Bottom up economics - trickledown doesn't work

[Sam_Stone]

I love the idea of deregulating small businesses so they don’t have to meet all the crazy licensing and zoning laws and all that. The problem is, those laws are generally there because very powerful vested interests have captured government and those regulations were put into place to protect their high wages and restrict entry into the field.

Here’s a perfect example of the kind of small business you’re talking about: Hair Braiding. There are immigrants from Africa who have been braiding hair their entire lives, and are authentic experts at it. There is big demand for their services.

Some of them have tried to sell their services as a micro-business, braiding hair out of their homes or going to a client’s home to braid their hair. You’d think if there’s one business that shouldn’t need a lot of regulation, it’s braiding someone’s hair. It’s undoable, no scissors are involved, no real dangers. There are no hidden defects, and customers will instantly know if the braids are uncomfortable or unattractive.

So you’d think these hair braiders should be able to just hang out a shingle and start braiding, right? Or maybe file for a business license so the state can make sure they pay their taxes and track their activity. We could go that far. But essentially it should be simple as pie.

Unfortunately, that’s not the case. The Beauty Salon racket has most states snarled up in all kinds of regulations to protect the salons from small individual operators undercutting them. So in many states, these hair braiders are being fined and shut down down until they meet the requirements for being a licensed cosmetologist or hair stylist. Oh, but those can’t be that odious, right? Wrong.

Some states require that a hair braider complete a 1,500 hour program in cosmetology (a program which, by the way, doesn’t teach that style of braiding at all). Most states will not allow braiders to work in the home, and in those that do, zoning laws may prevent home businesses that take walk-in traffic anyway.

Then you may be required to work in an actual beauty salon as an apprentice before you can work on your own - and the salons will use that as an opportunity to pay dirt cheap rates for talented people.

To be a cosmetologist in Ontario, you have to take 1,500 hours of training from an accredited school, plus you have to complete two years of apprenticeship in a licensed beauty salon, then you have to pass rigorous provincial exams. Plus you have to join the relative associations that control the licensing and pay their fees.

Many states also require a high school diploma, which instantly freezes out a lot of poor people and immigrants who don’t have that type of education.

All this so that you can be ‘allowed’ to cut someone’s hair or file their nails. It’s absolutely ridiculous. But it does protect the salon owners.

If you want to open your own salon you’ll have to meet all the various regulations that have been set up to make that as hard as possible to do. Then you’ll need inspections that you’ll have to pay for. In some cases the certification will be done with the help of a state salon organization - which has a vested interest in erecting as many barriers as possible to protect their current members from competition.

As for other industries - good luck making any kind of product in your micro-business that’s typically made by union labor - they’ve got their industries completely protected through the creation of barriers to entry that you simply can’t get past unless you’re in the union.

How about taxi driver? You’d think that so long as you can pass the test for a class-1 license and have a vehicle that is certified to be safe, you should be able to hang out a sign and drive people around for money, right? Nope. Almost every city colludes with the taxi companies to limit the number of cab licenses that can be awarded. Because of the shortage of cab licenses, the current ones become extremely valuable, and now the cities won’t open that market up because it would kill the price of the cab license, which can be bought and sold.

There is such a shortage of taxis in New York that in 2006 a taxi driver who was retiring sold his medallion (the right to operate a cab in NY) for $600,000! That price tells you that there is a huge shortage of cabs in New York - a shortage artificially maintained by the city in collusion with current cab owners.

You can’t even offer your services as a day laborer if a project contains any government contract money at any stage - because the Davis-Bacon act prevents companies from hiring workers who are paid below prevailing union wages (which has the effect of basically closing off all govenrment contracting to union workers only).

So forget about trying to make a special regulatory category for the lowest-income people. If you really want to create jobs, just start getting rid of these regulations. Period.

[Agnostic_Pagan]

A new study by the NBER. Who Creates Jobs?. The major drivers of job growth are young start-ups.

