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Author Topic: A new direction
Everard
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Ok, people have been asking if the democrats will do anything if elected...

http://releases.usnewswire.com/GetRelease.asp?id=67448

http://www.boston.com/news/nation/washington/articles/2006/06/15/democrats_to_run_in_new_direction/

http://www.boston.com/news/nation/washington/articles/2006/06/15/new_direction_for_america_platform/

So now we have specific proposals to argue over.

[ June 15, 2006, 08:02 PM: Message edited by: Everard ]

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WarrsawPact
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quote:
Negotiate lower prescription-drug prices with pharmaceutical companies for Medicare's drug program.
They're going to "negotiate" lower prices, eh?
The government? Negotiate with business about what price at which they buy products?

quote:
Fund stem cell research, increase access to healthcare
I love how they try to sneak in the second part as if it's logically connected to the first. Fund-research-comma-socialism.

quote:
Increase science research, ensure the teaching of evolution, increase funding for community colleges.
No problems from me on that. Of course, Bush has already been doing the last item.

quote:
Cut student-loan interest rates by half.
Do they mean Stafford loans, or all loans? If they're including private loans, how do they plan on doing this?
I mean, I'm a student. This helps me. I'd just like to know.

quote:
Ensure access to family planning methods and abortion, fund infant and child-care.

Increase the minimum wage from $5.15 to $7.25 an hour, increase employment benefits.

Wait, this was entitled "New Direction for America," right? Why is it travelling in the same direction as Democrats have been pulling us for decades?

Oh, and the minimum wage thing is hilarious. They really want to kill this low unemployment rate.

quote:
Enact funding recommendations of the 9/11 Commission.
Okay.

quote:
Institute lobbying reform,
I'd love to hear how they plan on doing this. Really. "Lobbying reform." The specifics are sure to make things interesting around here.

quote:
implement balanced budgets, pay down the national debt.
Wait, did you hear that? That's Democratese for "increase taxes." Expect them to be nailed on this one because they won't meet the conservatives halfway by making sensible cuts.
In fact, I'm going to enjoy this. Nothing kills an election year like "we're going to raise taxes." Democrats can't even get away with that in California -- they've all been defeated in the last three statewide elections there for trying to pull that exact stunt -- "tough love."

quote:
Enact tax changes to benefit entrepreneurs.
Actually, I'd like to hear details on this... oh, and how they square this with their plan to balance the budget and pay down the debt.

quote:
Focus national security strategy to nation's borders, increase port security.
Sneaky way of saying "get out of the fights we're in abroad."

quote:
Fund more public transportation, promote environmental restoration.
And balance the budget and pay down the debt!

quote:
Repeal subsidies for oil and gas companies to encourage renewable fuels.
Now, I like this one. I genuinely do. But it's political suicide. Republicans -- willing these days to sacrifice free trade for narrow interests and votes -- only will need to say: "Democrats = Higher prices at the pump."
Game frikkin' over.
I'm sure the Dems think they can turn this on the Reps and accuse them of being in bed with the oil companies... but that won't win the Dems any votes they weren't going to get anyway. Okay -- maybe a few disaffected libertarians. But that's not much compared to what they'll lose.

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The Drake
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Odd that They don't feature this on their website.
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The Drake
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aka. an old direction
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potemkyn
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WP,

Look, what you wrote was seriously ridiculous in a lot of places. More than I was willing to tolerate. Which is a lot, because I'm not in love with much of the Democratic plan. But WP, please. You went about this in a hugely immature way. You accused, put words in the Dem's mouths, and generally scoffed. Why'd you do that? Why all the snippiness?

A lot of what you wrote smacked of intellectual dishonesty.

I think you made some good arguments to go along with the bad, so please just tone it down.

Potemkyn

PS - I believe "New Direction" refers to America... which it says. Not the Democrats. So the line is quite accurate.

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potemkyn
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I notice that there is no mention of "open government" in that list of directional changes. Oh yeah, damned if you do, damned if you don't.

[Mad] [Roll Eyes] [Frown] [Mad]

Screw the Demopublicans.

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DonaldD
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quote:
"Fund stem cell research, increase access to healthcare"

I love how they try to sneak in the second part as if it's logically connected to the first. Fund-research-comma-socialism. - WP

That's interesting - I would have thought that inserting "access to healthcare" was a way to distract from stem cell research...

On a broader note, the dems would necessarily need to make many clawbacks/cuts. Some of these are alluded to (you even derided their "sneaky" way of reducing expenditures on foreign adventurism.) What's the cost of occupying Iraq (vs the cost of extending healthcare?)

And as far as raising taxes is concerned, aren't they already on record as opposing Bush's "tax breaks for the rich"? Those were only temporary cuts, right? At any rate, I'm sure some increases could be spun in a positive way.

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Adam Masterman
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potemkyn,
Pelosi talks directly about an open congress in her speech, the first link.

Warrsaw,
Ditto what pot said. I never though of you as a partisan, but thats all that post was. I can't believe you actually said "Wait, did you hear that? That's Democratese for "increase taxes."" That's a talk radio line.

I think this new presentation of the platform will help with electability, which is good, but I didn't see anythin smashingly new and interesting, except for the health and pharmaceutical proposals, which are definately what this country needs. Health care is rapidly becoming a crisis for people, and If the dems could actually pull off universal health care, they would cement their majority for another 50 years.

Adam

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A. Alzabo
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WP:
quote:
They're going to "negotiate" lower prices, eh?
The government? Negotiate with business about what price at which they buy products?

I don't have a lot of time, but businesses, private consumers, and government agencies do this all the time. What's wrong with it?
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ngthagg
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Come on, people, give the guy a break. He listed 12 quotes. I count six negative responses, three positive, and three requests for more information. He is expressing interest in learning more and/or agreeing with half of the points he raised. How is that partisan?

