David Simon on Two Americas and the loss of our Social Compact

[kendallf]

This article resonated with me as I think it nails America's struggle right now.

http://www.theguardian.com/world/2013/dec/08/david-simon-capitalism-marx-two-americas-wire

TL/DR: Capitalism has successfully wiped Marxism off the map in terms of production success, but now, unfettered pursuit of minimized human capital cost is breaking the social compact, marginalizing increasing numbers of our citizens, and increasing inequality will lead to violence if we can't moderate profit with concern for people and the common good.

I am an optimist and a believer in individual rights, but I also want to provide for the common good, especially in areas that seem to need mass coordinated action (environment, health care, anti-discrimination).  We need a better yardstick for human progress than "profit, all else be damned".

It's also funny that he feels to need to explicitly state that he's not a Marxist, and I am betting we'll get derogatory comments here based on this as well.

[Syonyk]

It's also funny that he feels to need to explicitly state that he's not a Marxist, and I am betting we'll get derogatory comments here based on this as well.

If someone starts a comment with, "I'm not a racist, but..." - they're not going to be well received most places either.  And that's almost literally what he says. :)

[kendallf]

It's also funny that he feels to need to explicitly state that he's not a Marxist, and I am betting we'll get derogatory comments here based on this as well.

If someone starts a comment with, "I'm not a racist, but..." - they're not going to be well received most places either.  And that's almost literally what he says. :)

Eh, not so much.  He says Marx's "solutions" belong in history's dustbin but that he was pretty good at seeing the end result of pure capitalism.  I think I'd agree on both counts.

[Syonyk]

He says,

"I'm not a Marxist in the sense that I don't think Marxism has a very specific clinical answer to what ails us economically. I think Marx was a much better diagnostician than he was a clinician. "

Rephrased:

"I'm not a Marxist ... but, I think..."

I stand by my interpretation of his phrasing.

If you have to assure people you aren't something prior to making an argument, it usually means you are that something.

[Argyle]

Whether he fits someone's definition of a Marxist or not is irrelevant.  Let's discuss his ideas without writing them off with a label.

[Janie]

Nice article, kendallf. Thanks for posting.

[kendallf]

Whether he fits someone's definition of a Marxist or not is irrelevant.  Let's discuss his ideas without writing them off with a label.

Bingo..

Nice article, kendallf. Thanks for posting.

You're welcome. 

I have been giving this sort of stuff a good bit of thought, from the context of working toward my own personal FI, and wondering what I'd like to do afterwards and who it will benefit.  I have great personal optimism but I do see our society becoming increasingly divided and wonder what direction we can take to mend the schism.

[PeachFuzzInVA]

Eh, not so much.  He says Marx's "solutions" belong in history's dustbin but that he was pretty good at seeing the end result of pure capitalism.  I think I'd agree on both counts.

We'd have to have actual capitalism first before we could ever see the result of pure capitalism. As it is, all we've ever experienced is the government making the rules to the advantage of the highest bidder. That's not capitalism, that's corporatism. Big difference.

[kendallf]

Eh, not so much.  He says Marx's "solutions" belong in history's dustbin but that he was pretty good at seeing the end result of pure capitalism.  I think I'd agree on both counts.

We'd have to have actual capitalism first before we could ever see the result of pure capitalism. As it is, all we've ever experienced is the government making the rules to the advantage of the highest bidder. That's not capitalism, that's corporatism. Big difference.

OK, fair enough -- though I don't believe our country had a "corporatist" beginning.  I believe the Founding Fathers were sincerely interested in forming a new and representative government (with gaping holes re: slavery and women's rights).  But yes, we have a broken, non-representative government bent to big corporate interests currently (which Simon mentions in this article). 

So would you advocate pure capitalism?  Do you believe we can capture current externalities like businesses which pollute because it's cheaper, or treat their workers like expendable, interchangeable units?  Is the only metric that matters the dollar?

I'm asking sincerely.  A good chunk of libertarianism resonates with me; I believe in personal responsibility and I believe that self interest is a necessary component in human motivation to work, to excel, to create.  What I found weak and unconvincing in writers like Ayn Rand, though, was the part where all of the true creators were going to leave the sheep to die and live in a remote utopia where nobody would do anything for free but our innate drive to create and excel would result in fair treatment for all.

There are Bad People and people are are occasionally bad with respect to others.  We need an ethos more complicated than "I made this", in my opinion.

[PeachFuzzInVA]

Eh, not so much.  He says Marx's "solutions" belong in history's dustbin but that he was pretty good at seeing the end result of pure capitalism.  I think I'd agree on both counts.

We'd have to have actual capitalism first before we could ever see the result of pure capitalism. As it is, all we've ever experienced is the government making the rules to the advantage of the highest bidder. That's not capitalism, that's corporatism. Big difference.

OK, fair enough -- though I don't believe our country had a "corporatist" beginning.  I believe the Founding Fathers were sincerely interested in forming a new and representative government (with gaping holes re: slavery and women's rights).  But yes, we have a broken, non-representative government bent to big corporate interests currently (which Simon mentions in this article). 

So would you advocate pure capitalism?  Do you believe we can capture current externalities like businesses which pollute because it's cheaper, or treat their workers like expendable, interchangeable units?  Is the only metric that matters the dollar?

I'm asking sincerely.  A good chunk of libertarianism resonates with me; I believe in personal responsibility and I believe that self interest is a necessary component in human motivation to work, to excel, to create.  What I found weak and unconvincing in writers like Ayn Rand, though, was the part where all of the true creators were going to leave the sheep to die and live in a remote utopia where nobody would do anything for free but our innate drive to create and excel would result in fair treatment for all.

There are Bad People and people are are occasionally bad with respect to others.  We need an ethos more complicated than "I made this", in my opinion.

That's a lot to get into at 10:30 on a Saturday night, but I would advocate for a pure free-society. If one group wants to have their socialist city, they're welcome to have it. If another wants to have their purely libertarian city, they're welcome to have it. Neither group should force the other to live under their rules and people would be free to choose which type of city they live in.

In a free market, artificial barriers to entry wouldn't be put in place by governments the way they have been and still are. In New York City, taxi's must have a "medallion" to operate. Essentially, to operate a taxi company in New York City, it costs $700,000 or more simply to obtain permission to do so. Meanwhile, the median annual salary for a taxi driver in NYC is $38,000 with even the 90th percentile only earning $55,000. Now that Uber has made it's way into New York, drivers for Uber have reported earning $90,000 in the city while providing a lower cost service to the customer. Uber (the free market) has succeeded in providing a superior service at a lower cost while paying the workers more. The medallion owners (corporatism) have filed suit to try to prevent Uber from operating in New York City, but the case hasn't been decided yet.

Capitalism can, and has been proven to, provide a win-win-win situation for everybody: the owner, the worker, and the consumer. Unfortunately, as long as our politicians remain for sale, we'll never get to experience it on a large scale.

[Bob W]

 “If that is Marxism, then I am not a Marxist”    Karl Marx.     He really wasn't you know.   The socialist central authority arguement has gone on since the first immigrants at Jamestown starved to death on collective gardens.   Lincoln forever cemented socialism at the point of a gun,  printing greenbacks,  imprisoning 10,000 journalists and killing 20% of the fighting age males.   He was a big proponent of crony capitalism having risen to power via his railroad lobbiest connections.              What we have currently is a 3 tier system.   The rich get richer and the upper middle class transfers their income to those who do not work.    It is an unsustainable system that cannot be sustained for much longer.    So a good mustachian should strive to use the system to their advantage and assume that their grandkids may be better off in another country.   I'm probably wrong though.
__________________

[Jack]

So would you advocate pure capitalism?  Do you believe we can capture current externalities like businesses which pollute because it's cheaper, or treat their workers like expendable, interchangeable units?  Is the only metric that matters the dollar?

