A Living Wage – Why Those Evil, Greedy Corporations Just Won’t Pay It

I get so tired of hearing this complaint.

A Living Wage?

My first question is, just what defines a living wage? Considering there are hundreds of millions of people living (barely surviving, but living) on less than $1 a day, I’d say just about any wage you earn in any developed country is a living wage.

Then the question becomes then what standard of living constitutes a “living wage” here? Let’s boost it to enough food to not be malnourished, a roof over your head and clothes to wear to fit the climate. If you’re willing to do what you need to do, even a minimal part time job covers that with money left over.

What’s next? A car? A private apartment? A cell phone? Air conditioning? Cable? Video games? Name brand sneakers? Who decides? Heck, I’ve only got three of those.

Oh, those Greedy Corporations

The next part is if a particular business is even able to pay what someone considers to be a living wage. While a business can pay people significantly less than they’re worth for a short while, especially in a tight job market, but what they can’t do, ever, is to keep paying people more than they are worth. An employee has to contribute more to the bottom line of a business than the total costs of hiring them.

If an employee makes the company $10 for every hour he works and you raise the minimum wage to $15 an hour, guess what … he’s out of a job, no matter how much he needs it. A business can’t afford it to be any other way and still stay in business. That’s not being a greedy corporation, it a business necessity.
If you increase the costs of having an employee by adding in mandates of any kind, same thing. An employee HAS to be worth more than they cost, whether that cost shows up directly on a paycheck or not.

And It Keeps Getting Worse

That’s what ALL externally imposed costs on employers do. They price people out of jobs by making it more expensive to hire them. They don’t allow a person to work cut rate while learning how to do a job, so they never get to learn what they need to get a better job, if they can get one at all. It drives people out of business or they never start one to begin with. That means even fewer jobs.

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The Confederate Constitution Actually Had A Lot Going For It

Everyone knows that the Confederacy was that evil part of the country that saw no problem with owning people. But it wasn't all bad, especially when it came to their Constitution.

If you read the Confederate Constitution, although most of it is copied verbatim, there are several areas that differ significantly from ours. Slavery, of course, was made legal subject to the same limitations on importation of any new slaves. But a separation of State and Economy got the most new changes and limitations on the government.

It explicitly banned their federal government from favoring any branch of industry in any way via duties or taxes on imports.

It required a 2/3 vote for approval of federal appropriations outside of a limited list of purposes as well as for taxes or duties on exports.

It required appropriations to have specific line item amounts for specific purposes and banned any additional payments to anyone after the initial contract had been made or services rendered.

It gave the President a line item veto on expenditures.

It most forcefully banned Congress from appropriating any money for the facilitation of commerce aside from a very few specific cases involving water transportations such as buoys, lighthouses and dredging, and, even in those, duties were to be laid on the navigation that got those improvements until they were paid for.

It made the Post Office pay for itself after the first two years.

It also made a Constitutional Convention easier to call for, requiring only three states instead of our 3/4. It limited the number of people any one Representative in the House could represent to 50,000. It gave the President the power to remove any department head or anyone in the diplomatic service. It also incorporated the Bill of Rights almost verbatim into the Constitution itself.

One of my favorites was getting rid of general omnibus bills: "Every law, or resolution having the force of law, shall relate to but one subject, and that shall be expressed in the title."

Except, of course, for the issue of slavery, I approve of almost all of them. They were almost all additional and explicit limitations on the power of the government in areas that our Constitution over the previous 70 years was found to be lacking in actual practice. Of all of the changes, only the slavery one was changed in ours.

Lincoln's issue, the succession itself, has never been addressed. There never was any ban on it. In fact Texas, which used to be an independent nation on its own, explicitly wrote into the agreement when it joined the US that it reserved the right to secede.

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Market Insanity

Speculative bubbles have been around for a long time. Whether it's a single item or a broad generality like real estate, they have the seeming power to make your wildest dreams come true or to destroy entire economies.

The Dutch Tulip Mania was the first recorded speculative bubble back in the late 1600's. Tulips were highly prized flowers and the bulbs weren't exactly cheap. But a group of investors saw them as a way to make money - big money. They started bidding prices up and up and tempting more people into the bubble, until a single bulb could be "worth" several years of actual wages.
 
Then one day a few people finally said "This is crazy. They're only flowers. Beautiful flowers, but just flowers." Over a matter of a few weeks the prices plummeted and lost 95+% of their "value" and wiped out the entire life savings of a lot of very foolish people.

Bubbles have been blowing up on a regular basis for quite a while now. The dot coms and real estate are only the two most recent to pop.

