By Brett Wilkins, staff writer at Common Dreams. Originally published at Common Dreams
Raising the minimum wage to $15 an hour is not incidental to the federal budget and is permissible under the rules,” the independent senator from Vermont said Saturday.
Sen. Bernie Sanders on Saturday said he is “confident” that the $15 hourly federal minimum wage he has long championed can be achieved via the Senate reconciliation process.
If Republicans could use reconciliation to try to take healthcare away from 32 million Americans by repealing the ACA, please don’t tell me we can’t use the same rules to provide a raise to 32 million workers by increasing the minimum wage to $15 an hour,” Sanders (I-Vt.) tweeted, referring to the Affordable Care Act—also known as Obamacare.
Sanders, who chairs the powerful Senate Budget Committee, referred to an analysis released earlier this week by the nonpartisan Congressional Budget Office that found raising the federal minimum wage to $15 an hour would have a significantly broader budgetary impact than two provisions of the 2017 Republican tax cut legislation that passed through reconciliation.
“Raising the minimum wage to $15 an hour is not incidental to the federal budget and is permissible under the rules,” Sanders said in a statement.
If Republicans could use reconciliation to try to take health care away from 32 million Americans by repealing the ACA, please don’t tell me we can’t use the same rules to provide a raise to 32 million workers by increasing the minimum wage to $15 an hour. No more excuses. https://t.co/ma7WHtczb1
— Bernie Sanders (@SenSanders) February 20, 2021
“The CBO has found that the $15 minimum wage has a much greater impact on the federal budget than opening up the Arctic National Wildlife Refuge to oil drilling and repealing the individual mandate penalties—two provisions that the parliamentarian advised did not violate the Byrd Rule when Republicans controlled the Senate,” Sanders continued.
“I’m confident that the parliamentarian will advise next week that we can raise the minimum wage through the reconciliation process,” he added.
President Joe Biden, who campaigned supporting a $15 minimum wage, has included the hike in the American Rescue Plan, his administration’s $1.9 trillion coronavirus pandemic and economic recovery proposal.
“No one in America should work 40 hours a week making below the poverty line,” Biden recently said. “Fifteen dollars gets people above the poverty line.”
The CBO estimates increasing the minimum wage to $15 by 2025 would lift 900,000 people out of poverty while giving another 17 million workers a raise. The CBO also says the move will cost 1.4 million jobs and increase the deficit by a relatively mild $54 billion over 10 years.
Proponents of an even more ambitious raise point to studies showing that the minimum wage would be over $24 today if it had kept pace with inflation since 1968. As Ohio congressional candidate Nina Turner tweeted Wednesday, “$15 is the floor, not the ceiling.”
$15 was already the compromise. We’ve been fighting for it since 2012. Kicking the can down the road is bad politics and shows a blatant disregard for the material needs of millions of low-wage workers. There is no next time on 15. It must be included in the recovery plan.
— Nina Turner (@ninaturner) February 19, 2021
Approval by the Senate parliamentarian does not guarantee the fight for $15 is won. Although Democrats technically control the Senate by the slimmest possible margin, conservative Democratic Sens. Joe Manchin (W. Va.) and Kyrsten Sinema (Ariz.) have both publicly opposed the increase.
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Democrats have limited political capital and have not yet decided how to spend it, though they are losing it by the day.
There seems to be much more talk on the hill about Gme and Robin Hood than about a minimum wage increase.
Unless 2022 goes swimmingly, the democrats have one big package to pass in this congress, and they’re still bickering
And they aren’t even getting Robinhood right. I see them floating the idea of a financial transaction tax which isn’t a bad idea at all, but the articles I’m reading keep touting the potential tax revenues. The purpose of the transaction tax is not to raise revenues in the first place – it’s to deter financial firms from making so many trades that earn just few pennies each at the expense of retail investors.
Also, it would not stop the Gamestop phenomenon at all. The whole point of the reddit rebellion was to buy and hold – the whole ‘diamond hands’ idea.
