Friday, April 22, 2016

The Essential Nature of $15 Minimum Wage

Wages paid to employees for their time producing goods and services definitely have an impact on the cost of buying those goods and services. By the same token, executive pay and profits for the owners do the same. Cost of raw materials, energy, rent, and other cost centers all add to the price one must pay. Non-productive hours are likewise a big burden on the sales price of everything.

Every business venture has both internal and external costs associated with their operations. Internal costs are the payroll, taxes, utilities, accounting, materials, etc. They are all rolled into the "market price" of whatever the business does. External costs are for such things as the town downstream having to remove the waste products in the river water so they can sell it as potable. The business who dumps the chemicals in the river doesn't have to pay those costs and they do not include them in their pricing.

Similarly, businesses who pay workers less than the poverty wage rate for labor are making it necessary for someone else to pick up the tab for the costs they account as external. In 2016 the disputed consensus is $15 per hour is the base wage necessary for a full time worker to be paid so he or she doesn't not need wage subsidies paid by taxpayers. This $15 per hour results in an annual income of about $30,000. If an employer pays less than that amount, the employee probably needs wage subsidy in the form of Food Stamps (officially called SNAP), rent subsidies and Medicaid coverage to make ends meet. The employer can account the wages-not-paid as part of its profit margin for owning and operating the enterprise.

One big argument against raising the Minimum Wage to $15 per hour is that it will "kill jobs". Yes, the near doubling of wages for businesses which are now paying $7.35 an hour will cause the businesses to re-evaluate their staffing levels and product/service prices. Not every employer who is paying sub-standard wages is paying as low as the Minimum Wage, therefore their problems will not be as great.

The claim by businesses is paying the $15 rate will require they cut staffing. This may be true if the company is already operating close to break-even and/or they cannot increase the prices they charge. Their arithmetic says, "If I must pay my workers twice as much in wages, I'll have to cut half of the positions."

Two employees earning only $15,000 per year each need another $15,000 in subsidies to match the $15 minimum wage that is being proposed and legislated. It would be better for one person to be paid the new minimum and not need subsidies. What about the other guy who is full unemployed as the result?

The person who loses his job because the employer can't or won't realign his operations will need full support of the order of $1250 per month ($15,000 per year) until he obtains a replacement job. Taxpayers may have to provide his income during that period but at least when he does become employed again it will be at a wage to pay all his living expenses. Employers need workers. When they want to expand operations or production, they will seek more employees and will have to make their decisions based on a wage which doesn't require subsidy by taxpayers. In this manner new jobs won't require subsidizing the business owners with tax dollars. Those businesses will not be able to "externalize" the true cost of their operations and make everyone else pay for that privilege.

Large and influential corporate businesses do this all the time. Or at least try. Mining operations extract the minerals and leave the land in poor condition which many times includes toxic mine drainage. Hydraulic fracturing extracts the gas and oil while creating billions of gallons of toxic water laden with the fracking chemicals and core cuttings. Those businesses eventually all go bust and use bankruptcy to discharge their financial obligations.

Small businesses claim they create millions of jobs, but if those jobs pay sub-standard wages, the owners are being afforded a taxpayers funded subsidy in order to be allowed to pay low wages. If the low wages are absolutely essential to the viability of the enterprise, then at least we ought to acknowledge the facts and call the wage subsidies what they are: subsidies to the business owner.

All SNAP funds go to the food producers. The people who get the allocation are mere agents for who gets the money and they assure the producers actually do something for the subsidy. Every rent subsidy dollar goes to a land and building owner in order to make their investment property businesses profitable. Without the rent subsidies many dwelling units would be vacant or at such a low rent the owner cannot afford to maintain the property.

The bottom line is we as a society want people to have food and shelter even when the purely economic market factors dictate a lower income for businesses than it costs them to operate. We need farmers to plant and grow food no matter how much it costs to do it. We need the food prices to be affordable so everyone can eat. To accomplish these to conditions we must have farm and rent subsidies or we must increase the income of people who provide their labor for an hourly wage so they CAN afford the market prices.

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Author's Note: The book cover images in the side margins of this blog are my own publications of eBooks available at both Amazon and B&N. Please take a moment and go to the sites and read about them. Then if you like it, buy one or two.

Thursday, February 18, 2016

Billboard Tuna: Lessons in Private Property Rights

"I think that I shall never see, a billboard lovely as a tree. Perhaps, unless the billboards fall, I'll never see a tree at all." -- Ogden Nash, Song of the Open Road, 1933
"A tree is a tree - how many more do you need to look at." -- Ronald Reagan, California Governor
After the close of WWII the nation went wild in celebration and with a free wheeling spirit that made everyone want to break out of their former lives for the open road. The coldwater flats of the city were no longer better places to live than the Victorian Era farm houses of the Mid-west. People had migrated into the city for the industrial jobs created since the mechanization of all manufacturing processes. Farming itself was becoming more mechanized at the same time.