I'm asking sincerely.  A good chunk of libertarianism resonates with me; I believe in personal responsibility and I believe that self interest is a necessary component in human motivation to work, to excel, to create.  What I found weak and unconvincing in writers like Ayn Rand, though, was the part where all of the true creators were going to leave the sheep to die and live in a remote utopia where nobody would do anything for free but our innate drive to create and excel would result in fair treatment for all.

I, too, would "like" to be libertarian, but I'm going to answer "no." Pure capitalism is not viable for two reasons:

• Externalities and the "Tragedy of the Commons." With pure capitalism, the only "solution" to that is to divide up the commons and/or sell it off to the highest bidder, so that it doesn't exist anymore. That might work for the literal Boston Common that Garrett Hardin used as an example, but it's not possible for things like air. Therefore, pure capitalism would inevitably cause terminal environmental damage.
• The perfect competition that libertarians often imagine pure capitalism would entail is a fantasy. First of all, perfect competition assumes all market participants are well-informed, but without government-imposed rules (e.g. food ingredient labels) that wouldn't be the case. Second, and more importantly, in any industry with non-zero barriers to entry, perfect competition is not a stable situation. Whichever business starts off with even the tiniest advantage would eventually out-compete and buy out his competitors, causing round after round of mergers until, in the absence of anti-trust regulation, the industry becomes a monopoly. Even worse, unchecked monopolies would buy themselves armies to enforce and maintain their economic advantage (remember, we've already privatized the police in this scenario), causing them to resemble all-encompassing autocratic dictatorships more than economic engines.

[NICE!]

“If that is Marxism, then I am not a Marxist”    Karl Marx.     He really wasn't you know.   The socialist central authority arguement has gone on since the first immigrants at Jamestown starved to death on collective gardens.   Lincoln forever cemented socialism at the point of a gun,  printing greenbacks,  imprisoning 10,000 journalists and killing 20% of the fighting age males.   He was a big proponent of crony capitalism having risen to power via his railroad lobbiest connections.              What we have currently is a 3 tier system.   The rich get richer and the upper middle class transfers their income to those who do not work.    It is an unsustainable system that cannot be sustained for much longer.    So a good mustachian should strive to use the system to their advantage and assume that their grandkids may be better off in another country.   I'm probably wrong though.
__________________

In before everyone flips out about your Lincoln comments and assumes you're a closet racist. I think you probably need to package them differently since most people don't know about the suspension of habeus corpus, deportation of a Congressman, or other historical facts. It is important to note that slavery was real and it was bad, just like racism. Does that excuse all of Lincoln's policies or actions? No, but people will have a hard time listening unless you make those points. That's not fair, but people love their worlds to have no grays in them. Nuance is extremely difficult for the overwhelming majority of people, especially when confronted with ideas or facts they've never heard.

That's quite the sidetrack, so back to the main discussion...

There is nothing new under the sun. There have always been wealthy people, poor people, educated people, and uneducated people. We had a good run after WWII that gave us a society with a good GINI coefficient and immense global power. The power remains but a "fair" economy, by the reckoning of some, evades us now because we are not the only remaining industrial power on Earth, like after WWII. After the devastation of that war, the United States was the only one left standing. It had already been a bigger economy than Britain for a long time (I think like 50+ years), but the hegemonic torch was passed due to Britain giving the US control over the seas with Lend-Lease and later the enshrinement of NATO, UNSC, and the Bretton Woods System (IMF, World Bank, USD as reserve currency)...All of these things giving the US a superpower role.

Over time, other economies recovered and developed. Technology progressed. Women entered the workforce. Minorities made significant social progress. All of these factors provided a downward pressure on overall wages, but most notably on the lower end of the scale. Equities and bonds provided excellent returns and tax/governmental constructs were built that favored at the very least the middle class, if not the wealthy. At the same time, Americans reacted harshly to some poor crime trends in the 1970s, bringing in aggressive 'tough-on-crime' laws and downright racist sentencing policies that still aren't fixed (Fair Sentencing Act of 2010 helped, but crack is still unscientifically given an 18-to-1 difference in the law). The result has been a country with 5% of the world's population and 20% of its prisoners. We're only now coming to terms with this through the decriminalization of marijuana, changes in sentencing, and an astonishing coalition of libertarians, social liberals, and the Christian right that have decided what we are doing isn't working.

All of these are way more important than some half-assed ideas of how capitalism is a broken philosophy or profit/greed is evil. Do I think we should have pure capitalism? Hell no. Do I think we have anything that looks like it? Hell no. Do I think we should worship money or that greed is good? Hell no. Do I really think that is as widespread of a problem as some people think? Hell no.

We have a weird corporatist mixed economy that functions well due to our place in the world and exploitation of the system through said hegemonic place. If we didn't control the seas with the greatest Navy the earth has ever seen, have natural protection from the Eurasian landmass thanks to two massive oceans, have a ridiculous nuclear arsenal, continue to find natural resource after natural resource, or have a somewhat unrealistically optimistic "frontier" mindset, then maybe things would be different. But we don't and they're not.

America is America for many reasons. Capitalism is but a small piece of that puzzle.

[Bucksandreds]

Article is spot on.  There are two ways to think about society. Either it's every man for himself or that, to some degree, we are all in this together.  I had a conversation with my parents a few weeks back which is similar.  My mom was complaining that under 'Obamacare' she has to carry pregnancy coverage when she is already in her 60s.  She couldn't comprehend that health insurance only works if every person pitches in for every condition regardless of their likelihood to need that specific treatment. My parents clearly are of the every man for himself mentality. I see my generation (millennials) as those who will get the U.S. system back to a country where all can share in the rewards.  It just may take time for the every man for himself baby boomers to expire.  I would immediately raise the minimum wage so that there are no full time working poor in our country.  I would expand the earned income tax credit to put more money in the pockets of the middle class and I would tax capital gains and dividends as regular income and end corporate tax welfare.  Those moves would very quickly rebalance the system, encouraging those that currently live off the system to work, as well as allowing all to share in the rewards of capitalism.

[Norioch]

The result has been a country with 20% of the world's population and 5% of its prisoners.

I think you flipped these numbers.

[PeachFuzzInVA]

So would you advocate pure capitalism?  Do you believe we can capture current externalities like businesses which pollute because it's cheaper, or treat their workers like expendable, interchangeable units?  Is the only metric that matters the dollar?

I'm asking sincerely.  A good chunk of libertarianism resonates with me; I believe in personal responsibility and I believe that self interest is a necessary component in human motivation to work, to excel, to create.  What I found weak and unconvincing in writers like Ayn Rand, though, was the part where all of the true creators were going to leave the sheep to die and live in a remote utopia where nobody would do anything for free but our innate drive to create and excel would result in fair treatment for all.

I, too, would "like" to be libertarian, but I'm going to answer "no." Pure capitalism is not viable for two reasons:

• Externalities and the "Tragedy of the Commons." With pure capitalism, the only "solution" to that is to divide up the commons and/or sell it off to the highest bidder, so that it doesn't exist anymore. That might work for the literal Boston Common that Garrett Hardin used as an example, but it's not possible for things like air. Therefore, pure capitalism would inevitably cause terminal environmental damage.
• The perfect competition that libertarians often imagine pure capitalism would entail is a fantasy. First of all, perfect competition assumes all market participants are well-informed, but without government-imposed rules (e.g. food ingredient labels) that wouldn't be the case. Second, and more importantly, in any industry with non-zero barriers to entry, perfect competition is not a stable situation. Whichever business starts off with even the tiniest advantage would eventually out-compete and buy out his competitors, causing round after round of mergers until, in the absence of anti-trust regulation, the industry becomes a monopoly. Even worse, unchecked monopolies would buy themselves armies to enforce and maintain their economic advantage (remember, we've already privatized the police in this scenario), causing them to resemble all-encompassing autocratic dictatorships more than economic engines.

