Both the Economy and Society Benefit When Poor Families Have More to Spend

by Brian T. Lynch, MSW

Enhancing the human dignity of employment is an obvious, self-evident social benefit of raising minimum wages. It is both empowering and ennobling when breadwinners are able to provide for the needs of their family on their own, without government or extended family supports. This is reason enough to enact a living wage law. The minimum fair exchange for a full-weeks work ought to be a self-sufficient minimum wage. The burden for this minimum standard of living should rightly be on employers and not on the taxpayers who currently help support full-time low wage earners.

Corporations and business owners enjoy the benefits of government-subsidized labor and don’t want to give it up. Most of their arguments opposing higher wage standards rely on business-friendly economists whose academic theories and scholarly studies plum the detrimental impacts on businesses from higher labor costs. It is current practice to treat workers as a labor commodity separate from workers and their families as consumers and social beings with basic human needs. It is also current practice to take a business view of the economy without consideration of the broader context of the overall social economy within which commerce operates. All this results in flawed and biased arguments against self-sufficient minimum wages.

The overall beneficial impacts of increasing the purchasing power among poor families are rarely studied. Now a major new study has found that the ripple effects when direct, substantial cash assistance is given to poor families have, “… large positive spillovers on non-recipient households and firms, and minimal price inflation. The researchers in this large-scale experiment in Kenya estimated that a direct cash payment of $1,000 US dollars to poor families within randomly selected communities resulted in a local fiscal multiplier of 2.6 times within the local communities.

In addition to measured improvements in the welfare of the children and families who received an infusion of cash, the experiment reinforced the relationship between income and increased consumption to the benefits of both businesses and the families who did not receive cash payments. Here is an excerpt from the study:

“A large-scale cash transfer program in rural Kenya led to sharp increases in the consumption expenditures of treated households, and extensive broader effects on the local economy, including large revenue gains for local firms (that line up in magnitude with household consumption gains), as well as similar increases in consumption expenditures for untreated and treated households approximately a year and a half after the initial transfers. Local firms do not show meaningful increases in investment, and there is minimal local price inflation, with quite precisely estimated effects of far less than 1% on average across a wide range of goods.” [snip]… The consumption expenditures of untreated households and firms rise substantially in areas receiving large cash transfers…”

The infusion of cash payments to poor families in the study did not come from employers, and the economy of Kenya is very different than the economy here in the US. Directly extrapolating the results isn’t possible. Nevertheless, these findings are hopeful. The high fiscal multiplier stimulus effect on local businesses from increased consumption by poor families appear to mirrored results found here within states and municipalities that have raised minimum wage standards. While the burden of cash transfers from higher minimum wages is on businesses, the literature I’ve seen so far suggests there is still a positive fiscal multiplier within the business community coupled with little increase in unemployment and negligible increases in inflation.

A broader look at the spillover effects of increased base wages might show similarly positive results for the business economy and those workers who are already self-sufficient wage earners. Future studies of communities where the wage base is improved should also look at the wellbeing and overall welfare of children living in low wage households as well as the social wellbeing of the wage earners themselves.

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Further Reading

Debunking the Myth That It’s Your Fault You’re Poorhttps://aseyeseesit.blogspot.com/2015/09/debunking-myth-that-its-your-fault.html

Myth Busting Data RE: Minimum Wage Increaseshttps://aseyeseesit.blogspot.com/2012/09/myth-busting-data-re-minimum-wage.html

Making the Case for a Living Wage  https://aseyeseesit.blogspot.com/2012/07/making-case-for-living-wage.html

NPR –

Researchers Find A Remarkable Ripple Effect When You Give Cash To Poor Families

 https://www.npr.org/sections/goatsandsoda/2019/12/02/781152563/researchers-find-a-remarkable-ripple-effect-when-you-give-cash-to-poor-families

Wealth Inequality has Always Been Un-American

by Brian T. Lynch, MSW

In an Intelligencer article entitled, “AOC Thinks Concentrated Wealth Is Incompatible with Democracy. So Did Our Founders,” Eric Levitz writes, “ [Alexandria] Ocasio-Cortez’s second argument against the existence of billionaires — that concentrated wealth is incompatible with genuine democracy — was something close to conventional wisdom among the founders. Levitz goes on to write:

“The notion that political freedom has a material basis did not originate with Karl Marx and the creed of Communism; it was a core idea of the 17th-century British political theorist James Harrington, and his formulation of classical republicanism. A man who does not own the means of his own reproduction can never exercise political freedom, Harrington argued, because “the man that cannot live upon his own must be servant.” Likewise, the man of immense wealth — whose fortune consigns great masses of men to servitude — is inevitably a kind of tyrant. After all, ‘where there is inequality of estates, there must be inequality of power, and where there is inequality of power, there can be no commonwealth.’”

