connecting a couple minimum wage points.

[dfuruta]

while money is nice, one does have to draw the line somewhere 

 

[L´Andratté]

The way things are going, it won't be too long until China is outsourcing its manufacturing back to the US 

Or maybe `they´ think twice about producing for just peanuts. China pretty much monopolised a lot of industries that `we´rely on and have no more facilities and workers for.

That is an interesting quote, and yes he said it, in the context of his support for Obama's tax the rich class warfare. I suspect this was just clever business on his part to keep the administration friendly to his sundry businesses, he is a very smart guy. Buffett has contributed a huge share of his personal wealth to Bill Gates charity. 

I think he just can afford speaking frankly :-[

While I don't want to pontificate about German History, you have a long tradition of paternalistic government. Your version of socialized healthcare is IMO a more effective combination of private/public where IIRC low income citizens get support to pay for healthcare plans.

Yes, that´s true about paternalistic and the healthcare is one of the two good things about it.

There is an argument about private charity vs forced government charity. All western civilizations try to provide some form of safety for the least among us, but at some point the state needs to get away from mandating outcomes for the broader population, or trying to. Not that it isn't nice to try, but because it is IMO impossible to accomplish and often fails miserably doing more damage than good. 

I don´t say or think people should be delivered everything for free or should give up any responsibility for their lifes, but on the other hand in a really wealthy society(e.g. Germany), they have a RIGHT to receive existential help if needed. This mustn´t be subject to any charity.

I saw a recent statistic that said renewable energy receives 3x the subsidy of non-revewable, per unit of energy created. I have been watching Germany's energy policy for years. They have recently walked away from nuclear, investing heavily in wind and solar, but at some fraction of the nations power consumption you can't rely on it always being windy and sunny enough, so you have to maintain conventional back up generation capacity to carry the load on dark, still days. This increases the cost of providing electricity and cost to consumers. In germany I believe they also subsidize the cost of electricity for industry (to preserve jobs) making consumers pay even more for electricity.

This is subject to decades of propaganda and counterpropaganda. As you probably know, you can prove EVERYTHING AND IT´S OPPOSITE with statistics and the german government does on a regular basis. E.g. the enormous costs of dumping atomic waste is not counted as subsidizes, but are paid with taxes???

Btw. if you´re interested to read about an truly talented capitalist, read Golo Mann:`Wallenstein´

 

[JohnRoberts]

The way things are going, it won't be too long until China is outsourcing its manufacturing back to the US 

Or maybe `they´ think twice about producing for just peanuts. China pretty much monopolised a lot of industries that `we´rely on and have no more facilities and workers for.

Like solar cells? EU was ready to impose tariffs on Chinese solar panels when the western factories were unable to compete on price, until China threatened to retaliate with tariffs on EU wine sold in China.  Um never mind, you're OK.  :'(

That is an interesting quote, and yes he said it, in the context of his support for Obama's tax the rich class warfare. I suspect this was just clever business on his part to keep the administration friendly to his sundry businesses, he is a very smart guy. Buffett has contributed a huge share of his personal wealth to Bill Gates charity. 

I think he just can afford speaking frankly :-[

I suspect he is too smart to speak completely frankly and put any of his businesses in regulatory crosshairs (at least I hope so, I own stock in his company). These days being friendly toward the administration is just good business. Jaime Diamond CEO of JPMorgan has spoken truth to power a little too much, being critical of the government's regulatory approach, and ended up with a target on his back. He just agreed to a $13B settlement for abuses related to housing securities sales , and behavior at bear Sterns and WaMu before he bought them under duress, He bought them with inadequate time to properly vet, during the height of the credit liquidity crunch in 2007-2008. These purchases were encouraged by the government trying to prevent a total collapse of the banking system. Diamond is not off the hook yet, the government is still trying to pin criminal charges on him and/or his company. He has become the poster boy for all the bad behavior of wall street and his company was relatively clean. There was some real bad behavior surrounding the housing bubble but the vast majority of those miscreants will walk because it wasn't strictly illegal to lend people no document loans, while it should have been. The huge fines seem like quid pro quo as the fed has been pumping money into the mega banks with low borrowing costs for years, and still are. Don't feel bad for JPMorgan they can afford the $13B fine and will still profit handsomely from buying Bear Sterns and Wamu. I guess his handlers are angry the he didn't kiss their ring and say yes master. I dislike seeing Jaime vilified, but understand the public's desire to blame somebody for this mess. Congress is never going admit their complicity in promoting easy lending standards and still haven't reformed Fannie and Freddie.