Even in a Libertarian society, your rights end where they violate the rights of another. Corporations still don't have a right to pollute the air as others have a right to breathe clean air. Where we would disagree is how to accomplish the task of preventing corporations from destroying the environment. Additionally, just as corporations don't have the right to pollute the air that other's have a right to breathe, you're assuming that in a Libertarian society, corporations would have an unchecked ability to initiate violence against others. Again, they'd be violating the rights of others and that's not a concept that's allowed in a Libertarian society.

With the system we're living in right now, we're already experiencing the very issues which you've brought up as an argument against libertarianism. Our government isn't run by us, it's run by the corrupt corporations. Corporate lobbyist are writing the bills, which are voted into law by the politicians they've bought, and enforced by the police departments, federal bureaucrats, and military funded by the tax dollars their politicians decide to take from us.  You're still confusing corporatism with capitalism.

While I agree that pure libertarianism, like any political ideology in its purest form, is Utopian, if you're willing to accept that libertarianism wouldn't work because of the corrupt nature of men in power, you must also accept that the opposite is true based on the same principle; that men in powerful positions in the government are equally as susceptible to the same corruption. To suggest libertarianism is flawed based on these theories would be to suggest additional government would be the answer, and that simply is not true.

[Bucksandreds]

So would you advocate pure capitalism?  Do you believe we can capture current externalities like businesses which pollute because it's cheaper, or treat their workers like expendable, interchangeable units?  Is the only metric that matters the dollar?

I'm asking sincerely.  A good chunk of libertarianism resonates with me; I believe in personal responsibility and I believe that self interest is a necessary component in human motivation to work, to excel, to create.  What I found weak and unconvincing in writers like Ayn Rand, though, was the part where all of the true creators were going to leave the sheep to die and live in a remote utopia where nobody would do anything for free but our innate drive to create and excel would result in fair treatment for all.

I, too, would "like" to be libertarian, but I'm going to answer "no." Pure capitalism is not viable for two reasons:

• Externalities and the "Tragedy of the Commons." With pure capitalism, the only "solution" to that is to divide up the commons and/or sell it off to the highest bidder, so that it doesn't exist anymore. That might work for the literal Boston Common that Garrett Hardin used as an example, but it's not possible for things like air. Therefore, pure capitalism would inevitably cause terminal environmental damage.
• The perfect competition that libertarians often imagine pure capitalism would entail is a fantasy. First of all, perfect competition assumes all market participants are well-informed, but without government-imposed rules (e.g. food ingredient labels) that wouldn't be the case. Second, and more importantly, in any industry with non-zero barriers to entry, perfect competition is not a stable situation. Whichever business starts off with even the tiniest advantage would eventually out-compete and buy out his competitors, causing round after round of mergers until, in the absence of anti-trust regulation, the industry becomes a monopoly. Even worse, unchecked monopolies would buy themselves armies to enforce and maintain their economic advantage (remember, we've already privatized the police in this scenario), causing them to resemble all-encompassing autocratic dictatorships more than economic engines.

Even in a Libertarian society, your rights end where they violate the rights of another. Corporations still don't have a right to pollute the air as others have a right to breathe clean air. Where we would disagree is how to accomplish the task of preventing corporations from destroying the environment. Additionally, just as corporations don't have the right to pollute the air that other's have a right to breathe, you're assuming that in a Libertarian society, corporations would have an unchecked ability to initiate violence against others. Again, they'd be violating the rights of others and that's not a concept that's allowed in a Libertarian society. You're still confusing corporatism with capitalism.

I'm afraid your inadvertently turning your argument into a red herring fallacy. Whether this country is suffering from overreaching capitalism or corporatism is not the main point. The main point is the effect of the extreme conditions.  Every study ever done points to negative effects on a society with a very large gap between the haves and the have nots. It does not need to be a political issue. I rarely vote for anyone other than independents but I recognize this as the seminal issue of our time. I am very non liberal in wanting to limit handouts. I am very unconservative in wanting to legislate more worker's rights. The true solution involves making it pay to hold a job (minimum wage is way too low) and holding the powerful to the same tax standards that they hold the middle and upper middle class to.

[PeachFuzzInVA]

So would you advocate pure capitalism?  Do you believe we can capture current externalities like businesses which pollute because it's cheaper, or treat their workers like expendable, interchangeable units?  Is the only metric that matters the dollar?

I'm asking sincerely.  A good chunk of libertarianism resonates with me; I believe in personal responsibility and I believe that self interest is a necessary component in human motivation to work, to excel, to create.  What I found weak and unconvincing in writers like Ayn Rand, though, was the part where all of the true creators were going to leave the sheep to die and live in a remote utopia where nobody would do anything for free but our innate drive to create and excel would result in fair treatment for all.

I, too, would "like" to be libertarian, but I'm going to answer "no." Pure capitalism is not viable for two reasons:

• Externalities and the "Tragedy of the Commons." With pure capitalism, the only "solution" to that is to divide up the commons and/or sell it off to the highest bidder, so that it doesn't exist anymore. That might work for the literal Boston Common that Garrett Hardin used as an example, but it's not possible for things like air. Therefore, pure capitalism would inevitably cause terminal environmental damage.
• The perfect competition that libertarians often imagine pure capitalism would entail is a fantasy. First of all, perfect competition assumes all market participants are well-informed, but without government-imposed rules (e.g. food ingredient labels) that wouldn't be the case. Second, and more importantly, in any industry with non-zero barriers to entry, perfect competition is not a stable situation. Whichever business starts off with even the tiniest advantage would eventually out-compete and buy out his competitors, causing round after round of mergers until, in the absence of anti-trust regulation, the industry becomes a monopoly. Even worse, unchecked monopolies would buy themselves armies to enforce and maintain their economic advantage (remember, we've already privatized the police in this scenario), causing them to resemble all-encompassing autocratic dictatorships more than economic engines.

Even in a Libertarian society, your rights end where they violate the rights of another. Corporations still don't have a right to pollute the air as others have a right to breathe clean air. Where we would disagree is how to accomplish the task of preventing corporations from destroying the environment. Additionally, just as corporations don't have the right to pollute the air that other's have a right to breathe, you're assuming that in a Libertarian society, corporations would have an unchecked ability to initiate violence against others. Again, they'd be violating the rights of others and that's not a concept that's allowed in a Libertarian society. You're still confusing corporatism with capitalism.

I'm afraid your inadvertently turning your argument into a red herring fallacy. Whether this country is suffering from overreaching capitalism or corporatism is not the main point. The main point is the effect of the extreme conditions.  Every study ever done points to negative effects on a society with a very large gap between the haves and the have nots. It does not need to be a political issue. I rarely vote for anyone other than independents but I recognize this as the seminal issue of our time. I am very non liberal in wanting to limit handouts. I am very unconservative in wanting to legislate more worker's rights. The true solution involves making it pay to hold a job (minimum wage is way too low) and holding the powerful to the same tax standards that they hold the middle and upper middle class to.

There will always be an extremely large gap between the haves and have-nots. Unfortunately, it's an unavoidable product of nature that every species on earth experiences. I do agree that workers should have more rights. One being that they should have the right to work for whatever wage and benefits they and their employer find mutually agreeable without an uninterested third party dictating those conditions. This is where I think labor unions have a place as they give the employee a stronger place at the negotiating table. Would you advocate for free trade in addition to raising the minimum wage?

[Argyle]

Very many species do not experience "a gap between the haves and the have-nots," and even human societies vary widely in how large the gap is.  Modern-day U.S. has one of the largest gaps in the developed world, which we then interpret as "normal."

