I quote the following passage from William Manchester's The Glory and the Dream because it summarizes the liberal, New Deal position on the cause of the Great Depression and recessions in general:
"The real blame lay in he false underpinnings of the Coolidge-Hoover prosperity. Seen in perspective, the Depression appears to have been the last convulsion of the industrial revolution, creating a hiatus [break] before the technological revolution. In the aftermath of the World War [One], the techniques of mass production combine to increase the efficiency per man-hour by over 40 percent. This enormous output of goods clearly required a corresponding increase of consumer buying power—that is, higher wages. But the worker's income in the 1920s didn't rise with his productivity."
But some of the increased efficiency became consumer buying power through the issuing of credit. Hence people bought on credit during the 20s, and when credit-based buying collapsed in 1929-1930, the entire economy went into a downward spiral. Less demand resulted in less production, and so in workers being fired, and so in a further decrease in demand. It was Herbert Hoover himself who used the term "Depression," trying to imply the whole affair was about a wrong mindset, a lack of confidence. If only confidence would return, the economic downturn would reverse itself.
The natural conclusion, if you buy the analysis is the quoted paragraph, is that all society needed to do was to give people more buying power. Society needed to "share the wealth" as socialists said. Then better-paid workers would buy more things; manufacturers would hire more people to make more things, then these hired people would also spend more, until "happy days are here again" [the Democratic Party theme of 1932] and there's "an automobile in every garage" [the Republican slogan on 1928].
But the problems of the Great Depression must have been more fundamental. Under the New Deal [often passed by an alliance of progressive Democrats and progressive Republicans; both parties had conservative wings that resisted the legislation] the federal government used a variety of methods to increase aggregate purchasing power. By 1934 deficit spending was the order of the day. The economy did improve off its 1932-33 lows, but not to anything resembling prosperity. Beginning roughly in 1939 with war orders from Europe, and accelerating in 1940 when U.S. deficits became even larger to prepare for war, the economy finally got back to where it had been in the mid-20s.
Even Democrats worried about the national debt after World War II; by American standards it was unprecedented. But with the slow-motion collapse of the British Empire, the U.S. had become the dominant world power. The revived economy, and high income-tax rates, generated an equally unprecedented stream of revenue to the federal government. Most federal programs were cut back only minimally, and new programs like the Interstate Highway System created jobs and demand for commodities.
When President Franklin Delano Roosevelt and Congress started running up deficits and the national debt in the 1930s they were starting off a small base, most of it left over from military expenditures for World War I. By the late 1950s even most Republican politicians and businessmen believed in deficit spending. Workers and capitalists alike were prospering, if some more than others. It seemed like capitalism propped up by heavy federal spending was the recipe for permanent prosperity.
This all turned sour in the 1970s, following the prosperity of the 1960s resulting from economic imperialism, spending on the Vietnam War and cold war, and the expansion of the New Deal into the Great Society "War on Poverty" programs.
Demand, in itself, could lead to the opposite problem from the Depression: inflation. In order to stop inflation, the Federal Reserve raised interest rates (and tightened the money supply). A series of recessions, interleaved with booms, followed, with aftermath of the most recent and most serious of the recessions still lingering with us.
Also lingering with us is a $17 trillion federal debt. And therein lies the real problem for America and the world. If during periods of prosperity the debt had been paid down (as happened until about 1930), then the only federal debt today would be from the latest recession. Call it $3 to $5 trillion. But no, instead every problem since 1933 has been solved with debt. If you are ideological you can consider it military debt or welfare debt, but it is an obligation of the citizens, regardless of the specifics of its origin.
So where we are now, in early 2014, can be summed up as:
1. The economy has been growing slowly since 2009, partly because of high deficit spending by the government and partly because of the natural tendency to grow off a bottom.
2. Unemployment is well over 6%, and even that excludes a lot of individuals who are under-employed.
It's not Depression or even Great Recession levels, but it isn't prosperity either.
3. Inflation has been minimal, lately.
4. People would buy more products if they made more money. Most employees are highly productive because of technological advances.
5. Because there are plenty of unemployed people, wages are stagnant; employers don't have to bid up wages to retain employees.
6. Economic imperialism is not really working anymore. It costs more to patrol the American empire (the entire world, for practical purposes) than the U.S. gets in economic benefit from the rest of the world (as seen by our negative balance of trade).
7. There is a $17 trillion and growing federal deficit. Interest payments already make up a considerable part of the federal budget, and if interest rates (on average on government debt) climb to say 5%, they will eat up a huge part of the annual federal budget.
