Tag Archives: Trickle Down Hoax

Amodei’s Wonderland: Wherein Economic Vision Becomes Hallucination

One of the more confusing statements from Representative Mark Amodei (R-NV2) concerns how the Republican Tax Scam will affect the economy:

(Part A) “With respect to the effect on businesses, Main Street job creators will see their tax rates reduced through the lowering of the maximum tax rate on business income to no more than 25%. (Part B) Additionally, federal tax rates on corporate taxable income will see a decrease from the highest rate of 35% to a flat corporate tax rate of 20%. (Part C) Each of these changes will help businesses and corporations expand, hire new employees, increase wages, and also give them the resources they need to stay competitive in the global marketplace.”  [Amodei] (“parts” added for discussion)

Let’s begin with Part A, those “main street job creators” are the high income earners discussed yesterday as be beneficiaries of the Pass Through Loophole.   It really doesn’t matter if the firm’s address is Main Street, 5th Avenue, or Wall Street, the result is essentially the same.  After telling Nevadans not to worry about losing their most popular deductions because not all that many people use them and the new standard deductions will take care of them,  Amodei doesn’t apply the same test to the business and corporate deductions.  That Pass Through Loophole, by any and all other names, has resulted in massive revenue losses in Kansas, the state which imprudently serves as a laboratory for the GOP’s ideological economics.  Let’s not confuse Mom and Pop’s Midtown Market with the capital management firm of Grabbem, Gouggem, & Howe.   Both may “create jobs” but there’s no comparison in terms of how much of a tax break each will receive for having essentially the same number of employees.

Moving along to Part B:  Yes.  At present there’s a plethora of corporate accountants employed to create a situation in which a top rate of 39.1% becomes an effective rate far below that maximum rate.  One study of Fortune 500 companies reached the following conclusions:

  • As a group, the 258 corporations paid an effective federal income tax rate of 21.2 percent over the eight-year period, slightly over half the statutory 35 percent tax rate.

  • Eighteen of the corporations, including General Electric, International Paper, Priceline.com and PG&E, paid no federal income tax at all over the eight-year period. A fifth of the corporations (48) paid an effective tax rate of less than 10 percent over that period.
  • Of those corporations in our sample with significant offshore profits, more than half paid higher corporate tax rates to foreign governments where they operate than they paid in the United States on their U.S. profits.

Now, if they’re starting at 39.1% and getting their taxes down by half or even more at present — imagine what they can do when they start from 20-25% and work their way down?  For example, the “intangible drilling costs” loophole seems not to have closed up at all in the House version, and this while it’s acknowledged that seismic testing has significantly reduced the prospect of drilling dry holes.  The old Depletion Allowance survives as it always does, even if other deductions for mere mortals do not.

Or, consider the creative ways corporations use depreciation.  The House Ways and Means Committee version allows corporations to write off the depreciation for new equipment immediately.  Nice, if one is looking for a way to get from 20% down to a 10% tax rate or less.  [WaPo]  Not to put too fine a point to it, but while mere mortals are expected to absorb the elimination of student loan interest deductions, home mortgage interest deductions, and major medical expense deductions — the corporations go almost untouched.

Part C is unalloyed wishful thinking.  Walter Isaacson observes in his new book about Da Vinci that “vision without implementation is hallucination,” and this GOP canard is an almost perfect example.   Where the Tax Cut Fairy Waves Her Magic Wand wonders ensue — commerce increases, new employees will be hired, employees will have higher wages, and we will be “more competitive.”

Let’s step back from the hallucinations and observe what happens in the real world of employment:

“Service businesses, in which payroll is the major cost of providing the service, can take on higher payroll percentages since the payroll is, in fact, producing the revenue. There is likely to be no other significant cost of services to be provided. In such situations, payroll can reach the 50% mark without destroying profitability. Manufacturers, however, must maintain a payroll figure closer to 30% or less as the business must endure the cost of manufacturing the widget plus the payroll. Same with restaurants, given the high cost of food the payroll must stay under thirty percent.”

