America's greatness is its working classes not "wealth" creators

[Chris]

As a 1995 paper in the Journal of Economics Literature put it, “There is a long history of empirical studies attempting to pin down the effects of minimum wages, with limited success.” No one found significant employment losses when President Truman raised the minimum wage by 87% in 1950. When Congress raised the minimum wage by 28% in two steps in 1967, businesses predicted large employment losses and price increases. As the Wall Street Journal reported six months later, “Employment and prices show little effect from $1.40-an-hour guarantee.”

Economic research supports raising the minimum wage Economic Policy Institute

The Economic Policy Institute is a very left leaning organization. You have to take it with a grain of salt the same way you'd take the American Enterprise Institute from the right with a grain of salt.

There are times when raising the min wage might have minimal impact...but during a weak recovery like this, it's a bad time to do it.

What about the Wall Street Journal?
Is that a "left leaning organization" as well?

Republicans long for the days of slavery in the Old South.

 

[Chris]

The business journal Bloomberg Businessweek points out that the country of Denmark has a minimum pay rate of the equivalent of about $20 an hour, but its business climate is sufficiently healthy for the World Bank to ranked it as the easiest place in Europe to do business in 2011, 2012, and 2013. Denmark is also "among the leading countries in income equality and national happiness." Denmark also had a lower unemployment rate (6.8%) and higher labor participation rate (64.4%) than the United States (7.4%, 63.6% as of September 2013) where the minimum wage is far lower ($7.25).

Great, then move to Denmark.

A number of things. One is that the people of Denmark are relatively homogeneous. They also have a great work ethic as a generality.

If the US was full of people basically like myself or someone with a hard work ethic, we'd be much better off as well. But unfortunately the ratio of those pulling the wagon is damn near 1 to 1 with those in the wagon. We are also a diverse country with many different value systems, races, religions, work ethics, etc..

In other words, they are pretty much the same with similar value systems, religion, race, etc.... we are a melting pot.

To say it's the leading IN EUROPE is not saying much. Europe is a fucking economic mess.

And no they don't have a lower unemployment rate.

People romanticize Europe but the price paid for their socialist tendencies is high, very high Unemployment rates. Denmark just happens to be one of the best at 6.8. Most are up in or near double digits almost all the time.

The list of what's wrong with your post and Europe in general is so long it's not funny. They also have more govt intervention and a lot less freedom. Long list....

When scientists polled all the countries in the world, they found that year after year the happiest country on earth is Denmark.

But the happiest people in the world pay some of the highest taxes in the world -- between 50 percent and 70 percent of their incomes. In exchange, the government covers all health care and education, and spends more per capita on children and the elderly than any country in the world. The system is efficient, and people feel "tryghed" -- the Danish word for "tucked in" -- like a snug child.

Denmark The Happiest Place on Earth - ABC News

 

[Rikurzhen]

The business journal Bloomberg Businessweek points out that the country of Denmark has a minimum pay rate of the equivalent of about $20 an hour, but its business climate is sufficiently healthy for the World Bank to ranked it as the easiest place in Europe to do business in 2011, 2012, and 2013. Denmark is also "among the leading countries in income equality and national happiness." Denmark also had a lower unemployment rate (6.8%) and higher labor participation rate (64.4%) than the United States (7.4%, 63.6% as of September 2013) where the minimum wage is far lower ($7.25).

Great, then move to Denmark.

A number of things. One is that the people of Denmark are relatively homogeneous. They also have a great work ethic as a generality.

If the US was full of people basically like myself or someone with a hard work ethic, we'd be much better off as well. But unfortunately the ratio of those pulling the wagon is damn near 1 to 1 with those in the wagon. We are also a diverse country with many different value systems, races, religions, work ethics, etc..

In other words, they are pretty much the same with similar value systems, religion, race, etc.... we are a melting pot.

To say it's the leading IN EUROPE is not saying much. Europe is a fucking economic mess.

And no they don't have a lower unemployment rate.

People romanticize Europe but the price paid for their socialist tendencies is high, very high Unemployment rates. Denmark just happens to be one of the best at 6.8. Most are up in or near double digits almost all the time.

The list of what's wrong with your post and Europe in general is so long it's not funny. They also have more govt intervention and a lot less freedom. Long list....

When scientists polled all the countries in the world, they found that year after year the happiest country on earth is Denmark.