During the 1920s the first phase of the National Highway system linking state capitals and major cities along the way was built of two narrow lanes of concrete. For the first time ordinary citizens could move about freely by automobile without having to brave the muddy and rocky roads.

Automobile travel steadily increased as ordinary workers could afford to buy a car and be free to move about at will. The introduction of credit to purchase such expensive machines further increased the magnitude of the motoring public.

And what happened? Roadside businesses sprung up along the way to provide food, fuel and lodging to the burgeoning volume of traffic on the highways. First it was signs to inform the traveler that travel services were just ahead. Then as local competition grew, the signs became bigger, more frequent and much further ahead of the stop.

It was no great leap of ingenuity when the first commercial billboard advertising company came into being to fill that particular niche of telling drivers that somewhere, anywhere there was a business that would fulfill their every need. And of course that first outdoor advertising enterprise was not alone for long. All too soon the landscape was awash with huge flat panels hawking everything from chewing gum and cigarettes to laundry soap and funeral services.
The prevalence of billboards and their longevity and reuse prompted a myriad of variations to the "Billboard Song" that so many people seem to know. Even my father knew, from somewhere, this particular version.
I was driving down the road one dark and dreary day.
I came upon a billboard, much to my dismay,
The sign was torn and tattered from the rainy night before.
The wind and rain had done its job and this is what I saw.
Smoke Coca-Cola cigarettes. Drink Wrigley Spearmint beer.
Ken-L-Ration Dog Food makes your complexion clear.
Simonize your baby with a Hershey candy bar
And Texaco the beauty cream is used by all the stars.
By the 1970s a backlash against the free-for-all attitude of advertisers prompted a Federal abatement program operated through the USDOT to limit and remove excessive numbers of advertising panels from the nations highways. With their hands on the highway trust fund money, the USDOT could require that states comply with the Highway Beautification efforts that conservationists long wanted. Specific limits to the linear spacing, numbers of panels, size and proximity to the roadway were promulgated. Roadway type was also rolled into the formulas. While new permits were limited, so was the number of existing ones. Where too many signs clogged the view of the landscape, they had to come down.

Not too surprisingly, the concept of property rights and of the tasking of personal property by the government became an issue. Due process must be followed in order for the taking to be legitimate. Compensation for the loss of use must be paid. Not unlike the taking of the family farmhouse and barn for the Interstate highway Right-of-Way, tax dollars had to be spent to buy out their interest in the signs. Estimated revenue losses per sign were calculated and settled upon as the signs were cut down. Sometimes the prorated estimated losses totaled to upwards of $10,000 per sign. And the Federal Government bought that Tuna. They redistributed the wealth to the tune of tens of millions of dollars: a small sum in Federal Government terms.

If that were the end of the story, there would be no point to be made. However, as with all tides, political tides turn too. By the mid-1980s that tide had turned. Advertising was no longer insidious and evil. No longer was it a blight on the landscape, at least not to the new government that ruled the highways and the byways of the nation. Ronald Reagan was President and he was pro-business.

Soon the landscape was dotted with the foundations of the next generation crop of billboards to inform motorists of the most essential things. At 1000 foot intervals, the masts would carry twin panels each. Like dandelions on a summer breeze the signs proliferated. These were the new high-tech steel masts complete with florescent lighting to make sure they stood out against the landscape in all type of conditions. Outdoor advertising moguls could order masts, booms and lighting from the same companies that supply the DOTs of the nation with highway masts, booms and lighting for the highway directional signs.

In the end, today there are many more roadside billboards than ever before. It seems that all one needs is a few sympathetic members of congress to get what one wants.

A similar scheme has been hatched to pay land owners for the loss of the potential profits derived from land development due to environmental controls. It seems that that swamp land you grandfather bought from that traveling salesman has some value after all. While I worked at the Planning Commission in Athens, Georgia in the mid 1980s, there was a constant battle between the private property rights advocates and the planners who wanted to use an intelligent design to shape the landscape.

The City and County passed Zoning Ordinances and developed a Master Plan to encourage developers to develop land in a sensible way that would minimize the need for new infrastructure, schools, police and fire protection. On the other side, the developers wanted to maximize the number of houses or residential units that could be constructed on a parcel of land. When the Planners recommended a lower limit to the size of the subdivision or apartment complex, the developers screamed that the Commission was "taking" their property and they must be compensated for the losses.

So the scheme became this: A developer would make a deal with a land owner to purchase his land for a price contingent upon the size of the development. If the overly ambitious plan was scaled back by the Commission, the land owner had grounds for his claim of damages.