According to the Rising today, $15 minimum is DOA – https://www.youtube.com/watch?v=NFNUvS7UioE&list=PLLri3HDD8DQtZLG5HPNEZ5aWGqTPI-PJS&index=1
Sure does seem like the Democrat party is not interested in being in power after 2022. But hey, if they won’t get it done, I’m sure Trump would love to run on a $15 minimum wage in 2024. That might even get me to vote for him, if only to spite the Democrats.
Yah, at the rate Dems are going, maybe they should just bring up some new charges against Trump and begin an all new impeachment against him. The blue types I talk seem to be concerned about little else other than getting Trump, in the political area. Although I do work with one guy who seems to like Trump that is keeps bringing up the minimum wage increase a being good and important thing. Ironic.
I’m cautiously optimistic over Biden so far. BUT unless DEMS pass $15/hr and other measures NOW to go big versus the GOP they can bend over and kiss their razor thin majorities aloha in 2022. WHY? A 50-50 SENATE plus Kamala’s vote isn’t a Rooseveltian vote of confidence. If the DEM half of Our Only Party – pace’ Gore Vidal – can’t or won’t, they’re toast.
Consider Impeachment Two; Jamie Raskin was ready to call the witness to Kevin McCarthy’s panicked phone call to Trump and heard “Sounds like the rioters are more pissed off than you are, Kevin.” That MIGHTA gotten a few more GOP Senate votes. Predictably, Chuck Schumer opted for Comity and kept the Two Party fig leaf over second degree murder, insurrection, treason and the U. S. Constitution.
But how can a superannuated Left Coast shrink compete with Master Parliamentarians?
As to the CBOs mainstream economics view raising the minimum wage would create (X) unemployment, I should remind you of something you cited earlier: https://www.ineteconomics.org/perspectives/blog/james-k-galbraith-says-cbo-not-competent-to-assess-economics-of-minimum-wage.
Yes, I meant to write an intro to this Common Dreams account, mentioning Jamie’s recent INET article, which Yves crossposted last week here on NC. But my computer was freezing up very much a couple of hours ago, and I abandoned my intro so as to get the post up. Thanks for highlighting Jamie’s work.
Can I just say that I can’t stand the concept of minimum wage? It’s symptomatic of weak political leadership that the government refuses to take responsibility for providing the minimums required for an acceptable standard of living. If there’s a certain minimum income everyone should have, it should be provided by the government to everyone as a universal basic income (social security for all?). If we had truly universal basic income, then money from working would be extra and could be any amount to which the parties mutually agreed. If the government provided everyone with basic income, free public healthcare and university, maybe our labor costs would be competitive with the rest of the world. Instead we administer layers of means tested public assistance programs which are too complex and bureaucratic for the average person to navigate, and which have the pernicious effect of embittering blue collar tax payers against the subset of the poor “get everything for free”. If something is so minimal that everyone should have it, the government should provide it to everyone.
I see. So people can construct business models that rely on the government to pick up their wage bills, in order that they can cream off maximum profits. I agree on the principle of universal basic services – that’s a socialist given – but a UBI is merely capitalism and the consumer society propped up by the government.
Ideally, working under others should be entirely voluntary anyway.
Otherwise, it’s wage slavery.
Per the Bible, roughly equal PRIVATE ownership of the means of production is the way to go for all citizens. Then citizens can work for themselves and their families and not be under compulsion to work for others, including for government.
That idea completely misses the point that most people are incapable of managing their lives “rationally” to begin with. I point to the example of organized religion as Exhibit #1 to prove that point.
Terran humans are a social species. Thus, politics, writ large and writ small.
What is the “essence” of ‘politics?’ Compromise, which is a species of ‘balance.’
>What is the “essence” of ‘politics?’ Compromise…
Sorry, no. Compromise is a tactic, a provisional maneuver. The essence of politics is the ‘public’ (“”social?””) exercise of power. The end is the (total!) defeat of one’s enemies.
I must disagree.
Life is not a debate. Life is not a zero sum game. There are externalities that no debate, however cunningly planned out could account for.