Having seen the ravages of extreme property-based wealth inequality in England, Thomas Jefferson was concerned that measures needed to be taken to prevent such inequality in America. Among his ideas, he wrote:

“Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.”

The vast concentrations of private wealth we see today is incomparable with a democratic society – and our founding fathers knew it. Regardless of if they were for or against democracy as a form of government, there was agreement that this nation needed to guard against the extreme accumulation of property in the hands of a few.

While Jefferson and the founding fathers understood this, they nevertheless adopted a Constitution which only permitted a flat tax (Art. 1, Sec. 9, 4th paragraph). It wasn’t until the Sixteenth Amendment was adopted in 1913 that the idea of a progressive income tax became possible.

The progressive income tax of 1913, as it was originally designed, did exactly what Thomas Jefferson had suggested. It was not intended that wage earners would be taxed at all. The bottom tax bracket began with incomes over $100,000 in today’s inflation-adjusted dollars and many higher marginal tax brackets climbed upwards from there. The one reason most wage earners ended up paying income taxes is that the 1913 law was not indexed to inflation. Just like the alternative minimum tax today, the progressive income tax crept down the income scale over time as wages were adjusted upward for inflation and productivity growth.

Up until World War II the top marginal income tax rate was over 90%. It was set that high to help prevent the unchecked accumulation of private wealth for the sake of maintaining a functioning democracy. President John Kennedy scaled back the top tax bracket to 70%, but it was Ronald Reagan who destroyed the whole purpose of the progressive taxes by cutting the top rate to less than it is now. At the same time, he adjusted the bottom rate to increase income taxes paid by lowest-paid workers. These changes, along with a law to tax capital gains at 1/2 the rate of wage income, set-in-motion one of the main conditions that would result in the creation of today’s billionaire class.

The other changes that allowed for the current unchecked accumulation of vast amounts of private wealth were the rise in the mid-1970s of organized capital in the form of political associations and PACS, (Political Action Committees) bent on killing unions and electing pro-business politicians. To this end the practice of sharing growth in the hourly gross domestic product (GDP) with workers in the form of productivity wages ended. Since then the US economy has nearly tripled but nearly all of that new wealth has gone to the wealthiest owners of capital. Wage growth, adjusted for inflation, has been nearly flat since 1975.

The irony here is that if productivity wages had been allowed to keep pace with America’s growing wealth (hourly GDP), the average family of four today would be making over $100,000 per year, the point beyond which they might have had to start paying income taxes if the original 1913 progressive tax law had been indexed to inflation.

On September 19th Donald Trump Declared himself to be Our Dictator

Screen Shot 2019-09-21 at 10.25.20 AMOn the morning of September 19, 2019, history will note, President Donald J. Trump officially declared himself to be this country’s first authoritarian dictator. On that day he announced to the world, in a court filing, that he was assuming unlimited criminal immunity to act within or outside the law. He also declared that anyone who works for him on his behalf is also above the law and cannot be investigated, charged or convicted of any crimes as long as he is in office. By logical extension, if no violation of the law can apply to him while in office, then no election can remove him from office and no Congress can remove him by impeachment or check his powers in any way.

This isn’t how the first draft of history read that day. Trump’s dramatic claims received relatively little notice. They came in a court filing and were so outrageous and incredible that no one took it seriously. The headlines on that Thursday read like some variation of this one from the New York Law Journal:

“Trump Sues Manhattan DA Vance in Federal Court in Wake of Tax Subpoenas”

In the wake of the Mueller investigation, with its assortment of indictments, trials, and convictions of Trump associates, there were over a dozen less noticed criminal investigations spun off to be conducted in other states by other prosecutors. It was a court filing in one of these lesser-known investigations that the President announced his sweeping declarations.

