Linda Lutton on Bush tax cut

Great Debates
21

A dollar a day is unlikely. He described some of the living conditions he experienced when he visited Guatemala-sleeping a one room hut with human waste and reptiles crawling on the floor. A young girl whose hair was falling out from malnutrition. A woman who got one dollar a day-and could not feed her family properly, but that’s the only work she could get. Maybe without the big corporations they could have had their own farms-but most of the land belongs to a select few-an oligarchy of the rich.

Just because it provides them with jobs-perhaps if the Americans hadn’t gone in there specifically to exploit the land and the workers, they may have done all right on their own. Neo-colonialism is no more than the old “White Man’s Burden.”
Read Walter LeFeber’s “Inevitable Revolutions: The United States in Central America”, as well as “Murdered in Central America” by Dr. Edward T. and Donna Brett. Dr Brett is the professor of mine who I speak of.

22

brent:

First of all, you still don’t seem to understand the concept of a cite. Mr. Bartlett’s website has hundreds of articles on it. Where is the one that deals with minimum wage?

Now on to the workers in Central America. You know, of course, that not every worker in the world works for a major corporation. There is such a thing as a local economy, where businesses are owned by local residents. The corporations that are exploiting third world countries are not altruists trying to provide employment; those regions could in fact have smoothly running economies even if the corporate facilities weren’t there. Have you convinced yourself that everyone in Guatemala was unemployed until those kindly, humanitarian American corporations agreed to set up sweatshops there?

Finally, you steered completly clear of any discussion of the humanitarian aspects of labor laws. Do you feel workers in both the third world and the USA have no right to expect a certain standard of living in exchange for the work that they do? Do you feel that it is correct for employers to force their employees to live in poverty, just because they can? You need to understand that there is more to this debate than just the economic side.

Communism failed in the Soviet Union, therefore all government programs are doomed to failure. Tell me something that I don’t know already. :rolleyes: There are plenty of countries with socialized medicine (Israel, Canada) that would be more useful for purposes of comparison with the United States. Now, do you have any evidence that the average wait for medical care is shorter in the United States than in countries with socialized medicine? If not, then it’s time to retract your statement. And by the way, I dont suppose that you have any suggestions for dealing with America’s 40 million uninsured.

23

Wow, Sam, Very Well Put! A really good explaination of the workings of the minimum wage.

In the US now, the min wage is too low to have much impact, but I worry about what will happen if well meaning legislation mandates a big increase, to whatever’s considered a living wage. I understand the appeal of this idea; the humane position seems to be to say that every worker should make enough money to cover the cost of the basic necessities for him/herself plus, say, two dependents.

But such a law would eliminate the low wage jobs people in other circumstances want. In particular, dependent-less young people with no skills and not much education who are looking for a first job. For most, such a job will be a stepping stone to something better.

But there are also people who cannot handle any job that any employer would pay a living wage for. The mildly retarded, the mildly handicapped, the seriouly weird… I think there are a fair number of people who want an undemanding low wage job. A living wage law would drastically reduce the number of such jobs.

24

Is there any evidence that this Mrs. Lutton has written anything at all that might have brought on the OP’s bout of foaming at the mouth ? Is this rant about taxes or minimum wage or the evils of communism or liberals or what ?

25

Originally posted by Kimtsu (quoting from a Health and Human Services Report):

<<At the lower end, researchers have found that a 10 percent minimum wage hike would reduce employment by only 1 percent.>>

An excellent example of “how to lie with statistics.” Let’s look at it this way: Unemployment currently lies around 4%. So if we reduce employment by 1%, unemployment goes to 5%. Which equates to a 25% increase in unemployment. At the lower end.

Sounds like a lousy deal.

<<<So it is far from clear that raising the minimum wage really does “throw many people out of work,” intuitive as that may seem to you.>>>

Sounds like you’ll have to reread your own cite. Your own source just got telling you that a 10% minimum wage hike would cause a 25% increase in unemployment “at the low end,” and potentially increase it by 250% (The inverse effect of a 10% decline in employment, and a corresponding increase in unemployment to 14% from current levels.)

No. Your own citation makes it extremely clear that raising the minimum wage really does throw people out of work, in every study the HHS looked at.