There may be legitimate criticisms of some of WP's points (thank you, A. Alzabo, DonaldD), but there is no reason to dismiss the entire post out of hand. WP was expressing his opinions on the election promises of the Democratic party. For example: Adam, if you don't think that the Democrats mean "raise taxes" when they say "balance the budget" what do you think they mean?

ngthagg

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KidA
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RE: minimum wage. We're always told that raising it will increase unemployment, and yet it never happens.

Check this out:

quote:
...any attempt to correlate minimum wage increases with joblessness falls on its face. When Clinton raised the wage in the mid-90's, low income employment skyrocketed. Some catastrophe. And we can take this as far back as folks want. Check this graph, showing the real value of the minimum wage (now at a historical low). Its peak was 1968. The unemployment rate in 68? A brilliantly low 3.5 percent.


The whole article, with links, is here.
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velcro
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Not to pile on, but I thought WP's post was more about finding things wrong with Democrats than about looking at the proposal rationally. Sure, there were 3 positive (actually 1 positive, 1 no problem and 1 OK) and 3 more infos, but the 6 negatives were nasty, sarcastic, and not conducive to real discussion. For example,
quote:
Focus national security strategy to nation's borders, increase port security.
I think we could have a serious discussion - given the current threats, should we reevaluate the priority we put on our border security compared to the resources we allocate to overseas efforts, or try to establish how efficient those efforts are at actually making us safer. But rather than that, WP snipes in with

quote:

Sneaky way of saying "get out of the fights we're in abroad."

Like no Democrat could conceivably think this is best for the country. I don't think you really believe that, but the post makes it sound like you do.

More of the same with the other negative comments. Get in a good dig rather than make substantive comments. You are capable of better WP. Don't get lazy.

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Adam Masterman
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quote:
For example: Adam, if you don't think that the Democrats mean "raise taxes" when they say "balance the budget" what do you think they mean?

Balancing the budget means making spending agree with tax revenue. Without further information, we have no way of knowing how the Dems plan to balance the current budget, though the massively out of control Republican spending would be a good place to start.


WP's comment was a snarky way of discrediting what both sides of the isle should see as a good thing. It was good when Republicans did it, and it will be a good things if and when dems do it? And I can admit the former without resorting to some meaningless partisan snipe.

Adam

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Everard
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The democrats are openly talking about rolling back the tax cuts on the top 2% of income earners. They are also openly saying that they will not raise taxes on any other income bracket.
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flydye45
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Here's constructive. We get millions of containers of freight from overseas every year going into dozens of ports or railways.

The Democrats have honestly or dishonestly dinged the administration for not providing port security. I would like to hear how they will deal with the logistical problems. I don't see how it can be done without seriously restricting the flow of goods, but I would love to hear more then complaints.

I would also like to hear about how focusing on our borders for national security is different then isolationism. Now before you get all huffy, there are valid reasons to approach national security in this way, but justify it. Are they willing to build a fence, even a virtual one? At what cost? Terrorists aren't crossing the border to get a job, so slamming employers really isn't going to directly help our national security.

If the tax increases aren't enough and we don't have enough bounce after we pull out of Iraq, what are they willing to cut domestically?

I am uncertain how the triple squeeze of higher taxes, a higher minimum wage, and the loss of cheap labor is going to do the economy any good.

KidA is correct. Raising minimum wage doesn't hurt the economy. It also doesn't really help the people involved either. Hawaii has a higher minimum wage. Yipee, it also cost three times as much for hamburger and pretty much everything else.

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canadian
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Isn't Hawaii a group of fairly isolated islands with a minimum amount of land and an intensely thriving tourist industry?
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canadian
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I think I just solved the mystery of the ten dollar burger.
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flydye45
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Yes exactly. There is also no illegal immigrants or commuting from another state in Hawaii. So the correlation that Kid's link has on employment numbers and the size of it's minimum wage is ridiculous.

When I read something by about 4 economists, then we may have a read on what minimum wage really does. (My belief? Not a whole bunch one way or another)

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canadian
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Is that true? No illegal immigrants in Hawaii? No commuting?
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RickyB
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quote:
The government? Negotiate with business about what price at which they buy products?
And this is wrong...why, precisely? (other than the fact that Shrub won't allow it, that is).

Seriously, why shouldn't the government use the fact that it's buying massive amounts of product to get a discount? Is there some kind of Adam Smithian rule that says that the government must not act like a sensible actor when it engages a market?

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potemkyn
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ngthagg,

I didn't respond in particular because WP made some decent points across the board. It's just that quite a few of them were mean-spirited. Which I thought was worth mentioning.

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scifibum
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quote:
The government? Negotiate with business about what price at which they buy products?
I didn't read this so much as 'this is a bad idea' as incredulousness...you know, $100 toilet seats.
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WarrsawPact
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Funny story: today my roommate, who has lived with me for several weeks now, started off a conversation by saying, "So you're a Democrat, obviously, right?"
He was totally serious. I hadn't identified myself one way or the other, and looking back on comments I've made since he moved in, I can see why he'd be confused.

So then I told him what my actual leanings were, and talked with him about how inept the Democrats -- the party in general, as well as individuals -- have been for a good long time now at politics.

This "new direction" thing strikes me as an example of what's wrong with the Party politically, but also strikes me as showing a little competence.

The "little competence" I'm referring to is that they made the proposals simple and easy to digest.

But politically, I can't see this ending well for the Democrats. They currently have an absolute joke of a party, saved from going under only by the late and incredible incompetence of their rivals.

My comments are a bit mean-spirited, but the Democrats surely weren't expecting anyone serious to take their proposals seriously. As soon as they have to go into the details, about half of the items on that list are going to damage them politically. A few of them will do serious damage if they pursue them hard enough.
So yeah, I'm scoffing at this "new direction." It's the same direction the Dems have been pulling America ever since Bush took office, only with lipstick.
-=-=-=-=-=-
Potemkyn - If you want to go into specifics, by all means do so. Don't just snipe at my posting style -- what specifically was intellectually dishonest? Where was I wrong about the words I was putting in their mouths?