In order to lend any credence to the overblown rhetoric of GOP apologists for reducing corporate taxes and enacting pass-through loopholes, we have to merge all hiring from all sectors into one grand lump.  No matter the tax rate, what really matters is that the widget factory can keep its payroll allocations to 30% or less of its costs.  Nor can we argue that the sector with the highest payroll allocation, “service,” is all created equal.  This tertiary sector includes everything from health care to banking to education, to media and communications.   At the risk of continuous redundancy, the tax rate doesn’t determine payroll allocation — no one will be hired to do anything unless there is a demand for the goods or services beyond the capability of current staffing levels to deliver an acceptable level of consumer or client satisfaction.

Employees will have higher wages if the corporation gets a tax cut?  Probably not.  We can wade into the deeply arcane economic theoretical weeds and talk about the relationship between labor costs and tax liabilities, but let’s keep our feet on the ground instead.

Nevada has a fairly unique economy given one of our major sectors is “hospitality,” (or how to house, feed, and amuse people whom we want to leave behind large sums of money) establishments.  Therefore, there’s nothing surprising about finding out that we’ll need about 191,141 people working in food service in 2018; a growth rate of 2.8% with about 5,048 new positions expected. [DETR download]  The mean wage for food service workers is $12.74 per hour.  Most dealers are earning about $8.57 plus tips.  What will drive up food service and dealers’ wages?  Which is more likely to drive increases in food services wages: (a) more customers or (b) a bigger tax cut for corporate headquarters?

If you answered “b” then you are willing to wait for the calculations to be completed concerning how much the corporation should allocate for payroll expenditures, and then try to bank the results from this theory:

“Why would anyone think slashing corporate tax rates would increase workers’ wages in the first place? The theory endorsed by the CEA relies on three steps to get from corporate tax cuts to higher wages. First, the corporate tax cut increases companies’ after-tax returns on investment. As a result, firms will make more investments in plant and equipment than they would in a higher-tax-rate environment. Second, greater investment by firms leads to higher productivity by the workers who put those investments to work. Third and finally, workers will receive increased wages in line with those productivity gains.” [vox]

And, if you believe this I have a lovely bridge over the Humboldt River to sell you.  Why? Because corporations can do lots of other things with those savings — higher executive compensation, mergers and acquisitions, stock buy backs, and dividend payments.

Short Form:  Representative Amodei’s analysis requires redefining “job creators,” as those titans of the financial system who don’t necessarily become those doing the hiring; and requires disconnecting wages and salaries from the accepted wisdom about payroll allocation; and, means a person has to roll the dice and hope that the corporation trickles the money down to the counter-man.  In Isaacson’s parlance:  It’s vision without implementation.

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Filed under Economy, Nevada, Nevada economy, Nevada politics, Politics

It’s The Income Inequality Gap, and it’s stupid

Nevada Income Gap Map We’ve had the following information in hand since last February:

“The average income in Nevada rose just 8.6% between 1979 and 2007, among the lowest increases in the nation. However, most of the state’s residents actually lost money during that time, as average real income dropped by 11.6% for the bottom 99% of earners. For the remaining top percentile of earners, average incomes rose by 164% between 1979 and 2007. As of 2007, the top 1% accounted for 28% of state residents’ total income, the fifth highest percentage in the United States. The gap between the top percentile and other earners has further increased in recent years. Incomes for the top 1% rose by 4% between 2009 and 2011, while incomes for the bottom 99% of earners slipped by a nation-leading 6.7%. Nevada has struggled with high unemployment in recent years, including an average unemployment rate of 11.1% in 2012, the highest in the nation that year.” [24/7WallSt]

Need more? The share of growth captured by the top 1% = 218.5%. The real income growth from 1979 to 2007 was the second lowest in the nation, at 8.6%  The income growth for the bottom 99% of Nevada residents was –11.6%, the 2nd least in the country, and the income growth for the top 1% was 164%, the 24th highest in the country. [24/7WallSt]

If this were a “one off” situation we might dismiss it more causally, but it isn’t.  The change in Nevada household income from the late 1970s to the mid 2000’s shows a 16.8% increase for the bottom 20%, a 19.7% increase for the middle 20%, and the top 20% saw income growth of approximately 58.6%. [CBPP pdf]  So, how much annual income does it take to make it into the top 1% of Nevada’s income earners?

Nevada top 1% From the map shown above, it takes about $306,000 per year to be in the top 1% of Nevada income earners.  And, what is the income inequality ratio in Nevada?