While I don't want to pontificate about German History, you have a long tradition of paternalistic government. Your version of socialized healthcare is IMO a more effective combination of private/public where IIRC low income citizens get support to pay for healthcare plans.

Yes, that´s true about paternalistic and the healthcare is one of the two good things about it.

There is an argument about private charity vs forced government charity. All western civilizations try to provide some form of safety for the least among us, but at some point the state needs to get away from mandating outcomes for the broader population, or trying to. Not that it isn't nice to try, but because it is IMO impossible to accomplish and often fails miserably doing more damage than good. 

I don´t say or think people should be delivered everything for free or should give up any responsibility for their lifes, but on the other hand in a really wealthy society(e.g. Germany), they have a RIGHT to receive existential help if needed. This mustn´t be subject to any charity.

I saw a recent statistic that said renewable energy receives 3x the subsidy of non-revewable, per unit of energy created. I have been watching Germany's energy policy for years. They have recently walked away from nuclear, investing heavily in wind and solar, but at some fraction of the nations power consumption you can't rely on it always being windy and sunny enough, so you have to maintain conventional back up generation capacity to carry the load on dark, still days. This increases the cost of providing electricity and cost to consumers. In germany I believe they also subsidize the cost of electricity for industry (to preserve jobs) making consumers pay even more for electricity.

[news update] A new dispute about (EU) legality of renewable energy electricity surcharges in germany.  [/news]

This is subject to decades of propaganda and counterpropaganda. As you probably know, you can prove EVERYTHING AND IT´S OPPOSITE with statistics and the german government does on a regular basis. E.g. the enormous costs of dumping atomic waste is not counted as subsidizes, but are paid with taxes???

Lies, damn lies, and statistics.... 8)

There are better nuclear fuel cycles to use (thorium), and I have already posted my suggestions for handling waste. Enthusiasm for nuclear energy was already waning before Fukishima disaster, so there is little support to develop new, better reactor designs. Apparently they are getting ready to remove hot fuel rods from that mess in japan pretty soon.

[news update] The feds have collected some $30B from nuclear power utilities to pay for permanent storage in Yucca Mountain, But Senate Leader Reid continues to resist the laws passed to do this, and the administration has relented. Now the regulators have decided to stop collecting the fee because the utilities have had to pay for temporary storage themselves in the meanwhile.  I don't see a problem with storage in Yacca mountain if properly engineered. This is not rocket science, nor your typical garbage dump. I still like my idea to dump it in a subduction zone where one tectonic plate is overlapping another. FWIW there is a nuclear reaction heating the earth's core, so nuclear waste will not be lonely down there.  [/news]

Btw. if you´re interested to read about an truly talented capitalist, read Golo Mann:`Wallenstein´

Interesting, I was not aware of his name as a notable capitalist but that book looks like an interesting insight into European History and financial dealings. Thanks

JR

 

[L´Andratté]

The EU is like the Mafia, only incompetent.

The interesting thing with Wallenstein in the context of this thread is, that, while he was co-responsible for greatly decimating the population of central europe, in his own vast territories in bohemia he maintined a rule of peace and social stability- out of total economic selfishness. He was clever enough to see he would benefit more from that than squeezing the hell out of the people. Sadly there´s not too much of that cleverness around here (Earth).

 

[JohnRoberts]

Just so we don't get caught by surprise it looks like there will be another organized labor** supported round of protests to raise minimum wage coming this week. From the outside this looks like a thinly veiled attempt by unions to stop their bleeding from declining membership. I saw another unrelated article that unions are talking about raising their membership dues. It must be tough to maintain their political spending with declining membership and revenue.

I consider this relatively recent trend of adult workers, trying to support families by working in the fast food industry, or as door greeters at Walmart making minimum wage and perhaps not even 40 hour weeks, is an unintended consequence of this perpetually sub-standard economic growth. If there were more real jobs they would be out working elsewhere for higher pay.

IF we had even historical average economic growth there would be a lot more jobs and these heads of household wouldn't have to flip burgers (and take government assistance)  to make ends meet.