[Bucksandreds]

So would you advocate pure capitalism?  Do you believe we can capture current externalities like businesses which pollute because it's cheaper, or treat their workers like expendable, interchangeable units?  Is the only metric that matters the dollar?

I'm asking sincerely.  A good chunk of libertarianism resonates with me; I believe in personal responsibility and I believe that self interest is a necessary component in human motivation to work, to excel, to create.  What I found weak and unconvincing in writers like Ayn Rand, though, was the part where all of the true creators were going to leave the sheep to die and live in a remote utopia where nobody would do anything for free but our innate drive to create and excel would result in fair treatment for all.

I, too, would "like" to be libertarian, but I'm going to answer "no." Pure capitalism is not viable for two reasons:

• Externalities and the "Tragedy of the Commons." With pure capitalism, the only "solution" to that is to divide up the commons and/or sell it off to the highest bidder, so that it doesn't exist anymore. That might work for the literal Boston Common that Garrett Hardin used as an example, but it's not possible for things like air. Therefore, pure capitalism would inevitably cause terminal environmental damage.
• The perfect competition that libertarians often imagine pure capitalism would entail is a fantasy. First of all, perfect competition assumes all market participants are well-informed, but without government-imposed rules (e.g. food ingredient labels) that wouldn't be the case. Second, and more importantly, in any industry with non-zero barriers to entry, perfect competition is not a stable situation. Whichever business starts off with even the tiniest advantage would eventually out-compete and buy out his competitors, causing round after round of mergers until, in the absence of anti-trust regulation, the industry becomes a monopoly. Even worse, unchecked monopolies would buy themselves armies to enforce and maintain their economic advantage (remember, we've already privatized the police in this scenario), causing them to resemble all-encompassing autocratic dictatorships more than economic engines.

Even in a Libertarian society, your rights end where they violate the rights of another. Corporations still don't have a right to pollute the air as others have a right to breathe clean air. Where we would disagree is how to accomplish the task of preventing corporations from destroying the environment. Additionally, just as corporations don't have the right to pollute the air that other's have a right to breathe, you're assuming that in a Libertarian society, corporations would have an unchecked ability to initiate violence against others. Again, they'd be violating the rights of others and that's not a concept that's allowed in a Libertarian society. You're still confusing corporatism with capitalism.

I'm afraid your inadvertently turning your argument into a red herring fallacy. Whether this country is suffering from overreaching capitalism or corporatism is not the main point. The main point is the effect of the extreme conditions.  Every study ever done points to negative effects on a society with a very large gap between the haves and the have nots. It does not need to be a political issue. I rarely vote for anyone other than independents but I recognize this as the seminal issue of our time. I am very non liberal in wanting to limit handouts. I am very unconservative in wanting to legislate more worker's rights. The true solution involves making it pay to hold a job (minimum wage is way too low) and holding the powerful to the same tax standards that they hold the middle and upper middle class to.

There will always be an extremely large gap between the haves and have-nots. Unfortunately, it's an unavoidable product of nature that every species on earth experiences. I do agree that workers should have more rights. One being that they should have the right to work for whatever wage and benefits they and their employer find mutually agreeable without an uninterested third party dictating those conditions. This is where I think labor unions have a place as they give the employee a stronger place at the negotiating table. Would you advocate for free trade in addition to raising the minimum wage?

There will always be a gap and that is very important to maintain to some degree as it gives incentives to work harder. The issue isn't an issue of removing the gap. Even the author of that article states that Marxism does not work.  The goal should be to improve the conditions of those at the bottom, particularly the working poor. There is not infinite wealth. Wealth can be created and destroyed but all there really ever can be is relative wealth. If everyone was given 10x what they have now there would be no more wealth on earth as there there was before hand. Things would just cost around 10x more.  Shrinking the wealth gap is about giving all of those, in this rich country who are willing to work, a relatively more stable financial situation.  You say more unions, I say higher minimum wage. Mandatory workers unions everywhere is a fine solution to me. Reagan greatly pushed forward the destruction of unions. Raising the minimum wage and indexing it to inflation would be the simplest way forward, to me. This would place upward price pressures on all, to a small to moderate degree. To limit the pain felt by the middle and upper middle class I would significantly expand the earned income tax credit. This would be payed for by eliminating, for tax purposes, the distinction between earned wages and investment income.

[jmusic]

A lot of the article resonates with me, however I don't see raising the minimum wage to be a solution. 

All that will do is increase the artificial shortage of jobs. 

Economics 101 people...
 

[Bucksandreds]

A lot of the article resonates with me, however I don't see raising the minimum wage to be a solution. 

All that will do is increase the artificial shortage of jobs. 

Economics 101 people...
 

Raising the earned income tax credit to a very high degree would have the same effect on poverty without raising the minimum wage. Business taxes would need to bring in more revenue to offset it. The earned income tax credit could work very much the same as raising minimum wage. It would 'pay back' the difference between what is payed by a company and what is needed to keep people out of poverty. If you don't then charge that back to the business in taxes, it becomes corporate welfare and raises the deficit. Businesses making record profits are not suddenly going to lay off half of their workforce. I've never seen any studies that cause the mass layoffs that conservatives scream is a fact.

[Syonyk]

Meanwhile, Walmart is closing stores for "unspecified plumbing problems" in a few areas... despite no indication of plumbing issues, no permits to do major plumbing renovations, etc... 

[Bucksandreds]

Meanwhile, Walmart is closing stores for "unspecified plumbing problems" in a few areas... despite no indication of plumbing issues, no permits to do major plumbing renovations, etc...

That is due to attempted unionizing. If you were suggesting that Walmart closed the stores to avoid paying higher wages, I hope that you were inadvertently conflating the issues. Destruction of unionization and labor in general is why the government needs to address the fact that a significant percentage of our population earns poverty level wages. You used an issue that proves the articles point even more but attempted to spin it into one that supports the opposite viewpoint.  You're not in a discussion with mental midgets, my friend.

[Syonyk]

I was aware one of the stores being closed was probably related to union issues - is that true of the other ones as well?  Last I saw, nobody had figured out a pattern for the other store closures.

And that was in response to "Businesses making record profits are not suddenly going to lay off half of their workforce."

[Bucksandreds]

I was aware one of the stores being closed was probably related to union issues - is that true of the other ones as well?  Last I saw, nobody had figured out a pattern for the other store closures.

And that was in response to "Businesses making record profits are not suddenly going to lay off half of their workforce."

On an individual store by store basis, for sure they will try to crush labor at the expense of that store's profit. The solution isn't for businesses to stop looking out for their own self interests. The solution is for our representatives to look out for us.  A nationwide raise in the minimum wage would lay off a small percentage of workers.  Mostly it would cause higher inflation, in the first year.  I would offset this by raising the earned income tax credit for the middle class. Either we voluntarily make a change or society slowly becomes more and more fractured. What is your solution?

[Syonyk]

The solution is for our representatives to look out for us.

Representatives get into office on money.  Low income workers, more or less by definition, don't have money.  Therefore politicians don't actually care very much about them.  They'll make the proper noises about it for interviews (because at least some poor people vote), but when it comes to actually doing something, very little manages to happen.  I don't have any expectation that politicians will fix the problem.  It's far more profitable to cater to people with money.

If you get into office by promising things to the people who will give you money to get into office, and then don't scratch their backs, "vote the bums out!" is very effective at finding a more compliant person for the position at the next election.

This is, of course, totally broken, and I hold the view that anyone who seeks a position of political power is, by that very nature, not suited to the position.  I don't think a random draft for Congresscritters and local politicians would be any worse than what we have now.  I'd also support a "None of the above" option in elections, and if that option won, a different slate of candidates would have to try for the position.

A nationwide raise in the minimum wage would lay off a small percentage of workers.  Mostly it would cause higher inflation, in the first year.  I would offset this by raising the earned income tax credit for the middle class.