Nevada Income Inquality ratio map The answer is 44.1%, one of the highest in the United States.  The next obvious question is: Why does a widening gap in income by households create a problem?  Hint: You don’t need a degree in finance or economics to figure this one out.  What tends to happen is that in the long run the lower income families tend to stay in the lower income brackets, the top 1% move steadily upward, and it’s the middle class that gets caught in the squeeze.  Economists Saez and Zucman explain:

“Among the fascinating findings of Saez and Zucman is how thoroughly the top 0.1% have shouldered their way past all other households. While their wealth share was soaring, that of the next 0.9% was barely growing, while that of the “merely rich” — those ranking in the top 10% but below the top 1% — actually shrank.

But the real victims of the trend are in the middle class. Saez and Zucman show that the wealth share of the bottom 90% grew from the 1920s through the mid-1980s, from 15% to 36%. Mostly the gain was due to the growth of pensions and of homeownership. Since the mid-1980s, however, middle-class wealth has evaporated, falling to 23% in 2012, about the same level as 1940.” [LATimes]

So what? What if middle income range families are getting the squeeze? To demonstrate that they ARE getting shouldered out of their share of increasing wealth doesn’t necessarily prove the situation is essentially economically negative?  Or does it? The answer is “yes, it does” if we’re talking about the real economy and not the shadow economy of the investment bankers and financialist allies.  For what now may be a record number of times in a single blog, let’s review the calculation of the Gross Domestic Product:

Gross Domestic Product Formula

Once More! The C is for consumer spending. The I is for investment. The G is for government spending. The (X-M) part is the difference between imports and exports. Who has disposable income to spend on goods and services? Who has income to save or invest?  If you guessed that there are more lower and middle income households you’d be right.

As of the 2012 IRS report, there were 144,928,472 household income tax filings. Of these filings 705,029 came from homes in which the annual adjusted gross income was between $500,000 and $1 million. Incomes between $1.5 million and $2  million accounted for 71,874 households, and there were 106,711 filings from households reporting income between $2 million and $5 million. 27,167 homes reported AGI of between $5 million and $10 million, and 17,685 reported AGI over $10 million. [IRS download]

Those 2012 filings of AGI ($500K-$1M) were 4.68% of the total; the next category up were 1.68% of the total filings; the next category composed 0.49% of the total; and the next 0.74%; at the very top the AGI ($5M-10M) comprised o.0187%, and the over $10 million were 0.0122% of the total filings. Now for the practical question: Who is buying more washing machines, television sets, and automobiles?  Who is buying more clothing, gasoline, and groceries?

We can narrow this down to Nevada’s statistics. [IRS download]   There were a total of 1,289,360 filings in 2012. Of these 4,420 were for adjusted gross incomes over $500,000 and 3,300 came from households with over $1 million.  The top bracket filings constituted 0.34% of the total and 0.25% respectively.  Again, who is purchasing consumer goods and services in Nevada?  Facing reality – a household could own one home in Las Vegas, one at Lake Tahoe, and another in Elko County – that’s still only three washing machines, three dryers – we could even toss in a car elevator and the total consumer spending wouldn’t create the DEMAND for goods and services which might be generated from the remaining 99% of Nevada income earners.

This is precisely WHY the Supply Side “Trickle Down” hoax is so pernicious. Continuing to monkey with the tax code by giving tax breaks, tax ‘incentives,’ and tax avoidance tactics to the upper 1% simply means we’ve skewed the numbers by which we measure our own economic growth. It has been, and continues to be, nothing less than a recipe for disaster.

Now, let’s take a look at the I part of the equation. Where is the investment going?  In good old fashioned garden variety capitalism, the “savings” or excess income is Invested in stocks or bonds which corporations can use to expand production, add employees, and use to build facilities or put into research and development – so, what are investment advisors telling their clients in the upper income brackets now?