Raising the minimum wage, is actually the wrong issue and just addressing a symptom of the larger economic malaise through a political lens of class warfare. In classic economic unintended consequences raising the minimum wage will just result in less entry level jobs making it even harder for new workers to get on the employment ladder. An interesting way to look at minimum wage, is what would happen if we make it $100/hr. I'll let you carry out this thought exercise by yourself, but it should be easy to see that would not turn out well. Raising it to $10/hr will have a similar effect, just in a less dramatic fashion. The important fact to understand is that wages are not some arbitrary amount that can be set by fiat independent of circumstances, but an exchange between employer and worker  for value created that drives an intricate profit/loss relationship that business leaders must balance and manage to survive.   

For evidence of the cost of regulation on the economy, I just read a new statistic today, that we now have the lowest number of small local banks since the depression. The recent increase in banking regulation, and artificially low central bank interest rates is forcing more small banks out of business. I would much rather see more small local banks that do most local lending and less large mega banks, not the trend we are apparently promoting now. 

Of course maybe I'm wrong.

JR

** I saw reports of a protest last week outside a Walmart in Il(?) where out of some 30 or so protesters there were only 2 or 3 actual Walmart employees.

PS: While the unions like to demonize Walmart as some evil empire, I have been following the aftermath of the factory fires in Bangladesh and Walmart is a member of a coalition of several clothing merchants pressing the factory owners there to improve worker safety and working conditions. They are independently pressing for reform because the Bangladeshi government is moving too slowly if at all. The government is probably apprehensive about upsetting their largest national export industry that is paying the government's bills. Of course Walmart has some self interest in distancing themselves from the abusive factory owners, and being able to influence the reforms. 

 

[emrr]

For evidence of the cost of regulation on the economy, I just read a new statistic today, that we now have the lowest number of small local banks since the depression. The recent increase in banking regulation, and artificially low central bank interest rates is forcing more small banks out of business. I would much rather see more small local banks that do most local lending and less large mega banks, not the trend we are apparently promoting now. 

OK, but weren't many local banks consumed in the fallout 5 years ago, through no fault of their own, other than being small, and buying into the same risky practices that everyone wanted in on?  Hell, stockholder demanded small banks keep up with big banks on methods and earnings; no choice while a 'good thing was rolling strong'.  With public pressure strong to have the Fed unload troubled assets (failed small banks), the only option is to sell them to the big ones.  At a certain size there's no one larger to do the buying other than the Fed itself, so those survived, begrudgingly.  I would have liked to have seen the Fed prop up all equally, if it had to be done at all, but much public sentiment was loudly against it.  And here we are, more 'too big to fail'. 

Maybe I'm wrong, I'm no expert. 

 

[JohnRoberts]

For evidence of the cost of regulation on the economy, I just read a new statistic today, that we now have the lowest number of small local banks since the depression. The recent increase in banking regulation, and artificially low central bank interest rates is forcing more small banks out of business. I would much rather see more small local banks that do most local lending and less large mega banks, not the trend we are apparently promoting now. 

OK, but weren't many local banks consumed in the fallout 5 years ago, through no fault of their own, other than being small, and buying into the same risky practices that everyone wanted in on?

The bad practice that all banks participated in was originating mortgages and then flipping them, keeping no skin in those mortgages that they originated. This was not bad revenue wise for the banks, as they made a quick buck, and passed along the future liability to others. This was just bad for all the rest of us when the music stopped and buyers of the packaged mortgages figured out how many were not worth what they said they were. The major pain for all the banks doing this was when the easy profit dried up, and they had to reduce staff and tighten their belts for a new normal. 

Hell, stockholder demanded small banks keep up with big banks on methods and earnings; no choice while a 'good thing was rolling strong'.  With public pressure strong to have the Fed unload troubled assets (failed small banks), the only option is to sell them to the big ones.  At a certain size there's no one larger to do the buying other than the Fed itself, so those survived, begrudgingly.  I would have liked to have seen the Fed prop up all equally, if it had to be done at all, but much public sentiment was loudly against it.  And here we are, more 'too big to fail'. 

It's the "number" of banks that made news by falling through that historic "depression" milestone. Total amount of money on deposit has actually increased  a bunch so mainly numerous small banks gobbled up by bigger banks.  Looking at the graph over time the number of banks fell even faster between 1985 and late 1990s when it slowed some, before speeding up again in 07-08. No large steps or gap downs, but a constant decline since mid '1980s the current rate of decline is smaller than in the late 1980s, but noticeably faster than early 2000s, FWIW.