[QUOTE=NBER Digest]
Of course, all startup firms operate in a volatile “up or out” environment. After five years, many of these young companies are “out” – they fail and, as a result, destroy nearly half of the jobs created by all new companies. Nevertheless, the surviving firms continue to ramp “up,” growing faster than more mature companies, and creating a disproportionate share of jobs relative to their size.

“Firm startups account for only 3 percent of employment but almost 20 percent of gross job creation,” the authors write. “[T]he fastest growing continuing firms are young firms under the age of five,” the authors conclude.
[/QUOTE]

I certainly hope this is making the rounds at the White House.

Lowering entry barriers for new firms will likely create far more job growth than incentives to existing firms and lead to increases in the earning and buying power of the middle class and lower classes.

Studies show that even ‘failed’ start-ups lead to gains in human and social capital for entrepreneurs leading to greater success rates for subsequent ventures.

And monetary stimulus measures will not be effective unless that increase in financial capital actually makes it way to new physical capital investment. Something that is not happening. At least in this country. I am sure it is helping to fuel the building boom in China and India. And considering our industrial capacity utilization rate remains stuck in the low 70s, and commercial office vacancy rates at a 16-year high and running around 10-12%, I don’t see expect to see any major capital investments any time soon.

Trickle down policies will not lead to sufficient growth in aggregate demand or reliving unemployment. If anything they lead to further automation or off-shoring which only aggravates the problem. Giving incentives to the top is what is fueling the race to the bottom.

Having idiots like McCain going on TV and stating iPads are made in America does not help either. Apple has created a great number of jobs, unfortunately most of them are not in America.

[Voyager]

@MichaelEmouse

Higher income correlates with a higer savings rate, it’s true. I called what Evil Captor said simplistic because he said “the rich don’t consume, they invest” which is simplistic. My post doesn’t assume there are as many rich as poor people, it simply doesn’t. I said that the rich consume too, if the wealthy’s increase in wealth only translates into, say, 50% of what it would be for the poor, then have twice as much of it*. After that, I talked about how if AD is insufficient, the State can use other means to boost it.

I think we can assume Evil Captor was not saying the rich consume nothing. However doubling the income of a rich person is unlike to double consumption. I am lucky enough to make more than I care to spend, and if my income suddenly doubled almost all of it would go straight into investments. And I’m hardly rich.
I think we all agree that cutting interest rates are a good first step to increasing demand. But we’ve run out of room in that regard, so we are up to secondary steps.

If Apple is sitting on a lot of cash, then it isn’t investing it. As others pointed out, it’s just a transfer from one investor to another. If Apple did hire more and buy more capital goods, that would be an investment which would contribute to AD.
You take the specific case of Apple, again, it’s true that it can happen for specific businesses. The fact that it happens for Apple is not any kind of problem. As I said above, if it happens widely enough to create a liquidity trap, there are other means compatible with trickle down that can be used to put AD a few % points above aggreate supply (AS).

I’m not saying it is bad - just giving an example of something you seemed to be uncertain happened. In the quoted article (which I just skimmed) it seemed that there was some complaint about Apple not getting a good return on this money. In the Times yesterday, though, it was said that the reason Apple was able to price the new iPad cheaper than competitors was that it used this money to buy up essential components.

Now, it isn’t the job of any business to hire people just to hire them. I know that Apple is hiring (I know some people who have gone there) and I assume they are hiring to the proper level. This just indicates the bigger point - investment does not necessarily increase the number of jobs. If there is a shortage of investment money, then it can.

If the higher savings rate of the rich and businesses sitting on cash causes a problem, refer to what I outlined above. If you believe those means would be insufficient to put AD a few % above AS, please say why.

I’m not sure what your solution is. Cutting interest rates did not raise demand enough. The stimulus package however seemed to help. If you mean the EIC, then I agree.

• There may be other reasons why you wouldn’t want the wealthy to become wealthier or why you would prefer to give tax breaks/money transfers to the poor and middle class. I’m in favor of it myself. But the idea that trickledown will lead to insufficient demand is simply false.

