Crossing the Divide

50 years ago, society attempted to end racial tensions by ending segregation. 40 years ago society tried to put minorities, as well as poor whites, on par with the rest of society by instituting the "War on Poverty", ended "poll taxes" to give equal access to the ballot box everyone, and instituted a hiring quota system---Affirmative Action--- to ensure equal access (some would argue "preferred" access) to certain jobs---individual and commercial. 30 years ago, we instituted forced busing to bring about education parity. We have since introduced "No Child Left Behind", and other various programs, and yet we still have sectional poverty no better than some third world nations, high levels of crime, violence, and unemployment, failed schools and failing students, decrepit neighborhoods, broken homes, taxpayer dependency, and children having children, which only perpetuates the cycle.

We've seen the education performance of students decline as academic rigueur and discipline is thrown out the window. The only thing "common" is equal underachievement for all. Underperforming minority students often threaten and intimidate other achieving minority students for acting "too white" , as if being a societal failure and more often than not, a statistic, is a goal to be proud of. Minority studies have been introduced in various colleges, yet outside academia, they have little economic value, while minority and low income students should instead be encouraged to major in high demand professions which will improve their social and economic standing. Despite federal hiring quotas and spending billions on "urban renewal" to refurbish downtowns over and over again, inter-cities continue to look more like blown out war zones than centers of economic growth.

Among most young adults, and even some older adults who grew up during segregation and the Civil Rights Movement, race has become a nonissue. Close friendships across racial lines is more common than not. Inter-racial dating and marriage, once not just frown upon, but outright illegal, is scarcely even acknowledged. Many individuals, who've survived the bullying by their peers not to succeed in school as the risk of "trying to act white" have entered into professions their grandparents could only dream of, be it corporate, law, medicine, science, entrepreneurship, or academia; many achieving the highest levels in their chosen profession. Today, it's not uncommon to have black, Asian, or Hispanic civil, military, business, or political leaders. America even has a bi-racial president (what is unusual, however, is that despite making up over 50% of the population, we've yet to have our first female head of state in stark contrast to numerous other and less "democratic" nations). The "race card" has been all played out, especially as economic parity improves.

Today, minorities can claim their own TV and radio channels, magazines, movie and music genres, social media sites, awards, pageants, associations, events, and so forth (though whites ironically, are precluded from doing so in the name of "equality"). Still, such promotions seem increasingly little more than quaint holdovers aimed at dividing society--- a commercialized version of "separate but equal"---rather than uniting us as a People. As a friend of mine once said, "the only color that matter is green".

So, the question is "why"? Why the continuing divide? Is it, as once believed, that the races ultimately cannot not long lived side by side; that eventually one will have to emerge as dominate and the others as subordinate or even perish as a race unto itself? Why, after the billions spent rebuilding, are minority dominated areas still poor and crime ridden? Why is alcoholism, single parent households, drugs, and academically failing students (with higher than average dropout rates) considered the norm in low income and minorities communities, along with the imprisonment a large segment of its population ? And, while we're at it, why is academic underperformance considered acceptable when it neither enhances the critical thinking skills of the student nor properly prepares them for life in society? Why is academic mediocrity rewarded while excellence is quietly discouraged out of fear of making someone or some group "feel bad" about themselves? Why is the failed political philosophy of "throw-enough-money-at-it-and -it- will -fix -itself" still pursued ? For that matter, why are individuals allowed or even encouraged to adopt a dependence on federal government handouts to the point of subservience when programs enhancing work skills and self reliance would be more cost effective and personally enriching while peripherally reduce crime, lower unemployment, create more jobs, and ultimately increase the overall tax base?

As the saying goes, "a government big enough to give you everything is big enough to take everything from you". From this writer's perspective, all we've succeeded in doing is to dismantled the family unit, created an economic dependency no less addictive as any drug, destroyed all sense of individual self-worth, morals, or personal responsibility, devalued life, and created a sub-culture which feeds on instant gratification at any cost, while at that time penalized those who continue to seek economic and personal self-worth. It matters little to the slave or serf their master's name except that freedom is denied.

What An Increase in Minimum Wage Means

The federal minimum wage is $7.25 an hour. That's works out to be $290.00 for a 40 hour week or $15,080.00 a year, excluding any unpaid time off. That's not much, and that's before taxes (in post-Depression 1938, when minimum wage was established under the Roosevelt Administration, the minimum wage was 25 cent an hour). Of course, minimum wage is a bit higher in the District of Columbia and 19 other states while four states have a lower minimum wage and five states (all Southeastern) have no minimum wage laws. President Obama favors an increase of the minimum wage to $10.10 an hour. Fast food employees, as many of you know, have been protesting for an increase to $15.00 an hour. 13 states have increased their minimum wage effect January 2014. In Kentucky, State Senator Greg Stumbo (D-Prestonsburg) favors an increase in the minimum wage to around $10.00 an hour while other states are considering similar increases.