If you raise the minimum wage and prices of things more or less rise to match, you've not really accomplished much other than "making the proper noises to get some of the poor people to vote for you."  It usually will be swallowed up by a rise in housing prices in an area anyway (see my comments on that below).

EIC helps a little bit, but if you've raised minimum wage and costs rise, you've not really helped those making minimum wage much, and if you have to then spend money to keep the next tier of earners from falling right down onto the minimum wage line (with EIC), I'm not convinced this is a huge net benefit to anyone.  None of this really bothers the wealthy one bit, though costing their businesses more money isn't going to be popular.

Either we voluntarily make a change or society slowly becomes more and more fractured. What is your solution?

Well, I don't actually have a "solution" that I think will work without major pain for everyone, unfortunately.  I'm not convinced there is one.

A huge contributor to the problem we have right now is the Federal Reserve policy of "asset bubbles uber alles."  Current Federal Reserve policy seems to more or less resolve to, "Blow asset bubbles.  If one pops, find another one as soon as possible.  If that one pops, shitshitshit, find another asset to inflate and create a bubble in!"

Yellen's response to poor people who don't benefit from the asset bubbles is more or less to tell them to own assets.  It's only slightly more useful than just saying, "Well, have you tried not being poor?"

The very relevant downside of all this asset bubble blowing is that the created money has to find somewhere to go.  Mostly, right now, it's going into stocks and housing.  Stocks are mostly harmless (there's a lot of long term bad behavior that comes out of this, but very little of it is relevant to low income earners), but the housing price bubbles are incredibly harmful.  In a lot of large cities, many towers worth of luxury apartments are being sold to people who have purchased them as investments, and they're mostly unoccupied.  In other areas, small single family houses are bid to absurd prices by buyers who can afford huge mortgages due to the combination of bubble assets they're cashing in, and stupidly low interest rates the Fed keeps hoping will "fix things."

When you have unaffordable housing, and housing takes up most of a low income budget, there's not a huge amount that can be done.  Throwing a bit more money at people isn't going to make a big difference, and at least in Seattle, the "15 NOW" minimum wage increases seem to be doing a great job of either driving small businesses out of business, or causing them to not hire people and the owners work more hours instead (for something well under minimum wage in terms of effective income).  A small increase in housing prices will eat up the wage gains.

Building more inexpensive housing is an option, but it's generally a very unpopular option by those who own housing in the immediate area, since they are benefiting from the rise in housing prices that are a result of the scarcity.  It's usually rammed through eventually as a condition of building luxury units, but there's not nearly enough being built to deal with the rise in housing prices in many popular areas.

I'd like to see a reversion to some sort of sane fiscal policy that doesn't involve blowing huge asset bubbles, but there's no way to correct the current state without a serious crash (of course, trying to maintain the current state of bubble blowing will also lead to crashes, as it has every other time it's been tried).  So, sadly, I think we've backed ourselves into a corner from which there is no painless way out.  There are a wide variety of ways out, one or more of which will eventually happen, and all of which are varying degrees of "catastrophic" to a large chunk of the population.

There's also the uncomfortable issue that the vast majority of people on this forum benefit from asset bubbles.  We mostly either own assets or trying to own assets (stocks, housing, etc).  So something that would actually be useful is likely to hurt this group of people decently.  Doesn't really bother me, but it's something to keep in mind.

And the issue that our economic growth of the last 300 years is truly abnormal in the history of the planet, and can be attributed to the extreme use of fossil fuels.  :)  But that's another thread.  Something about a 25 year depression that I think is just a cover for long term decline of western industrial civilization.

As far as useful things to do?  Gardens and yard-scale livestock (chickens, ducks, rabbits, etc) are good options in low income areas.

[Bucksandreds]

If you raise the minimum wage and prices of things more or less rise to match, you've not really accomplished much other than "making the proper noises to get some of the poor people to vote for you." 



That is not quite accurate. Prices would only be inflated relative to the extra income used on consumption which would be on the magnitude proportional to the amount of salaries raised and the degree to which they're raised. Since the majority of salaries would be untouched, inflation would be no where close to the degree in the raise in the minimum wage. This raise in inflation would then be offset by an expansion of the earned income tax credit to insulate the middle class. The only losers would be the rich who's investment income would be taxed like everyone else's earned wages which would in reality, just be the right thing to do all along.

[Syonyk]

That is not quite accurate. Prices would only be inflated relative to the extra income used on consumption which would be on the magnitude proportional to the amount of salaries raised and the degree to which they're raised. Since the majority of salaries would be untouched, inflation would be no where close to the degree in the raise in the minimum wage.

I disagree.

Raising the minimum wage isn't going to affect the prices of $1M apartments/condos/houses/etc at all.  It's irrelevant at that scale.

And, conversely, people who purchase $1m homes aren't likely to be considering cheap low income housing.

It's going to have a more significant impact in the low end of the economic price spectrum, which is what matters if you're discussing minimum wage changes.  If there's not that much low income housing, the vast majority of people in it are at or around minimum wage, and minimum wage goes up, that's going to affect that housing cost a good bit in the long run.

It's also going to affect the cost of goods anywhere subject to the new minimum wage requirements as the local stores in the area raise prices to deal with new labor costs.  So that's going to consume another chunk of the raise.

Also, don't forget, people don't generally put up with extreme wage compression for long periods of time.  If the current arrangement is for $10/hr cooks and $15/hr management at a fast food restaurant, do you really expect things to remain such that cooks are making $15/hr and shift management is making $15/hr for long?  It has a upwards push on all wages at that end of the income spectrum.

This is obviously a desired result, but that also has an impact on housing and other costs in an area.  I'm not convinced the net effect will be anything but a wash.

[Bucksandreds]

That is not quite accurate. Prices would only be inflated relative to the extra income used on consumption which would be on the magnitude proportional to the amount of salaries raised and the degree to which they're raised. Since the majority of salaries would be untouched, inflation would be no where close to the degree in the raise in the minimum wage.

I disagree.

Raising the minimum wage isn't going to affect the prices of $1M apartments/condos/houses/etc at all.  It's irrelevant at that scale.

And, conversely, people who purchase $1m homes aren't likely to be considering cheap low income housing.

It's going to have a more significant impact in the low end of the economic price spectrum, which is what matters if you're discussing minimum wage changes.  If there's not that much low income housing, the vast majority of people in it are at or around minimum wage, and minimum wage goes up, that's going to affect that housing cost a good bit in the long run.

It's also going to affect the cost of goods anywhere subject to the new minimum wage requirements as the local stores in the area raise prices to deal with new labor costs.  So that's going to consume another chunk of the raise.

Also, don't forget, people don't generally put up with extreme wage compression for long periods of time.  If the current arrangement is for $10/hr cooks and $15/hr management at a fast food restaurant, do you really expect things to remain such that cooks are making $15/hr and shift management is making $15/hr for long?  It has a upwards push on all wages at that end of the income spectrum.

This is obviously a desired result, but that also has an impact on housing and other costs in an area.  I'm not convinced the net effect will be anything but a wash.

Basically, what I am suggesting is that wealth in terms of buying power is only relative and not absolute.  The rich would consume less due to loss of buying power from inflation as well as much higher investment income taxes. Poor would purchase slightly more. I agree that a $5 per hour raise for the poor does not get $5 per hour more in purchasing power. Probably closer to $4. It's still a very big gain for these people.

[kendallf]

I spent the day crawling around in an attic trying to fix faulty wiring, and I come back to some good discussion.  :-)

I agree with a number of points various people have raised, but I'm not going to spend the time to cut snippets out to quote.   Most of us seem to be in agreement that inequality is widening and that's a problem.  The disconnect is over how to fix it.

Is inequality the engine that drives people to get ahead?  I hope not.  Make the gulf big enough, and nobody will try to swim across (a strained metaphor, I know..).

