John Boehner Should Travel More. To Australia.
To me, one of the great frustrations in Obama’s failure during most of his first term to communicate, effectively or at all, the basic premises of Keynesian and other liberal economics-related arguments (including on healthcare) was his apparent resistance to mentioning–early, often, or ever–specific other countries’ successes or failures that illustrate the point.
But there’s no time like the present for him and the congressional Dems to start to do do this, by maybe mentioning these facts: that Australia’s minimum wage is $15 U.S. and that its unemployment rate is 5.4%, and that the United States has (surprise!) the largest gap between the minimum wage and the median wage of any advanced economy in the world.
I learned those facts yesterday when I read Washington Post columnist Matthew Miller’s Feb. 6 column. He mentioned it and linked to it in his column yesterday about Obama’s State of the Union address. In yesterday’s column, he suggested seemingly, facetiously, that it was his February 6 column that had persuaded Obama to include a minimum-wage-hike proposal in his address. But after reading the earlier column, I suspect that it was not only what convinced Obama to make the call but also was what caused Obama to even think of it.
Both of Miller’s columns say that the $9/hr. figure that Obama proposed in his speech would still leave the minimum wage at $1.68 below what the value of the minimum wage was in 1968. The first column, Miller also mentions that several CEOs of large corporations support a rise in the minimum wage and that a prominent conservative, the editor of American Conservative magazine, suggests raising the minimum wage to $12/hr. Of course, the Republicans will showcase their own CEOs, and some small-business owners, to support their own position.
Which is where Australia comes in. Or at least where invoking it should come in. The special beauty of using Australia as an example–whether in support of an increase in the minimum wage or in refuting the Obamacare-is-socialism/makers-vs.-takers mantra–is that few Americans associate Australia with, um, socialism. They associate it instead with free-enterprise economics and a high standard of living. And soon, hopefully, also with a higher minimum wage that corresponds to a low unemployment rate.
Maybe Marco Rubio and John Boehner could get a travel discount if they booked their reservations together.
“John Boehner asked: “Why would we want to make it harder for small employers to hire people?””
Hmmm, so employers, large and small alike, only hire people to get the work done because its cheap to do so? I thought businesses hire workers in order to get the necessary work done. Wasn’t it that old Marxist Henry Ford that raised the wages of his line workers with the explanation that it would allow them to buy the cars that he was making? Crazy idea that was, pay people enough money to live above abject posverty so that they can recycle the money and rejuvinate the economy. I’d have suggested raising the minimum wage to a high enough amount that a full time worker would then have to pay income tax and help reduce the budget deficit.
What? Get people out of poverty and reduce the deficit at the same time? That’s crazy talk!
Maybe Marco Rubio and John Boehner could get a travel discount if they booked their reservations together.
only if their destination is Botany Bay.
J.C.
Don’t blame me. The idea was first brought up by that crazy Socialist Henry Ford. A higher wage at the bottom of the scale for a healthier and growing economy. It has something to do with a demand economy ideology rather than that supply side bull shit. It’s only a few exstra bucks, but if it’s earned by a few tens of millions of people pretty soon you’re talking about serious money being multiplied into serious financial health.
Damned if I can explain it, but Ford seemed to think it would work. Wonder what ever happened to the guy?
If you believe in the minimum wage then it is fair and reasonable to have it keep pace with inflation. I think I know what the GOP believe and it is far from fair and reasonable.
The entire population of Australia is about the same as the population of New York state.
Australia does not have 6 – 8 million undocumented workers.
Etc., etc.
Silliness.
From Business Insider, the dumbest sentence I have read today:
“Historically managers will cut other expenses in order to compensate for an increase in the minimum labor cost and the increased minimum wage functions as a form of stimulus.”
So if I had $100 to payroll and cut other spending by $100 I get…… stimulus? Huh?
STR you might want to look into Australia’s illegal migrant problem and various off shore internment programs before pulling the false equivalence card.
And there are plenty of European countries that don’t have the population of any of our four most populous states. And a couple of Asianones that have multiples of our population. If we are going to play that game just about the only country close to the U.S. in population size is Russia followed maybe by Brazil. And what distantly by Germany. Which has its own problems with illegal immigrants and cross border crossers who being EU are not necessarily illegal at all.
Once you start quantifying your “etc, etc” you end up just ruling out international comparisons at all. And at the extreme cross state ones. I mean I could equally point out that Alaska and Rhode Island aren’t New York anymore than Australia is.. And the Solomon Islands not Poland. Or as you eloquently states “Etc, etc”
There are only a handful of countries which emerged from the English Empire with a dominant Anglo-Saxon legal, linguistic, social and unfortunately racial structure. And while obviously each of the four major ones in terms of overall wealth have different histories in detail, the fact remains that if we can’t compare Australia, Canada, South Africa, the U.S. (and perhaps plucky Kiwis) between themselves and in contrast back to Britain we might as well give up International Studies at all. I mean these are the EASY ones.
rusty
well, i suppose they could raise prices or cut profits.
or, of course, automate.
or, god help us, even use the help more efficiently.
one of the observations of new englanders visiting ante bellum south was that it took an overseer and ten slaves to do in a week what two “free” farmers would do in an afternoon.
minimum wage at below subsistence (which is where it is) is slave labor. only thing lacking is the whip and the auction block.
Hmm. Call me stupid–and I’m sure you will, rusty–but I have no idea why illegal immigration is a reason not to raise the legal minimum wage. Are you saying that McDonald’s would start hiring illegal immigrants, at a lower hourly wage?
I also have no idea what it has to do with how large a country’s population is.
As for the Business Insider statement, it sounds illogical to me, too, but I guess what matters is what expenses you save on. People who make minimum wage usually spend all or most of their wages very quickly. It does still sound odd, though, although I haven’t read the article, so maybe there’s some explanation in the article.