But they're back. All those trillions of dollars the FED has been pumping into the economy since 2008 haven't been invested in actual productive pursuits, but into speculative investments. Propping up companies that should have gone under (bail outs anyone?). Starting of companies that should never have been started (think Solyndra). Projects that never got off the ground. Real estate again. Dot com again. Multi billion dollar buyouts. Lusting after the Next Big Thing.

I don't expect a pop in the next few months, but I'd be surprised if it was more than a couple of years away and this one could be a lot bigger than the last. A whole lot of paper wealth is going to disappear and there's even more dominos lined up to fall over this time. Time to be thinking about battening down your financial hatches.

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When The Executive Orders

One of the most common methods Obama has used to make things go his way are through Executive Orders. It's also one of the scariest things that Trump is going to have at hand when he's sworn in. But where did the President get that power anyway?

The origins of modern Executive Orders lie in the War Powers Act of 1917 during WWI. That enabling legislation gave the president the *temporary* "emergency" powers to immediately enact laws regulating trade, economy, and other aspects of policy as they pertained to enemies of America. But they explicitly *excluded* that power from being able to affect Americans directly, but those powers were never rescinded after the end of the war.

Then, under FDR in 1933, the War Powers act was amended to allow those same, essentially legislative making power, to operate directly on Americans.

That is the legislation behind the fact that Executive Orders (and later judged to include Memoranda and Directives) are treated as law. It has nothing to do with the Constitution, as the Constitution says "*ALL* legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives."

The power granted to the Executive branch was only to carry out that legislation, not make it, as well as deal with foreign affairs (although without Senate consent, no treaties are valid) and as Commander in Chief of the military, to grant Reprieves and Pardons, and to make appointments to the courts, ambassadors, ministers, consuls, etc. when consented to by the Senate.

As executive types of power are the most common type of overweening authoritarian actions, it was intentionally made very weak and dependant on the Legislative and overridable by the Judicial branches. It was NEVER intended to be authorized to act on its own domestically without explicit legislative authorization.

It's one thing to lay out how a specific piece of legislation is to be enforced, but it's an entirely different thing to *create* regulation with the force of law out of whole cloth.

Past infractions do not justify present or future ones. Although forgiven in retrospect as it having been done for a "good" cause, much of what Lincoln did during the Civil War was outright unconstitutional. For that matter, so was the Louisiana Purchase, as it was presented for payment as a fait accompli, and several other significant actions taken by presidents essentially on their own.

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The Well-Regulated Definition

The phrase “Well-Regulated” is so long out of use that dictionaries no longer cover it as a phrase. Since the word “regulated,” in common (non-scientific) usage requires an external regulator, many people assume that a well regulated militia requires an outside regulator, i.e. the government.

However there are examples of it in usage at the time which gives us, in a way, an even better definition.

  • If a liberal Education has formed in us well-regulated Appetites and worthy Inclinations.
  • A remissness for which I am sure every well-regulated person will blame the Mayor.
  • It appeared to her well-regulated mind, like a clandestine proceeding.
  • The advantage of living a well-regulated life was never better illustrated than in the person of his brother Andrew. — “The Prodigal Father” by J. Storer Clouston
  • He has led a well-regulated life, but his virtues are narrow and petty. — “Prescott of Saskatchewan” by Harold Bindloss
  • Lord Byron’s mind was as well regulated as it was powerful. — “My Recollections of Lord Byron” by Teresa Guiccioli
  • And the one I ran across while reading Mary Wollstonecraft’s “A Vindication Of The Rights Of Women” — … the harmonious propriety that attunes the passions of a well-regulated mind, that I blush …

It referred to something being in proper working order or was associated with self control. Something that was well-regulated was functioning as expected. Government control of the people’s arms was not only NOT what was meant by the phrase in the 2nd amendment, it was the opposite. Arms under the self control of the militia (which was the entire body of the populace capable of bearing arms) is what was necessary to keep government under control.

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Trade Wars

Do imports really hurt the American Economy?
95% of the people used to work on farms. Now it's 2%. Yes, there were periods of wrenching dislocations and plenty of individuals who were hurt. But does anyone really think it would be best to go back to 95% of the population spending their days in strenuous back breaking labor in the fields?
 
Most of the manufacturing jobs we lost were due to mechanization and improving productivity, not lost to other countries, for all of the political pronouncements to the contrary. The unions had a heyday in the aftermath of WWII when most of the world's manufacturing had been destroyed - except ours. But that couldn't be expected to last. We even paid to help everyone else rebuild theirs while ours started to rust away.
 
It's always easy to point to the individual people hurt by a process ... they're always there. But what do the poor do when prices for essentials start skyrocketing because of punative tariff taxes. How much steel does it take to make a car, a refrigerator or a washing machine. Those prices will be going up if either Trump or Clinton has their way. Prices go up, fewer bought, lower production and lost jobs. They just aren't as obvious or concentrated as the ones we can directly point to.
 
