Saturday, February 10, 2007
Back in the late 70s when I was driving for a car service in the Bronx I had more than one almost accident with police cars -- not chasing a suspect -- but rather whose drivers had ALREADY made an arrest and were so pumped that they blew red lights forgetting lights and sirens.
Last -- and perhaps most importantly: Justice White's dictum -- on which the prosecution theory lies -- did not comprehensively rule on the aspects of "imminent danger" as far as I can see. Justice White defended his opinion at the time that by explaining "It is better for all suspects to escape than for all suspects to be killed." That sounds to me like a rule that finds society's need to apprehend the suspect of less weight than the suspect's Fourth Amendment rights -- not a rule that says finds imminent danger to the officer's life automatically outweighed by the suspects rights.
End poverty in 30 years: said John Edwards a few months back. Better to return 40 years back, to when....
Who can fault with the education or self-discipline of third and fourth-quintile income American families....
...or, just enough to subsidize buidling the 16.5 million cars and trucks we manufacture every year as LITHIUM, PLUG-IN hybrids -- at $10,000 per vehicle!
Now, with oil in range of $150/bbl, we are shipping $500 billion more a year overseas; potentially justifying any form of subisidy for the manufacture of lithium plug-in hybrids. At the very least we could re-direct the flood of dollars into our own pockets -- even if the subsidy only broke even on savings -- even if the subsidy did not save multiples of itself (which is much more likely and which trend will grow over time).
January 2006 -- NOT YET REWRITTEN FOR THIS BLOG
Who would dispute that today’s Americans were living through a wage depression if a quarter of our workforce earned minimum wage – or if most, somehow, earned substantially less – and if the minimum wage we were talking about was that of two generations before?
In 1968, L.B.J.'s minimum wage was $9/hour (inflation adjusted, CPI-U) – our 25 percentile wage has become $9/hour (“State of Working America, 2004/2005”, table 2-6) – double the per capita income later!
Today’s federal minimum wage take-home is no better than F.D.R.’s, 1939 minimum of $4.20/hour (no tax) – meaning today’s just-above minimum wages must be comparable to just-above wages in the depression era – quadruple the per capita income later! I wonder how far up the wage curve the depression parallel holds.
Science fiction writers dream up wrongheaded Malthusian futures in which population growth outstrips earth’s resources (“Make Room! Make Room!; “Stand on Zanzibar”) – though advancing technology promises the opposite. Exponentially expanding production aside, the average American could be on the way to a bottom of the barrel future (who builds housing for the median income anymore?).
It all happened before – it was called the industrial revolution.
1800s English factory workers out-produced their individual artisan forbearers ten to a hundred times but ended up subsisting on oat cakes three times a day because they could not afford to eat wheat bread (Thompson’s “Making of the English Working Class”).
The common denominator of schizoid prosperities – then and now: the evaporation of labor’s bargaining clout.
Raising today’s federal minimum wage a dollar an hour would add six percent to fast food cost – but twenty percent to minimum wage purchasing power. Admittedly, raising the minimum from $206 a week to $246 a week won’t send any rush of new customers to the cash registers.
Raising the minimum wage from $5.00/hour to $12.50/hour would hike a six-dollar meal to nine dollars (the two dollar labor cost growing to five) – but the price of that meal relative to a minimum wage weekly paycheck would drop from 3% to 1.8% (the same percentage of a $330 a week income that a six dollar meal represents, today).
Should we keep fast food cheap for $500 a week earners at the expense of making life miserable for $206 workers? A $500 earner who spends $60 a week at McDonalds would need but $30 a week more to maintain his fast food fashion at 50% higher prices.
Overall inflation caused by a $500 minimum wage should only be 4%* -- not counting other wages pushed up.
Inflation can redistribute wealth from those who don’t get a raise to those who do – but recapturing labor’s share from CEOs, ballplayers and TV anchors who make 25 times their 1960s predecessors pay would take ruinous levels. Only a seriously unionized workforce can practicably re-take share from that high up the income scale.
1800s British workers designed to rebuild labor’s market muscle via protective legislation (‘twas to be their non-violent “French Revolution”) – but for them to so much as promote the vote (for all males) guaranteed, first, jail, and then, Australian exile (“1984” in 1804). The only thing perpetuating American workers on track to a “Freejack” future is their own complacency – even the 50% who would “rather be” unionized don’t sense any pressing “national emergency” – aided and abetted by an asleep-at-the-switch press corps (at least on labor matters).
Most untold story**: under the federal, stopped-clock-was-right in 1955, poverty formula (three times a crisis food budget), the poverty line for a family of four would be $72,000 a year by today -- had food prices risen twice as fast as other goods in the meantime -- instead of half as fast, leading to as foolish an official guideline of $18,000 (“Raise the Floor”, table 2-4). How alive to the great wage divide all America could be had a more alert media informed us poverty was rising from 15% in L.B.J.’s time to 25% – as it happened!
If and when America wakes up and smells the prosperity:
The most comprehensive approach – perhaps the only realistic hope – to end the American race to the bottom is (Germany’s tried and proved) sector-wide labor agreements, wherein employees working in the same occupation in the same geographic area must – by law – work under one and the same collectively bargained contract – even for different employers!
Sector-wide agreements could rebuild American labor’s bargaining power overnight – and reconstitute its political muscle – while eliminating pesky (contractless) scabs. A 1700s American scientist and philosopher might say: “Be not the first by whom the new is tried, nor yet the last to lay the old aside.”