Is the fix purely economic?  Raise the minimum wage?  Is it in social policy?  Housing?  Unions?  I think it's a combination of all of these.   

[Syonyk]

Basically, what I am suggesting is that wealth in terms of buying power is only relative and not absolute.  The rich would consume less due to loss of buying power from inflation as well as much higher investment income taxes. Poor would purchase slightly more. I agree that a $5 per hour raise for the poor does not get $5 per hour more in purchasing power. Probably closer to $4. It's still a very big gain for these people.

I understand your argument.  I just disagree significantly about the actual values involved, due to my argument that there are several mostly self-contained "tiers" of economic activity, and the minimum wage increase will only have a substantial impact in the "places minimum wage earners shop" circle, which will chew up most of the gains after things stabilize, so I'd guess the long term effect would be nearly zero, if not negative in aggregate (fewer people employed because fewer business can afford to employ them - it's a great way to drive up "average wage," but not such a great way to deal with wealth inequality).

The rich, by definition, have a large net wealth.  The cost of goods doesn't really matter that much to them (and most of us on this forum qualify as rich, though more price sensitive than a lot of people).  A burger increasing in cost by 15% doesn't factor into the decision to buy a burger, and minimum wage has nearly zero impact on the cost of luxury cars/large houses/etc.  Goods and services purchased by the rich simply aren't affected that much, because either the labor involved is making more anyway, so it doesn't matter, or because the impact of minimum wage labor on their expenditures is irrelevant (the cost of a McDonalds burger doesn't bother them, or, more likely, they don't really buy many McDonalds burgers anyway).

In the low income circle, places like fast food restaurants, dollar stores, thrift shops, etc, are where a lot of people go to shop.  Those places tend to be populated by minimum wage or near-minimum-wage workers, so will have their prices affected significantly more.  Or will go out of business/not hire more workers.  A high minimum wage is entirely useless to someone who cannot get a job.

If the cost of goods in places where minimum wage workers shop goes up to cover the higher minimum wage cost for those places, the impact of a higher wage is reduced significantly.  There seems to be this conception that a lot of small business owners are Scrooge McDuck, swimming in their money bins at night gleefully chuckling about how they pay their workers so little, but the reality, if you actually talk to them, is that an awful lot of them would *love* to be making minimum wage and only working 40-50 hours/week.  The ones who are making a lot more have frequently spent many years in the earlier state to get to that point.  It's the very rare small business that is obscenely profitable right out of the gate.

There's also the fun question of, "What is enough?"  If a $15 minimum wage is better than a $10 minimum wage, wouldn't a $20 or $30 minimum wage be even better and bring more prosperity?  People generally understand the absurdity of setting, say, a $200 minimum wage, but rarely is this thought applied to smaller increases.

[Syonyk]

I agree with a number of points various people have raised, but I'm not going to spend the time to cut snippets out to quote.   Most of us seem to be in agreement that inequality is widening and that's a problem.  The disconnect is over how to fix it.

Step 1 would be to reverse policies that are explicitly designed to increase inequality of wealth... :)

I don't have access to the actual paper, but as cited here: http://economix.blogs.nytimes.com/2013/06/03/the-fed-and-inequality/
According to recent research by the New York University economist Edward Wolff, the richest 10 percent of households own more than 81 percent of stocks, as measured by value.

So any policy that is trying to drive stock price will manage to, as a result, increase inequality.  See current Fed policy.

Housing?

The cost of housing is an effect that then leads to a cause, but market distortions (rent control, mostly) are generally not a great solution to problems caused by a supply/demand mismatch.

[okonumiyaki]

Anyone read Piketty?

His hypothesis is that it was the 1910s-1960s in the West that was odd (major depression, major wars, large parts of the world being removed from capitalism) and this led to a mjor destruction of capital, and flattening of incomes.  Also, the West, faced with requirement to fight communism & facism, had to motivate all of society with propoganda, but this propoganda led to action.  E.g. "We are fighting for Freedom" and the impact of returning US servicemen on the civil rights movement, or the UK wartime debates on "Why We Fight" which led to the NHS and "Homes for Heroes" social housing

Without this destruction of capital, and without an external enemy that requires cohesion, the rich are getting richer, and don't feel they need to care so much about the non-rich. 

In the FIRE community we see this (rich getting richer) but we call it snowballing. 

[Syonyk]

He's not an easy read. Still trying to make it through.

[Bucksandreds]

Basically, what I am suggesting is that wealth in terms of buying power is only relative and not absolute.  The rich would consume less due to loss of buying power from inflation as well as much higher investment income taxes. Poor would purchase slightly more. I agree that a $5 per hour raise for the poor does not get $5 per hour more in purchasing power. Probably closer to $4. It's still a very big gain for these people.

I understand your argument.  I just disagree significantly about the actual values involved, due to my argument that there are several mostly self-contained "tiers" of economic activity, and the minimum wage increase will only have a substantial impact in the "places minimum wage earners shop" circle, which will chew up most of the gains after things stabilize, so I'd guess the long term effect would be nearly zero, if not negative in aggregate (fewer people employed because fewer business can afford to employ them - it's a great way to drive up "average wage," but not such a great way to deal with wealth inequality).

The rich, by definition, have a large net wealth.  The cost of goods doesn't really matter that much to them (and most of us on this forum qualify as rich, though more price sensitive than a lot of people).  A burger increasing in cost by 15% doesn't factor into the decision to buy a burger, and minimum wage has nearly zero impact on the cost of luxury cars/large houses/etc.  Goods and services purchased by the rich simply aren't affected that much, because either the labor involved is making more anyway, so it doesn't matter, or because the impact of minimum wage labor on their expenditures is irrelevant (the cost of a McDonalds burger doesn't bother them, or, more likely, they don't really buy many McDonalds burgers anyway).

In the low income circle, places like fast food restaurants, dollar stores, thrift shops, etc, are where a lot of people go to shop.  Those places tend to be populated by minimum wage or near-minimum-wage workers, so will have their prices affected significantly more.  Or will go out of business/not hire more workers.  A high minimum wage is entirely useless to someone who cannot get a job.

If the cost of goods in places where minimum wage workers shop goes up to cover the higher minimum wage cost for those places, the impact of a higher wage is reduced significantly.  There seems to be this conception that a lot of small business owners are Scrooge McDuck, swimming in their money bins at night gleefully chuckling about how they pay their workers so little, but the reality, if you actually talk to them, is that an awful lot of them would *love* to be making minimum wage and only working 40-50 hours/week.  The ones who are making a lot more have frequently spent many years in the earlier state to get to that point.  It's the very rare small business that is obscenely profitable right out of the gate.

There's also the fun question of, "What is enough?"  If a $15 minimum wage is better than a $10 minimum wage, wouldn't a $20 or $30 minimum wage be even better and bring more prosperity?  People generally understand the absurdity of setting, say, a $200 minimum wage, but rarely is this thought applied to smaller increases.

So rich and poor don't all buy gasoline and shop at grocery stores and use electricity?  I think you are over thinking this. A significant portion of the same resources are used by all people of all social classes in this country.

[Syonyk]

So rich and poor don't all buy gasoline and shop at grocery stores and use electricity?  I think you are over thinking this. A significant portion of the same resources are used by all people of all social classes in this country.

Rich and poor use transportation and eat food, but they don't generally get them in exactly the same places or manners.

Low income people are likely to shop at whatever is cheap.  Dollar stores, Aldis, your local hispanic/asian store, etc.  Those places generally are using minimum wage or near-minimum-wage labor.

Higher income people are much more likely to shop at higher end stores.  Whole Foods is an example of this, as are many local places that sell absurdly priced organic something-or-other.  These places tend to pay their workers more.  Costco is also popular.