There can be other reasons for sufficient demand, like during the Bubble, where higher incomes for the wealthy were not a problem because it went along with rising incomes for many people. But when there is already insufficient demand, trying to increase trickle down to repair it does not seem to work.

[Voyager]

@Sam_Stone

So forget about trying to make a special regulatory category for the lowest-income people. If you really want to create jobs, just start getting rid of these regulations. Period.

Perhaps a better solution would be to amend the law to make it not apply to hair braiders, a category not imagined by those who drafted it, and keep the rest?
Many zoning laws are designed to keep businesses with high traffic volume from reducing the comfort of a residential zone. There are often, perhaps usually, good reasons for regulations when drafted, but new circumstances might require a rewrite. It doesn’t seem unreasonable to make sure someone handling strong chemicals knows what she is doing - which is not applicable to braiders. Similarly, one person pushing the rules in some way does not mean every transaction in that industry needs a federal monitor.

[MichaelEmouse]

Voyager:

“I’m not sure what your solution is. Cutting interest rates did not raise demand enough. The stimulus package however seemed to help. If you mean the EIC, then I agree”

The EIC is good and I was referring to that as well.

Personally, I would prefer the gov’t just printing money and mailing a monthly check to people. Don’t rely on banks to lend to businesses who then buy and hire. Just give money to consumers until AD is moderately above AS.

One weakeness of the EIC is that it’s yearly whereas AD variations are more rapid. Monthly checks would be faster in effect, could be tailored to precise moments in the cycle and feel more real than tax deductions*.
*Yes, a check is no more real than a tax deduction but many people have difficulty thinking about money and understanding tax law, the latter being completely understandable. A check rather than a deduction would increase consumer confidence to a further extent.

[gonzomax]

@Sam_Stone

I love the idea of deregulating small businesses so they don’t have to meet all the crazy licensing and zoning laws and all that. The problem is, those laws are generally there because very powerful vested interests have captured government and those regulations were put into place to protect their high wages and restrict entry into the field.

Here’s a perfect example of the kind of small business you’re talking about: Hair Braiding. There are immigrants from Africa who have been braiding hair their entire lives, and are authentic experts at it. There is big demand for their services.

Some of them have tried to sell their services as a micro-business, braiding hair out of their homes or going to a client’s home to braid their hair. You’d think if there’s one business that shouldn’t need a lot of regulation, it’s braiding someone’s hair. It’s undoable, no scissors are involved, no real dangers. There are no hidden defects, and customers will instantly know if the braids are uncomfortable or unattractive.

So you’d think these hair braiders should be able to just hang out a shingle and start braiding, right? Or maybe file for a business license so the state can make sure they pay their taxes and track their activity. We could go that far. But essentially it should be simple as pie.

Unfortunately, that’s not the case. The Beauty Salon racket has most states snarled up in all kinds of regulations to protect the salons from small individual operators undercutting them. So in many states, these hair braiders are being fined and shut down down until they meet the requirements for being a licensed cosmetologist or hair stylist. Oh, but those can’t be that odious, right? Wrong.

Some states require that a hair braider complete a 1,500 hour program in cosmetology (a program which, by the way, doesn’t teach that style of braiding at all). Most states will not allow braiders to work in the home, and in those that do, zoning laws may prevent home businesses that take walk-in traffic anyway.

Then you may be required to work in an actual beauty salon as an apprentice before you can work on your own - and the salons will use that as an opportunity to pay dirt cheap rates for talented people.

To be a cosmetologist in Ontario, you have to take 1,500 hours of training from an accredited school, plus you have to complete two years of apprenticeship in a licensed beauty salon, then you have to pass rigorous provincial exams. Plus you have to join the relative associations that control the licensing and pay their fees.

Many states also require a high school diploma, which instantly freezes out a lot of poor people and immigrants who don’t have that type of education.

All this so that you can be ‘allowed’ to cut someone’s hair or file their nails. It’s absolutely ridiculous. But it does protect the salon owners.