On October 7, 2019, District Judge Victor Marrero, of the Southern District of New York, summed up the President’s claim in an introduction to his ruling rejecting Trump’s claim. Judge Marrero’s ruling reads in part:

“The President asserts an extraordinary claim in the dispute now before this Court. He contends that… under the United States Constitution, the person who serves as President, while in office, enjoys absolute immunity from criminal process of any kind. Consider the reach of the President’s argument. [As] the Court reads it, presidential immunity would stretch to cover every phase of criminal proceedings, including investigations, grand jury proceedings and subpoenas, indictment, prosecution, arrest, trial conviction, and incarceration. That constitutional protection presumably would encompass any conduct, at any time, in any forum whether federal or state, and whether the President acted alone or in concert with other individuals. Hence, according to this categorical doctrine as presented in this proceeding, the constitutional dimensions of the presidential shield from judicial process are virtually limitless: Until the President leaves office… [this includes crimes committed in*] his official capacity, but also to ones arising from his private affairs, financial transactions, and all other conduct undertaken by him as an ordinary citizen both during and before his tenure in office.”
“Moreover, on this theory the President’s special dispensation from the criminal law’s purview and judicial inquiry would embrace not only the behavior and activities of the President himself, but also extend derivatively so as to potentially immunize the misconduct of any other person, business affiliate associate, or relative who may have collaborated with the President in committing purportedly unlawful acts, and whose offenses ordinarily would warrant criminal investigation and prosecution of all involved.”

The judge concluded his introduction with these words:

“Because this finds aspects of such a [Presidential] doctrine repugnant to the nation’ s governmental structure and constitutional values, and for the reasons further stated below it ABSTAINS from adjudicating this dispute and DISMISSES the President’ s suit.”

The Trump Administration immediately appealed.

President Trump’s immunity doctrine stemmed from a criminal investigation to see if Trump’s non-profit organization falsified business records.

In summary, Cyrus R. Vance, Jr. is a District Attorney in New York. He empaneled a grand jury to probe whether the Trump Organization falsified business records related to money paid to Stormy Daniels and Karen McDougal prior to the 2016 Presidential Election to keep them quiet about his sexual relationships with them. These were payoffs funneled through Donald Trump’s personal lawyer, Michael Cohen. Some of these payments were by checks made out to Cohen from the Trump Organization, a non-profit entity registered in New York. These payments were categorized as legal fees on the books of this non-profit.

Paying to keep damaging information from the public during an election is a violation of campaign finance laws. Using money donated to a non-profit organization for personal use is also a violation of the law, as is falsifying business records to cover up such misdeeds.

The grand jury investigating the business records of the Trump Organization requires documents, tax records and the cooperation of Mazars USA, the accounting firm hired by the Organization. Trump sent a letter to Mazars USA and forbade the company from releasing his tax records. The jury subpoenaed the company to release the last eight years of Donald Trump’s tax returns. That’s when Trump made his move on unlimited Executive power.

How this constitutional crisis resolves is critical to our republic. By elevating William Barr to Attorney General, Trump, and the Republicans have removed any chance that the Barr-lead Justice Department will ever challenge any illegality committed by the President or his administration. By ramming through two ultra-partisan Supreme Court Justices, and by seating so many highly partisan judges to the federal bench, Trump and the Republicans are betting that all legal challenges to both Congressional oversights, or judicial challenges to Trump’s limitless criminal immunity doctrine, will ultimately fail. The complicity of Congressional Republicans in installing this all-powerful authoritarian government should now be obvious. Articles of impeachment should still be aggressively pursued, but it is no longer a given that an impeachment conviction in the Senate would remove Trump from office. Under his unlimited criminal immunity doctrine, it isn’t even certain that he will honor Presidential election results, or even allow future elections.

Here is where I believe we stand. If the courts don’t uphold the rule of law, all hope for the republic is lost. If the courts do uphold the rule of law after House impeachment and Senate conviction, then it will be up to some combination of the President’s willing capitulation, law enforcement, the U.S. military or massive national citizen protests to assure that Donald Trump leaves office. If the Senate won’t convict Trump of impeachable offenses, it is up to the voters to set the stage for the same options mentioned above. If Donald Trump is reelected, however, it will probably be too late to save our Republic from dictatorial rule.

The Unasked Question

The New York Times recently asked each of the Democratic primary candidates for President a series of identical questions. The last question on their list was, “Does anyone deserve to have a billion dollars?”

The trivial framing of that question bypassed the grave urgency for asking it in the first place. In a variant form of the question, the Times was essentially asking, “Isn’t it OK to be a billionaire if you played by the rules and worked hard to earn it?”