THIS ENTIRE MESSAGE IS IN THE PUBLIC DOMAIN – for updates see: www.purpleocean.org/blog/80
PS. A Republican baked inflation formulation (C-CPI-U) would lower Social Security cost of living adjustments by going in opposite directions at once:
(a) taking fuller count of technological deflation (a same price TV now comes with a remote):
(b) while ignoring rising prices when consumers substitute less desirable,cheaper goods (less gasoline for more subway rides; less pork for more rice).
[ * A $7.50 hourly raise translates to an average yearly raise of $7500 for earners between old minimum wage and new. To the 54 million now below $500/week (“State of Working America, 2004-5” table 2-6) we add 6 million who get a full raise -- to get 60 million half raises. (1/3 up,1/4 down simplifier >) $10,000 X 45 million = $450 billion raise -- divided by $12 trillion GDP = 3.75% inflation.]
[ ** More missed misreporting: the Census reports top-fifth families taking 50% of all income – up from 40%, two decades back -- by “top-coding” family income above one million dollars out of its survey – adjust for “top-coding” by assuming overall family income doubled (over the same span per capita income did) and top-fifth rakes 60%!]
$9/hour has become the minimum wage norm in modern Europe – for now! England’s and Ireland’s minimums are scheduled to rise above that in 2006. The minimums of such poor countries as Greece, Malta and Cyprus cluster around $170/week (E600); a little less than America's.
“The United States of America of 1968” featured a minimum wage of $9/hour (at half of today’s labor productivity!) – scheduled to drop in future years (if we had had a crystal ball) to $8/hour by 1974, $7/hour by 1981, $6/hour by 1991 and $5.15/hour by today (which remits the same take home amount as the untaxed $4/hour minimum of 1939 -- in adjusted 2005 dollars).
European minimum wages – and their negotiated equivalents -- are adjusted annually – excepting the Netherlands (at $350/week) and Latvia every two years). The USA's 1997 minimum has stuck still for 8 years, now; 1991’s stuck for 4 years; 1981’s for 9 years.
The interesting thing here is that, if L.B.J.’s minimum could pay $9/hour at half of today’s American and European labor productivity, does that mean economies on both sides of the Atlantic could practicably support an $18/hour minimum wage today?! Just to pose the question.
A $12/hour, USA minimum wage would raise the cost of GDP output by only a manageable 3.5% -- not counting other wages being pushed up – and could effectively eliminate most poverty and crime levels that Europe hasn't had for a long time.
Which president’s signatures are on the $4, $5, $6, $7, $8 and $9/hour minimum wage bills (in 2005 dollars)?:
$4 (w/o tax): FDR’s – at 25% of today's income level, per capita.
$5: Clinton’s (same as FDR's w/tax)!
$6: Bush I’s -- at 80%.
$7: Eisenhower’s -- at 40%.
$8: Nixon’s -- at 60%.
$9: LBJ’s -- at 50%.
President Nixon signed an $8/hour minimum wage bill in 1974 -- to go into effect immediately -- when average income was 60% of today's.
At that time, Nixon was also promoting his version of a national health insurance plan – an employer mandate version, more market oriented than Ted Kennedy’s competing, single-payer version -- not because of any heavy free market bent on his part; he just thought a less radical approach (for the time) would sell more easily. Had Nixon lasted out a normal second term, the only question might have been which national health insurance program was now law.
I caught Nixon on a 1992 Larry King interview: it was so refreshing to hear a national political figure state flatly that Israeli settlements in the West Bank were an unworkable mistake (now that America has traded skyscrapers for settlements, I guess time has so proven him right).
What today’s Democratic Party needs is leadership well to the left of any of its recent or current presidential aspirants – who wont hesitate speak up about their social welfare policies: more "flaming liberals" types in the progressive mold of Richard M. Nixon.
How Rube Goldberg might fix Social Security:
FIRST: Unionize American labor across the board.
SECOND: the other 90% of American hourly wages begin to catch up with the 70% increase in labor productivity that has occurred since 1973 -- which they have completely missed out on until now.
THIRD: Americans cut way back on their working hours (we work 50% more hours than Europeans, today).
FOURTH: American GDP takes a one-time drop (per capita output is currently one third larger here than modern Europe only because we work more hours).
FIFTH: Social Security coffers are flooded with new revenue (as hourly wages below the 84 percentile cap – the only incomes whose growth impact FICA collections – finally grow!).
SIXTH AND MOST IMPORTANT: Social Security collections go on a pay-as-you-go basis for all time – potentially while cutting FICA rates immediately – hopefully while raising benefits formulas over time (as all American incomes again race along side productivity – about four times population growth’s pace -- forever).
Lets, see: our president wants to borrow a couple of trillion dollars to jump start Social Security private retirement accounts – because of the shortfall they will cause in current disbursements. Wouldn’t it be simpler to say he wants to borrow a couple of trillion to lend to individuals to buy securities.
Meanwhile – while Social Security borrows trillions for whatever – Social Security will go on lending its current surplus to the government to cover non-Social Security expenditures.
Meanwhile – while trillions of dollars of tax cuts for the well off are promised to lift all Americans to permanent prosperity – President Bush bases his Social Security future worries on the worst possible economic growth projections….
….all the while proposing a stock market solution that depends on the best possible growth expectations.
As Casey Stengel once put it: “Does anybody here know how to play this game”?