Guinistasia: << A woman who got one dollar a day-and could not feed her family properly, but that’s the only work she could get.>>

Yes, perhaps. and “That’s the only work she could get,” I think, is the operative term. Well, maybe the factory could pull out and she could always go into prostitution or something. Would that be preferable?

ITR Champion: <<<Have you convinced yourself that everyone in Guatemala was unemployed until those kindly, humanitarian American corporations agreed to set up sweatshops there?>>

No. But everyone who’s working at the factory was–or at least, underemployed, and making LESS than that “proverbial” $1 day (A figure which actually I’d like to see a cite for. I’m thinking sweatshop wages in Nicaragua tend closer to 30-50 cents/hour, which equates to several TIMES that figure). That wage figure is corroborated by http://www.nlcnet.org/nicaragua/jemiii.htm

Weren’t you just jumping on brent for posting “facts” without cites?

<<Just because it provides them with jobs-perhaps if the Americans hadn’t gone in there specifically to exploit the land and the workers, they may have done all right on their own.>>

You’re making some absolutely huge leaps of logic here. After all, wasn’t it the Spanish, not the Americans, who did most of the historical “exploiting?”

And if someone comes in and opens a factory and pays people more than what they’d be making working in the fields (which is how they are able to hire people in the first place), it’s kinda hard for me to consider that “exploiting.” Sounds to me like a developing economy is making some progress. If that’s exploitation, then we ought to do a lot more of it.

<<<<One of my professors is an expert on American policy in Latin America.>>>>>

Ooooh.

Well, ok. One of MY professors (Dr. Alex Hybel) was an expert on American policy in Latin America, too. So where does THAT leave us?

ITR Champion: <<<<Do you feel workers in both the third world and the USA have no right to expect a certain standard of living in exchange for the work that they do?>>>

Absolutely correct. They ought to have a right to pursue work elsewhere if they sense a better opportunity. And they ought to have some confidence that contract law will be enforced in the court system. But there is no “right” to a certain “standard of living.” That’s a total fabrication on your part.

26

No evidence at all. And which rant are you referring to. our friend Brent has changed the subject several times during the course of this thread.

If I meet anyone who’s pushing such legislation, I’ll tell them that you said hello. But this is just a scare tactic. Minimum wage never gets a “big increase”, it has never increased by more than a dollar at a time. And we still haven’t seen any factual evidence that raising the minimum wage results in fewer jobs. The proportion of jobs that actually pay minimum wage at places such as fast food chains and supermarkets is actually quite small, so it would have a minimal impact on the companies’ bottom lines. In such industries, hirings and firings are determind by the number of workers necessary.

27

Sheer nonsense. Dick Cheney didn’t create the goods and services that that money represents. He acquired the money. If he didn’t exist, someone else would have acquired it (and paid taxes on it) instead.

It’s a mistake to confuse people who amass large concentrations of wealth with those who create the wealth in the first place.

Wealth (as, in actual growth in the GNP) comes from the creation of products or delivery of services. Cheney does neither of these two things. So the fact that he acquired 36 Million last year merely means that someone else didn’t.

Now if that 36 Million was distributed among the people who actually created it, they would likely have paid a lower individual tax rate, so I guess we can give him a medal for THAT if you like.

tj

28

As for your second sentence here, if your previous posts are any judge, this is no doubt true! And, I will agree with you that the two do give a thoughtful, reasoned analysis. However, it is also a very “Econ 101” analysis. This doesn’t mean it is necessarily wrong, but to paraphrase Shakespeare, there are more complications in the real world than are dreamt of in your philosophies. I don’t argue that there are no trade-offs between minimum wage level and unemployment…certainly if the minimum wage is hiked up to $10/hour, people will be thrown out of work. However, the extent of those trade-offs (and hence the decision about when they are worthwhile or not) is subject to much debate.

And, kimstu actually understated the evidence from the last minimum wage rise…It’s not only that unemployment didn’t go up at the time but that it continued to fall to levels which we hadn’t seen in quite some time. Now, one could say, “Well, it would have even fallen to significantly lower levels had the minimum wage hike not been implemented” but this seems rather unlikely, no? And, I believe that there are statistics available of how many jobs were affected by the minimum wage hike and while it may have not been a huge proportion, it wasn’t miniscule either. (It’s also worth pointing out that the hike tends to affect wages that lie not only between the old and new minimums but also wages even somewhat above the new minimum.)