If you want to open your own salon you’ll have to meet all the various regulations that have been set up to make that as hard as possible to do. Then you’ll need inspections that you’ll have to pay for. In some cases the certification will be done with the help of a state salon organization - which has a vested interest in erecting as many barriers as possible to protect their current members from competition.

As for other industries - good luck making any kind of product in your micro-business that’s typically made by union labor - they’ve got their industries completely protected through the creation of barriers to entry that you simply can’t get past unless you’re in the union.

How about taxi driver? You’d think that so long as you can pass the test for a class-1 license and have a vehicle that is certified to be safe, you should be able to hang out a sign and drive people around for money, right? Nope. Almost every city colludes with the taxi companies to limit the number of cab licenses that can be awarded. Because of the shortage of cab licenses, the current ones become extremely valuable, and now the cities won’t open that market up because it would kill the price of the cab license, which can be bought and sold.

There is such a shortage of taxis in New York that in 2006 a taxi driver who was retiring sold his medallion (the right to operate a cab in NY) for $600,000! That price tells you that there is a huge shortage of cabs in New York - a shortage artificially maintained by the city in collusion with current cab owners.

You can’t even offer your services as a day laborer if a project contains any government contract money at any stage - because the Davis-Bacon act prevents companies from hiring workers who are paid below prevailing union wages (which has the effect of basically closing off all govenrment contracting to union workers only).

So forget about trying to make a special regulatory category for the lowest-income people. If you really want to create jobs, just start getting rid of these regulations. Period.

That is a strange weird universe you inhabit Mr, Reagan. Like he said take the foot of regulation off the neck of business and all will be well. We have slaughtered regulation since. How did that work out?
You bounce from micro economics and pretend that it answers the macro questions.
Our mess is much due to relaxation of banking regulation. It had to do with banks creating complex products and mislabeling them to avoid any regulation. It had to do with a shift of money from millions of poor people and middle class people into powerful ,well connected financial institutions. It was not caused by a cabbie in New York.

[Voyager]

@MichaelEmouse

Voyager:
Personally, I would prefer the gov’t just printing money and mailing a monthly check to people. Don’t rely on banks to lend to businesses who then buy and hire. Just give money to consumers until AD is moderately above AS.

One weakeness of the EIC is that it’s yearly whereas AD variations are more rapid. Monthly checks would be faster in effect, could be tailored to precise moments in the cycle and feel more real than tax deductions*.

Good point about the timeliness of the EIC. Another problem is that one time lump sum payments tend to be saved rather than spent, while increases in monthly paychecks may get spent more.
However, I am still in favor of increasing the top tax rates, partially to reduce income inequality, partially because the negative impact will be quite small, and partially to put us closer to balancing the budget and paying off at least some of the debt going forward, when revenues recover. We have historically low tax rates today, and I suspect the right’s whining about high taxes has a lot more to do with crippling the government than the tax rates themselves.

Rand Paul on TDS last night absolutely refused to respond to Stewart’s question about shared sacrifice except with the old chestnut on how much the rich pay.

[Chessic_Sense]

@Agnostic_Pagan

The problem is that everyone does not think that. And I am trying to fix that. It is simple. You get born, you deserve a fair share. You want more, than work for that.

Yes, exactly! Finally, a liberal gets it! Your fair share is $0. You want more, then work for that. Right?

@Agnostic_Pagan

But requiring the majority to rely on wage income, while the rich have no need to, living off of rent, dividends and interest, and then take obscene levels of wages themselves for the icing on their cake, that is the damn problem. The sooner conservatives recognize that and realize we need a transition to a better means of compensation, the better off we will all be. If they continue to force the status quo on everyone - well, the losers are going to greatly outnumber the winners and payback will be a bitch.

I’m so tired of this “the rich are lucky” canard. 80% of millionaires are first-generation. CEOs work 12-hour days adn weekends. The work never stops. For those fortunate CEOs that don’t have to work long, hard hours, there are people behind the scenes doing the heavy work for them. But ask yourself- what job do you think the CEO had before he was CEO? Yes, those very same back-breaking jobs. Even children of business owners aren’t just handed fortunes- they usually work very hard in their parent’s company for decades before taking over.