The fed did prop up all banks (and still is)  with the unnaturally low interbank rate, and regulation had to be (re) applied to keep investment banks from tapping into this cheap depositor money they gained from merging with consumer banks to employ in their investment operations. 

However this new regulation does not hit all banks equally. Small banks can not afford the costs of compliance. Very small banks get exclusions but a low margin business like banking needs scale to prosper. The arm waving about eliminating too big to fail seems at odds with what we see happening.

The real loser from this low interest rate regime is retired people trying to live off interest income from bond coupons and CDs.

Maybe I'm wrong, I'm no expert.

Nor am I, and IMO this is far from the largest banking issue we face. Like Dodd-Frank regulations still not completely defined, and too big to fail banks even bigger. Not to mention Fannie and Freddie still being ignored as if they had nothing to do with this mess. I just mentioned the data point in passing and the change in rate of decline dies appear coincident with the recent increased bank regulation. I suspect a fair counter-argument could be made that this is just an artifact of the 2007-2008 credit crisis. To me it does not look like an isolated event in the data, but a persistent trend.  I could imagine a future when we only have a small handful of bank choices remaining.

Just like all restaurants become Taco Bell, all banks become Bank America.  ;D ;D ;D


JR

 

[hodad]

I suspect he is too smart to speak completely frankly and put any of his businesses in regulatory crosshairs (at least I hope so, I own stock in his company). These days being friendly toward the administration is just good business.

Buffett was on the "tax the rich" bandwagon during the GWB years--in fact, he was at odds with the administration back then.  Good business, or just speaking frankly? 

JR,  one of your classic defenses of the the indefensible is to say, "I can't speak to others' motivations."  Well, you just assigned motive to someone, and you were also completely off base in your assumption.  Maybe you should a) play by your own rules; and b) do your homework before assuming someone's motivation--particularly if you own stock in their company.

 

[JohnRoberts]

I suspect he is too smart to speak completely frankly and put any of his businesses in regulatory crosshairs (at least I hope so, I own stock in his company). These days being friendly toward the administration is just good business.

Buffett was on the "tax the rich" bandwagon during the GWB years--in fact, he was at odds with the administration back then.  Good business, or just speaking frankly? 

Good point, perhaps it was just wishful thinking in my part.

JR,  one of your classic defenses of the the indefensible is to say, "I can't speak to others' motivations."  Well, you just assigned motive to someone, and you were also completely off base in your assumption.  Maybe you should a) play by your own rules; and b) do your homework before assuming someone's motivation--particularly if you own stock in their company.

Actually my reluctance to speculate about other people's personal motivations is not in support of some thesis, but because it is impossible to prove definitively, so not productive to argue about one way or the other. That does not prevent "motivations" and "beliefs" from being common fodder for political attack. I grow weary hearing nasty comments about what one side or the other thinks so try to avoid that.

Thanks for keeping me honest, No I can no know what Warren Buffet is/was thinking, but I find his actions instructive. He has already decided how to divide up his massive ($Billions) estate. He put a modest fraction of it into family charities, and committed the bulk of it to Bill Gates charity. It seems that if he believed the government was spending money wisely he could just sign it all or at least some fraction over to them. Of course I can not know his thought process, "I suspect" he believes that Bill Gates will do more good spending it, than the government. I course there is a difference between supporting higher taxes for all people and volunteering to turn over your personal wealth.

=====
Just to be slightly on topic... I still think the new campaign to raise minimum wage is more about throwing a bone to unions, and a little changing the focus away from the bad economy. Of course the president makes no secret about his redistribution of wealth goals. (Sorry if I lapse into some speculation here). I do not see wealth as a zero sum game that can only be gained by taking it from someone else. Wealth can be created by the public sector if allowed to.

JR

PS: For some promising news it sounds like congress is close to negotiating a budget deal, so maybe they can take their Christmas break without the specter of another divisive budget fight when they return in Jan.