Many corporate CEOs are, naturally enough, opposed to an increase in the minimum wage, at least to $15.00. Some cite a statistic by the Bureau of Labor Statistics which states that most individuals earning minimum wage are not working adults supporting a family, but are primarily teenagers still living at home and, at least in part, still being supported by their parents; specifically, 24% of 3.6 million workers earning minimum wage, and another 25% were under 25 years of age. In addition, for those who are attempting to support a family, many if not most are qualified for some form of taxpayer based assistance like food stamps (SNAP---Supplemental Nutrition Assistance Program) or earned income tax credits for children.

With 3/4 of Americans calling for an increase in the minimum wage, advocates also cite CEO salaries in the US are now 357% over the average company worker; the highest in the world (some estimates put it closer to 495% when their total compensation package is taken in account). The top 20% of the richest people in America now control 89% of all wealth in this country. Now if that doesn't give you pause, consider that the top 1% of the world's richest control 46% of world's total wealth according to a Reuter's report released on October 9, 2013! In America, the top 1% control 40% of the nation's total wealth. Therefore, this excess of wealth needs to spread around proponents claim. Those on the Right argue that the wage gap is justified; it's just a part of the capitalist system. They further claim that it's corporate (and personal) profits that allow them to employ the majority of the nation's workforce.

But, what about from an economic perspective? What happens when there's an increase in minimum wage? Well, obviously a broad based income increase will result in an increase in purchasing power, at least temporarily. That means there will be a sudden demand for products; usually high end products such as cars, houses, as well as appliances and entertainment, but also to groceries, utilities, and even taxes. Typically, very little of the wage differential (the difference between the original wage and the new wage) will go into savings or similar investments, though some may find its way in paying down debt, statistically this tends to be minimum at best. Instead, overall debt tends to rise. As the economy adjusts to the influx of additional income, there is always a slight delayed rise in costs to offset the sudden rise in demand. However, once supply reaches a equilibrium with demand, the newly set increase in price will always adjust itself upward to match the new level of demand.

This generally tends to have two secondary actions. First, with the increase in demand, there will be a resulting delayed increase in retail costs as wholesale costs begin to rise to compensate for the declining level of supply and a rush to acquire raw material at a newer, higher premium prices to match the demand. Secondly, there's a short term increase of cost to the manufactures/producers in terms of wages and other internal costs as companies attempt to catch up with demand. This could be simply increasing work hours through overtime or additional shifts; perhaps even temporary hiring. However, as prices of merchandise rise, the demand will begin to drop until it reaches a price equilibrium. This results in less demand for the product and a corresponding reduction of hours to original levels, or even a drop in hours worked.

To put it another way, there's a short term benefit to the employees but as demand increases, the costs rise to meet the level of supply, so that in the end, most everyone is back where they started from but everything has increased in price and in some case, more than by the percentage of the wage increase. Some companies may find that the demand for whatever it is they do has dropped (especially if it's considered a non-essential item). The result will be a reduction in hours or workforce, or even closure. Therefore, employees may be no better off than before; some could even be far worse off. So, how do we get out of this predicament?

A lot of politicians like to talk about increasing minimum wage since it sounds like they're "giving" the people something for free. The reality, however, is that they're not giving them anything. Companies have to raise prices to offset the increase in wages. The money has to come from somewhere after all doesn't it? And you can sure bet it won't be coming out of profits margins. With increased prices, demand could drop. This may mean layoffs or a cutback in work hours with employees having to pick up the slack. For those not affected by the wage increase, they'll be forced to pay more as prices increase while not bringing home any more money. This is especially true for those who are unemployed or on a fixed income.

Free market advocates (or libertarians for that matter) might call for doing away with the minimum wage and allowing demand compete with supply. Employers offering the best salary (and benefits) would attract the most potential employees while those who don't will be forced to adjust the wages upward to attract workers. Of course, those who, at least initially, offer better wages will attract the most potential employees, thus the supply will obviously exceed the available positions which will, in turn, result in employees willing to work for less money in hopes of getting at least an acceptable wage while the employer would get the most qualifed individuals at the lower wage.

Perhaps, then, the best solution would be mandatory increases in wages tied to the inflation. As prices "naturally" rise due to demand over time, wages would match the increase accordingly. Such an increase would simply keep pace with the change in prices and would have little to no adverse affect since the wage adjustment would apply to everyone. A secondary solution would be the complete overall of the US tax code and the adoption of a national consumption tax in lieu of a federal income tax. People could manage their level of taxation based on their purchases. The rich would obviously pay more since they tend to buy more while the poor would pay less since they buy less. Nevertheless, an increase in the minimum wage comes with a price.