Secondly, one of the basic functions of any society is the organization of public actions to deal with the non-human environment; thus, dams, bridges, irrigation systems, etc. These actions are aimed at dealing with Nature, a definitely non-human ‘actor’ in our little drama. This brings us one major “fact of life” that many do not recognize, but which moves on it’s inexorable way nonetheless; Nature cannot be ‘defeated,’ ever. That little Fever Dream is an Eidolon of the Technocrats.
Thirdly, the stated goal of the total defeat of one’s ‘enemies,’ is a self defeating strategy, at least at the social level and above. As Rome found out to it’s cost after “Carthago Delenda Est” was implemented as public policy, one must fear success as much as one fears defeat. Neither occurs in a vacuum. Just as Rome needed a viable rival to keep itself “honest” in the Mediterranean sphere, so too do we need viable ‘auslanderin’ to keep our selves focused and constrained from committing excesses. Consider this a form of “balance.”
Certainly nature sets the ultimate constraints on what is possible, which extends to the political insofar as the political is a part of the human and the human is a part of nature. And, of course, it would be folly to seek to destroy the whole which you are a part, unless you seek by that to destroy yourself. But the political is a realm of human action, and concerns only the contest of human actors. As such, as a human concern, one should not expect the ends of politics to be determined rationally, nor any political contest to conclude optimally for anyone–though it may, by accident. That does not affect its essence (impossible), nor its purpose.
If you think of government as being “of the people” then working for the government is working for the people. That’s what government does: government is chosen by the people to carry out the work the people deem is necessary and essential for all. That’s why healthcare, education, water, electricity, housing, etc. should be provided for everyone and regulated by good government.
There is a place for private enterprise but it should not be at the expense of other people doing without. When private money becomes the means by which policy is carried out, then some do well (the 1%) and some do not (the lower 99%).
If you think of government as being “of the people” then working for the government is working for the people.
Yes, and government should pay the highest wages to attract the best people – but people who may (normally) freely chose to decline working for ANYONE, including government, having independent means of survival such as a family farm that cannot be permanently lost (see Leviticus 25).
I’m just saying that wage-slavery is, per the Bible, NOT the norm for citizens (though some might fall into it for a while).
Otherwise, we’re just swapping one slave driver for another.
A government that did something to support the needs of the many could certainly constrain the abuses of the few.
Our current government, fully owned by the few, provides every conceivable opportunity for looting productive capital and exploiting labor.
It is the same owners of our government you are worried about exploiting any help for labor. The idea the many must suffer until full power is wrested from the few is the opposite of how one builds an alternate power center. Real material benefits for the many empower the many to object to the scamming you are worried about. If you try to end the scamming first, you’ll never have the power to do it.
If it is a human right, and that is a subjective determination, then the government should provide it. Is housing a right? Is food a right? Is health care a right? And if it not a human right then let them starve. A UBI is just a cash equivalent of certain rights and by cutting out the middle men more efficient. To give you a sense of the middlemen……it costs LA 1 million dollars per unit to build housing for the homeless. New York spends 4000 per month per capita on the homeless. The middlepeople are making bank.
“But my vital small business model supplying essential high-salt, high sugar junk foods at high prices relies on my paying my workers insufficient money to live on and I demand a luxury vacation in the summer and at Christmas. So I must oppose the $15 minimum wage.”
This. The classist D-bags are always busy with their exploitation.
Rep. Ro Khanna on CNN Inside Politics. https://www.youtube.com/watch?v=Me8IwAIRJew
Abby Phillip: “Well of course large businesses, like Amazon and McDonald’s for example, can and perhaps should pay more. But I’m wondering what is your plan for smaller businesses? How does this, in your view, affect mom and pop businesses who are just
struggling to keep their doors open, keep workers on the payroll right now?”
Ro Khanna: “Well, they shouldn’t be doing it — by paying people low wages. We don’t want low-wage businesses. I think most successful small businesses can pay a fair wage. If you look at the minimum wage, it increased with worker productivity until 1968, and that relationship was severed. If workers were actually getting paid for the value they were creating, it would be up to 23 dollars. So I love small businesses, I’m all for it, but I don’t want small businesses that are underpaying employees. It’s fair for people to be making what they’re producing, and I think 15 dollars is very reasonable in this country.” “I think most successful small businesses can pay a fair wage.” I think?