For example, every time the Dems have talked about balancing the budget in the last several years, they haven't been talking about spending cuts; they've been talking about raising taxes.
-=-=-=-=-=-
Adam - My comments weren't partisan. Do you see me talking about how much better the Republican alternative is? No. Yes, I slammed the Democrats for a number of those proposals for being either patently dishonestly stated or for being politically suicidal. That doesn't translate into "partisan."
-=-=-=-=-=-
A. Alzabo, RickyB - What's wrong with the government "negotiating" down prices is, the government doesn't negotiate with private parties. They coerce. If the government wants to have companies bid for contracts, that's fine -- but that's not what the government is talking about.

If they want to buy drugs cheaper than they could with bidding, that means they either refuse to buy above a certain price, or they offer businesses an offsetting tax cut or subsidy behind the curtain. That's not negotiation.

If they opt for the former, the companies will pass on costs to the consumer one way or the other, and the market will suffer in the aggregate because the firms won't be willing to supply the country/world with as much medicine if they're forced to sell at a lower price. Price ceilings hurt people. They also tend to lead to a drop in quality.

If they opt for the latter, taxpayers will be the ones paying instead of consumers. We won't really be getting the drugs cheaper; it'll just be that the people who pay taxes will be the ones bankrolling everyone who actually signs on to the government's program. Many Democrats undoubtedly love this plan. And they especially love it because they plan on doing this without raising taxes on anyone but the top 2%, who are all bad people who don't deserve their money (that's putting words in their mouth [Razz] ).

But let's place ourselves in fantasyland for a second, and say that the firms' managers are all hopped up on crack and decide not to pass on direct costs to the consumer. Instead, they'll be forced to cut back on costs somewhere. Who wins in that situation?
Nobody. Funds will undoubtedly come from research budgets or from something relating to quality, not from advertising, because now the firms have to advertise their products that much harder just to make their money back on each new drug. We all have to wait that much longer for new drugs that would otherwise be saving lives and making people more comfortable. In the meantime, people are uncomfortable, sicker than they need to be, and even die.
I mean, where do people think new drugs come from?

As for your next comment, Adam:
quote:
WP's comment was a snarky way of discrediting what both sides of the isle should see as a good thing. It was good when Republicans did it, and it will be a good things if and when dems do it? And I can admit the former without resorting to some meaningless partisan snipe.
Yeah, but when Republicans said they planned on balancing the budget in the Nineties, they focused exclusively on cutting wasteful spending as a means of arriving at that goal.

The Democrats have only paid the mildest of lip service to this, when they've bothered at all. Any proposal to balance the budget and pay down the debt, in anything like the near or intermediate term, will require either raising taxes or cutting nondiscretionary spending. Let's say for a second that they really mean to just cut spending and not raise taxes (which is the only way I'm wrong and "putting words in their mouth").
Even if they cut and run from Iraq, that's not nearly enough to cover the difference. Same with repealing oil and gas subsidies (of which I approve, by the way).

And they plan on expanding -- not cutting -- health care, so what does that leave?
Certainly not cutting Social Security, for which the Democrats openly, roundly, and smilingly applauded their own efforts to "protect" SocSec.

Other costs to add in: stem-cell research, science research, increased funding to community colleges, reduced revenues from student loans, funding for infant and child care, funding to expand family planning and abortions, funding 9/11 Commission recommendations, funding border and port security, funding public transportation, protecting the environment.

So what do they plan on cutting?
If the Democrats came up with a serious plan that involved some cuts they would consider painful, I'd give them a good hearing. As it stands, everyone knows what a Democrats means when he/she says "balance the budget and pay down the debt." Be honest with yourselves and with others; they mean "raise taxes, particularly on the relatively wealthy."

If they don't think that their policies will constrict the economic growth needed to increase tax revenues, they're dreaming.
Increasing environmental protection may be nice, but it comes with a cost. Increasing minimum wage and employment benefits means higher input costs and lower profits and higher unemployment (more on that below, since someone challenged it). Increasing taxes means less reinvestment.

I want to know where the money is going to come from. The top 2%? The people who will have every reason -- and usually the means -- to hide their money (or flee with it) if their feet are pressed to the flame? The people who are already paying so much of our total tax revenue?
-=-=-=-=-=-
KidA -
quote:
Check this graph, showing the real value of the minimum wage (now at a historical low). Its peak was 1968. The unemployment rate in 68? A brilliantly low 3.5 percent.
Well, yeah. We also had well over half a million young men who were "employed" by the federal government that year in Vietnam. That, combined with expanding the public sector for a combined "guns and butter" program (VN + Great Society), can indeed bring your unemployment rate down quite a bit. But it comes with a cost, just as Bush's guns and butter programs come with their own great cost.

Also, he mentioned individual states.
Now, I like Ezra Klein. He's one of the most rational and level-headed lefties on the 'net, and it's usually a pleasure reading his arguments. But in this case, as in several others (I read his stuff regularly, and he's even been a guest on QandO's podcast), he ignores the obvious argument that while minimum wage may not solely determine unemployment (he gets this part), it still has a logically negative impact on employment. He offers no reason to suspect that raising the minimum wage will increase employment other than that low-wage unemployment dropped in the booming Nineties while the minimum wage went up.

Well, gee, Klein... might other factors have contributed to this turn of events? Ezra doesn't say. Ezra doesn't consider that low-wage unemployment very well might have dropped even further if the minimum wage had stayed lower. He doesn't consider any logical reason why raising the minimum wage will increase employment. At least, he doesn't consider it in this post.

I'm open to any argument that mentions such reasoning, though.
-=-=-=-=-=-=-
More later. Just some quick hits.

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KidA
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WP,

My point is simply that there is no evidence that raising the minimum wage causes major unemployment. Wage increases can - and usually are - phased in over a long period of time, so that employers are prepared to absorb the added cost.