In a Goldilocks scenario the capitalist class, either out of self-interest or forced by the federal government, would both increase wages significantly for workers and pay off a substantial part of the federal debt. The wage increase would increase demand, resulting in profits that would compensate the capitalists for their sacrifices. With increased demand more of the federal debt could be paid off; prosperous workers could help some with that. Inevitably another recession would roll around, at which time deficit spending would be appropriate to counter the economic cycle until growth resumed.
Do not plan on the Goldilocks scenario. It won't happen in our broken political system. Republicans have done a good job emphasizing the debt issue, but are unwilling to raise wages or tax the super-rich to reduce the debt. Democrats would raise the minimum wage, but won't tax the capitalists and won't do anything about the debt.
The Federal Reserve will keep making excuses to keep interest rates low, saying it is to help revive the economy. But the real reason is allowing interest rates to rise will show how naked the economy really is. The math is simple. 5% of $17 trillion is $0.85 trillion per year. The fiscal year 2013 federal budget resulted in spending $3.45 trillion. But revenue was just $2.77 trillion. So if interest rates rise to 5% on average, and revenue stays flat, interest payments on the federal debt will eat up over 30% of revenue.
So less spending, even on the military. And less spending means less demand, meaning fewer jobs. And lower tax revenue.
Or Congress can kick the can down the road a few last inches, into the wall of reality, and continue to increase the debt even when the economy is relatively good.
Which just happened when the Democrats and Republicans in Congress raised the debt ceiling.
Showing posts with label minimum wage. Show all posts
Showing posts with label minimum wage. Show all posts
Thursday, February 20, 2014
Wednesday, April 3, 2013
Raise The Medicare Contribution Rate
If Medicare and Medicaid will need more funding in the future, the logical and fair thing to do would be to raise the contribution rates. These raises could be small and gradual, say a quarter percent (0.25%) per year until contributions come in line with projected future expenditures.
The Medicare payroll deduction is not a tax. It is an compulsory insurance premium. It is currently 2.9%. For wage slaves the accounting of the 2.9% is that 1.45% is paid by the employer, and 1.45% paid by the employee. (Self-employed people pay both halves). In reality employers pay the full amount, of which half appears as a deduction when employees get the accounting for their pay check. For the history of this arrangement see Medicare History.
I think it would be a good thing to account for any rate increase on the worker side. Most businesses are profitable, and so most workers create more value than they are paid for, the difference going to management's usually bloated salaries and the profits of the owner. Capitalist apologists (who complain endlessly for their suffering rich clients) say that increased taxes on business discourage hiring. By placing the increase on the worker side of the paycheck it raises awareness that this is a necessary expense to pay for health care in your old age.
How would paychecks change? The most commonly paid wage in America is the federal minimum wage, currently $7.25 per hour. Assuming a 40 hour work week, raw wages are then $290.00 per week. At the current 2.9% rate, employers turn over $8.41 to the federal tax authority. Of that $4.205 appears as a payroll deduction to the workers. Each 0.25% increase would deduct a further $0.725 per week.
That does not sound like much (unless $0.73 is the difference between making your rent or not), but over time it should add up to enough to keep the nation's Medicare budget balanced. It takes a lot of years of saving to prepare for almost-free medical care beyond the age of 65.
A different way to look at the problem is to admit that the medical profession has not come up with inexpensive ways to keep large numbers of people healthy once they are old. A person who never made more than $15,000 a year in their lifetime may cost the Medicare system over $100,000 a year for as long as they can be kept alive.
It almost seems as if the health system for seniors is mainly designed to extract the last penny from their pockets and from the Medicare system.
Everyone thinks medical costs need to be capped, but no one (except maybe me) wants to be accused of letting a senior die for lack of medical treatment, no matter how expensive.
The only events that could fix the system are catastrophes. A disease with high mortality that affects seniors more than working-age people would perform actuarial wonders.
We could take a lesson from the Roman Republic, upon which so much of our original system was based. Seniors could buck up and pledge to refuse treatments that do not prolong a healthy, mobile, and fully conscious life. We could make opium smoking available to seniors who can't stand pain, and let nature takes its (inexpensive) course.
Unless we are willing to take a far harder line on capping expenses, we need to raise the Medicare contribution rate.