As for health care, others have answered the claims of the OP (which were backed by 0 evidence) very well. But, I will just add that if you start looking at waiting times, you better look at them in the U.S. too. I know from recent personal experience that even if one has very good health insurance and goes to the best hospital in town, one still deals with waits produced by the affects of understaffing. And, believe me, while waiting a couple of hours for pain medication may not sound horrendous to you, but try having a kidney stone attact yourself and you may feel otherwise!

And, while many people tend to equate government single-payer health care systems with bureaucracy, we seem to have created in this country a very very impressive health care bureaucracy here without it! In fact, the percentage of health care costs going toward the bureacratic end of things is, I have heard, much higher here than in countries of Canada and Western Europe where they have single-payer systems.

Finally, as to giving Cheney a medal, you may want to note that, as has been pointed out, despite Cheney’s self-serving claim in the vice presidential debate that “the government had absolutely nothing to do with” the fact that he is much better off than he was 8 years ago, the evidence speaks otherwise. He worked in an industry awash in government subsidies and contracts and one might suspect that the company that hired him as CEO [Halliburton] did so in part because they felt his government connections would be lucrative for them. At least, the evidence (in terms of government contracts that the company received) is that it was very lucrative for them! (See http://www.tompaine.com/opinion/2000/10/06/ ) Maybe we ought to give Cheney the “government handout medal of honor”!

29

Well, let’s not all be disingenuous just because brent can’t construct an argument and assume that everyone who disagrees with him on any given point must be one o’ them there dirty liberals.

While there may not be a big push for a Federal “living wage” legislation, there are lots of such campaigns at the state and county level, a partial list of which can be found here. They usually concentrate on getting companies that receive state or county contracts for work to pay a living wage, as well as companies that receive relocation subsidies or tax abatements. Some have been quite successful.

30

I don’t recall the United Fruit Company being a Spanish company…

31

A couple of years ago my wife did some volunteer work in a small town in the mountains of Honduras, helping to bring them potable water. You cannot imagine the poverty of these people. And there’s no opportunity at all for economic success in their area.

If someone started a factory in this town and paid anything at all, the people of the town wojld be dramatically better off. On the other hand, if a requirement for (what rich Americans consider) a “living wage,” prevents a factory from starting up, then the promoters of the “living wage” have done great harm to some very needy people.

BTW in the real world, this town is hard to get to, so it would never be a good location for a factory, but there are factories on the coast of Honduras.

32

::sniff::

I’m a Republican.

::looks at most recent bank statement::

I sure wish I was typical.

:wink:

33

Jshore is right that there is a reasonable debate to be made about whether or not the small increase in overall unemployment or decrease in economic growth is worth sacrificing to raise the minimum wage. This is a philosophical and social argument, not an economic one. All economics can do is tell you what is likely to happen. It’s up to us to decide if that’s what we want.

The problem is that most people who advocate increases in the minimum wage don’t make this argument. Rather, they attempt to claim that minimum wage laws have absolutely no negative effects on the economy. And that’s demonstrably false.

He’s also right that the issue is more complex than the simple Econ 101 argument I gave before. For an example of that complexity, take the situation of ‘full employment’, which is what we basically enjoy now (in fact, our unemployment rate is below the historical levels considered to be ‘full employment’ in a healthy economy).

When you have such demand for workers, it drives wages up. But those wage increases take time to make their way through the economy. For example, the boom of the 1990’s didn’t result in wage increases at the bottom end until 1997, but between 1997 and 2000 wages for the lowest percentiles increased dramatically (5-7% per year, after inflation).

Now, if we enact minimum wage laws, how does that effect this picture? The classical economic argument might be that wages were rising on their own anyway, so the minimum wage law just sped that process up by a year or two. But in the meantime, it disrupted market mechanisms, caused short-term price spikes in certain goods, maybe even drove some companies out of business. The end result in this case could well be that the economy still grows, and employment still stays full, but that economic growth was reduced by some amount over what it otherwise would have been.

The problem is that effects like that are damned hard to determine from the data, because the effects are rather small, and there are so many interactions that pinpointing a single cause and effect can be nearly impossible.

