Sunday, May 5, 2013

Solving Unemployment By Making Markets Work

Status of minimum wage in 2006 in United State...
Status of minimum wage in 2006 in United States and territories (Photo credit: Wikipedia)

Sometimes I think it would be cheaper to eliminate the minimum wage and have the government directly hand the working poor a subsidy for every hour worked than to have the Fed and the government continue destroy the functioning of the marketplace in a vain effort to make unemployment go away.

I don't like the government doing either thing, but destroying the functioning of markets is far, far worse than a handout based on how much you work, even considering the fraud that might produce. Especially considering the amount of fraud the activities of the Fed enable.

If we gave every worker earning less $12 an hour a subsidy of 50 cents for each dollar they earned below $12 an hour, those whose labor is only worth $6 an hour would take home $9. Those worth $8 would take home $10, Those worth $10 would take home $11. 

The earned income tax credit may work like this, but I doubt its adjustment is as steep. And workers must wait until the end of the year to qualify.

No doubt a similar thing could be accomplished by eliminating taxes for the working poor. The payroll tax cut is tiny and not targeted at low wage workers.

If prices of the lowest price labor were allowed to fall to where employers could afford to hire them, their skills would start to grow again and eventually the subsidy would shrink.

Republicans won't go for doing something like this because all new spending for the poor is evil. Democrats won't go for it because it disposes of their precious minimum wage, something Republicans don't view as damaging as the actual spending of money.

The minimum wage has other bad effects too.  By placing a floor on what you can earn instead of an escalator, the working poor don't get immediately rewarding for becoming more productive.  Earning minimum wage at one job is as rewarding as earning the same wage at another job.  Improving one's productivity is only rewarded when your value as an employee rises above the threshold of the minimum wage.

Which means that those who earn the least get the least positive feedback for their efforts.  That's a terrible side effect.

Tuesday, April 2, 2013

Taxation Without Good Representation

West Courtroom
West Courtroom (Photo credit: afagen)

Imagine if you and other parties suing each other had to hire a single lawyer to represent all of you. And you could only pick from a few pre-approved choices. And then that lawyer spent half his time fundraising from people that stand to gain or lose depending on how he handles the lawsuit.

That would be stupid, of course. Each party needs their own representation. And you should be able to select any lawyer you like. And he certainly should not be allowed to collect money from people who would profit from your interests being poorly represented.

And yet, we put with all of that from our representatives in Congress. Instead of proportional representation where each kind of voter can select his kind of representative, we only get one representative per district that can't possible represent all the competing interests of the voters. 

Such a representative is beholden to no one and can freely rent his vote to the highest bidder.

And they need the money, because getting all those voters to think that he's the best one for the job is an expensive effort. 

In a system using proportional representation, the diverse interests of the voters are better represented and less subject to gaming by the monied special interests. 

The solution to the corruption in Washington is not campaign finance reform. The solution is allowing you to have the representation of your choice.

Saturday, February 16, 2013

Without Balance, We Will Keep Stumbling

Jones! (Photo credit: gomattolson)

We need a balanced budget amendment. There's no reason that the world's richest nation cannot pay its expenses as it goes, even if there is an emergency.

Say we have an emergency that costs a trillion dollars. We can pay it off over 50 years with a temporary tax, just as you would pay off a mortgage. 

Mind you, I am not proposing more taxes. I'm just saying that true financial emergencies can be dealt with by levying a tax that pays off the amount we need to spend. And that can be done in a predictable way over time. 

In other words, an emergency is not a legitimate excuse to avoid manage one's affairs responsibly. You borrow what you need and you pay it back on a schedule that pays it off.

Of course, in reality, there are very few few legitimate emergencies.  Its just an excuse politicians use to justify their addiction to spending more than is taken in.
A balanced budget requirement will force Congress to make the hard choices. If they want to spend, they will have to tax. And if the people don't want more taxes, they will have to pus h cuts. I'd even put budgets to a referendum, with the new taxes spelled out.

Without a balanced budget, we can have tax cuts and spending increases. Everybody can get what they want, until the shit hits the fan and our ability to deal with true emergencies is greatly impaired.