As to Big Pharma, you make some assumptions that I recommend re-examining.

quote:
But while the rhetoric is stirring, it has very little to do with reality. First, research and development (R&D) is a relatively small part of the budgets of the big drug companies—dwarfed by their vast expenditures on marketing and administration, and smaller even than profits. In fact, year after year, for over two decades, this industry has been far and away the most profitable in the United States. (In 2003, for the first time, the industry lost its first-place position, coming in third, behind "mining, crude oil production," and "commercial banks.") The prices drug companies charge have little relationship to the costs of making the drugs and could be cut dramatically without coming anywhere close to threatening R&D.

Second, the pharmaceutical industry is not especially innovative. As hard as it is to believe, only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). The great majority of "new" drugs are not new at all but merely variations of older drugs already on the market. These are called "me-too" drugs. The idea is to grab a share of an established, lucrative market by producing something very similar to a top-selling drug. For instance, we now have six statins (Mevacor, Lipitor, Zocor, Pravachol, Lescol, and the newest, Crestor) on the market to lower cholesterol, all variants of the first. As Dr. Sharon Levine, associate executive director of the Kaiser Permanente Medical Group, put it,

If I'm a manufacturer and I can change one molecule and get another twenty years of patent rights, and convince physicians to prescribe and consumers to demand the next form of Prilosec, or weekly Prozac instead of daily Prozac, just as my patent expires, then why would I be spending money on a lot less certain endeavor, which is looking for brand-new drugs?[4]

Third, the industry is hardly a model of American free enterprise. To be sure, it is free to decide which drugs to develop (me-too drugs instead of innovative ones, for instance), and it is free to price them as high as the traffic will bear, but it is utterly dependent on government-granted monopolies—in the form of patents and Food and Drug Administration (FDA)–approved exclusive marketing rights . If it is not particularly innovative in discovering new drugs, it is highly innovative— and aggressive—in dreaming up ways to extend its monopoly rights.

And there is nothing peculiarly American about this industry. It is the very essence of a global enterprise. Roughly half of the largest drug companies are based in Europe. (The exact count shifts because of mergers.) In 2002, the top ten were the American companies Pfizer, Merck, Johnson & Johnson, Bristol-Myers Squibb, and Wyeth (formerly American Home Products); the British companies GlaxoSmithKline and AstraZeneca; the Swiss companies Novartis and Roche; and the French company Aventis (which in 2004 merged with another French company, Sanafi Synthelabo, putting it in third place).[5] All are much alike in their operations. All price their drugs much higher here than in other markets.

Since the United States is the major profit center, it is simply good public relations for drug companies to pass themselves off as American, whether they are or not. It is true, however, that some of the European companies are now locating their R&D operations in the United States. They claim the reason for this is that we don't regulate prices, as does much of the rest of the world. But more likely it is that they want to feed on the unparalleled research output of American universities and the NIH. In other words, it's not private enterprise that draws them here but the very opposite—our publicly sponsored research enterprise .


The whole article is here.

[ June 17, 2006, 11:24 PM: Message edited by: KidA ]

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potemkyn
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WP,

I actually wrote it all out, but then didn't post it because I don't want to get into a page long diatribe on what is essentially not that important. I really don't want to argue with you over whether or not a phrase was snippy or intellectually dishonest because you aren't going to want to admit being one or the other. It's my view on what you posted. There's no empirical evidence about it. I can't post statistics which make it seem over the top, but that's what I see.

Like I said above, I think a lot of the points were fine, but the way you said them wasn't.

The one exception would be the issue of port and border security, which seems relatively honest and not at devious to me. Why do I say that? Because the Dems can make plenty of hay about Iraq and they sure don't need to beat around the bush with it using something which is an issue in its own right. The 9/11 Commission did say that the administration is failing in a lot of respects in both areas, it's not stupid to bring those issue up.

Other than that, just tone it down.

Potemkyn

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WarrsawPact
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Potemkyn - No.
If the only problem with my post was that some people didn't like what I had to say, I'm not going to change my behavior. If I said something incorrect, if I stepped over some line, if I lied, if I insulted a poster here, then by all means, say so. If you just were rubbed the wrong way, well, that's your problem, not mine. I don't think I disrespected anyone with my first post here, and if it was less convincing because some have a partisan aversion to criticism of the Democrats' political prowess, I'm not particularly concerned. If the Democrats want to cry a river, they'll just have to build a bridge and get over it.

In the meantime, expect to keep being called on the same points over and over again, which is an awfully stupid waste of money and time, and to keep losing elections despite the gross incompetence of many Republicans.
-=-=-=-=-=-
KidA -
quote:
My point is simply that there is no evidence that raising the minimum wage causes major unemployment. Wage increases can - and usually are - phased in over a long period of time, so that employers are prepared to absorb the added cost.
First of all, you've got to be kidding whe nyou slip in the word "major" there. What is and is not "major" is subjective, and furthermore, I never used the word "major," so with whom exactly are you arguing?

Raising the minimum wage obviously does not affect most wage earners' earnings directly. But sectors that do employ people that make that amount necessarily must employ fewer people. Even if you give them (and I had to re-read to make sure you were being serious) time to adjust, you're still doing nothing but raising input costs and thus making some inputs less affordable. Businesses then face a choice: cut back somewhere, or raise prices.

Now, since minimum wage only affects domestically produced output, that means raising prices will be impossible in some sectors without being out-competed by foreign countries. Last I checked, the Democrats were beating their breasts and gnashing their teeth over Republicans allowing jobs to leave the country for places where labor was cheaper.

Raising the minimum wage will create transition costs. It will create fewer employment opportunities at the bottom. It will raise prices on domestically produced goods, and it will thus make the US less competitive in more sectors.

What is it supposed to accomplish? Economically, let's hear the argument.
Some labor is simply worth less than $7.25 per hour (plus benefits, which the Democrats also promised). All that labor will become unaffordable if the Democrats have their way. Thus the Democrats are telling low-skill workers that they don't deserve to work in such menial jobs, that we'd rather they don't work at all.