Minimum wage is only the first step. A lot more is needed. Tipping jobs and non-tipping jobs should have same minimum wages. Measures like Prop 22 that get around minimum wages should be removed. Forced arbitration clauses in employment contracts should not be allowed.
The problem with small businesses is they have a higher fixed cost structure by design. So they tend to have lower profit margins. Something must be done to help them break-even even while paying $15/hour. A federal payroll assistance for every employee perhaps?
This Forbes article gives some “helpful” ideas for small businesses. They are: Cut costs, Raise prices, Reduce operating hours, Cut staff, and “Streamline your business offerings”. The typical consultant spiel. Smh.
https://www.forbes.com/sites/mikekappel/2016/07/19/5-ways-small-businesses-can-survive-a-rising-minimum-wage/?sh=54878ffd79c6
Aaron: this statement doesn’t make sense to me:
“The problem with small businesses is they have a higher fixed cost structure by design”
It’s certainly true that many small businesses have higher unit costs because they lack scale, but there are many small businesses whose strategy is to compete on the basis of lower fixed costs. For example:
farmers who sell at farmers’ markets (lower retailing equipment investment)
food trucks (no real estate rents)
sellers that use ebay and Amazon’s warehouse/retail facility (the sellers are small businesses)
There are many contra-examples to your assertion. Please explain; I know I’m missing something, and I’d like to learn what it is.
I wonder if the point was intended to be that “small business competing in the same market as big business has a higher fixed cost structure.” Farmer’s markets aren’t supermarkets, food trucks aren’t sit down restaurants, etc. It’s probable that large business gets better deals on fundamentals like rent, utilities, insurance, etc. when compared to small companies that are direct competitors.
Also, As to food, wholesale, grocery: Smaller businesses cannot compete with large companies in the compliance regimes now. The costs are huge to small business, and that is of course why laws like FSMA get passed- large companies are totally fine with it, as helps to increase the cost of compliance for small companies, with the big players can easily absorb them.
You can also add in employer-based ‘health’ insurance which continues to get more expensive. M4A would help small business enormously, but, there you go… Very large enterprises have a lot of power, and a lot of friends in gov’t and they know exactly what they are doing
BUT, one can still compete in more niche markets, higher end, ‘natural’ foods etc. In fact, in many ways, it’s an advantage to not be a huge brand name. Some people can, and will pay, for products that are not cheap mass-market stuff
In hindsight, my statement is generalizing too much, and I stated my point too briefly. I will try to explain. “Scale” is the key here.
First, the “fixed cost” the cost that does not change too much whether you 10K business a week or 100K. Rent costs will be higher comparable to a large business in the same area, because of the bigger business can bargain harder. Then the tax and regulatory compliance costs are also lower on a per $ earned or per employee basis, because of scale.
In the variable cost side, the cost of sourcing supplies again goes up because of scale. If you order a million pounds of potatoes every year for your restaurant, you can get a better discount than if you order just a few thousand pounds.
You mentioned three counter-examples for small businesses with low fixed costs. The farmer market and food truc are great examples of running a small business without much fixed costs. Thank you. But I think you will agree that not every business can be run that way. For example, a diner, a spa, a gym, a catering service all need some fixed stuff.
The third option of using ebay/Amazon to sell things is what many businesses have resorted to. It certainly cuts costs, but it will kill the business in the long term. Amazon is continuously dredging through it’s seller data to spot the products that are successful. Then Amazon starts selling the same product in under its private label brand. This is often accompanied by putting the private label above the third-party seller in the search listing, and/or knocking down the price by a few dollars. So the seller sees good business for a few months after listing in Amazon, then comes the private brand and then sales slowly die.
https://www.cnbc.com/2020/04/23/wsj-amazon-uses-data-from-third-party-sellers-to-develop-its-own-products.html
https://tinuiti.com/blog/amazon/amazons-private-label-brands/
https://www.cnbc.com/2018/10/06/amazon-doubling-down-on-private-label-sellers-see-huge-fear.html
FWIW, Ebay does not do stuff like this. But Ebay is a tad costlier than Amazon. And the reach is also smaller. So neither sites are good enough to make a sustained profit, especially if you are selling stuff anyone can imitate/copy.