The reason “the rich have no need to” rely on wage income is because they either took a huge risk or put in a huge investment of time, money, and sweat. Do you know why I know that’s true? Because I realize that no one will give you money for nothing. No one will make that rich person rich unless they provide something of value to other people.

And yet you continually ignore that basic economic principle. You insist that those that have provided something of value to others (the rich) don’t deserve it and those that have provided nothing (the poor) deserve it.

In your world, some people have to give what they’ve earned to other people. Some sow and others reap. Some lose money and others receive it, and this is the way it should be by force of law, you say. Why? Because everyone’s equal! Shame on you.

[gonzomax]

@mazinger_z

Anytime anyone mentions productivity increases without the corresponding wage increases/stagnation is only understanding part of the equation.

1. Productivity increases necessarily implies wage stagnation, even decline because a) most likely there is an increase in automation or best practices which makes the job easier to do, easier to do jobs or increase in automation means that there is a larger supply of people (or machines) that can do the job which drives down wages. In some instances if labor is shifting to outsourcing, then there may be a corresponding wage increase;

2. the other part of the equation is lower prices; when people were supposedly making more money, how much were goods and services back then? See tvs, computers, cars, clothes. Some food prices have increased but that is mostly due to increase in fuel. Anecdote: My side practice has not raised fees since we opened. We’re supposed to be the low cost alternative, so we can’t raise fees if our competition is not raising or in some cases dropping them.

Productivity increase does not imply wage stagnation. It just means greater profits. The question is what is done with the profits. Much could be passed on to workers. Or it could be pushed up into bonuses and salaries for the execs. Guess which choice they made.

[Sateryn76]

@Voyager

Good point about the timeliness of the EIC. Another problem is that one time lump sum payments tend to be saved rather than spent, while increases in monthly paychecks may get spent more.
However, I am still in favor of increasing the top tax rates, partially to reduce income inequality, partially because the negative impact will be quite small, and partially to put us closer to balancing the budget and paying off at least some of the debt going forward, when revenues recover. We have historically low tax rates today, and I suspect the right’s whining about high taxes has a lot more to do with crippling the government than the tax rates themselves.

Rand Paul on TDS last night absolutely refused to respond to Stewart’s question about shared sacrifice except with the old chestnut on how much the rich pay.

It is my understanding that you can get your EIC payments added into your paycheck, so you can get it on an ongoing basis.

There’s some language to that effect on the standard 1040, but I’m not sure of the limitations.

[Sateryn76]

@Chessic_Sense

Yes, exactly! Finally, a liberal gets it! Your fair share is $0. You want more, then work for that. Right?

I’m so tired of this “the rich are lucky” canard. 80% of millionaires are first-generation. CEOs work 12-hour days adn weekends. The work never stops. For those fortunate CEOs that don’t have to work long, hard hours, there are people behind the scenes doing the heavy work for them. But ask yourself- what job do you think the CEO had before he was CEO? Yes, those very same back-breaking jobs. Even children of business owners aren’t just handed fortunes- they usually work very hard in their parent’s company for decades before taking over.

The reason “the rich have no need to” rely on wage income is because they either took a huge risk or put in a huge investment of time, money, and sweat. Do you know why I know that’s true? Because I realize that no one will give you money for nothing. No one will make that rich person rich unless they provide something of value to other people.

And yet you continually ignore that basic economic principle. You insist that those that have provided something of value to others (the rich) don’t deserve it and those that have provided nothing (the poor) deserve it.

In your world, some people have to give what they’ve earned to other people. Some sow and others reap. Some lose money and others receive it, and this is the way it should be by force of law, you say. Why? Because everyone’s equal! Shame on you.

Good luck on getting a good, reasoned response on this. I have never gotten one myself - maybe the Dope will come through on this for me! ::crosses fingers::

[Agnostic_Pagan]

@Chessic_Sense

Yes, exactly! Finally, a liberal gets it! Your fair share is $0. You want more, then work for that. Right?