Minimum wage laws affect the first set of stores much more than the second.

As for gas/transportation, it depends on the area.  In a lot of places, poor people take the bus/subway/train/etc, instead of driving themselves.  And I'd point out that, at least here in the Seattle area, the more wealthy are buying EVs and not bothering with gas at all.

Your argument seems to be that, given the size of area economies, minimum wage laws won't have a significant impact on housing or other resource costs, so people will be better off.

I'm trying to argue that the people minimum wage laws effect operate in a much smaller, local subset of the area economy, and that subset is the area that will be most affected by minimum wage laws, reducing the impact of increased wages in terms of actual material wealth.  I suspect it will be slightly positive for those who get paid more (not as much as you think it will be), but I'm not convinced the overall effect on the economy (in terms of jobs lost or jobs not created due to the increased cost for small businesses) is significantly positive.

As much as the GDP numbers look better if someone making $1600/mo starts making $2400/mo ($10/hr to $15/hr), if that extra $800 is consumed by taxes, rent, and increased cost of goods to the point that they're able to afford the same things, it's still a wash.  And comes out substantially negative if they lose their job/can't get a different job/etc due to the market distortions.  And, while things take time to adjust to the new prices, so do the wages in most systems, so the wages creep up over a few years, as do prices of everything.  So in 3-4 years, that extra $5/hr is worth substantially less in real world terms.

[kendallf]

This is degenerating into another "raise the minimum wage or don't" discussion.  I suggest you're thinking too small.

Why don't we have someone proposing a modern equivalent of FDR's New Deal programs?  Could welfare be tied, on a large scale, to a jobs program with private industry or government?  Are large scale uses of unskilled labor dead?  Would there be a path up for people in such a program? 

... I don't know the answer to any of these, of course.  But I wonder why such proposals seem to be non-existent in the current, dichotomized landscape.

[Syonyk]

I'm pretty confident I suggested ending the Fed's endless bubble blowing as a way to improve the state of the country...

More thoughts later, trying to get a crying kid to sleep for a while.

[Syonyk]

Why don't we have someone proposing a modern equivalent of FDR's New Deal programs?

Because the government taking on huge amounts more debt only seems to happen if there's brown people to bomb or banks to bail out.  They're really not doing a great job at much else.  Paying off debt for the last iteration of bombing brown people or bailing out banks that made stupid bets included.

Could welfare be tied, on a large scale, to a jobs program with private industry or government?

Technically, sure.  But if you want to look at popular attitudes to such ideas, see what people's response to Maine's welfare reform was (sadly, I suggest comments sections on news articles for this).  They tied welfare benefits for non-disabled people to working (20 hrs/wk), volunteering (I think it's around 24h/month), or attending vocational training.  Reasonable sounding, yes?

The result:
Out of the 12,000 non-disabled welfare recipients without children who were on the rolls last year, only 2,680 remain as of now, according to David Sorensen, spokesman for the Department of Health and Services.

And people consider this horrible, and how could anyone be this cruel, this terrible thing must be rolled back, etc.

Are large scale uses of unskilled labor dead?  Would there be a path up for people in such a program?

We could stand to fix infrastructure before we kill more people with collapsing bridges.  I'm not sure where that falls on the skilled/unskilled labor end of things, but given that the last time it came up, the federal government indicated they care radically more about bailing out their friends (read, campaign contributors) who made some spectacularly bad bets on some mortgage backed securities & such instead of investing in infrastructure, I'm going to assume that nobody actually cares about infrastructure enough to bother spending any money on it.

... I don't know the answer to any of these, of course.  But I wonder why such proposals seem to be non-existent in the current, dichotomized landscape.

"Utterly infeasible under the current system" seems to be a good description of anything that might make a useful difference.  The current political system is finely tuned to provide value for the campaign contribution dollar, and poor people don't have money to contribute to campaigns, so they don't matter beyond making the right noises a few times during a campaign so the poor people will *think* you care and vote for you.  Any proposals to fix said system have to go through people who profit substantially from the current arrangement, so aren't going to happen.

I'm happy to be shown wrong here, but the past 10 years or so seem to line up pretty well with my interpretation of things.

[NICE!]

The result has been a country with 20% of the world's population and 5% of its prisoners.

I think you flipped these numbers.

I did - thank you! I don't know how that happened.

This is degenerating into another "raise the minimum wage or don't" discussion.  I suggest you're thinking too small.

Well, I sat down for about 15 minutes and gave a 30,000 ft-view reply and it was ignored. I'm not surprised - it is easier to get down into the weeds and say that we can 'fix' things with a minimum wage or earned income tax credit increase. It is harder and quite discomfiting to say that many of these trends are/were secular. People don't want to talk about geopolitics and (quasi)determinism, they want to talk about the politics of the day.

[PathtoFIRE]

Why don't we have someone proposing a modern equivalent of FDR's New Deal programs?  Could welfare be tied, on a large scale, to a jobs program with private industry or government?  Are large scale uses of unskilled labor dead?  Would there be a path up for people in such a program? 

I personally find a lot to like in the modern monetary theory (MMT) descriptions and proposals in recent times (I've included a few links below, but there are quite a few other researchers and websites along similar lines). One of their major proposals is for what they call a Job Guarantee (JG), which calls for federal funding of a job for anyone that wants to work. This would replace the minimum wage and some of the welfare apparatus, and would provide a floor for wages (hard to imagine anyone taking a private sector job for less than the JG wages). It also has the presumed benefit of eliminating or are least partially negating the negative connotations that attach to the jobless, meaning employment through the JG should make it easier to get the next job later. Anyway, these economists are still a small voice, but they certainly propose some out-of-the-box ideas and understanding of modern economies, and it feels like some of their ideas are gaining ground, with one (Stephanie Kelton) being recently appointed to Chief Economist, U.S. Senate Budget Committee (Democratic Staff).

http://neweconomicperspectives.org/2014/01/growing-recognition-need-job-guarantee.html
http://www.levyinstitute.org/topics/job-guarantee
http://moslereconomics.com/2012/01/10/proposal-update-including-the-jg/

[Bucksandreds]

Why don't we have someone proposing a modern equivalent of FDR's New Deal programs?  Could welfare be tied, on a large scale, to a jobs program with private industry or government?  Are large scale uses of unskilled labor dead?  Would there be a path up for people in such a program? 

I personally find a lot to like in the modern monetary theory (MMT) descriptions and proposals in recent times (I've included a few links below, but there are quite a few other researchers and websites along similar lines). One of their major proposals is for what they call a Job Guarantee (JG), which calls for federal funding of a job for anyone that wants to work. This would replace the minimum wage and some of the welfare apparatus, and would provide a floor for wages (hard to imagine anyone taking a private sector job for less than the JG wages). It also has the presumed benefit of eliminating or are least partially negating the negative connotations that attach to the jobless, meaning employment through the JG should make it easier to get the next job later. Anyway, these economists are still a small voice, but they certainly propose some out-of-the-box ideas and understanding of modern economies, and it feels like some of their ideas are gaining ground, with one (Stephanie Kelton) being recently appointed to Chief Economist, U.S. Senate Budget Committee (Democratic Staff).

http://neweconomicperspectives.org/2014/01/growing-recognition-need-job-guarantee.html
http://www.levyinstitute.org/topics/job-guarantee
http://moslereconomics.com/2012/01/10/proposal-update-including-the-jg/

I've thought of this same idea.  I would do it similar to FDR's style and use it as a way to improve infrastructure while maintaining full employment.

[Bucksandreds]

So rich and poor don't all buy gasoline and shop at grocery stores and use electricity?  I think you are over thinking this. A significant portion of the same resources are used by all people of all social classes in this country.

Rich and poor use transportation and eat food, but they don't generally get them in exactly the same places or manners.