PPS: Speaking of Buffet, now I have to sell the Exxon stock I just bought several months ago because Warren Buffet recently reported buying a large position in Exxon for Berkshire Hathaway (his trades get reported months later), so now I own it twice... (great minds think alike.  8) ).  The market feels a little toppy here but end of year tax loss selling could take a little more wind out of it. Right now the stock market is getting buoyed up by fed policy, and a wise old saying is do not fight the fed.  Buy a house, buy some stocks, any real assets make sense until the fed retreats sometime next year.    ..... or not.

 

[hodad]

While I agree it's not possible to be utterly certain of another's motivations, there are times when something walks like a duck and quacks like a duck--so it's pretty safe to assume it's a duck.  Example:  our state insurance commissioner has stated that he will hinder implementation of the ACA, his actions reflect such a desire, so I think it's fair to say he's motivated to do that--in other words, his obstruction is no accident.  I can't get any deeper and tell you why he wants to do this, but there's a certain depth to which I think it's fair to speak of his motivations. 

On the other hand, the teachers at my wife's school were recently shown a video presentation (produced at some expense) about the huge budget shortfall for the coming year.  They were then given cards (produced at some expense) listing various means of budget cutting, and asked to prioritize them.  Nowhere was there a card that listed the option of raising property taxes, or one that offered the option of slicing the county's educational bureaucracy, or one that suggested tossing the handful of cronies the superintendent brought with him and immediately gave hefty raises upon their arrival (not that it would be different elsewhere, but this is a GOP-run county.)  Now do I think his motivation was to have genuine involvement from teachers on these matters, or do I think his motivation was to make teachers feel involved in a process in which their input means next to nothing (according to my wife, the teachers at her school weren't buying into it), or maybe to provide himself some cover in the future, when he might counter criticism with, "Well, this is what the teachers asked for."

So yes.  I appreciate the nuances in assigning motivation to action.  But it's a bit like poker--you might be wrong in guessing why a player is betting the way he is, but if you're not assigning some motivation, you're not in the game. 

 

[JohnRoberts]

While I agree it's not possible to be utterly certain of another's motivations, there are times when something walks like a duck and quacks like a duck--so it's pretty safe to assume it's a duck.  Example:  our state insurance commissioner has stated that he will hinder implementation of the ACA, his actions reflect such a desire, so I think it's fair to say he's motivated to do that--in other words, his obstruction is no accident.  I can't get any deeper and tell you why he wants to do this, but there's a certain depth to which I think it's fair to speak of his motivations. 

Like I often say, ignore the head fakes and watch the feet... What people do is easier to determine.

ACA is a very contentious piece of legislation. Many of the criticisms of it that were dismissed years ago as being unfounded are now playing out in real time. The states accepting short term federal money to expand medicaid, are showing a disproportionate number of new accts, which will be the states responsibility long term.  It seems like every day we are learning of new problems. Some on the right are predicting the outright collapse of this due to poor design. The poor implementation of the website is just making matters worse (the website is not the hard part).

At some point we as a nation need to work together to come up with a workable solution, but it's still too early for that, when the top leadership is still claiming it will turn out fine with a few tweaks. Maybe if we throw 2x or 3x the original budget at it, but that is the point. it would have been far cheaper to hire a concierge doctor for all the homeless and be done with it. So I will postpone my whining for now. As always I would love to be wrong and see this actually reduce healthcare costs, for more than just the people getting government assistance, as promised.

On the other hand, the teachers at my wife's school were recently shown a video presentation (produced at some expense) about the huge budget shortfall for the coming year.  They were then given cards (produced at some expense) listing various means of budget cutting, and asked to prioritize them.  Nowhere was there a card that listed the option of raising property taxes, or one that offered the option of slicing the county's educational bureaucracy, or one that suggested tossing the handful of cronies the superintendent brought with him and immediately gave hefty raises upon their arrival (not that it would be different elsewhere, but this is a GOP-run county.)  Now do I think his motivation was to have genuine involvement from teachers on these matters, or do I think his motivation was to make teachers feel involved in a process in which their input means next to nothing (according to my wife, the teachers at her school weren't buying into it), or maybe to provide himself some cover in the future, when he might counter criticism with, "Well, this is what the teachers asked for."

I was expecting a new round of "what's wrong with education", after the new test results showing America's 15YO  math skills not comparing well against the world. I saw a filmmaker interviewed on TV and he seemed very credible to me. http://www.cnbc.com/id/101246647  He laid out a small handful of key education principles that when employed together would improve our results. An important point, and missed by most humans who tend to be single minded, (looking for the one thing to fix), his list involves 5 things that must all be done together to work. Kind of like in personal health. We need to get enough sleep, eat healthy food, exercise, don't smoke, and watch our weight. Ignore any one of those factors and health declines. Same for education, we must do all five of his key principles to close the gap in our performance.