A final piece of the cost angle is the cost of money itself. When a business goes to the local bank to borrow money, the smaller the business is, higher the interest rate (generally). Large corporations can raise lots of equity. Another problem is many businesses decide not to incorporate to avoid regulatory/compliance costs. This exposes the owner to personal liability if the business runs out of money.
So, with all these caveats, let me restate the point as: “A sizeable portion of businesses have higher fixed & variable costs by design, thus resulting in thin profit margins. Their ability to increase prices to cover higher labor costs will also be constrained by competition from big businesses”. So they are squeezed at both cost and revenue ends.
Even Amazon volunteering to raise wages to $15 is ploy to squeeze everyone else out of business. They are worth 1.6 Trillion now. They can hold on for longer than any other business. They can always pull an Uber style Prop 22 in the future, and hold the state to ransom to get a tax break.
There are ways to get around it though. Shopify lets businesses set up their own website and sell stuff, without trying to become a competitor. Ebay is still a good place to buy things (But investors are throwing more money at Amazon, which tells you whom they expect to make them more money). Small businesses can form collectives/co-ops to bargain for supplies and share resources. Government can ease some regulatory burdens like reducing the amount of paperwork required. Then there are occupational licenses for everything from hairdressing to watchmaking, that you have to get if you want to start a business. Progressives can do a lot of good by looking at these things.
Finally, there are always exceptions to all this. I am willing to hear what others have to say.
Aaron:
Your restatement:
“A sizeable portion of businesses have higher fixed & variable costs by design, thus resulting in thin profit margins. Their ability to increase prices to cover higher labor costs will also be constrained by competition from big businesses” is a good one.
I also agree with all the rest of your points, esp. about little guys .vs. Amazon, et. al. That was a quite helpful summary, and shows a lot of insight – possibly some direct experience. Thanks.
Taking a step back….
If one were to liken the commercial arena to warfare (sorry folks, don’t like doing that, but in some ways the analogy pertains), then of course all the work by Sun Tzu about competitive (warfare and statecraft) strategy, and the later works re: asymmetrical warfare starts to become .. interesting, if not directly applicable.
For those that have yet to read this material, may I summarize as:
a. Don’t fight according to your opponent’s rules, and don’t fight on turf they control/know
b. Pit your strengths against the opponent’s weaknesses
c. Many strengths can become weaknesses under the right conditions. Identify and exploit those conditions
This is the material that the Viet Cong used during the Seventies to convince us to leave Viet Nam. It’s also part of the cultural foundation that some Asian leaders have in mind as they conduct low-order economic warfare with the West.
And it works, but it takes a lot of IQ and even more discipline to pull off.
a lot, lot of small businesses will close. maybe that is the plan.
in the long term, yes things will equilibrate, like in long term we all die etc.
I don’t understand how the min wage is only supposed to lift 900,000 out of poverty — plus — give only 17 million a raise. According to Fortune (and many other sources) 40% of American workers earn less than $15 an hour. 40% of 160 million labor force is 60 million by my eighth grade math.
http://fortune.com/2015/04/13/who-makes-15-per-hour/ — 2015, pay wall
All wages would have to go up. My friend making $20 per hour will not be too happy if the order taker at McDonalds now makes $15 per hour. My friend (rightfully) should also get a wage to keep her wage $10 higher than the current minimum wage, so she should make $25 per hour if the minimum goes up to $15.
Why? Just because person A makes more money, how does that make it worse for person B?
What’s wrong with upward pressure on wages?
Unless, of course, your “the man.”
If you provide citizens with reasonable cost universal healthcare then $15/hr.works for everyone; business and employee. Remove the exhorbitant healthcare cost and hassle for both and you “grease” the economy, and provide greater freedom of job search (movement).