Low income people are likely to shop at whatever is cheap.  Dollar stores, Aldis, your local hispanic/asian store, etc.  Those places generally are using minimum wage or near-minimum-wage labor.

Higher income people are much more likely to shop at higher end stores.  Whole Foods is an example of this, as are many local places that sell absurdly priced organic something-or-other.  These places tend to pay their workers more.  Costco is also popular.

Minimum wage laws affect the first set of stores much more than the second.

As for gas/transportation, it depends on the area.  In a lot of places, poor people take the bus/subway/train/etc, instead of driving themselves.  And I'd point out that, at least here in the Seattle area, the more wealthy are buying EVs and not bothering with gas at all.

Don't most grocery stores (high end and low end) buy their produce, meats and consumables from similar/the same suppliers?  Would not the wholesale price be effected to the same degree for all stores?  How would bus/train prices be raised to the same degree as a raise in the minimum wage?  Most are already subsidized in one form or the other.  If twice as many people wanted to buy a cheap new car, car prices would not double.  Production would be switched to the higher seller and margins would stay close to flat due to competition.  I know what your saying.  I just think that you are taking a very conservative view on the situation and I am taking a more liberal one.  I don't think that we'll agree but I'll gladly vote against politicians with your view and I'm sure that you'd do likewise.  No sense discussing this anymore because our views seem to be at complete odds.  Without implementing ideas, we stand no chance for these problems to correct themselves.  I hope that you lose some of your cynicism regarding possibility of improving the disparity in incomes and wealth in the U.S.

[kendallf]

Why don't we have someone proposing a modern equivalent of FDR's New Deal programs?  Could welfare be tied, on a large scale, to a jobs program with private industry or government?  Are large scale uses of unskilled labor dead?  Would there be a path up for people in such a program? 

I personally find a lot to like in the modern monetary theory (MMT) descriptions and proposals in recent times (I've included a few links below, but there are quite a few other researchers and websites along similar lines). One of their major proposals is for what they call a Job Guarantee (JG), which calls for federal funding of a job for anyone that wants to work. This would replace the minimum wage and some of the welfare apparatus, and would provide a floor for wages (hard to imagine anyone taking a private sector job for less than the JG wages). It also has the presumed benefit of eliminating or are least partially negating the negative connotations that attach to the jobless, meaning employment through the JG should make it easier to get the next job later. Anyway, these economists are still a small voice, but they certainly propose some out-of-the-box ideas and understanding of modern economies, and it feels like some of their ideas are gaining ground, with one (Stephanie Kelton) being recently appointed to Chief Economist, U.S. Senate Budget Committee (Democratic Staff).

http://neweconomicperspectives.org/2014/01/growing-recognition-need-job-guarantee.html
http://www.levyinstitute.org/topics/job-guarantee
http://moslereconomics.com/2012/01/10/proposal-update-including-the-jg/

Thanks for the links!  I thought the first paper was mostly verbose back patting and no details, but the Tcherneva policy note in the second link was interesting. 

TL;DR: She proposes gov't grant funding of non-profits to do community work, hiring the unemployed.  This would (hopefully!) avoid creating a vast new gov't bureaucracy and infuse non-profits which have already identified a need with the resources to do more. 

I could personally see spending my time working for Habitat for Humanity or the like, fixing and building housing for low income families.  That would address the topic of housing unaffordability brought up earlier as well.

[jmusic]

Why don't we have someone proposing a modern equivalent of FDR's New Deal programs?  Could welfare be tied, on a large scale, to a jobs program with private industry or government?  Are large scale uses of unskilled labor dead?  Would there be a path up for people in such a program? 

I personally find a lot to like in the modern monetary theory (MMT) descriptions and proposals in recent times (I've included a few links below, but there are quite a few other researchers and websites along similar lines). One of their major proposals is for what they call a Job Guarantee (JG), which calls for federal funding of a job for anyone that wants to work. This would replace the minimum wage and some of the welfare apparatus, and would provide a floor for wages (hard to imagine anyone taking a private sector job for less than the JG wages). It also has the presumed benefit of eliminating or are least partially negating the negative connotations that attach to the jobless, meaning employment through the JG should make it easier to get the next job later. Anyway, these economists are still a small voice, but they certainly propose some out-of-the-box ideas and understanding of modern economies, and it feels like some of their ideas are gaining ground, with one (Stephanie Kelton) being recently appointed to Chief Economist, U.S. Senate Budget Committee (Democratic Staff).

http://neweconomicperspectives.org/2014/01/growing-recognition-need-job-guarantee.html
http://www.levyinstitute.org/topics/job-guarantee
http://moslereconomics.com/2012/01/10/proposal-update-including-the-jg/

The job guarantee is definitely an interesting concept and a new take on the problem.  I agree that it would be much better than the current 'we'll pay you for nothing' system (welfare).  That said, there are still large questions that no one seems to have a coherent answer to, one of the biggest being what exactly these people will do. 

Also, regarding the stepping stone to a better job, I hope you're right.  However, I'm not sure putting "the employer of last resort" on one's resume would be attractive to a majority of employers. 

[Iron Mike Sharpe]

Seems to me we would be in a better position if we actually tried reducing the number of poor in the US.

Currently, the US govt heavily subsidizes the poor to breed via deductions in the tax code and through social programs like WIC.  Wouldn't it be better if we gave people incentives to not reproduce?  Education levels are lower for the poor.  So, if you reduce the birthrate amongst the poor, you would reduce to supply of less educated people. 

Give people tax deductions for not having kids.  Have the govt fully pay for adoptions/abortions.  Give people big tax credits to obtain one. 

Whatever.  Just try something new.  The current system does not work.

[ChrisLansing]

Anyone read Piketty?

His hypothesis is that it was the 1910s-1960s in the West that was odd (major depression, major wars, large parts of the world being removed from capitalism) and this led to a mjor destruction of capital, and flattening of incomes.  Also, the West, faced with requirement to fight communism & facism, had to motivate all of society with propoganda, but this propoganda led to action.  E.g. "We are fighting for Freedom" and the impact of returning US servicemen on the civil rights movement, or the UK wartime debates on "Why We Fight" which led to the NHS and "Homes for Heroes" social housing

Without this destruction of capital, and without an external enemy that requires cohesion, the rich are getting richer, and don't feel they need to care so much about the non-rich. 

In the FIRE community we see this (rich getting richer) but we call it snowballing.

Or, to put it slightly differently, the possibility of working people deciding they liked communism gave the rich a reason to share the wealth, to some extent.   Now that communism is seen as a complete failure, there is no fear that people will turn to it, and no reason for a reasonably prosperous middle class.    What's the alternative?   There isn't one anymore.   

There's more to all this than what I said above, but that's part of the story.   

[jmusic]

Another factor that no one is willing to entertain on the public stage, is the lack of financial education among the poor.  The reason for this is that fewer people can rip off those who are more savvy, and there's no money in unbiased advice.  On the other side, there's plenty of money in pawn shops, payday loans, car title loans, buy here pay here car lots, the list goes on and on...

We bash people around here for poor financial sense, yet we lament that when we try to enlighten them, we're met with indifference or outright hostility. 

I'd also ban the use of "Saving Money" verbiage in advertising. 

[jmusic]

Or, to put it slightly differently, the possibility of working people deciding they liked communism gave the rich a reason to share the wealth, to some extent.   Now that communism is seen as a complete failure, there is no fear that people will turn to it, and no reason for a reasonably prosperous middle class.    What's the alternative?   There isn't one anymore.   

There's more to all this than what I said above, but that's part of the story.   

This factor alone is quite scary.  When people think there is no alternatives or no hope, eventually the discontent will grow to the point of open rebellion.  Whatever the cause or nuance, every governmental regime throughout history was overthrown by disenfranchised populations within their ranks.  Wars are won or lost by hearts and minds.