So yes.  I appreciate the nuances in assigning motivation to action.  But it's a bit like poker--you might be wrong in guessing why a player is betting the way he is, but if you're not assigning some motivation, you're not in the game.

Not to change the subject back to minimum wage, but the factory workers in Bangladesh just got a minimum wage increase to $68.00 a month. While still the lowest wage in the region (China is $155/ month), factory owners are predicting some reduction in sales and jobs. This is not good or bad, it just is the expected cause and effect of increasing labor cost.  Bangladesh is still the cheapest labor in the region, so I don't expect major disruption. A little inflation in apparel costs is probably not a bad thing as the west is still nervous about deflation. (note: Chinese Yuan is now the second largest currency for international trade after the USD, eclipsing Yen, Euro, et al). 

JR

PS: My favorite poker joke is,  if you do not know who the patsy is in a game, you are the patsy...  8)

 

[hodad]

The states accepting short term federal money to expand medicaid, are showing a disproportionate number of new accts, which will be the states responsibility long term. 

There's also been a jump in enrollment in medicaid in the non-expanding states (4.1% vs. 15.5% in expanded states.)  Also worth factoring in is the positive economic impact of expansion, and the negative economic impact of non-expansion.  The states that have rejected may turn out to be penny wise but pound foolish. 

 

[JohnRoberts]

The future is also impossible to know.

The political class seems incapable of responsibly dealing with funding long term entitlement costs. (one exception seems to be the discipline imposed by congress on the post office to fund their long term retirement costs before the sh__ hits the fan. but that fiscal discipline from congress seems uneven as they simultaneously make it harder for the PO to cut current costs..)

The different states and cities can be more or less responsible about such matters (at least they can't print money, while some abuse their borrowing). We are seeing in real time what happens, like in Detroit when reality catches up with too generous promises and they can't keep borrowing when lenders don't see how they can be paid back. Several cities in CA have gone bankrupt for similar reasons. The Birmingham AL sewer bond default seems an unusual case of incompetence/malfeasance.  IL is bracing for push back from the strong unions there as they try to adjust future commitments to be more consistent with revenue available.

I do not mind speculating about the future, while arguing about it is hard to resolve without proof.  I guess that is a major part of the real work of politicians, and they do not often do that well. As I have offered before the magic piece of the puzzle missing from the economy today is strong growth. Another couple percent of GDP growth would make all the difference in the world for all these marginal situations.  If we look at government activity through the lens of will this increase economic growth or slow growth I see a pretty one sided list in the slowing growth column.

Of course maybe I'm wrong...

JR

 

[JohnRoberts]

OK, for some outside the box thinking, raising the minimum wage might not be all bad for the general economy. It would be inflationary, as the cost increases get passed along to consumers with higher prices.

This inflation would actually be a good thing for central bankers trying to fight disinflation and prevent outright deflation with their increasingly ineffective monetary easing tools. A minimum wage increase would not just affect entry level workers, since the entire pay scale would have to increment up to incentivize all workers.

I do not like this philosophically because of the negative employment consequences I expect, but there is some good for the world economy if we can keep the deflation wolf away from the door. The call for a doubling of minimum wage is just silly, but a modest increment up is not crazy. Ideally this would be done locally or by states so the wage rate can better match local cost of living. Some states already have higher than federal minimums.

I need to think about this some more, at federal level is not the best way to manage this.

JR
 

 

[JohnRoberts]

I guess I will continue this soliloquy with myself.

I read a recent statement from MacDonald headquarters, a major target of the minimum wage raise, that they are investing in developing automated or wireless food ordering systems, to manage labor costs for menial tasks. It is easy to imagine ordering and paying for your happy meal using a smart phone, and having it delivered by a roomba.

There will probably be one poor minimum wage worker somewhere in the back of the kitchen humping raw food into the machines. 

A classic case of trying to mandate a result (higher pay) and instead getting unintended consequences (less entry level jobs).