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WarrsawPact
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Now, as for pharma, the arguments made in that paper are all spurious to one extent or another.

quote:
First, research and development (R&D) is a relatively small part of the budgets of the big drug companies—dwarfed by their vast expenditures on marketing and administration, and smaller even than profits. In fact, year after year, for over two decades, this industry has been far and away the most profitable in the United States. (In 2003, for the first time, the industry lost its first-place position, coming in third, behind "mining, crude oil production," and "commercial banks.") The prices drug companies charge have little relationship to the costs of making the drugs and could be cut dramatically without coming anywhere close to threatening R&D.
Whoever wrote this has no knowledge of how companies become successful.

Does the author recommend that pharmaceutical companies cut down on advertising or profits? In both cases, they'll have less to reinvest if their sales or attracted investment dip as a result. They advertise so that they can sell more product and make back the money they put into research and infrastructure in the first place.
Does the author recommend cutting back on administration? Well, if these companies could undercut competitors by lowering those costs, they already would be attempting this.

quote:
Second, the pharmaceutical industry is not especially innovative. As hard as it is to believe, only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). The great majority of "new" drugs are not new at all but merely variations of older drugs already on the market. These are called "me-too" drugs. The idea is to grab a share of an established, lucrative market by producing something very similar to a top-selling drug. For instance, we now have six statins (Mevacor, Lipitor, Zocor, Pravachol, Lescol, and the newest, Crestor) on the market to lower cholesterol, all variants of the first. As Dr. Sharon Levine, associate executive director of the Kaiser Permanente Medical Group, put it,

"If I'm a manufacturer and I can change one molecule and get another twenty years of patent rights, and convince physicians to prescribe and consumers to demand the next form of Prilosec, or weekly Prozac instead of daily Prozac, just as my patent expires, then why would I be spending money on a lot less certain endeavor, which is looking for brand-new drugs?"

First, there are differences between these drugs that make some better for certain circumstances than others, if I've been correctly informed. I'm not terribly well-informed on medicine, mind you, so I'd appreciate a correction if I'm at all wrong.

But the assertion about only a few important drugs coming to market is just dumb. The industry is innovating faster than ever, and actually becoming more focused on the margins of the most common ailments. The reason they're able to make variations on these molecules is that they are engineering new molecules to take on slightly different circumstances and ailments.

quote:
Third, the industry is hardly a model of American free enterprise.
How does the author square this with criticizing the industry based on comparisons of total cost of production with the price, as if the real world operates as a perfectly competitive environment?

To be sure, it is free to decide which drugs to develop (me-too drugs instead of innovative ones, for instance), and it is free to price them as high as the traffic will bear, but it is utterly dependent on government-granted monopolies—in the form of patents and Food and Drug Administration (FDA)–approved exclusive marketing rights . If it is not particularly innovative in discovering new drugs, it is highly innovative— and aggressive—in dreaming up ways to extend its monopoly rights.[/quote] First of all, I have no problem with government-granted temporary monopolies.
Secondly, new drugs are not so much a matter of discovery as they used to be; more often than ever, they're being engineered.

quote:
All [pharmaceutical companies] price their drugs much higher here than in other markets.
... because this is the only place they can make back the money they lose from state coercion elsewhere in the developed world. I wonder if the difference in revenue accounts for profits and R&D costs...

quote:
It is true, however, that some of the European companies are now locating their R&D operations in the United States. They claim the reason for this is that we don't regulate prices, as does much of the rest of the world. But more likely it is that they want to feed on the unparalleled research output of American universities and the NIH. In other words, it's not private enterprise that draws them here but the very opposite—our publicly sponsored research enterprise .
This is quite plausible. We have more top-tier universities, some of the best on the planet. We also don't tax them nearly so much as other countries.
And of course, not regulating prices may help.

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KidA
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WP,

quote:
First of all, you've got to be kidding whe nyou slip in the word "major" there. What is and is not "major" is subjective, and furthermore, I never used the word "major," so with whom exactly are you arguing?

Raising the minimum wage obviously does not affect most wage earners' earnings directly. But sectors that do employ people that make that amount necessarily must employ fewer people. Even if you give them (and I had to re-read to make sure you were being serious) time to adjust, you're still doing nothing but raising input costs and thus making some inputs less affordable. Businesses then face a choice: cut back somewhere, or raise prices.

Now, since minimum wage only affects domestically produced output, that means raising prices will be impossible in some sectors without being out-competed by foreign countries. Last I checked, the Democrats were beating their breasts and gnashing their teeth over Republicans allowing jobs to leave the country for places where labor was cheaper.

Raising the minimum wage will create transition costs. It will create fewer employment opportunities at the bottom. It will raise prices on domestically produced goods, and it will thus make the US less competitive in more sectors.

What is it supposed to accomplish? Economically, let's hear the argument.
Some labor is simply worth less than $7.25 per hour (plus benefits, which the Democrats also promised). All that labor will become unaffordable if the Democrats have their way. Thus the Democrats are telling low-skill workers that they don't deserve to work in such menial jobs, that we'd rather they don't work at all.

Congrats on your mastery of Clintonian obfuscations. Define "major", you say? Or should I say "significant"? Or will you need that defined as well? How's "more than a little"? I'm going to give you the benefit of the doubt that you do not wish to argue about something that will have only a "minor" effect.

Look, I'm familiar with your argument against raising the minum wage. It is precisely the same argument used by Republicans every time such a wage increase is proposed. It is not a difficult argument to understand - the logic is easy and straightforward. But where's the evidence, over decades and decades of raising the minimum wage at various times, that it actually happens? I have yet to see you or anyone show me the numbers.

As for the statement you had to re-read "just to make sure I was serious" - maybe you are too young to remember, but that is how it is often done. California - your home state, n'est pas? - did it in the late 90's.