The wording of the question pre-supposes that the laws and social rules in place, by which a person may accumulate a billion-dollars, are fair and open to anyone. It ignores whether inherited wealth is also deserved.  Most importantly, it treats wealth as if it is only a money count and not a measure of privilege and social power. By doing so, the question as it was posed ignored the essential problem that extreme private wealth is toxic to human society regardless of a person’s character or how they obtained it.

A more salient question would have been, “How many more billionaires can this human society sustain before it collapses?

In the 50,000-year history of human civilization, the concepts of private ownership and private wealth are recent developments. The full ramifications of these constructs on our social cohesion and collective welfare are still being revealed. The written history of civilizations offers no comfort. There are no examples of a happy, stable society where extremes of wealth inequality existed. The lessons of history seem to be that a suitable balance of power is required to sustain a healthy and stable society. Human populations simply cannot tolerate distributions of wealth/power that either force unnatural equality or permit unlimited extremes of private wealth.

There is no question that we crossed the Rubicon into a world where extreme wealth inequality is corrupting world governments and destroying the balance of nature. The questions we should be asking candidates for President and all our elected officials are, “What are your plans to rebalance the distribution of wealth and social power in America?”   And then the follow-up question, “What are you going to do to stabilize and rebalance the Earth’s damaged ecology?”

Humanizing the Minimum Wage

A State Senator in New Jersey fears a $1 raise for the working poor in this state will be too much of a hardship for businesses if the economy slows down a little.

For some national context, New Jersey passed a minimum wage law last year that will boost the minimum to $15 per hour by the year 2024. After the initial jump this past January, the working poor will receive a one dollar per hour raise every January between now and January of 2024.

New Jersey is an expensive state in which to live. The northern half of the state is part of the New York City metropolis. The central sections of the state are within the Philadelphia metropolis. The latest Economic Policy Institute study estimates a family of two adults and two children in Morris County would need a combined income of $104,121 per year to live comfortably. That works out to $50 per hour, 40 hours per week for one breadwinner, or $25 per hour if both parents work full-time. It also means that a single mother making the current minimum wage of $8.85 per hour would have to work 25 hours per day, 9 days per week to live comfortably in Morris County.

State Senator Vin Gopal, a Democrat from Monmouth County, NJ, said the state minimum wage law was an “irresponsible bill” when it passed. He is sponsoring a bill that would suspend minimum wage hikes in the future if there are signs of an economic slowdown. He calls this, “a basic, common-sense precaution.”

Back when workers and business owners were neighbors, owners cared about what would happen to an employee’s family during economic downturns. They would make adjustments and only ask all of their workers to make a small temporary sacrifice if needed so that the business and workers could both survive.

In today’s callus corporate environments, workers are a commodity (labor) to be hired or fired as a way of fine-tuning profits. This jaded view of people is reflected in the pending NJ Senate bill, S3607, which would suspend future minimum wage increases when there are signs of a slowing economy.

This bill doesn’t ask every employee to sacrifice during hard times. It asks only the most vulnerable workers to take a hit for the company. And where is there any built-in expectation that businesses should make any temporary accommodations to their bottom line?

If a company is really so economically fragile that it can’t afford an extra $58 dollars a week for a low wage worker during a downturn, they should have an option to apply to the state for an economic bridge loan to cover the cost of the raise until the economy turns around. Increasing worker incomes during an economic downturn, after all, makes economic sense. It is what economists call an economic stimulus. It increases local spending which helps jumpstart the economy.

For businesses to shift the economic stress caused by the normal ups and downs of the business cycle onto the backs of the lowest-paid workers is repugnant to me.

Who Are We, America?

by Brian T. Lynch, MSW

For more than a generation the narratives, myths, legends and stories (culture) that bound us together as a nation were overpowered by media noise and corporate branding campaigns. Our culture became threadbare as many insurgent subgroups chipped away at our national mythology by inserting competing amendments and alterations to America’s story in an effort to make us a more inclusive nation.

Millions of Americans became disoriented, disaffected and felt marginalized amid the morass of competing narratives, the vanishing clarity of who they are, and the unfulfilled promises of both political parties and corporate entities as they competed for power with increasingly loud and belligerent messaging.

Then along came Donald Trump with an entirely new American mythology, a new story about who we are. This has been a clarifying storyline that captures the imagination of those who no longer respond to America’s traditional fictions. Donald Trump has created a new nation in the minds of millions who needed something and someone to believe in again. It is a story that defines America as an exceptional nation of exceptional people under siege by immigrants, racial groups, ethnic group, the gay community, and non-Christian religions.