Actually the most stupid statement i have read today
was Rusty’s comment about population and illegal immigrants.
it brings me to despair that humans find it so easy to find reasons to believe what they want to believe.
Beverly
my guess is that BI just wrote rather clumsily. the increase in min wage is a stimulus the same way a tax cut or payroll tax holiday is a stimulus.
the important difference is that the money would go to people who don’t have money, unlike the tax cuts that go do people who are already sitting on their money, or the tax holiday, which oddly enough benefits people more if they are making more money.
to refute the allegation that an increase in the minimum wage will cause low-wage workers to lose their jobs, jared bernstein shows the true elasticity of job loss with respect to a minimum wage increase hovers around zero…
our wage differences are no where near comparable to australia…with a Gini coefficient of 0.450, the US ranks near the extreme bottom end of the inequality scale, with the likes of Cameroon, Madagascar, Rwanda, Uganda, & Ecuador…Australia’s is 30.5, Russia’s is .422, China’s is .415 and India’s is .368, all quite a bit more equal than the U.S.
(everyone with the same income would be a gini coefficient of zero; one person with all the income & evryone else unpaid slaves would be a gini coefficient of 1)
misplaced decimal…Australia’s gini coefficient is .305
I agree with you, Dale, on your first point. (Sorry, rusty, but ….) On the BI comment, though, I assume that what rusty was saying is that business expenditures are fungible regarding their impact on the economy, so how could the additional income to workers be an economic stimulus if there is a corresponding decrease in the money the business spends on other things? But I’m not sure that business-expenditure money is completely fungible in its effect on the economy.
I’m all for Boner and the Rube traveling together.
But not to Australia.
I’d send them much farther south.
JzB
beverly
well, in my theory of economics a wage increase at the bottom will be a stimulus even if the money comes out of prices or profits.
same deal… i won’t notice an extra ten cents for a hamburger, and since i am rich (beyond imagination) the dime will come out of my “savings” (under the couch), so it will be an extra dime into the economy when the min wage guy uses it to buy something he needs.
but if it comes out of profits.. well, my guess is that the owner of the burger joint would also be taking it out of “savings”… it’s not money he would be spending into the economy, considering the state of the economy today.
can i prove any of that? no. but my kentucky windage is generally more accurate than all the fine tuning of the economicsics.
Jazz
but Antarctica used to be such a clean environment.
Let’s send John Boehner and George Osborne to Australia and let them both bloody stay there.
GreenWorld Farmland Investments
Dale –
I was actually thinking of some place a bit warmer.
JzB
jazz
ah. THAT south.
But would they be happy in MIssissippi?
(corollary: can we let Mississippi secede?
can we? hunh? hunh?)
Hell? Mississippi? For some people there is hardly a difference.
Cut corporate taxes in exchange for a min wage hike. The Rep party cannot say no to that.
What is the real world economic or equity case for cutting corporate taxes?
If there isn’t one then buying off the Reps is morally equivalent to negotiating with hostage takers or cheerfully paying your protection money to the Mafia.
Other than white boards in Econ 1 classes across the country or on the more Greek laden such in graduate seminars in freshwater economic departments is there any solid argument that cutting corporate taxes actually serves any useful economic function? Other than boosting the potential dividend pool?
I know how the Econ 1 arguments go. BAsically they all rely on really shitty history and a view of markets that starts and stops with some Austrian Alps village c.1745.
Or to jargonize it. Where is the macro argument? I mean everyone has his price and you can materially sweeten almost any deal to get buy in, but that doesn’t automatically justify paying vigorish.
You have to remember that the openly stated ultimately goal of the Ryan Budget as signed off by almost every Republican in power is to eliminate all tax on capital for both individuals and ‘corporations are people too’. In exchange there would be some sort of a use tax. Given that any and all claims that the corporatists are just looking for efficiency or equity or revenue neutrality are literally nonsense. And proposals to further buy them off in hopes they will magically convert to a stance supporting burden sharing even more so.
Now maybe there really is a rigorous case to show that corporate taxes are in REALITY economically distorting in negative ways for the overall economy. But special pleading based on crazily simplified models that boil down to drawing a line and a curve on that whiteboard and saying “There!” Nor are arguments that blithely assume that corporate taxes frictionlessly slip through to prices and so the real incidence ALWAYS falls on the buyer coupled with arguments from the same folk that increases in wages are totally sticky and so never just flow through to price but simply serve to destory jobs.
Some people might think that taxes and wages are just components of cost and that their ultimate effect on prices is controlled by demand side considerations. But no under Econ One Whiteboard Theory one component is frictionless (after all the customer ALWAYS ends up paying all costs) and the other is fixed in place and impossible to just be passed on.
As such it is impossible to believe that the actual policy preferences are being driven by anything other than pure material self-interest and that the tax and wage arguments are just post hoc justification for “screw the workers and save the coupon clippers”.
Just as it ever was.
Hey guys, I was raised in MS and I turned out OK. I’d hate to think the few that do manage to survive wouldn’t have the rest-of-the-US to flee to.
Well, you COULD become an illegal alien, AnnaLee. Or, better, a legal immigrant, since without the Southern congressional delegation, this country might have decent immigration laws.
Aw shucks Miss Anna,
I was born in the South too. But I got better.
As they say about Texas but equally appropriate to much of the southern tier of the old confederacy:
“Texas a great place to be FROM”
Sorry, just getting around to this. Bruce, higher min wage reduces profits, and thus corporations oppose min wage increases. Reducing the corporate tax offers an offset and makes the plan marketable. Now, please show me what benefit corporate taxes offer society? Wouldn’t higher pay be a far bigger benefit?