The other variant of the scheme was to purchase land that had highly restrictive zoning limits and apply to have it changed citing the higher investment return as the motivation. When the higher use was denied, the applicant claimed that their property rights were being infringed upon and compensation was warranted.

At about the same time period, in Tennessee, a family owned cemetery business developed an ingenious scheme that turned ones final resting place into a scheme of buying and selling. As the available land in their cemetery became scarce, they needed additional space to continue selling plots. Without additional acreage available for sale, they removed the grave markers from the oldest sections and plowed the earth and reseeded it. With new section markers, everything was ready for expansion.

The oldest sections had graves dating back to the Civil War and earlier. No one had been coming to visit those graves in a very long time. Therefore, there was little risk in selling the plots a second time. First they would sell the plot, then they would fill it, sometimes years apart in time. After all, many funeral directors convince their customers to "be prepared" and have everything planned and laid out before they themselves need to be laid out.

When the time came to open the ground, they used a backhoe to dig right through the old caskets that had been rotting in the ground for over a hundred years. Most of the people working at the cemetery were family. They wouldn't tell. But everyone working there knew what was going on. They were making money. Wages were paid. Grave sites were being made available to people who needed a space. The dead did not complain much.

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Author's Note: The book cover images in the side margins of this blog are my own publications of eBooks available at both Amazon and B&N. Please take a moment and go to the sites and read about them. Then if you like it, buy one or two.

Sunday, January 24, 2016

Why the Malheur Occupation is Not Being Shutdown

Above all the hoopla that Ammon and Ryan Bundy are stirring up at the Malheur National Wildlife Refuge in Warner County, Oregon under the flag of defending the US Constitution is their sole desire to graze cattle on land that is not theirs and not have to pay for it.

The fact that the land in question is federally owned and managed sticks in their craw because they and their minions believe that the federal government has no authority over them or anything they want to do. It galls them that the bureaucrats in Washington, DC can tell them where, when and how they do their business. Ranchers and cattlemen like the Bundy family, including their father, Cliven, have historically taken what they want and used force and coercion to hold on to it. To them having to deal with the federal government makes their ability to influence outcomes much more difficult. They believe, and probably rightfully so, that state or county level management would be less stringent and thereby less expensive.

Cattle grazing on public land is not the only use the protest is about. Mining, drilling and Off-road Vehicle users each have their constituents who fume at the denial of their intended use by the "overreaching federal government.

This assertion that the government over reaches is one that is held by most if not all Republican legislators, Governors and Mayors. While someone needs to say NO to the unbridled exploitation of the land, air and water, the private interests have grown up believing it is their right to take what is there as God-given resources for them to have. Ammon Bundy as he continued to occupy the MHWR in January 2016 said his Mormon God told him to do it.

Republicans have supported the reallocation of land control to the states for many decades. President Ronald Reagan called himself a supporter of the "Sagebrush Rebellion" back in the 1970s and 80s. There is nothing in the Bundy Agenda that is at odds with the Republican congress of the United States.

The problem of relinquishing federal control of the western lands it owns is far greater than mere grazing of cattle. The cattle will not stop eating before the plat food is severely diminished. That is why the BLM requires permits. The BLM can monitor the health of the land and the plant growth stopping over-grazing that ALWAYS occurs when there are competing ranchers.

How the Buying and Selling of everything lessens it real value. When the tuna made people sick, the seller said, "I thought you understood that that tuna was for buying and selling, NOT eating."

The problem with state control is that mining concerns and drilling concerns are far more likely to influence the state level bureaucrats to not interfere. Sale to private owners leaves open the perpetual control of the land to any use the owner chooses without concern for the consequences. That issue is where the label of Tuna! arises. Buy and sell the land, do what makes a profit, deplete the resources and move on to another location without concern for the long-term damage being done. With every exploitative interest reaching for the most revenue from the land, someone has to speak for the land itself. That is the job of the federal government.

The land is more than just sagebrush and minerals. It is beauty that tourists want to visit. It is archaeological sites. It is cultural sites of the indigenous people who lived here first. There are species other than humans who depend on the land too. The parcels of land that ware being contested do not exist in isolation. Water flows from and through these lands becomes the water of people downstream. They deserve protections too. Cows defecating in streams, pollute that water for downstream users.

When it comes to long term sustainability of land and its uses, private and weak governance leads to its depletion and degradation. It is for the corporate interests that the ranchers occupying Malheur are really fighting. They are fighting the Republican battle against the federal government. They are using the specious claim that they are now defending the US Constitution by cherry-picking sections to use as their claim of legitimacy.  There can be no wonder why the FBI has not move immediately to squash this sedition. Much of the claims are in accordance with the Legislative opinions of the present Congress.