Now we are at a crossroad in history. We can’t go back to what wasn’t working and can’t abide by what Trump has created. We need a better, brighter, more radically different national narrative about who we are as a nation. We need a broadly shared vision of who we are that can make and keep better promises for us all.

Coup d’état – The Revolution Has Been Televised for Years

by Brian T. Lynch, MSW

The Party of Lincoln is gone. Forever gone. All that remains of it are a nostalgic band of loyal followers around the country who can’t see, or accept that it’s gone.

Systematically over time, and with stealth, the Republican Party officeholders have been replaced by politicians who are hostile to a pluralistic, democratic Republic in which they must share power with others who don’t look, think, or worship like them. The goal of these democracy-thieves is to take down our Republic and replace it with a Neo-Republican authoritarian state. We have seen how this works in states today that already have all Republican control. An authoritarian, single-party federal government is the only way they can impose the “superior” will on the majority of Americans. Their long-range plans for the takeover of our Republic can be seen most clearly in the broad outlines of their attacks on the government.

When these Neo-Republicans recently controlled the Congress and the Democrats controlled the Executive Branch, they grossly abused their Congressional oversite authority to disrupt the regular order of government. They blocked or attempted to block all legislative initiatives, even ones they had proposed themselves. They blocked all judicial nominations, especially, and most dramatically, to the Supreme Court. In the state governments controlled by them, they suppressed the vote and drew up unconstitutional Congressional districts to hold on to power. They passed unconstitutional anti-abortion laws. In Washington, they shut down the federal the government on several occasions to alienate the affection of the people towards our Republic. They harassed the popularly elected President, Barak Obama, with endless investigations and obstreperous oversite. We thought this was because Obama self-identified as an African-American. This was partly true, but it was only just the surface of what they were really up to, as it turns out.

After the Executive Branch flipped to Trump, with an assist from Russia, the Neo-Republicans ended all over-site while President Donald Trump took a wrecking ball to our Republic and democratic institutions we so admired. He began installing himself as the first Supreme Executive while breaking every norm of the high Office he holds.

Now with Democrats in control of the House of Representatives, regular oversite is being restored. But Donald Trump, backed up by Congressional Neo-Republicans, is resisting any oversite activity whatsoever. He is challenging the House’s authority to hold him accountable in any way. When you step back to look at the big picture it becomes clear that we are experiencing a slow-motion coup d’état.

Consider how the Republicans have been blocking all Democratic Party candidates for federal judgeships while packing the Judiciary with their ideological judges when Republicans are in control. Consider how brazenly Mitch McConnell stonewalled President Obama’s pick to replace Justice Scalia for over a year in order to fill the vacancy with a Republican ideologue.

We have three separate co-equal branches of government. To take control you must control all three branches. At this moment in history, only the House of Representatives is beyond their control.

But there is also the question of the fourth estate, the news media. You can’t get away with taking over control of a government without also taking control of the messaging and public perceptions. Here is where the Republican coup actually got started, after Nixon’s impeachment. For a whole generation now, the Neo-Republicans have been building a massive network of alt-right media with a high online presence and lots of toxic, anti-government content.

This alt-right network, the Republican “echo chamber” as Hillary Clinton first perceived it, is now working in parallel with Russian cyber-disinformation activities to continually misinform and arouse the alt-right political base that Neo-Republicans have been carefully cultivated over the years.

So, put it all together and what immerges is a new Republican Party grasping to control all of the levers of power in order to have their way. This new governing party doesn’t want majority rule when that includes the votes and opinion of people they don’t like; People who don’t share their distorted Christian values. Our most trusted democratic institutions, such as the FBI, NSA, the Justice Department, are under siege. They are beginning to crack. The status of the Judicial branch, and especially the Supreme Court to save our democracy is about to be severely tested, and the prospects of salvation from the Court seems murky at best.

Here is how the revolution stands. We have embattled civil servants trying courageously and disparately to hold on to our great democratic institutions and the rule of law. We have one-half of the legislative branch clinging on to our democracy. They are just beginning to understand the fight they are in. They are trying to right the ship of state without the support they were expecting from the Neo-Republicans in Congress. We have the fourth-estate locked in a massive counter-informational battle with alt-right media and foreign powers.

And so we must now pin our hopes on a deeply divided judicial system and Supreme Court, hoping that just one conservative Justice will rise above politics to save our Republic.