The “hottest” investments for 2014 were in non-wrap mutual funds (82%) and exchange traded funds (79%). [OnePA]  “The exchange traded funds are like index funds but they can be bought and sold just like shares of common stock.  Whenever an investor purchases an ETF, he or she is basically investing in the performance of an underlying bundle of securities — usually those representing a particular index or sector. Unit Investment Trusts (UITs) are often organized in the same manner. However, the unusual legal structure of an ETF makes the product somewhat unique.” [Invest]  They can be bought and sold like common stocks but the crucial part is that they are NOT common stocks, and the “somewhat unique” structure comes with some tax advantages.  Who could have guessed?  A non-wrap mutual fund is one in which there isn’t a mutual fund advisory program giving the investor access to a big pool at a set annual fee.   Not to put too fine a point to it, but what we have here is a Financialists Day Dream – lots of ‘financial products’ to trade based on “an underlying bundle of securities.” Not reality.  If you were thinking that the I stood for the good old capitalistic categories of fixed investment and changes in business inventories – think again?

And this is the way the income gap expands.  Wage and salary workers face issues of globalization, technological changes, educational and training gaps, and increasing levels of indebtedness, while the top 1% bets on the capacity of the 99% to pay off the debts which have been warehoused, sliced, diced, slung into the Wall Street version of the financial Cuisinart, and traded in the financial markets.

There are no Silver Bullets but there are some things that might help.

  • Tax capital gains at the same rate as any other form of income. People work and get taxed, if ‘money works’ then tax it as well.
  • Close the special tax advantage loopholes which allow ‘investors’ to play with Dark Pools, exotic funds, and other Wall Street creations which serve to minimize Wall Street risk and place the general economy in a volatile financial environment.
  • Don’t fall for simplistic solutions like the Flat Tax, which is simply one more way for the top 1% to get a break while the wage and salary owners continue to pay the freight.
  • Increase the federal and state minimum wages.
  • Increase investment in education and training programs.
  • Encourage union and worker organizations.
  • Encourage American manufacturing with a long term national plan to improve U.S. manufacturing, including the government procurement of items made in America.
  • Avoid trade treaties which impinge on U.S. production, labor, environment, and U.S. sovereignty.

Nor can we assume that any one of these elements will bring Peace and Prosperity – there must be a conscious desire to return to that good old garden variety Capitalism – with an acknowledgement that “financial products” are here to stay – coupled with the encouragement of investment in infrastructure (public and private), production improvements, and research and development.  It’s possible if we can get our noses out of our checkbooks long enough to get a better view of our economic horizons.

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Filed under Economy, Nevada economy

Wall Street Whine with Cheesy Job Creators Argument

 Wall Street Pig

It is inevitable. When anyone suggests that the top 1% pay a bit more for the comforts of life in a civilized society – comforts like defense, police protection, firefighting services, a judicial system for the resolution of complaints and the enforcement of contracts, to name but a few – someone will wail, “You Can’t Tax The Job Creators.” [C&L] There is a philosophical side to the refutation of this old whopper:

“Great success should be celebrated, but not institutionalized. When we tax working Americans at a higher rate than billionaires, it is bad for business. When we tax the small business more than our largest corporations, it is similarly bad for business. When we give tax breaks to the wealthiest while excluding those in the middle and the bottom, we slow down our economy by slowing down the rate of idea creation, because so many are excluded from the process of solving our nation’s problems.

Small adjustments in how we run our system can make a huge difference to our economy and our country. A truly capitalist system structured to maximize the participation of the many rather than the advantages of the few will generate more jobs, growth, and prosperity. Additionally, being fairer and more inclusive will increase solidarity in our country, creating yet another positive feedback loop of ever-increasing cohesiveness and patriotism.” [Atlantic]

One might have hoped this old “Job Creator” canard had dissipated along with the four excuses Republicans always bring to the fore, however that’s not to be. The Voodoo Economics and attendant statistical gymnastics associated with the Trick Down Hoax are nothing if not tenacious.  The tenacity is impressive since it has maintained a hold on media types long past its sell-by date.

The hard truth is that the ultra-rich do not create jobs. Wall Street financiers do not create jobs.  Investment bankers do not create jobs. In fact, no single segment of our economic ecosystem creates jobs. Jobs are the result of a combination of elements which taken together form our capitalist system.

The classic Capitalist chain begins with a person who has  an idea.  Investors may be induced to support this idea with some money.  The idea (product or service) hits the market. Now comes the important part – it doesn’t matter how good the idea might be, or how much investment is poured into the project – IF there are no customers for the product or service.  All three legs of the stool have to be solid before any weight can be placed on it.