Although younger workers don’t use lots of expensive hospital care, they do usually need dental care that helps maintain good health. Include dental insurance in universal healthcare.
Great points.
I’ve read lately … in two different, fairly hi-quality venues that the U.S.’ lack of industrial cost-competitiveness is partly caused by the high cost of living in the U.S. Not by “high wages” – but by “high household costs”. That’s an important distinction.
Everyone knows about the potential efficiencies of single-payer, of socialized medicine and education. That’s well-discussed. And everyone knows the effect that real estate price inflation is having on households – so much more of income has to be allocated to housing that in prior years.
What I didn’t quite realize till it was pointed out to me is that some – maybe a lot – of the reason U.S. companies have a tough time exporting abroad is not just because U.S. workers have it easy, expect a lot, etc. It’s also because U.S. households have to pay more of their income (than many other nations’ workers) for the things that other nations’ workers get “for free”.
U.S. businesses are losing out because of this. It’s not just the U.S. workers.
=====
I also would like to echo the point about preventive health care. A great deal of aggravation and cost can be very easily avoided via regular checkups / cleaning / early interventions of all sorts. Preventive care really works.
Yep. Remember, already back in 2005, Toyota passing up Alabama to open an assembly plant in Canada? One of the main reasons was that Canada has a national health care system, and the US doesn’t. Big savings for Toyota, obviously.
There may be other similar cases.
Michael Hudson often references the high costs born by workers in the US in order to provide rents to landlords, the parasitical finance sector and the “healthcare” (which is about neither) industry, all of which renders the economy uncompetitive.
Sigh. The system is rigged. That $15/hour (in 5 years — HAHAHAHAHA!), as just and admirable as it is, will be scooped by the FIRE sector faster than it is implemented. M4A would be a great help to small business and the self-employed (we SME’s couldn’t manage without it here in Canada) but some sort of control over rents and housing costs will have to be done as well. Thousands homeless, soon to be millions, vacant rental units both residential and commercial, yet the RE market has not crashed? They can buy and hold longer than we can remain alive.
Why is neoclassical economics so bad?
The classical economists identified the constructive “earned” income and the parasitic “unearned” income.
Most of the people at the top lived off the parasitic “unearned” income and they now had a big problem.
This problem was solved with neoclassical economics, which hides this distinction.
It confuses making money and creating wealth so all rich people look good.
Neoclassical economics is a pseudo economics, which is more about hiding inconvenient truths than telling you how the economy works.
Everyone trips over the cost of living with neoclassical economics.
Economics was always far too dangerous to be allowed to reveal the truth about the economy.
How can we protect those powerful vested interests at the top of society?
The early neoclassical economists hid the problems of rentier activity in the economy by removing the difference between “earned” and “unearned” income and they conflated “land” with “capital”.
They took the focus off the cost of living that had been so important to the Classical Economists as this is where rentier activity in the economy shows up.
Now everyone trips up over the cost of living.
We got some stuff from Ricardo, like the law of comparative advantage.
What’s gone missing?
Ricardo was part of the new capitalist class, and the old landowning class were a huge problem with their rents that had to be paid both directly and through wages.
“The interest of the landlords is always opposed to the interest of every other class in the community” Ricardo 1815 / Classical Economist
What does our man on free trade, Ricardo, mean?
Disposable income = wages – (taxes + the cost of living)
Employees get their money from wages and the employers pay the cost of living through wages, reducing profit.
Employees get less disposable income after the landlords rent has gone.
Employers have to cover the landlord’s rents in wages reducing profit.
Ricardo is just talking about housing costs, employees all rented in those days.
Low housing costs work best for employers and employees.
Disposable income = wages – (taxes + the cost of living)
“Who put that other term in the brackets with taxes?” neoliberal policymakers
They thought people would get better off by lowering taxes.
The cost of living rose, so people didn’t actually get better off.
The French were so upset about their lack of disposable income they put on yellow vests and took to the streets.
What is the minimum wage?
Set disposable income to zero.
Minimum wage = taxes + the cost of living
As housing costs rise we drive up the minimum wage.