But the happiest people in the world pay some of the highest taxes in the world -- between 50 percent and 70 percent of their incomes. In exchange, the government covers all health care and education, and spends more per capita on children and the elderly than any country in the world. The system is efficient, and people feel "tryghed" -- the Danish word for "tucked in" -- like a snug child.

Denmark The Happiest Place on Earth - ABC News

I'd be happy too if we could transform the population of the US into one which mirrors Denmark. What's your point?

 

[Rikurzhen]

As a 1995 paper in the Journal of Economics Literature put it, “There is a long history of empirical studies attempting to pin down the effects of minimum wages, with limited success.” No one found significant employment losses when President Truman raised the minimum wage by 87% in 1950. When Congress raised the minimum wage by 28% in two steps in 1967, businesses predicted large employment losses and price increases. As the Wall Street Journal reported six months later, “Employment and prices show little effect from $1.40-an-hour guarantee.”

Economic research supports raising the minimum wage Economic Policy Institute

The Economic Policy Institute is a very left leaning organization. You have to take it with a grain of salt the same way you'd take the American Enterprise Institute from the right with a grain of salt.

There are times when raising the min wage might have minimal impact...but during a weak recovery like this, it's a bad time to do it.

What about the Wall Street Journal?
Is that a "left leaning organization" as well?.

It's funny that you ask:

In a 2004 study, Tim Groseclose and Jeff Milyo calculated the ideological bias of 20 media outlets by counting the frequency they cited particular think tanks and comparing that to the frequency that legislators cited the same think tanks. They found that the news reporting of The Journal was the most liberal, more liberal than NPR or The New York Times​

 

[Shrimpbox]

Middle class net worth in steep decline.

So the facts say that the working man has suffered mightily under the Obama administration and the rich have gotten richer but many still feed us the bull about how much democrats care

True. But you are oversimplifying some historical trends. Middle class decline pre-dates Obama by decades. (-just as many of the problems Bush was wrongly blamed for pre-dated his administration)

The apex of middle class power was in the 50s & 60s when their was no political opposition to the New Deal; and no political opposition to the protection of American Labor from cheap foreign labor markets. Think about it - both Eisenhower and Nixon were staunch New Deal Republicans; they did more to protect high union wages... and more to protect government subsidies to things like education than any president thereafter. In short, they supported all of the FDR-style reforms that moved money and government resources to the middle class.

Problem is . . . business took over Washington in 1980 with the election of Ronald Reagan, who convinced the nation that we needed to remove all burdens on capital, and we needed to put business (rather than "brownshirt regulators") in charge of Washington. FYI: this pre-figures the current lobbying industrial complex where there is no longer a line between a lobbyist and Senator. Right now, in exchange for key votes, senators are given lucrative lobbying jobs once they leave office.

You understand the reforms that Reaganomics brought to the middle class government of FDR/Truman/Eisenhower/Kennedy/Nixon, right? One such reform had to do with the cost of production. Simply put, after decades of Liberal rule, the USA had the highest labor costs in the world. Our corporate sector and wealthy elite simply did not want to pay the wages (& tax burden) associated with a strong middle class - but they needed a president and a political party to do their bidding. So they invested an unprecedented amount of money into Reagan and Republican politicians. You get it right? Wealthy people were sick of all the resources that went into maintaining high wages and high benefits and all the government programs that went into giving the middle class an affordable cost of living (especially) through the investment in things like public universities and programs like the GI Bill. Reagan was purchased by a powerful movement that no longer wanted government to take an active role in building a strong middle class.

So the first thing the ol' gipper did was bust unions and remove the legal infrastructure that protected American labor from ultra cheap labor markets in Communist China. So . . . starting in the 80s we watched as our noble corporate sector shipped manufacturing to Taiwanese and Chinese sweatshops. This resulted in MASSIVE profits for our noble/patriotic corporate class (and all its investors), but it decimated the wages and benefits of the middle class. Our noble patriotic profit makers also got their Washington puppets to drastically reduce their taxes through the most loop-hole-ridden tax structure on planet earth (which eventually resulted in a situation where corporations like GE pay zero taxes and the upper class pays 15% on capital gains, as compared to the +30% the middle class pays on income).