The “Job Creator” notion works IF and only IF we take the third leg off the stool. Until someone buys the product or service, and that someone is joined by enough other customers to make the idea profitable there are no real jobs created – only paper prospects.   Let’s look at some real world examples.

Some products are too far ahead of their time.  Witness the fate of Norman Bel Geddes’ 1933 Roadster design for the Graham-Paige Company. [RoadTrack] The Depression didn’t help – there weren’t customers for the stylish automobile, and Graham-Paige was eventually sold to Kaiser-Frazier. However, our best example for “too far ahead of the customer curve” may well be the 1898 Lohner-Porsche hybrid – yes, that’s HYBRID as in combination gasoline and electric car. [Wired] All the investment in the manufacturing capacity of Graham-Paige or Lohner-Porsche couldn’t bring the idea to fruition and to profitability without customers. Ultimately, the investors in these ideas didn’t create a single job.

Some products are behind the curve.  Remaining in the automotive realm, there’s the venerable Edsel example. The Flop Heard Round The World.  When the car without customers was finally euthanized in November 1959, some $250 million (or about $2 billion in today’s dollars) had been sunk into  the flop.  Again, lots of investment, lots of marketing, and ultimately no permanent jobs created by this machine which hit a saturated market.

Some products glitched. Apple poured a ton of money into the Newton. Remember the Newton? Not too many people do, but this personal assistant tool was the predecessor of the Palm Pilot.  Two major problems beset the early model PA, the writing recognition was literally laughable, and the price was too high.  [DailyFin] Customers stayed away in droves. Apple’s employment numbers didn’t increase because of the investment in the good old Newton.

Some products fail because of poor marketing. All we might have to say here is “BetaMax,” or “New Coke?” Herein we have products, especially the BetaMax, which were essentially good products, for which there was a market, but the corporations never connected the customers and the products in a way to make the launch profitable.  At least the two gave business schools some quality examples of marketing failures to add to their curricula.

The examples lead to a rational conclusion:

“Investment capital is an important part of the economic ecosystem, as are entrepreneurs. But investment capital alone cannot create sustainable jobs. Investors do not keep investing in businesses that don’t produce products the market wants and will pay for. And, eventually, no matter how much money is invested up front, unless the ecosystem supports a company, whatever jobs it temporarily adds will disappear.” [BusinessInsider]

Along with the 1933 Roadster, the 1898 Porsche Hybrid, the Newton, BetaMax, New Coke, and the Edsels.  The emphasis on investment to the exclusion of focus on the real economy kicks at another leg of the stool. It’s not like we haven’t been warned; there is this comment from James Tobin, a member of President Kennedy’s Council of Economic Advisers, from back in 1984:

“I confess to an uneasy Physiocratic suspicion…that we are throwing more and more of our resources…into financial activities remote from the production of goods and services, into activities that generate high private rewards disproportionate to their social productivity.” [MonthlyReview]

What happens if “more and more of our resources (capital)” is directed toward “financial activities remote from the production of goods and services?”  Financialism.  Our financialists would have us believe that not only are they the ultimate essential feature of the free market system, but that their wealth is creating wealth for everyone. Leaping to that insular conclusion means a long swim back. 

The accumulation of corporate cash under the financialist perspective, combined with the Shareholder Value Theory of Everything, is a recipe for stagnant wages, which translates all too quickly into decreased demand for goods and services.  But, the people on top are doing nicely, thank you very much.

“When firms do use this money, as opposed simply to piling up cash, it is frequently to pay dividends to stockholders, buy up other companies, or else to buy company stock in the hope of driving share prices up: a pure speculative endeavor. In 2013 corporations authorized $755 billion to buy back shares of stock.  Failure to absorb the enormous economic surplus and its use instead for speculation means that the actual rate of growth of the economy slows down in relation to its potential rate of growth. To the extent that corporations do continue to invest in this kind of economic environment it often serves to displace labor and decrease their unit costs of production, increasing the overall surplus at their disposal. The capital formation that does occur under these circumstances is therefore unable to lift the economy out of its general listlessness.” [MonthlyRev 5/14] (Emphasis added)

Or, those who are primarily interested in “capital formation” are missing the point – and they cannot create “jobs” much less “general prosperity.”  The self same interests which are slowing down the economy’s rate of growth are exactly those who are trying to tell us they are responsible for it.  Good Grief.  This is all rather like having the man who has tied a thick elastic band to the rear axle of your vehicle tell you that any forward progress you make is due to his exertions.  