Another thing you fail to consider is that when low-wage earners have more income, they will spend more of it, and the economy will benefit. Do I need to "prove" this? Yes and no - it is equally logical on paper as your contention that rasing the wage will cost jobs. You "prove" yours and I'll "prove" mine.

Your big Pharma non-response:

Please read the whole article. Therein is explain how the advertising industry was de-regulated in the 80's and 90's, and how ths lead to a rapid growth in expenditures (with no subsequent growth in innovation).

(Do you understand profit margins? Wal-Mart has like a 3.5, 4% profit margin. That's a lot. Many big pharma companies are up in the teens.)

The "new drugs on the market" are often old drugs under a new name, catering to newly invented disorders. Your statment that: "The reason they're able to make variations on these molecules is that they are engineering new molecules to take on slightly different circumstances and ailments" tells me that you've drunk deep the industry Kool-Aid.

Finally, you completely miss the most important point, the innovation here and abroad is largely supported by state funding. And you provide no evidence that Pharma suffers any "losses" by selling abroad. That would be a highly difficult point to prove, given how much "state coercion" fuels the R&D to begin with.

[ June 18, 2006, 04:43 PM: Message edited by: KidA ]

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RickyB
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Pharma is trying to insist on pricing freedom of a luxury, when its product is a necessity. We don't let the utilities charge whatever they want either.
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WarrsawPact
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quote:
Congrats on your mastery of Clintonian obfuscations. Define "major", you say? Or should I say "significant"? Or will you need that defined as well? How's "more than a little"? I'm going to give you the benefit of the doubt that you do not wish to argue about something that will have only a "minor" effect.
Sure I do. The minimum wage is one of a huge number of variables that affect employment at any given time.

I've seen no logic that suggests that raising the minimum wage will increase net employment. It just doesn't make sense. On the other hand, there's plenty of evidence that it will contribute to unemployment.
I've got to ask, again: what exactly is the point of increasing the minimum wage? What is it supposed to accomplish?

quote:
Look, I'm familiar with your argument against raising the minum wage. It is precisely the same argument used by Republicans every time such a wage increase is proposed. It is not a difficult argument to understand - the logic is easy and straightforward. But where's the evidence, over decades and decades of raising the minimum wage at various times, that it actually happens? I have yet to see you or anyone show me the numbers.

As for the statement you had to re-read "just to make sure I was serious" - maybe you are too young to remember, but that is how it is often done. California - your home state, n'est pas? - did it in the late 90's.

Hell, until you give a reason why one is necessary or even the slightest bit positive for the economy, I shouldn't even have to provide the evidence in numbers.

When the minimum wage was increased in California -- or in any other part of the country -- there was plenty of slack for positions that paid less than minimum wage, in the form of workers without documents. The law incentivizes black market activity, as does any market distortion.
And frankly, restrictive regulation was part of the reason businesses started leaving California for other states and even other countries. Increasing benefits -- as Democrats have threatened/promised to do if elected -- incentivizes this exact behavior. And we can see it in the exodus of businesses from California during the Davis years to less restrictive states like Florida, Arizona and Nevada.

In businesses that didn't operate under the radar, yes, I was a direct beneficiary of the increase in the state's minimum wage. I made incremetally more money per hour, but we noticeably stopped hiring so many new baggers and the baggers who were initially making less than the new minimum wage started getting fewer hours. This happened at every stage of the increase in minimum wage -- and it may have exascerbated the conditions that led to the union strike I was on that lasted several months (and which we lost). It's not as if we didn't see the increase in wages coming, mind you.
Simply put: stores that play by the rules have to make budget every week. Their budgets are set by the corporations that know that labor is (one of the, if not) the most easily manipulated item on the budget from week to week.

quote:
Another thing you fail to consider is that when low-wage earners have more income, they will spend more of it, and the economy will benefit. Do I need to "prove" this? Yes and no - it is equally logical on paper as your contention that rasing the wage will cost jobs. You "prove" yours and I'll "prove" mine.
Mine's perfectly obvious economics. Yours is fairly straightforward too, except that their income has to come from somewhere. Firms will not pay people more for their labor than the labor is worth in the long term, and given that we trade with other countries, we won't be able to just raise prices at will to compensate for the increased cost. Somewhere, American products will suffer in terms of higher prices and/or lower quality and/or a number of other things that will make American firms less competitive. That'll lead to even more unemployment... but the myriad transition costs will take different amounts of time to show in the economy, which makes the exact numbers difficult to produce.

Why? We have to compete with other countries whose wages and employee benefits we do not control.
Raising our prices will make us less competitive with foreign firms both here and at home.

[ June 18, 2006, 06:34 PM: Message edited by: WarrsawPact ]

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WarrsawPact
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I'll have to answer the rest later. No time at the moment.
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canadian
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quote:
I've seen no logic that suggests that raising the minimum wage will increase net employment. It just doesn't make sense. On the other hand, there's plenty of evidence that it will contribute to unemployment.
I've got to ask, again: what exactly is the point of increasing the minimum wage? What is it supposed to accomplish?

If we're dealing with a static model, maybe. But usually, when there is a demand for an increase in minimum wage, it is generally because of other motivating factors beyond, "sounds like it might be a good idea."


For example, inflation.

Sometimes it's just to keep up with a reality that is already imposed by the marketplace. For example, it would be a very difficult thing to find a minimum wage job in an area of 3% unemployment. There is obviously a great demand for workers in such an environment and employers are more than willing to pay above and beyond the government mandated wages. But it is helpful to have a "lowest denomination" benchmark in such a case. And this would be a minimum wage. Raising it in such an environment would have little or no impact on the current employment atmosphere.

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Everard
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"I've seen no logic that suggests that raising the minimum wage will increase net employment. It just doesn't make sense. On the other hand, there's plenty of evidence that it will contribute to unemployment.
I've got to ask, again: what exactly is the point of increasing the minimum wage? What is it supposed to accomplish?"

