little natural gas into the coal mix or any of the other currently available emission technologies goes to the companies that develop, sell and maintain these pollution-preventing technologies. The money is not burned and lost to the economy. It is used to create a more diversified economy, and one that is not so hazardous to the health of the Earth.

As to poor people who might not be able to afford the new higher prices when companies clean up their act, it seems to me that it’s far simpler to give the poor an energy tax credit than to create a convoluted and easy-to-scam cap-and-trade marketplace.

I applaud California for actually doing something about greenhouse gas emissions.  I only wish it had followed the dictum of 14th century Christian philosopher, Thomas of Occam, to seek the simpler solution, which in this case means making polluters pay.