Another complicating factor is illegal immigration. The U.S. has a very large illegal workforce which is immune to minimum wage laws. This acts like a ‘buffer’ against government policy, much like the black market does in countries with central planning. Separating out effects of employment law can be difficult when you have a hidden economy picking up the slack.

And does the minimum wage benefit the workers? If it causes wages to rise faster than economic growth, it could just lead to inflation, meaning that the inflation-adjusted wage of the workers doesn’t change at all. In the meantime, holding an artificially high wage for some jobs tends to increase demand for those jobs and reduce demand for other competing jobs. For instance, if McDonald’s pays $18,000 a year, but becoming a journeyman carpenter will result in a salary of $24,000 per year, then some people will choose that route over McDonalds. But if an artificial wage increase causes McDonald’s to have to pay people the same amount as a carpenter makes, but without the training, then more people may opt for that job. This causes distortions in the employment market, leading to shortages of carpenters.

The market is very good at allocating resources by prices, including the price of labor. But when the government steps in and fixes prices (which is what minimum wage laws do), it causes distortions in the price system which makes people less able to make intelligent decisions. This leads to economic inefficiency and lower growth.

34

Honduras has already been exploited-by United Fruit and Cuyamel. In fact, at one time I believe, more than 80 percent of the land in Honduras was owned by people outside the country-who also owned the railroads. (Or maybe I’m thinking of Nicaragua…)

35

About the minimum wage in addition to the possibility that it will create unemployment there is also the possibility that it will lead to an offsetting reduction in non-wage benefits or that it will lead to an increase in prices which is like a tax paid partly for the poor. The only adjustment which doesn’t fall partly on those the minimum wage is trying to benefit is a reduction in profits and especially in the long run this is unlikely to be large. So overall it’s not unreasonable to think that the minimum wage may well be like a regressive tax for reducing poverty.

When you add the fact that a large proportion of the benefits go to the non-poor eg teenagers in middle-class families it’s hard to believe there aren’t more efficient ways of helping the poor. The earned-income tax credit, ,which acts like a minimum wage to an extent , and which can be much-better targetted to poor families is a good example.

BTW I don’t know about Ehrenreich and CTJ, but Krugman’s columns are motivated not by class envy or ideology but for the most part by solid economics, hardly surprising considering the fact that he is one of the best economists in the world and a likely future Nobel Laureate.

He is quite correct that the Bush tax plan has been incredibly fraudulent on several levels, about who gets the benefits , about how much it will help get the economy out of recession and about how much it will actually cost.
Most of his criticisms are echoed by the Economist magazine which endorsed Bush and is not exactly known for class-war. And a recent study by the IMF highlighted the bogus calculations needed to fit the tax cut under the 1.35 trillion dollar limit and worried about the long-term fiscal implications.

36

In my previous post I meant “tax paid partly by the poor” not “for the poor” (that was probably obvious)

BTW doesn’t the “edit” feature work on this board?

37

It does work, but not for regular members. Moderators and adminstrators have that feature avaiable to them.

38

Hmm so you mean that it is a deliberate decision not to allow posters to edit their posts? I have to say that is rather odd …

39

Or maybe just that the effects are much smaller than the other side tends to claim.

But, I am willing to admit that some advocates of minimum wage increases are too simplistic in not worrying about the possible unemployment and other adverse economic effects if you are willing to admit that many of the advocates of not increasing it, who usually trot out reasons about how it will hurt the poor more than help them, are in fact motivated more not by their concern for the poor but by their concern for their own pocketbooks. I find it sort of amusing the extent to which sound economic policy for the poor in the view of the corporate CEOs, Chamber of Commerce, etc. just happens to align very well with what is in their own best interests! How convenient!

40

I know a lot of people who argue against the minimum wage. I don’t know a single one who would be personally hurt by it.

I’m sure in the larger debate there are lobbyists against minimum wage laws that are protecting their own pocket, but the philosophical and economic arguments raised against it are rarely motivated by self-interest.

I’d like to put in another plug for Krugman. I don’t agree with his philosophy, and we are on opposite ends of the political spectrum. But I have yet to find fault with any of his economic analyses. I think he’s one of the best thinkers in economics today.

I just wish he’d update his web page more often!