But it gets better. What did we do after Reagan (and his liberal clone, Clinton) helped our noble/patriotic capitalists ship American jobs to tyrannical countries (from Mexico to China to Honduras)? What did we do when we decimated that jobs, wages, benefits and programs that created the strongest middle class in world history? What did we do to the largest middle class in recorded time, the middle class that existed in the 50s and 60s when we had the world's highest economic growth, highest wages and highest taxes? What happened when we ended all of these things because Reagan wanted to move ALL resources to the suppliers?

I'll tell you what happened. We undertook the most radical expansion of credit the world has ever seen. We replaced the high wages/benefits that the middle class enjoyed under liberal rule (1945-1980) with credit cards and every possible debt-based gimmick. This is why we all started receiving three credit cards offers a week starting in the 80s. This is why American Household Debt skyrocketed in the 80s.

[Don't trust me, do some research. Google: "Household Income and Debt Trends Since 1980". Reagan helped his corporate friends get rid of exorbitant middle class labor costs; and then he handed out credit cards so the middle class could stay afloat. And it worked incredibly for two decades. It's like trying to revive a depressed person with cocaine - it definitely works until the crash. This is why the economy is so stagnant. This is why Bush had the worst job creation of any president in the last 50 years (because he inherited the same problem, that is, he inherited an American consumer that is too indebted to consume at the needed volume to incentivize investment and job growth).

We swallowed poison in 1980 and BOTH parties are to blame. Clinton was a deep believer in the Labor and Trade policies of Reaganomics that destroyed the middle class.

It was predicted in 1980 by Reagan's detractors that we would end up with an extremely narrow accumulation of wealth, one punctuated by an impoverished middle class coupled with the wealthiest 1% in history. This is why we now have more billionaires and more impoverished people than at any time prior. This is what happens when you transform the middle class into a cheap-labor goldmine for capital. This is what happens when you cut their benefits in order to expand profits.

We were told all those profits made possible by cheap labor and the immense Reagan tax reforms would trickle down. We were told that lowering Capital Gains taxes to 15% would trickle down. We were told that freeing capital to seek the cheapest possible labor costs across the globe would lift all our boats. Here is the thing though. When these promised didn't materialize, we covered up the problem by expanding credit to the middle class. We had to make up for the money that wasn't trickling down. And... after 30 years of expanding credit and accumulating debt, the middle class is now an indentured servant to interest payments so that the capitalists structure that shipped their jobs to freedom-hating nations can profit off their demise...

Londoner good post

I want to disagree with some points and agree with others

High union wages actually destroyed companies. Unions breed inefficiency. As unions became so bloated companies(like GM) could not compete with foreign car makers because labor costs had gotten out of control, ditto for car quality and design in the 80s. These companies would and did go bankrupt if they continued on the same path.

It really ain't quite true that education subsidies have gone down in recent years. We have a trillion dollar student loan debt and we have so many dodo government subsidies for research on duck sex or whatever that is really disguised vote buying. Universities are drowning in federal largess, direct and indirect.



Are lobbyists and politicians in cahoots with each other? Absolutely!

I would also agree that labor and capital should be taxed at the same rates.

I can't go with your credit card version. No one twisted anyone's arm to get a credit card, our culture changed and good judgement was suspended at the same time as education started its free fall. Not paying your debts is no longer a badge of shame, because it is really someone else's fault. So as well as losing the mindset of an Eisenhower and a Nixon we have also lost the morals of those times.

What I believe is indisputable, the larger the entitlement society gets the larger the gap gets between the rich and poor.

Here is something I have been giving a lot of thought to lately. I think any business, financial transaction, or investment that does not benefit the middle class should be subject to a super tax. Benefit could be jobs, quality of life, technological innovation, or medical advancements. Support capitalism but not the abuse of capitalism. Hedge funds, insurance and mortgage sleight of hand, and options trading have the potential to do a lot more harm to the folks than bring them ANY benefit. We need to tax them out of existence.

Please try to keep the applause down!

 

[pinqy]

Hell , look at you in this thread. You went from "EVERY STUDY SHOWS THAT RAISING THE MINIMUM WAGE CAUSES UNEMPLOYMENT" to "oh well studes can be made to say whatever you want them to say, and there is a lot more to UE than the minimum wage" the moment I showed you actual hard proof that were wrong , minimum wage increases do NOT increase UE.

Every study I've looked at in the past has. But then I know how to question underlying numbers and assumptions. I've been doing it for 20 years.