Wrong! A fair share is a sufficient portion of the resources that a society has produced - something that has increased dramatically since the invention of the printing press and the steam engine - a sufficient share so that they can contribute and live meaningful lives - according to their desires, not according to what capitalists decide.

A fair share then begins with access to quality education, quality health care and fair markets for no other reason than we now have the capability to provide that access. A fair share also means a strong social net so that even those that finish at the bottom of the class (and even if everyone graduated with a 4.0, there will be those that are not as competent as others, and will be the last ones picked), those that suffer from accidental illnesses and injuries, and those that fail at their economic ventures (whether a failed start-up or see their trade or profession become obsolete) still have the means to partake of the benefits of society, and that their disadvantages will not cripple them. A fair share means that they should receive a sufficient income so that they do not need to work out of necessity, and can therefore seek to work in order to improve themselves.

I’m so tired of this “the rich are lucky” canard.

Well you will continue to hear it because it is true. The rich and their children have access to better education, health care, and employment opportunities. Their children do not have to work part-time starting in high school to help support their families. Their children can afford to take unpaid internships in Wall Street or DC since their families have to means to support them without it being a financial strain. They receive numerous advantages based no more than in which family they were born into.

80% of millionaires are first-generation. CEOs work 12-hour days adn weekends. The work never stops. For those fortunate CEOs that don’t have to work long, hard hours, there are people behind the scenes doing the heavy work for them. But ask yourself- what job do you think the CEO had before he was CEO? Yes, those very same back-breaking jobs.

All work is not equal. Their 12-hour days are not comparable to the 12-hour days that those at the bottom have to work - often in two jobs, neither with sufficient benefits. And their work does stop. The average tenure for a CEO is 6-7 years and the majority enter retirement with pensions and perks that are often outrageous compared to what they give their average workers that often have to keep working past retirement age.

Even children of business owners aren’t just handed fortunes- they usually work very hard in their parent’s company for decades before taking over.

Sorry, I’ve met too many trust fund babies in my time to know that is not true. And being rotated through the departments to learn the ropes means they do not have to work as hard as those that spend their entire career in those departments. If the kid fucks up, they just move him along. If the employees fuck up, they are out the door.

The reason “the rich have no need to” rely on wage income is because they either took a huge risk or put in a huge investment of time, money, and sweat. Do you know why I know that’s true? Because I realize that no one will give you money for nothing. No one will make that rich person rich unless they provide something of value to other people.

I am trying really hard to keep a straight face reading this part. So in this world of yours inheritances do not exist? And how many CEOs have run their company into the ground while they parachuted to safety? And the primary reason behind the financial crisis was bankers and CEOs creating money out of nothing through CDOs and other derivatives. How much economic value did they create? I daresay little to none, but they were great at inflating financial assets and then converting that into cash into their pockets while the taxpayers and their governments were left with the bill when that bubble burst.

And yet you continually ignore that basic economic principle. You insist that those that have provided something of value to others (the rich) don’t deserve it and those that have provided nothing (the poor) deserve it.

Everyone deserves an proportionate share of added value based on their contribution, and 1) the rich are taking far more than they contribute, capturing the majority of productivity gains since, I don’t know, the dawn of humanity; 2) financial measures are horrible at capturing the value of that contribution; 3) economics ain’t got nothing to do with it. GDP and profit maximization is not the end all be all of human society. There are principles and priorities greater than economics. Capitalists seem to have hard time with that, but there is more to life than money and economic principles.

And basic incomes are not a matter of providing something for nothing - before a person comes of age, it is an investment. After they come of age, it is a dividend. And they are entitled to those ‘somethings’ for no other reason than they were born in the modern age and not the feudal era. As equally entitled as the trust fund babies.

In your world, some people have to give what they’ve earned to other people. Some sow and others reap. Some lose money and others receive it, and this is the way it should be by force of law, you say. Why? Because everyone’s equal! Shame on you.