The general consensus is that a 10% hike in minimum wage increases unemployment by 1%. But, that consensus is... not necessarily depictive of the entire picture. For example, raising the minimum wage doesn't increase unemployment, it decreases employment... similar, but not the same thing. It slows job growth, it doesn't cause jobs to be cut.

The point of raising minimum wage in an economy in which most of the population is employed is that there's a large "spike" at the bottom end of a pay scale. A lot of people are working at minimum wage, or just above it. Raising their income forcefully shifts that spike, faster then inflation devalues the cost of a minimum wage. What you end up with is a lot more people having a lot more disposable income, which gets cycled into the economy. Small amounts of disposable income get cycled through the economy REALLY FAST compared to large amounts of disposable income, because a lot of large piles of money isn't being put to work... its sitting there accumulating interest. PART of that capital is being put to work through investment, but not all of it. Plus, investment moves slower then exchange, typically. On the other hand, small piles of disposable income get spent on mp3 players, car repairs, resturants, etc. 10 dollars in the hands of a McDonalds customer cycles through the economy many times more then 10 dollars in someone's stock portfolio.

So, aside from improving the quality of life of a lot of people (whether they be teenagers or otherwise, and most studies indicate that employment that gets hurt the most is teen employment), increasing the minimum wage also spurs wealth production. The more times you cycle cash through the economy, the more wealth you are creating.

One of the other side effects of increasing the minimum wage seems to be to spur innovation. It gets more expensive to pay someone to answer the phone, then to figure out how to make an automated telephone system. It costs more to pay someone to feed the chickens then to figure out how to get feed to livestock mechanically.

There ARE downsides to increasing the minimum wage. The question is balancing the downsides with the upsides. In an economy that is mostly employed, the upside tends to outweigh the downside, in my view. We're currently mostly employed... but, those jobs aren't as valuable to the people who hold them as they were 5 years ago. Thats when increasing the minimum wage has the biggest positive effect, and the smallest negative effect.

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WarrsawPact
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canadian -

How does raising the minimum wage alleviate inflation? Yes, minimum wage is worth a little less every year that it isn't raised... but who stays at minimum wage long term?

If you let minimum wage continue to drop in value, that'll open up more jobs at the bottom of the barrel for people just getting into the job market (e.g., 16- to 17-year-olds). It all comes down to what a person's labor is worth, and many jobs are simply worth less than $7.25/hr. plus benefits... and this will still be true next year, when $7.25 is worth 3+% less than it is now.

You assert -- entirely without supporting evidence or logic -- that "it is helpful to have a "lowest denomination" benchmark in such a case."
Why is it helpful, canadian?
-=-=-=-=-=-
Everard -
quote:
For example, raising the minimum wage doesn't increase unemployment, it decreases employment... similar, but not the same thing. It slows job growth, it doesn't cause jobs to be cut.
It caused people where I worked to be underemployed, getting fewer hours. It only makes sense that this would be true of any other firm whose payroll is affected by the minimum wage. So yes, it increases unemployment too (because underemployment is counted in unemployment).

I know for a fact that people lost their jobs all over Southern California as a result of increasing costs of benefits. Anyone have any reason to believe the same will not be true -- even more true, in fact -- when such benefits are enforced by the government instead of by unions?

quote:
The point of raising minimum wage in an economy in which most of the population is employed is that there's a large "spike" at the bottom end of a pay scale. A lot of people are working at minimum wage, or just above it. Raising their income forcefully shifts that spike, faster then inflation devalues the cost of a minimum wage.
But in the aggregate, you won't raise their income. Accountants aren't fooled into paying more than a job is worth, not in the long term (or intermediate term, and usually not even in the short term), because their business is at stake. You tell someone making payroll every week that he has to pay his 1000 workers another 10% on top of their current earnings, and he'll pass on the extra costs to someone.

He'll pass it on to the customers, possibly, but he'll be hesitant to pass on a 10% increase in prices. That'll make his firm less competitive than all foreign firms that don't have the sudden 10% increase in labor costs reflected in higher prices. His first instinct will be to cut costs somewhere else -- usually in quality somewhere along the line, cutting corners where possible, or the old-fashioned way: by cutting labor costs. If wages and benefits have a floor, then he'll get around it either by hiring someone who will work for less under the table or by hiring fewer people for fewer hours per week, starting with the full-timers (labor patterns in the US bear me out over and over again). The same amount of work probably needs to be done, so they'll work each employee harder for less money per week.

And whoever passes on the most costs to the employees will fare better in the price wars.

And in the meantime, there are jobs that simply will not be done for $7.25 an hour plus benefits. That entire class of jobs goes out the window, cutting down opportunities for low-skilled workers. The people who don't get jobs as a result will be added to the people who are underemployed in suffering under the new, higher minimum wage. In the aggregate, you lower quality of life for the low-skilled people of your country.

Road. Hell. Intentions.

I simply don't buy that increasing wages at the bottom and benefits will increase the amount of money cycling through the economy. It will constrict employment in the aggregate; businesses will necessarily provide fewer labor-hours and less money through payroll. Hence, you don't actually have more money flowing through the economy! You have less!

quote:
We're currently mostly employed... but, those jobs aren't as valuable to the people who hold them as they were 5 years ago.
Spurious line of logic. I defy you to prove this has anything to do with the minimum wage. If anything, having a lower real minimum wage allows more people to hold jobs. Maybe they don't appreciate them, but would they better appreciate having no job at all?

[ June 18, 2006, 11:06 PM: Message edited by: WarrsawPact ]

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Jesse
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Wait....

Businesses will provide fewer-labor hours-internally consistant.

Less money through payroll?

You've presented no case that net payroll drops, only that in order to compete businesses will reduce the number of hours of labor they pay for.


Since the income of the employed will increase under a new minimum wage much more rapidly than the federal poverty line, raising the minimum wage will bring at least hundreds of thousands off of various forms of federal assistance.