While it certainly has its issues, the Card and Kreuger study of New Jersey minimum wage and fast food is one you must have read. Now, it's always been criticized, justly and unjustly, but you can't act as if it doesn't exist.
Now, it's not applicable to a nationwide increase, because the disparity between the New Jersey and Pennsylvania min wages was a large part, but it does, without doubt, show that the issue is extremely complex (which you have, of course, acknowledged.

I also know every place that provides stats has political bias.

You may believe that, but you don't know it. Certainly all statistical agencies are subject to political pressure and influence, but the methodology is the methodology, and there's no bias in the actual calculations.

 

[EconChick]

Hell , look at you in this thread. You went from "EVERY STUDY SHOWS THAT RAISING THE MINIMUM WAGE CAUSES UNEMPLOYMENT" to "oh well studes can be made to say whatever you want them to say, and there is a lot more to UE than the minimum wage" the moment I showed you actual hard proof that were wrong , minimum wage increases do NOT increase UE.

Every study I've looked at in the past has. But then I know how to question underlying numbers and assumptions. I've been doing it for 20 years.

While it certainly has its issues, the Card and Kreuger study of New Jersey minimum wage and fast food is one you must have read. Now, it's always been criticized, justly and unjustly, but you can't act as if it doesn't exist.
Now, it's not applicable to a nationwide increase, because the disparity between the New Jersey and Pennsylvania min wages was a large part, but it does, without doubt, show that the issue is extremely complex (which you have, of course, acknowledged.

I also know every place that provides stats has political bias.

You may believe that, but you don't know it. Certainly all statistical agencies are subject to political pressure and influence, but the methodology is the methodology, and there's no bias in the actual calculations.

Good post.

But I was referring to the assumptions part of stats, not the actual calculations.

I have been heavily trained in Keynesian assumptions, which I came to reject....so I'm very sensitive to that bias.

But good points in your post.

 

[pinqy]

Good post.

But I was referring to the assumptions part of stats, not the actual calculations.

I have been heavily trained in Keynesian assumptions, which I came to reject....so I'm very sensitive to that bias.

But good points in your post.

But are Keynsian assumptions really a POLITICAL bias? Accpetance of those assumptions might be, but are the assumptions themselves political? One may adhere to a school of thought based on politics, but that's not the same as the assumptions of that school being political.

If you start going that way, you have even the very concept of the CPI being "political bias" from an Austrian perspective.

But, if we want to get into whether specific statistical assumptions are political, perhaps we should wait until tomorrow when the Employment Situation comes out and all the people who never studied even the basic concepts put forth their misconceptions or cite shadowstats or zerohedge. And then CPI is due out on the 17th.

As a quick example, though...BLS under Obama instituted a program to measure "Green Jobs." It was a purely political maneuver and I don't know anyone at BLS who thought it was a good idea, including the people who worked on it. But the way the BLS economists addressed the issues ... the assumptions, classifications and definitions ... was purely apolitical and the best of a bad job. Green Jobs was thankfully cancelled due to budget cuts.

 

[EconChick]

Good post.

But I was referring to the assumptions part of stats, not the actual calculations.

I have been heavily trained in Keynesian assumptions, which I came to reject....so I'm very sensitive to that bias.

But good points in your post.

But are Keynsian assumptions really a POLITICAL bias? Accpetance of those assumptions might be, but are the assumptions themselves political? One may adhere to a school of thought based on politics, but that's not the same as the assumptions of that school being political.

If you start going that way, you have even the very concept of the CPI being "political bias" from an Austrian perspective.

But, if we want to get into whether specific statistical assumptions are political, perhaps we should wait until tomorrow when the Employment Situation comes out and all the people who never studied even the basic concepts put forth their misconceptions or cite shadowstats or zerohedge. And then CPI is due out on the 17th.

As a quick example, though...BLS under Obama instituted a program to measure "Green Jobs." It was a purely political maneuver and I don't know anyone at BLS who thought it was a good idea, including the people who worked on it. But the way the BLS economists addressed the issues ... the assumptions, classifications and definitions ... was purely apolitical and the best of a bad job. Green Jobs was thankfully cancelled due to budget cuts.

The overwhelming majority of people trained in economics in our university system have no idea they're indoctrinated in Keynesian thinking. It's taught as if it is gospel, not as if it's just one of many schools of thought. Keynesian philosophy is closely identified with Democrat philosophy in big government answers. No, many people don't think they're being political; they think they're administering "THE" economic answer.