No, the shame is on those that place the value of money higher than the value of human dignity. The shame is on those that refuse to recognize that obscenely disparate concentrations of wealth crowd out investment by those at the bottom and force them to lead lives based on necessity and deprivation while those at the top lead lives of luxury and opulence. The shame is on those that violate the social contract by privatizing their winnings while socializing their losses and then refuse to allow others to do the same.

[Sateryn76]

@Agnostic_Pagan

I am trying really hard to keep a straight face reading this part. So in this world of yours inheritances do not exist? And how many CEOs have run their company into the ground while they parachuted to safety? And the primary reason behind the financial crisis was bankers and CEOs creating money out of nothing through CDOs and other derivatives. How much economic value did they create? I daresay little to none, but they were great at inflating financial assets and then converting that into cash into their pockets while the taxpayers and their governments were left with the bill when that bubble burst.
No, the shame is on those that place the value of money higher than the value of human dignity. The shame is on those that refuse to recognize that obscenely disparate concentrations of wealth crowd out investment by those at the bottom and force them to lead lives based on necessity and deprivation while those at the top lead lives of luxury and opulence. The shame is on those that violate the social contract by privatizing their winnings while socializing their losses and then refuse to allow others to do the same.

Do you have a cite re; the amount of millionaires who inherited their money? Everything I have read indicated that’s it’s about 20%, which means 80% of them worked hard and saved and invested their own money.

How about a percentage of how many CEOs took the parachute versus those that work hard and grow the company? Enron made the news, but you know that Enron is only one company out of millions, right?

[Shodan]

@Agnostic_Pagan

All work is not equal. Their 12-hour days are not comparable to the 12-hour days that those at the bottom have to work - often in two jobs, neither with sufficient benefits.

This part is wrong, of course - most poor families do not have a full-time year round worker.

As Figure 5 illustrates, 26% of the working poor work full-time year-round, compared to 67% of all workers.

Regards,
Shodan

[AlienVessels]

@Shodan

This part is wrong, of course - most poor families do not have a full-time year round worker.

That doesn’t mean those workers don’t put in 12 hour days and 7 day weeks. It also doesn’t mean they don’t put in non-compensated work time pursuing new work.

[Shodan]

@AlienVessels

That doesn’t mean those workers don’t put in 12 hour days and 7 day weeks.

Yes, it does, unless you have a different definition of “full-time, year-round” than the rest of the known universe.

Regards,
Shodan

[Ace309]

@gonzomax

You bounce from micro economics and pretend that it answers the macro questions.

Without comment on the thread generally, this argument is a nonstarter. Much of the development in macroeconomics over the past few decades has been the development of micro foundations.

[mazinger_z]

@gonzomax

Productivity increase does not imply wage stagnation. It just means greater profits. The question is what is done with the profits. Much could be passed on to workers. Or it could be pushed up into bonuses and salaries for the execs. Guess which choice they made.

. Right, like automation doesn’t lessen the need or otherwise decrease the need for workers? The same could be said for off-shoring and outsourcing (like HR depts). In the short term there might be an increase in profits but as soon as other companies can apply the same techniques they go back to competing on price.

[furt]

@Sam_Stone

I love the idea of deregulating small businesses so they don’t have to meet all the crazy licensing and zoning laws and all that. The problem is, those laws are generally there because very powerful vested interests have captured government and those regulations were put into place to protect their high wages and restrict entry into the field.

Here’s a perfect example of the kind of small business you’re talking about: Hair Braiding. There are immigrants from Africa who have been braiding hair their entire lives, and are authentic experts at it. There is big demand for their services.

Some of them have tried to sell their services as a micro-business, braiding hair out of their homes or going to a client’s home to braid their hair. You’d think if there’s one business that shouldn’t need a lot of regulation, it’s braiding someone’s hair. It’s undoable, no scissors are involved, no real dangers. There are no hidden defects, and customers will instantly know if the braids are uncomfortable or unattractive.

So you’d think these hair braiders should be able to just hang out a shingle and start braiding, right? Or maybe file for a business license so the state can make sure they pay their taxes and track their activity. We could go that far. But essentially it should be simple as pie.