The Medicare payroll deduction is not a tax. It is an compulsory insurance premium. It is currently 2.9%. For wage slaves the accounting of the 2.9% is that 1.45% is paid by the employer, and 1.45% paid by the employee. (Self-employed people pay both halves). In reality employers pay the full amount, of which half appears as a deduction when employees get the accounting for their pay check. For the history of this arrangement see Medicare History.
I think it would be a good thing to account for any rate increase on the worker side. Most businesses are profitable, and so most workers create more value than they are paid for, the difference going to management's usually bloated salaries and the profits of the owner. Capitalist apologists (who complain endlessly for their suffering rich clients) say that increased taxes on business discourage hiring. By placing the increase on the worker side of the paycheck it raises awareness that this is a necessary expense to pay for health care in your old age.
How would paychecks change? The most commonly paid wage in America is the federal minimum wage, currently $7.25 per hour. Assuming a 40 hour work week, raw wages are then $290.00 per week. At the current 2.9% rate, employers turn over $8.41 to the federal tax authority. Of that $4.205 appears as a payroll deduction to the workers. Each 0.25% increase would deduct a further $0.725 per week.
That does not sound like much (unless $0.73 is the difference between making your rent or not), but over time it should add up to enough to keep the nation's Medicare budget balanced. It takes a lot of years of saving to prepare for almost-free medical care beyond the age of 65.
A different way to look at the problem is to admit that the medical profession has not come up with inexpensive ways to keep large numbers of people healthy once they are old. A person who never made more than $15,000 a year in their lifetime may cost the Medicare system over $100,000 a year for as long as they can be kept alive.
It almost seems as if the health system for seniors is mainly designed to extract the last penny from their pockets and from the Medicare system.
Everyone thinks medical costs need to be capped, but no one (except maybe me) wants to be accused of letting a senior die for lack of medical treatment, no matter how expensive.
The only events that could fix the system are catastrophes. A disease with high mortality that affects seniors more than working-age people would perform actuarial wonders.
We could take a lesson from the Roman Republic, upon which so much of our original system was based. Seniors could buck up and pledge to refuse treatments that do not prolong a healthy, mobile, and fully conscious life. We could make opium smoking available to seniors who can't stand pain, and let nature takes its (inexpensive) course.
Unless we are willing to take a far harder line on capping expenses, we need to raise the Medicare contribution rate.
Wednesday, February 13, 2013
The State of Barack Obama
An interesting way to teach American History would be to have the students read each of the State of the Union addresses, starting with George Washington's first. What students would mainly learn would, hopefully, was to not put too much stock in the opinions of a single politician, even if he is the President of the United States. [for the record, I have read only a limited set of these addresses, notable those I included in my Internet Biography of Andrew Jackson.]
In four years we will know how much of the objectives outlined in Barack Obama's speech have been achieved. Probably little.
What we already know is the 2013 State of the Union speech failed to inform Congress or America of the State of the Union. It was filled with misleading statistics, political hype, digs at the Republicans, meaningless tales of individual Americans, and just plain obfuscation. President Obama wants some good things: more confidence in the private sector, resulting in more jobs; world peace (without sacrificing American power or imperialist loot); a higher minimum wage; more careful Federal spending. He even wants both more natural gas production and less global warming. But wanting things is the easy part. We all want to have our cake and eat it too. That is why we are not a nation of savers.
The word "bank" is not mentioned in the speech, except for "food bank." That is a pretty funny thing. Compare Andrew Jackson's speeches, which almost always had something to say about banks. What's wrong with this picture, Mr. President? Could not 90% of the problems of "middle class" Americans be summed up in one word: banks?
His speech provokes the Islamic faithful, which means we must continue to spend more money on bloodshed, or leave the Islamic nations to work out their own fates. "And we will stand steadfast with Israel in pursuit of security and a lasting peace." Which means the private property of the Palestinians will not be returned to them, nor will damages be paid. So the prior sentence, "but we can -- and will -- insist on respect for the fundamental rights of all people," is just a bold-faced lie. The oppression of women in Israel, Ireland, Saudi Arabia and numerous American allies will be overlooked, but used to justify murder with drones in Pakistan, Somalia, Iran, and other states not buckling under our imperialist demands.
As to good jobs, the President wants to fill them with immigrants: "real reform means fixing the legal immigration system to cut waiting periods and attract the highly-skilled entrepreneurs and engineers." Perhaps the President should be required by the Constitution to report on his campaign donations. Then we would know what policies he will pursue.
Getting $9 per hour will not make anyone "middle class." Thirty years ago, even, $9 an hour would not have made a person middle class. Why won't the President use the term "working class?" There are a lot more working class American citizens than middle class ones.