And the level of the capital gains tax on all this speculation? What does that do?  Economics professor Leonard Burman dropped this little bombshell in the midst of a joint meeting of the Senate Finance Committee and the House Ways and Means Committee in 2012:

Burman Chart

Go ahead, try to find a statistically valid relationship between the rate of the capital gains tax and the economic growth line.  Good luck. Professor Burman’s conclusion:

“Does this prove that capital gains taxes are unrelated to economic growth? Of course not. Many other things have changed at the same time as tax rates on capital gains and many other factors affect economic growth. But the graph should dispel the notion that capital gains taxes are a very important factor in the health of the economy. Cutting capital gains taxes will not turbocharge the economy and raising them would not usher in a depression.”

What Do We Know?

We know that a generally more prosperous economy encourages ideas (for new economic enterprises), and that while investment is a key element in the process it is not exclusive – product timing, development, and marketing also play crucial roles.  We know that vast capital accumulation doesn’t automatically mean economic growth.  We know that capital accumulation diverted into speculation in exotic financial paper can be a drag on the overall economy; and, we know that there’s no statistically valid correlation between the level of the capital gains tax and the level of economic growth.

So, taxing those self-anointed  “Job Creators” may not be so bad an idea after all.

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Filed under Economy, Taxation

Heller: 0.01% trumps Nevada’s 15%

Heller 2As of 2012 there were some 161,317 workers in the state of Nevada who would be directly affected by an increase in the minimum wage, out of a total workforce of approximately 1.068,842.  Of the 161,317 directly affected 139,064 were aged 20 or above.  [EPI pdf] A bit of punching on the plastic brains (read calculator) shows that 15.1% of Nevada’s workforce would be directly affected, and that 86.2% of these workers were NOT teenagers.

So, why would Senator Dean Heller (R-NV) vote to sustain the Republican filibuster of the minimum wage increase bill in the U.S. Senate? [Senate]

Senator Heller offered two explanations: (1) “Heller’s vote was rooted in his belief the minimum wage should be determined by individual states and not the federal government, “and this particular legislation is no exception,” according to his spokeswoman Chandler Smith.” [LVRJ] (2) “Smith added Heller was persuaded by a Congressional Budget Office estimate that the legislation “could cost our economy 500,000 jobs.” [LVRJ]

Let’s take the second part first — Senator Heller seems to have read one half of the report, or one half of the CBO’s conclusions.  The conclusions created a “mixed message:”  A popular Democratic proposal to raise the minimum wage to $10.10 an hour, championed by President Obama, could reduce total employment by 500,000 workers by the second half of 2016. But it would also lift 900,000 families out of poverty and increase the incomes of 16.5 million low-wage workers in an average week.” [NYT]

Evidently, it doesn’t take too much precision to convince Senator Heller to embrace half a report.  He missed the part wherein there were two options ($9.00 and $10.10) and he obviously missed this portion of the text:

In CBO’s assessment, there is a two-thirds chance that the effect of the $9.00 option would be in the range between a very slight increase in the number of jobs and a loss of 200,000 jobs. If employment increased under either option, in CBO’s judgment, it would probably be because increased demand for goods and services (resulting from the shift of income from higher-income to lower-income people) had boosted economic activity and generated more jobs than were lost as a direct result of the increase in the cost of hiring low-wage workers. [CBO pdf]

There’s our old friend “aggregate demand” again, if more workers have more money there will be more demand for goods and services and hence more employment.  Unfortunately, Senator Heller is still locked into his mantra “less regulation, more tax cuts (especially for the 0.01%), “rein in government spending” (unless that means loopholes for corporations), and supporting comprehensive energy policies (read: support the oil and gas giants and the Canadian XL Pipeline).” [Heller]  None of this is substantiated by the conclusion reached in the February 18, 2014 version of the report issued by the CBO. Nor is the conclusion all that solid.

“Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects (see the table below). As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers.”

