The minimum wage debate
Jeannette Wicks-Lim does the math:
Each time a minimum wage hike is put on the table, the political debate spins on the question of whether such a move would cause business costs to increase so much that jobs are lost. To progress past this perennial debate, one key fact has to be pounded into the American psyche: Average minimum wage hikes impose small cost increases on businesses—so small that businesses can typically adjust by means other than closing their doors or laying off workers. Recent proposals to raise the $7.25 federal minimum present a welcome opportunity to take another whack at this.
Read her piece here.
The economics of the minimum wage
Arin Dube reviews recent research to answer some basic questions:
While we can set a wage floor using policy, should we? Or should we leave it to the market and deal with any adverse consequences, like poverty and inequality, using other policies, like tax credits and transfers? These longstanding questions take on a particular urgency as wage inequality continues to grow, and as we consider specific proposals to raise the federal minimum wage — currently near a record low — and to index future increases to the cost of living.
Read his piece in the New York Times here.
Subsidies that fuel fossil fuels
Worldwide subsidies for fossil fuels amount to a whopping $500 billion annually, according to a new report from London-based Overseas Development Institute:
They are subsidizing the very activities that are pushing the world towards dangerous climate change, and creating barriers to investment in low-carbon development.
Read about another tilted playing field here.
The tilted playing field: in public education, some are more equal than others
In his classic novel Animal Farm, George Orwell famously wrote that “some are more equal than others.” Turns out the same is true for public education in the United States. Eduardo Porter’s column in the Times explains why America’s educational playing field is far from level:
The United States is one of few advanced nations where schools serving better-off children usually have more educational resources than those serving poor students, according to research by the Organization for Economic Cooperation and Development. Among the 34 O.E.C.D. nations, only in the United States, Israel and Turkey do disadvantaged schools have lower teacher/student ratios than in those serving more privileged students.
Andreas Schleicher, who runs the O.E.C.D.’s international educational assessments, put it to me this way: “The bottom line is that the vast majority of O.E.C.D. countries either invest equally into every student or disproportionately more into disadvantaged students. The U.S. is one of the few countries doing the opposite.”
Read his piece here.
A view from the top
Bill Gross, managing director of the investment firm PIMCO, urges the 1% to get some common economic sense:
1) Growth depends on investment and investment in part depends on an equitable rebalancing of personal income taxes, capital gains and carried interest.
2) The era of taxing “capital” at lower rates than “labor” should end.
3) Investors in the U.S. and elsewhere must look for investment in the real economy, not share buy-back maneuvers that artificially elevate stock prices.
Read his blog on the “Scrooge McDucks” of the world and the need for real tax reform here.
How inequality of opportunity varies across America
How a child’s chances of upward mobility vary by location:
For discussion and an interactive map, see here.
Inequality for All
Here’s the trailer for the new film “Inequality of All,” featuring Robert Reich:
Read more about the film and the facts behind it here.
Guess who’s looting the pension funds of public workers
Matt Taibbi writes in Rolling Stone:
The bottom line is that the “unfunded liability” crisis is, if not exactly fictional, certainly exaggerated to an outrageous degree. Yes, we live in a new economy and, yes, it may be time to have a discussion about whether certain kinds of public employees should be receiving sizable benefit checks until death. But the idea that these benefit packages are causing the fiscal crises in our states is almost entirely a fabrication crafted by the very people who actually caused the problem. It’s like Voltaire’s maxim about noses having evolved to fit spectacles, so therefore we wear spectacles. In this case, we have an unfunded-pension-liability problem because we’ve been ripping retirees off for decades – but the solution being offered is to rip them off even more.
Everybody following this story should remember what went on in the immediate aftermath of the crash of 2008, when the federal government was so worried about the sanctity of private contracts that it doled out $182 billion in public money to AIG. That bailout guaranteed that firms like Goldman Sachs and Deutsche Bank could be paid off on their bets against a subprime market they themselves helped overheat, and that AIG executives could be paid the huge bonuses they naturally deserved for having run one of the world’s largest corporations into the ground. When asked why the state was paying those bonuses, Obama economic adviser Larry Summers said, “We are a country of law. . . . The government cannot just abrogate contracts.”
Now, though, states all over the country are claiming they not only need to abrogate legally binding contracts with state workers but also should seize retirement money from widows to finance years of illegal loans, giant fees to billionaires like Dan Loeb and billions in tax breaks to the Curt Schillings of the world. It ain’t right. If someone has to tighten a belt or two, let’s start there. If we’ve still got a problem after squaring those assholes away, that’s something that can be discussed. But asking cops, firefighters and teachers to take the first hit for a crisis caused by reckless pols and thieves on Wall Street is low, even by American standards.
Read the piece here.
See Taibbi interviewed by Democracy Now! on the Great Pension Fund Rip-off here.
The free market myth
Robert Reich peels away the layers of an ideological onion:
One of the most deceptive ideas continuously sounded by the Right (and its fathomless think tanks and media outlets) is that the “free market” is natural and inevitable, existing outside and beyond government. So whatever inequality or insecurity it generates is beyond our control. And whatever ways we might seek to reduce inequality or insecurity — to make the economy work for us — are unwarranted constraints on the market’s freedom, and will inevitably go wrong.
By this view, if some people aren’t paid enough to live on, the market has determined they aren’t worth enough. If others rake in billions, they must be worth it.
Read more here.
Economy malfunction
Nobel laureate Joe Stiglitz doesn’t mince words:
Let us be clear: our economy is not working the way a well working economy should. We have vast unmet needs, but idle workers and machines. We have bridges that need repair, roads and schools that need to be built. We have students that need a twenty-first century education, but we are laying off teachers. We have empty homes and homeless people. We have rich banks that are not lending to our small businesses, but are instead using their wealth and ingenuity to manipulate markets, and exploit working people with predatory lending.
Read excerpts from his speech at the AFL-CIO here.