I'm not interested in arguing the practicality of those programs or their utility. It is a fact that a hike in the minimum wage that "lifts people out of poverty" (talk about Clintonian speech) will also mean that fewer of them qualify for the EIC, and more revenue is collected.

This, at least in the short run, helps to reduce the defeceit.

The simple fact is, in Southern California urban regions, rents are set at almost exactly the take-home income of person earning minimum wage working 30 hours a week for the cheapest available dwellings. This means that two people working those hours at those wages, or one person working two jobs, can afford to fill those vacancies.

In my life-time, every time my state has increased minimum wage, rents have spiked massively. There is little to no benefit for the consumer economy. It's just a huge driver of the sort of inflation the Federal Statistics don't like to take into account.

I see no real benefit to it.

The biggest single reason for the loss of jobs in CA in the recent recession was the massive spike in energy costs. I know from the owner of Buck Knives, first hand, that that was his sole reason for moving production to Idaho after 50 years in San Diego. He's not the only one.

The dot-com crash, occuring at the same time, led to a massive drain in state revenue. The Septemeber eleventh attacks had a massive impact on a largely tourist driven economy. We were hit by a perfect revenue reducing storm, and neither the legislature nor the executive did what was necessary to curb spending in response.

The major grocery store chains were experiencing some of the highest annual profits in their history at the time of the strike, despite the increase in minimum wage. It was to maximize profit that they reduced hours and the number of employees, something they would have been doing with or without an increase in minimum wage.

Cutting back on hours, expecting fewer and fewer workers to do more and more, these are national trends occuring in states which don't even have their own minimum wage laws as well.

If you wanted to make your case, you would need more than annecdote. You would need to provide data that show lower staffing levels in interstate corporations in states which have higher minimum wage standards.

My personal opinion is that raising the minimum wage is a wash.

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WarrsawPact
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quote:
Businesses will provide fewer-labor hours-internally consistant.

Less money through payroll?

You've presented no case that net payroll drops, only that in order to compete businesses will reduce the number of hours of labor they pay for.

I have, although I apologize if this wasn't clear:
There are some jobs currently in the US that are not worth $7.25 plus benefits. If firms are forced to pay that wage and those benefits, those man-hours will not simply reappear at a higher wage rate and with benefits -- they will be gone.

quote:
Since the income of the employed will increase under a new minimum wage much more rapidly than the federal poverty line, raising the minimum wage will bring at least hundreds of thousands off of various forms of federal assistance.
... while sending more people onto federal assistance because they can't make ends meet with fewer hours, or because they can't get a job. Never mind the externalities, with some percentage of low-skilled workers turning to crime to make money. Or the greater number of people who will work for less than $7.25-plus-benefits under the table, thus preventing them from paying taxes. Less man-hours on the payroll also means less tax revenue collected, even if we're just talking withholding.

quote:
Cutting back on hours, expecting fewer and fewer workers to do more and more, these are national trends occuring in states which don't even have their own minimum wage laws as well.
... which doesn't change the fact that a higher minimum wage will exascerbate the problems without providing real benefits. Just because some of it is happening already is no reason to add to the problem with no benefits in return.

As for California's problems, yes, of course there were many factors involved in the problems we had. First of all, the state started spending money as if the revenue spike was going to last forever, and the CA government borrowed money we had little reason (outside of pure optimism) to suspect we could pay back later.
I could bring up even more in addition to the problems you listed; for example, worker's comp is a disaster that chased businesses abroad to, again, states with a less regulated environment.

As for CA's grocery chains: you're ignoring some very important things about where they stood when those strikes began. I was one of the people on strike, so I heard it all. Keep in mind that the cost of those union benefits had been skyrocketing with the rise in the cost of health care, and we had every reason to suspect it would continue (as it has). The major chains were just starting to face pressure from WalMart, and faced obvious competitive pressure to keep prices low and reinvestment high, while also facing new competition in the form of the high-quality stores like Whole Foods. All the stores -- particularly Safeway (and their subsidiaries, Vons and Pavilions) were going through a retrofitting/remodelling sweep to deal with the need to carve out a niche as they were pressured from above and below. I know this because I attended corporate meetings including the CEO of Safeway, the boogeyman of the strike, who explained our corporate strategy at length. That "profit" was being reinvested, at considerable cost to the corporation, believe you me. My store was partly or totally remodelled four times in the four and a half years I worked there.

And as for raising the minimum wage being a "wash"... how do you figure? Where are the benefits? How do you account for the transition costs, the deadweight losses? How do you account for the loss of jobs that just cannot be done at those costs anymore? What offsets these problems?

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WarrsawPact
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Everard -

Yes. It is. Time and time again, though isolating the exact effects is laborious. I can show you on the microeconomic and macroeconomic level why this is the case, and in fact I've been explaining it this whole time.

You have a study that has controlled for other factors and shows that increases in the minimum wage and minimum benefits did not eliminate jobs and man-hours that fell under that price floor? Go ahead and cite it.

Otherwise, your anecdotal evidence runs into a high tide of countervailing anecdotal evidence and economic theory.

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Everard
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I deleted my post while trying to edit it and write a new one :-/.

However, in response to your new post, I will point out that I'm not the one offering anecdotal evidence... you are.

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WarrsawPact
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Well, if you've got something other than theory and studies with controls for other factors, what else can you bring to the table but anecdotal evidence?

[edited for spelling]

[ June 19, 2006, 12:39 AM: Message edited by: WarrsawPact ]

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Everard
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What happens with increases in minimum wage is, basically, a 3-5% increase in standard of living, for about 10% of the population. What you sacrifice is about 1% employment, concentrated in teenage jobs, for a period of about 6 months.

Thats pretty much what all the data indicates, warsaw.

This happens because most of the costs of living do not rise as quickly as the minimum wage goes up. Food, utilities, transportation, and luxuries, do not rise to match minimum wage hikes... they catch up after a long period of time. Housing costs, as jesse points out, rise almost immediately. But housing eats up the same percentage of a families income before and after a minimum wage increase. So throw that out the window.

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