With all due respect to those who toil diligently at the CBO to provide economic analysis, a conclusion that there is a 66% chance of a range of employment displacement from “very slight” to 1 million isn’t all that robust.   However, this seems sufficient to support Senator Heller’s proclivity for hugging his favorite talking points.

At the risk of over-simplifying his position, the core of it is essentially Trickle Down Hoaxsterism with Austerity for All and Prosperity for A Few.   Somehow we are to believe that cutting taxes (especially for the 0.01%) and deregulating Wall Street will “create jobs” … sometime…somewhere.  Meanwhile, social safety net programs are subsidizing the poverty level wages being paid by major corporations. [HuffPo]

Meanwhile back in the real world, and in the state of Nevada — of those 161,317 workers directly affected by an increase in the minimum wage increase 68,247 are non-Hispanic whites, another 54,572 are Hispanic, and 12,957 are African American.  [EPI pdf]

As to the argument that minimum wage jobs tend to be part time, the EPI statistics don’t support that myth either — 81,115 are full time employees.  56,971 are mid-time employment, i.e. from 20 to 34 hours per week, and only 23,230 are actually part time jobs with 20 hours per week or less.    Nor are the people working a minimum wage jobs necessarily “drop outs” — 64,606 are high school graduates, 40,187 have some college or post secondary education, 5,824 have an associate’s degree, 12,051 have bachelor-level degrees; leaving 38,639 with less than a high school diploma or its equivalent.  [EPI pdf]

The notion that when speaking of minimum wage workers we’re talking about teens, females, and drop outs isn’t sustained by the actual numbers, in fact, while there are more Nevada women holding down minimum wage jobs (83,079) there are 78,238 men trying to maintain life on the minimum wage in Nevada. [EPI pdf]

We might summarize by concluding that Senator Heller would far rather support further tax cuts for the 0.01%, and more deregulation of the Wall Street Casino, and yet more “austerity” for those who work for corporations paying below living wages, than he would care to support legislation to support at least 15% of Nevada’s working men and women.

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Filed under Economy, Heller, Politics

Legacies and Burdens

House CleaningIt’s a good practice to periodically clear out unwanted and unused items from cupboards, pantries, basements, and attics.  Some items are superficial, some represent fads and fashions, others are weighty pieces of dubious use and questionable value — and there are others which are downright unsafe.  The U.S. has some items left by previous and present tenants which fall into the latter category.

Trickle Down Economics:  It’s high time this flammable collection hit the bin.  We’ve probably all purchased items of untrustworthy provenance at one time or another — like raffle tickets for unknown charities, or magazine subscriptions from a con team, or perhaps unwarranted service on a motor vehicle.  However, this was a fraud perpetrated on Americans which has had spawned undue hardship and such illegitimate progeny as ‘austerity economics.’   First off, there never really was a reputable basis for the Trickle Down theory. [AmericanThinker] Even conservative economists are willing to disparage the concept of a school or theory of Trickle Down.  It was, and remains, all Trick and nothing down.

The trick came in the infamous 1971 Powell Memo.  Lewis Powell saw the “American enterprise system” under “attack.”  The ideas he perceived as damaging to American business were lumped into the “statism, socialism, communism” category.  He urged businesses and their organizations to fight back on campuses, in the media, and in the courts.   CEO’s, he argued, should lead the pack:

“The day is long past when the chief executive officer of a major corporation discharges his responsibility by maintaining a satisfactory growth of profits, with due regard to the corporation’s public and social responsibilities. If our system is to survive, top management must be equally concerned with protecting and preserving the system itself. This involves far more than an increased emphasis on “public relations” or “governmental affairs” — two areas in which corporations long have invested substantial sums.”

Powell’s statement isn’t far from the adage most associated with Calvin Coolidge in 1925: “the chief business of the American people is business.”   Combine this with Herbert Hoover’s 1934 “Rugged Individualism” and we have a toxic blend of motifs which seek to justify corporate management control over the entire economy (including labor) in a social setting in which disparages cooperative and altruistic efforts and leaves individuals “on their own.”   One modern  problem with this legacy is that corporate leadership has appended a corollary:  “What’s mine is mine, and what is yours is negotiable.” [JFK]

And there’s is considerable — we have allowed the creation of Corporate Welfare Queens — with tax breaks, subsidies, no-bid contracts, anti-labor legislation, and loopholes ready to hand that facilitate hiding assets off shore.  They wish to be de-regulated, and “free” to conduct their business in the least transparent, least accountable way possible.  No “burdensome” regulation for them — meaning, of course, no Sarbanes-Oxley Act to control corporate malfeasance (Enron), no Dodd-Frank Act to control banking irregularities, no Clean Water Act, no Clean Air Act…no acts at all which might impinge on corporate profits.