JR

PS: For those paying attention It looks like banking regulators are relaxing mortgage lending standards hoping to goose the housing market.  Dodd-Frank legislation was supposed to address such lax lending. Instead it looks like they are reducing the previous poorly regulated bad behavior to formal regulatory standards. How could this end badly?? (rhetorical).
http://online.wsj.com/articles/divided-sec-signs-off-on-relaxed-mortgage-lending-rules-1414009530

 

[okgb]

I believe one of the biggest employers in Canada is the Federal Government, who
employ allot of people to examine & claw back taxes & money from people

 

[Gold]

I don't see any reason I should be subsidizing minimum wage workers, corporate CEO's and shareholders  with my tax dollars. If Wal-Mart can't pay a living wage then they should go out of business. I don't think they are short on money though. It shouldn't be possible to work 40 hours a week and require food stamps and a housing allowance.

I'm not sure why this isn't the conservative position. I can choose to pay five cents more for a hamburger if I want to. I do not wish to pad corporate profits with my taxes. Prices should reflect real costs. There is a lot of slop at the top.

 

[JohnRoberts]

I believe one of the biggest employers in Canada is the Federal Government, who
employ allot of people to examine & claw back taxes & money from people

They need to also need to hunt down fraud from people making false claims for disability and entitlements.. It seems like every week I'm reading about some doctor gaming medicare with obscene billings for obscure un-needed procedures.  The good news is the large frauds tend to stand out, the smaller individual frauds take more work so are less profitable to claw back. 

JR

 

[JohnRoberts]

I don't see any reason I should be subsidizing minimum wage workers, corporate CEO's and shareholders  with my tax dollars. If Wal-Mart can't pay a living wage then they should go out of business. I don't think they are short on money though. It shouldn't be possible to work 40 hours a week and require food stamps and a housing allowance.

I'm not sure why this isn't the conservative position. I can choose to pay five cents more for a hamburger if I want to. I do not wish to pad corporate profits with my taxes. Prices should reflect real costs. There is a lot of slop at the top.

MacDonalds is a franchise so the parent is a different corporation than the operating restaurants. Raising the minimum wage above the value the workers generate will just lead to less employees. As i already posted these marginal businesses are already exploring automating payment systems to eliminate minimum wage labor, I was joking (a little) about robot food servers, but Lowes just announced that they are buying robots to roam the aisles and help customers find and /or answer questions about products.

MacDonalds would raise prices if they could but they are not reporting good profits now and are looking for ways to cut costs, they do not appear to have much fat to give away in higher pay.  I can imagine the fast food restaurant of the future where you place your order with a smart phone and a few minutes later a smart robot finds you. perhaps using your phone signal to locate you, then releases your Happy meal when you pay with Apple-pay or whatever. I think the Lowes robots sound a little creepy, but who wouldn't mind not having to deal with the slacker working the MacDonalds register?

This situation reveals the real crux of the current employment malaise. As technology advances and keeps replacing low value labor made uneconomic due to wages there will be less such jobs. For there to be real wage inflation we need very profitable businesses and a scarcity of workers. Wages are strong and growing in the new shale oil regions (at least they were before the price of oil started falling). The ACA, corporate tax policy, and a generally adversarial business climate is not encouraging companies to invest and hire, For the last several years large companies have been using their retained earning to buy back stock propping up share prices by distorting the price to earnings ratios (reducing shares outstanding dividing the same earnings by less shares makes the P/E look better).

We need to let minimum wage be set locally by local governments  hopefully to keep a bottom rung on the employment ladder for kids just starting out, and help unemployable gain job skills. Not give them easy college loans to study basket weaving, but more practical skills like welding for example.

Sorry for the rant,,, but I grow weary of the economic theory coming from DC for the last several years. Their theory has been tested and failed. We are only now slowly recovering after 6 years and then with sub average GDP growth. The only good news is that the rest of the world is worse off.

JR

PS: The good news is that the softening crude oil price is already showing up as lower pump prices which means consumers will have extra pocket money to spend on fast food, or whatever,  while it might help the next level up food chains more than Mickey D. . 

 

[Gold]

I'd hardly call MacDonalds a marginal business. Not profitable enough for who? A franchise owner? They are not hurting. I call BS.

I read long paragraphs of gloom and doom for the poor with less jobs. It is the corporations that benefit from a taxpayer subsidized low wage  workforce who will loose.  That's why there is strong organized opposition. It's not the workers who are saying it will be bad for themselves.