Someone from the CBI (Confederation of British Industry) has just seen the equation.
Disposable income = wages – (taxes + the cost of living)
Two seconds later …..
They realise the UK’s high housing costs push up wages, and are actually paid by the UK’s employers reducing profit.
UK’s high housing costs make UK labour very expensive compared to elsewhere in the world, and it makes it very expensive to do anything in the UK.
Employees get their money from wages.
Employers pay the UK’s high housing costs in wages reducing profit.
The West doesn’t realise how its high cost of living will work against it in an open, globalised world and this drives off-shoring from the West.
Don’t get confused between making money and creating wealth.
(I know it’s too late, you have)
When you equate making money with creating wealth, people try and make money in the easiest way possible, which doesn’t actually create any wealth.
In 1984, for the first time in American history, “unearned” income exceeded “earned” income.
The American have lost sight of what real wealth creation is, and are just focussed on making money.
You might as well do that in the easiest way possible.
It looks like a parasitic rentier capitalism because that is what it is.
You’ve just got to sniff out the easy money.
All that hard work involved in setting up a company yourself, and building it up.
Why bother?
Asset strip firms other people have built up, that’s easy money.
The private equity firms have found an easy way to make money that doesn’t actually create any wealth.
Bankers make the most money when they are driving your economy into a financial crisis.
They will load your economy up with their debt products until you get a financial crisis.
On a BBC documentary, comparing 1929 to 2008, it said the last time US bankers made as much money as they did before 2008 was in the 1920s.
https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6
At 18 mins.
The bankers loaded the US economy up with their debt products until they got financial crises in 1929 and 2008.
As you head towards the financial crisis, the economy booms due to the money creation of bank loans.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
OK, I accept your premise that making money != creating wealth.
I also accept your assertion that high cost of living drives down international trade competitiveness.
Now, what to do about it?
Do you – and I’m just asking, as you’ve already done a great job of presenting the objections (to the current economic Modus Operandi), and I don’t expect you to also do the work of devising solutions – but, if indeed you have done the addn’l thinking, what is your proposed solution-set to:
a. Redirecting society-wide effort toward creating wealth .vs. making money, and
b. Redirecting the wealth-drain from “rents” and toward productive investment?
Recall that – maybe around 2008 – I heard Warren Buffet, the poster-boy for smart investment here in the U.S. – say “I can’t find anything to invest in”.
Shortly thereafter, he bought BNSF railroad in its entirety. He said “I’m bullish on the US, never bet against the US!”.
For those that aren’t aware of what BNSF does, it’s primarily an East-West rail link between Chicago and the west coast. It includes the southern link – used to be the Santa Fe, and the northern link, which used to be BurlingtonNorthern. Union Pacific owns the central east-west link.
BNSF moves raw materials – food, coal, lumber to the west coast for export, and runs container trains carrying imports from the west coast to the interior. The traffic pattern looks very curiously like that of a 3rd world country – exporting raw materials, importing finished manufactures.
How is BNSF relevant to the discussion? Let me point out that BNSF is one of the two major east-west trade corridors of the mid- and far-west. It’s one of the five major shipping arteries of the U.S. Note also that Warren Buffet, poster-boy capitalist, the buyer of all companies which throw off cash (and purportedly “create wealth”)…can’t find anything to buy except something that hollows out the US.
Sound of Suburbs: the solutions you’re looking for will require a fairly intensive redesign and then rebuild of the (fairly obsolete) U.S. industrial physical plant, not to mention the re-allocation of costs from the household to the public as a long-term cost-cutting maneuver.
And those are just a few of the things that need doing, and rent-extractors are not keen on any of those moves, as it drains off … rents.
I’m just nicking the edge of the issue. I’d love to hear more from you about solutions, if indeed you’re prepared to – and wish to – discuss them.
It will require industrial policy, capital controls and ruthless enforcement of anti-trust/anti-monopoly legislation currently languishing.
Further it will require tax reform to shift the burden off labour and onto rents of all kinds.
But I don’t expect to see much of this in my lifetime.