Unfortunately, that’s not the case. The Beauty Salon racket has most states snarled up in all kinds of regulations to protect the salons from small individual operators undercutting them. So in many states, these hair braiders are being fined and shut down down until they meet the requirements for being a licensed cosmetologist or hair stylist. Oh, but those can’t be that odious, right? Wrong.

Some states require that a hair braider complete a 1,500 hour program in cosmetology (a program which, by the way, doesn’t teach that style of braiding at all). Most states will not allow braiders to work in the home, and in those that do, zoning laws may prevent home businesses that take walk-in traffic anyway.

Then you may be required to work in an actual beauty salon as an apprentice before you can work on your own - and the salons will use that as an opportunity to pay dirt cheap rates for talented people.

To be a cosmetologist in Ontario, you have to take 1,500 hours of training from an accredited school, plus you have to complete two years of apprenticeship in a licensed beauty salon, then you have to pass rigorous provincial exams. Plus you have to join the relative associations that control the licensing and pay their fees.

Many states also require a high school diploma, which instantly freezes out a lot of poor people and immigrants who don’t have that type of education.

All this so that you can be ‘allowed’ to cut someone’s hair or file their nails. It’s absolutely ridiculous. But it does protect the salon owners.

If you want to open your own salon you’ll have to meet all the various regulations that have been set up to make that as hard as possible to do. Then you’ll need inspections that you’ll have to pay for. In some cases the certification will be done with the help of a state salon organization - which has a vested interest in erecting as many barriers as possible to protect their current members from competition.

As for other industries - good luck making any kind of product in your micro-business that’s typically made by union labor - they’ve got their industries completely protected through the creation of barriers to entry that you simply can’t get past unless you’re in the union.

How about taxi driver? You’d think that so long as you can pass the test for a class-1 license and have a vehicle that is certified to be safe, you should be able to hang out a sign and drive people around for money, right? Nope. Almost every city colludes with the taxi companies to limit the number of cab licenses that can be awarded. Because of the shortage of cab licenses, the current ones become extremely valuable, and now the cities won’t open that market up because it would kill the price of the cab license, which can be bought and sold.

There is such a shortage of taxis in New York that in 2006 a taxi driver who was retiring sold his medallion (the right to operate a cab in NY) for $600,000! That price tells you that there is a huge shortage of cabs in New York - a shortage artificially maintained by the city in collusion with current cab owners.

You can’t even offer your services as a day laborer if a project contains any government contract money at any stage - because the Davis-Bacon act prevents companies from hiring workers who are paid below prevailing union wages (which has the effect of basically closing off all govenrment contracting to union workers only).

So forget about trying to make a special regulatory category for the lowest-income people. If you really want to create jobs, just start getting rid of these regulations. Period.

Why do you hate poor people and seek to oppress them?

[Evil_Captor]

@Sateryn76

Do you have a cite re; the amount of millionaires who inherited their money? Everything I have read indicated that’s it’s about 20%, which means 80% of them worked hard and saved and invested their own money.

How about a percentage of how many CEOs took the parachute versus those that work hard and grow the company? Enron made the news, but you know that Enron is only one company out of millions, right?

The question is not whether or not millionaires made ALL their money but whether the arose from dire poverty or not. You can be very lucky and comfortable coming from the middle class, especially the upper middle class. Bill Gates’ father, for example, was upper middle class/lower upper class and was able to provide him all sorts of advantages. Inherited wealth is not ONLY a trust fund, it is also the economic comfort needed for higher education and the leverage with bankers and such to start a business.

Also, “millionaire” does not mean what it once did. When homes routinely are valued at $250 thousand -$350 thousand (a regrettable mistake on the part of the real estate industry, but surely no conservative will gainsay them their greed even if it did ruin the economy) and cars sell for $45,000 new, a small businessman can with a moderate cash flow could be a millionaire on paper even if he’s not snorting cocaine off the butt of his trophy wife on his Lear jet as he heads for his tropical island.