They’re down with all this as long as they can convince enough people that they’ll get a trickle.

The War of Northern Aggression:   I hate to be the one to break it to the neo-confederates, but if we take Civil War era southern leaders at their word — the war really was about their Peculiar Institution, human slavery.  Even the somewhat reluctant rebel Alexander Stephens expressed the situation bluntly in his Cornerstone Speech in 1861:

“The new Constitution has put at rest forever all the agitating questions relating to our peculiar institutions—African slavery as it exists among us—the proper status of the negro in our form of civilization. This was the immediate cause of the late rupture and present revolution. Jefferson, in his forecast, had anticipated this, as the “rock upon which the old Union would split.” He was right. What was conjecture with him, is now a realized fact. But whether he fully comprehended the great truth upon which that rock stood and stands, may be doubted. The prevailing ideas entertained by him and most of the leading statesmen at the time of the formation of the old Constitution were, that the enslavement of the African was in violation of the laws of nature; that it was wrong in principle, socially, morally and politically. It was an evil they knew not well how to deal with; but the general opinion of the men of that day was, that, somehow or other, in the order of Providence, the institution would be evanescent and pass away… Those ideas, however, were fundamentally wrong. They rested upon the assumption of the equality of races. This was an error. It was a sandy foundation, and the idea of a Government built upon it—when the “storm came and the wind blew, it fell.” [Cornerstone Speech]

It doesn’t take too much cogitation to see where CSA President Jefferson Davis was headed in his inaugural address:

“The declared purpose of the compact of Union from which we have withdrawn was “to establish justice, insure domestic tranquillity, provide for the common defense, promote the general welfare, and secure the blessing of liberty to ourselves and our posterity;” and when, in the judgment of the sovereign States now composing this Confederacy, it had been perverted from the purposes for which it was ordained, and had ceased to answer the ends for which it was established, a peaceful appeal to the ballot-box declared that so far as they were concerned, the government created by that compact should cease to exist. In this they merely asserted a right which the Declaration of Independence of 1776 had defined to be inalienable; of the time and occasion for its exercise, they, as sovereigns, were the final judges, each for itself.”

By Davis’s lights the Perversion emanated from that pesky “all men are created equal” segment, a policy the southern states were loath to acknowledge.  Thus our neo-confederates are left with the sophistry of the Lost Cause publishers of the late 19th century, who sought to put a gloss on the rusting patina of antebellum southern society.  There’s not one of the Six Pillars of the Lost Cause ideology still left standing.

The residue, however, is still with us even if Pollard and his associates who dreamt up the Lost Cause have passed long ago.  The racism and bigotry which underpinned the southern reaction to the abolition of slavery still erupt, less now like explosive eruptions and rather more like the effusive eruptions slowly emitting a base which obliterates rational thought in the area.

The Lost Cause mentality informs the present day “white victimization.”  The Others must be the reason the farm was lost, the job was outsourced, or the wages have been stagnant.   All the usual suspects are rounded up — the Jewish bankers of New York City, the African American family qualifying for SNAP benefits, the urban dwellers with their strange ways and corrupt politicians.  [Salon] Those having the temerity to disagree are simply dismissed as “white haters.”

Conflations:  Nothing could be handier for the proponents of Corporate America than a segment of citizens ready and willing to believe that someone “other” than their own constituency is somehow responsible for their plight — If the Corporatists wish to shred the social safety net (Social Security, Medicare) then the phantom of the Welfare Queen, conveniently Black, is inserted into the picture.  If the Corporatists wish to indulge their financialist whims, then the phantom of the Imposing State is conjured up.

We can no more flee from our legacies than we can be convinced to part with all the ‘treasures’ in our attics, but what we should do is more house cleaning, more often.

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