History has shown their is only one sure way to make working class Americans middle class. Unionize them, and use the power of the union (One Big Union, united to seek fairness for all) to take, not just higher wages, but a fair share of capital and a majority share of decision making power. But the state of union organizing is not mentioned.
Nothing about clear cut forests from sea to shining sea. Nothing about mountaintop removal. Nothing about overpopulation. Nothing about reproductive rights.
Nothing about the rapid proletariatization of the work force by robots and artificial intelligence. No honest talk about foreign policy or the destruction of the American economy by the imperialist military budget.
Nothing about the Obama policy of closing down marijuana clinics in states where they are legal; nothing at all about the effects of U.S. recreational drug consumption on crime in the U.S. and in Mexico.
Mr. Obama just proved again that he is a very good political campaigner, but can't settle down to actually governing a nation with liberty and justice for all.
Of course Democrats will find much to love in the speech, and Republicans will find much to hate. Again, illustrating what George Washington and other Founders foresaw, that the party system would be bad for America. That is why political parties are not mentioned in the U.S. Constitution.
In four years we will know how much of the objectives outlined in Barack Obama's speech have been achieved. Probably little.
What we already know is the 2013 State of the Union speech failed to inform Congress or America of the State of the Union. It was filled with misleading statistics, political hype, digs at the Republicans, meaningless tales of individual Americans, and just plain obfuscation. President Obama wants some good things: more confidence in the private sector, resulting in more jobs; world peace (without sacrificing American power or imperialist loot); a higher minimum wage; more careful Federal spending. He even wants both more natural gas production and less global warming. But wanting things is the easy part. We all want to have our cake and eat it too. That is why we are not a nation of savers.
The word "bank" is not mentioned in the speech, except for "food bank." That is a pretty funny thing. Compare Andrew Jackson's speeches, which almost always had something to say about banks. What's wrong with this picture, Mr. President? Could not 90% of the problems of "middle class" Americans be summed up in one word: banks?
His speech provokes the Islamic faithful, which means we must continue to spend more money on bloodshed, or leave the Islamic nations to work out their own fates. "And we will stand steadfast with Israel in pursuit of security and a lasting peace." Which means the private property of the Palestinians will not be returned to them, nor will damages be paid. So the prior sentence, "but we can -- and will -- insist on respect for the fundamental rights of all people," is just a bold-faced lie. The oppression of women in Israel, Ireland, Saudi Arabia and numerous American allies will be overlooked, but used to justify murder with drones in Pakistan, Somalia, Iran, and other states not buckling under our imperialist demands.
As to good jobs, the President wants to fill them with immigrants: "real reform means fixing the legal immigration system to cut waiting periods and attract the highly-skilled entrepreneurs and engineers." Perhaps the President should be required by the Constitution to report on his campaign donations. Then we would know what policies he will pursue.
Getting $9 per hour will not make anyone "middle class." Thirty years ago, even, $9 an hour would not have made a person middle class. Why won't the President use the term "working class?" There are a lot more working class American citizens than middle class ones.
History has shown their is only one sure way to make working class Americans middle class. Unionize them, and use the power of the union (One Big Union, united to seek fairness for all) to take, not just higher wages, but a fair share of capital and a majority share of decision making power. But the state of union organizing is not mentioned.
Nothing about clear cut forests from sea to shining sea. Nothing about mountaintop removal. Nothing about overpopulation. Nothing about reproductive rights.
Nothing about the rapid proletariatization of the work force by robots and artificial intelligence. No honest talk about foreign policy or the destruction of the American economy by the imperialist military budget.
Nothing about the Obama policy of closing down marijuana clinics in states where they are legal; nothing at all about the effects of U.S. recreational drug consumption on crime in the U.S. and in Mexico.
Mr. Obama just proved again that he is a very good political campaigner, but can't settle down to actually governing a nation with liberty and justice for all.
Of course Democrats will find much to love in the speech, and Republicans will find much to hate. Again, illustrating what George Washington and other Founders foresaw, that the party system would be bad for America. That is why political parties are not mentioned in the U.S. Constitution.
Thursday, November 11, 2010
Sarah Palin to Introduce National Health Prayer Plan
As part of her bid to win the Republican Party nomination for President of the United States, Sarah Palin is preparing to announce a National Health Prayer Plan, according to sources close to Mrs. Palin.
An early draft of her speech on the subject says National Health Prayer will not "interfere with doctors or private health insurance companies." Instead it will eliminate Medicare, Medicaid, and other federal subsidies to "false, science-based health schemes."