Neither one of the candidates have been honest with us. They both pandered to fears and scare tactics and outright lies. In the end the election isn't about who most people wanted in the Oval Office, it's who they fear the most moving in.

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Hayek Vs Keynes

Just ran across links to a couple of my favorite economics videos.

A little background … Hayek was a free market economist of the Austrian school and Keynes an interventionist. Their biggest argument was about the causes of business cycles and of the Depression in particular. So without further ado, here you go …

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Currency And Inflation

So what is inflation? Where does it come from? What does it actually do?

Whether it’s paper currency (fiat currency, that isn’t directly backed by anything of value), digital or even physical clams, it’s what we use for trading with other people when the economy is too big to do direct trades of I have what you want and you have what I want. It also allows us to store earnings for later spending or investment. If the clamshells are pretty enough, you can even wear them as is. Which, incidentally, works for Gold and Silver too, but that’s a topic for a different post.

So let’s set up a simple example. You have 100 people with an average of $100 each that have, on average, $95 worth of stuff (physical goods, services, etc) to sell. That works out pretty well. Everyone can pretty much get what they want with something left over for saving or investing in increased future productivity. But two of the people, let’s call them the Freds, realize that they can set up a printing press and get more money to spend without having to actually work for it or take it directly from the other 98. So off they go, and before you know it they’ve printed an additional $1000 worth of bills that you can’t tell from the original. Now they get to go on a buying spree.

Of course the amount of stuff available for sale hasn’t increased, or at least not by nearly as much as the money supply. Next thing you know people can’t get what they want because the Freds already bought it with all of their “extra” inflationary money. So the next time around, they realize if they want something they’re going to have to be willing to pay more for it. The prices start to go up. And up. Those who sell for more have more money to buy with though, so they’re not too bad off. Eventually it all settles out to where the prices and dollars available equal back out. Ah, but those Freds still have their printing presses.

Now, let’s look at something interesting. On first glance, it seems that it all comes out in the wash and nothing really changes. But that’s not what happens in reality because of the time it takes for that money to work it’s way through.  Who really benefits the most from the inflated money supply? The Freds, of course. They got to do their buying at the pre-inflation prices. The people they bought from (usually big business) get the extra money when the prices haven’t gone up nearly as much as they eventually will. The big losers? The average Joe that has to pay the inflated prices long before the extra money cycles through the economy enough times to get to him. So the poor get poorer and the rich get richer.

 

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Don’t Count On Social Security Benefits

The Ponzi scheme known as the Social Security Benefit system is running out of steam.

When it was first created, it was promoted as supplement to regular retirement savings for a few well-defined groups of people. Life expectancy was 63 and full benefits didn’t kick in until 65. During its first 40 or 50 years, for those who lived long enough to collect on it, it was the best and “safest” return on your money for retirement there was.

Far more money went into the so-called trust fund than was paid out. That “excess” was “invested” in “special” Treasury notes, in essence IOUs from the government to itself. That money then went into the general fund and was spent like all the rest. Since it was an internal debt it doesn’t even show up on the balance sheets or get counted as part of the debt.

Over the years, more and more people have been added and benefits increased to where many people expect Social Security benefits to take care of their minimum retirement needs. Life expectancy increased to 65, 67, 70, 72 years old or more. More people getting more money for a longer time with fewer and fewer people paying into the system. There was a major “patch” made in the 80’s when age for full retirement was boosted up and tax (excuse me, “contribution”) rates shot up.

As the demographics kept changing, there was less and less “excess” to tap. External borrowing had to take its place. Deficits began skyrocketing up.

Not one penny was paid out on those “securities” until just a few years ago.

It was all just funny money on cooked books. Nothing was being cashed in. Nothing taken out of revenues, only more put into the general fund and replaced by those IOUs. Treasuries are only as safe as the government’s power to take money from current taxpayers.

The Court has already ruled that you have no legal claim to Social Security benefits. There is absolutely NOTHING that guarantees that the retirement payments you expect will continue to be made or at what level or at what retirement age or with what COLA formula (if any) or any other change they want to make, after all, it’s just another law.

One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It is simply too painful to acknowledge — even to ourselves — that we’ve been so credulous. (So the old bamboozles tend to persist as the new bamboozles rise.) – Carl Sagan

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Politicians – Yuck!!!

John Stossel, in today’s column, reminded me of a quote from economist Walter Williams that I particularly resonated with so I thought I’d share it today …

“I respect ordinary thieves more than I respect politicians. Ordinary thieves take my money without pretense. (They don’t) insult my intelligence by proclaiming that they’ll use the money that they steal from me to make my life better.”

So true 🙂

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