"God invented the free market to scourge the lazy and reward the diligent. He invented disease to punish people for their sins. Tax payers should not be penalized for other people's sins."
While the details of the National Health Prayer system remain to be worked out, Palin's vision involves a computerized system of matching sick people to the local church of their choice. "It is a rewards based system for faith healers. Those who are cured will be required to give 10% of their incomes for the rest of their life to the church that cured them."
"God created free markets; the devil created safety nets and socialism," according to Palin. "When you interfere with free markets, you interfere with God's plan for us." The savings to taxpayers would be substantial. The Medicare tax, currently 2.9% of wages would be eliminated.
"Employees will have the equivalent of a 2.9% wage increase. What better gift could the Republican Party give to the voters of the United States of America? However, we do plan to lower the minimum wage to a new global fair wage scale of $1.88 per hour. At that wage level we believe the United States will hit full employment within 2 years of my taking office."
A number of groups are already planning responses to the Palin plan, soon to be known as the Prayer Deal. Commented Roberta Hell of the Flaming Atheist Alliance: "Sarah Palin knows prayer is ineffective, otherwise she would be Vice-President right now. Seniors who rely on Medicare will have their medical care rationed by their limited ability to buy private insurance or at soak-the-patient private doctor prices. That is what this is all about: rationing. Under Palin, America will become one big forced labor camp with monopoly corporations rationing out food, shelter and medical care."
An anonymous source close to Barack Obama said, "The President is aware of the Palin Health Prayer Plan and wishes he had thought of it first. If the Republican Congress presents such a bill to him, the President will look at the specific provisions of the bill before deciding whether or not to sign it."
I asked a local senior about the Palin National Health Prayer Plan. "But I've been paying Medicare tax all my life! It's not fair to cut me off now," she commented. "I'm going to pray that Sarah Palin beats me to the grave, [the rest of her comment was unprintable]"
Sadly, life is not about fairness. It is about free markets and politicians who worship money and power. Not even prayer can change that.
See also Sarah Palin Blasts Health Care [MiamiHerald.com, November 11, 2010]
Category: Satire
An early draft of her speech on the subject says National Health Prayer will not "interfere with doctors or private health insurance companies." Instead it will eliminate Medicare, Medicaid, and other federal subsidies to "false, science-based health schemes."
"God invented the free market to scourge the lazy and reward the diligent. He invented disease to punish people for their sins. Tax payers should not be penalized for other people's sins."
While the details of the National Health Prayer system remain to be worked out, Palin's vision involves a computerized system of matching sick people to the local church of their choice. "It is a rewards based system for faith healers. Those who are cured will be required to give 10% of their incomes for the rest of their life to the church that cured them."
"God created free markets; the devil created safety nets and socialism," according to Palin. "When you interfere with free markets, you interfere with God's plan for us." The savings to taxpayers would be substantial. The Medicare tax, currently 2.9% of wages would be eliminated.
"Employees will have the equivalent of a 2.9% wage increase. What better gift could the Republican Party give to the voters of the United States of America? However, we do plan to lower the minimum wage to a new global fair wage scale of $1.88 per hour. At that wage level we believe the United States will hit full employment within 2 years of my taking office."
A number of groups are already planning responses to the Palin plan, soon to be known as the Prayer Deal. Commented Roberta Hell of the Flaming Atheist Alliance: "Sarah Palin knows prayer is ineffective, otherwise she would be Vice-President right now. Seniors who rely on Medicare will have their medical care rationed by their limited ability to buy private insurance or at soak-the-patient private doctor prices. That is what this is all about: rationing. Under Palin, America will become one big forced labor camp with monopoly corporations rationing out food, shelter and medical care."
An anonymous source close to Barack Obama said, "The President is aware of the Palin Health Prayer Plan and wishes he had thought of it first. If the Republican Congress presents such a bill to him, the President will look at the specific provisions of the bill before deciding whether or not to sign it."
I asked a local senior about the Palin National Health Prayer Plan. "But I've been paying Medicare tax all my life! It's not fair to cut me off now," she commented. "I'm going to pray that Sarah Palin beats me to the grave, [the rest of her comment was unprintable]"
Sadly, life is not about fairness. It is about free markets and politicians who worship money and power. Not even prayer can change that.
See also Sarah Palin Blasts Health Care [MiamiHerald.com, November 11, 2010]
Category: Satire
Subscribe to:
Posts (Atom)