Minimum Wage Laws by States
http://www.dol.gov/whd/minwage/america.htm


Fast Food Workers Cry Poverty Wages
http://www.npr.org/blogs/thesalt/2013/12/03/248567592/fast-food-workers-cry-poverty-wages-as-mcdonalds-buys-luxury-jet


13 states raising pay for minimum wage workers
http://www.usatoday.com/story/money/business/2013/12/29/states-raising-minimum-wage/4221773/


Disclosed: The Pay Gap Between CEOs and Employees
http://www.businessweek.com/articles/2013-05-02/disclosed-the-pay-gap-between-ceos-and-employees

The Gulf of America

One of the greatest issues facing America is the increasing disparity between the rich and poor and the government's inability to save the Middle Class. Between 1947 and 1972, average hourly wages increased by 72%. Since then, the average hourly wage has increased by only 4%. There are more households living at or below the poverty line...some 47 million...since the Commerce Department started keeping records in 1959, and that's regardless of which party was in power. Meanwhile, the disparity between the well off and the working poor continues to widen. It was once part of the American Dream that a college education was considered a way up the economic ladder. No longer. The average 4 year graduate starts off with a debt of $32,500 with less job security than their parents. Since 1969, the top 1% saw their after tax income gains increase 155% while the middle 60% saw only a 37% increase. The next 19% fared better with a 58% increase and bottom 20% has an increase in the after tax income of 45%, Translated, it means the top 1% far out stripped the rest of America while everyone else pretty much balanced out, with less distinction between the Middle Class and the working poor. Welcome to the Gulf of America.

Wages for top CEOs have since an increase of 354% over that of the average employee (40 years ago it was only 20%). In Germany, Europe's economic powerhouse, it's 147% while in Japan, it's 67%. Companies who had the deepest cutbacks in jobs also had the highest increase in executive compensation; 42% for S&P 500 companies. Overall profits have increased by 20%. Meanwhile, since 1990, the cost of living has gone up 67% and despite the Great Recession, productivity has increased amid all the closures and layoffs, meaning the average American worker is doing just what you thought...working more for less. It would seem to that this dramatic decline of real growth of wages, the Middle Class, and jobs also appears to coincide with the decline of union membership. Between 1983, when union membership was about 20% of the workforce. It's dropped to only 12% by 2007. As an aside, you may be interested to know that the pay for several of Labor's top leaderships, would also put them in that same top 1% category they so decry. Kettle meet pot.

There are an estimated 12 million illegal immigrants in the US right now, perhaps more. Despite opposition by the majority of Americans, it appears likely that Congress (with its 14% approval rating) will pass some sort of amnesty deal. Interestingly, it's big business that's behind the push (which isn't surprising since they are behind most legislation). This support of amnesty isn't due to some sort of social conscientious, although their PR departments will tell you otherwise as will their surrogate mouthpieces, the media. The whole idea is simply the law of supply and demand. By flooding the job market with more eligible employees, and given the decreased amount of available jobs (thanks, in part, to the exportation of jobs), wages will drop as competition for employment increases. This will also drive down peripheral costs such as health and retirement benefits as well as safety and health standards. Those who complain can and will be quickly replaced.

There's also a little discussed side bonus for big business. America, for the first time in its history, is a minority nation. In the past, white Europeans were a solid majority with a small, mostly black minority. Now, Hispanics have not only replaced blacks but are near on par with whites while Asians are expected to supplant blacks in the near future for the third position. With basically a two-tier economic structure, the "have-nots" will be too busy fighting amongst themselves to focus their attention on the "haves". And so, they gulf between the rich and everyone else will increase as the working poor battle with each other over the few jobs and whatever scraps their "betters" thrown down their way. Government will continue to serve the needs of the corporate elites while expanding their role as the "overseer class". Welcome to the new feudalism.

Today, 81% of Americans do not trust their government and a whopping 50% believe the biggest domestic threat to Americans is the federal government. Although the media will be more than happy to tell you who to blame while trying to distract us with the "crisis-de-jour", the plain fact is that Americans know exactly who's to blame. Americans realize that that both political parties are to blame and the system is broke beyond repair. What they have yet to realize, however is what to do about it. Perhaps that's why the federal government is hell bent on expanding its surveillance capabilities and acquiring the apparatus of a police state.


A Guide to Statistics on Historical Trends in Income Inequality
http://www.cbpp.org/cms/?fa=view&id=3629

Income Inequality
http://inequality.org/income-inequality/

Union Leaders in Top 1%
http://www.bloomberg.com/news/2012-04-27/union-leaders-decrying-ceo-pay-also-in-top-1-bgov-barometer.html

Americans Express Historic Negativity toward Government
http://www.gallup.com/poll/149678/americans-express-historic-negativity-toward-government.aspx

Fat Tax

Granted, times are tough. People are doing whatever they can to cut back to save money. Governments across the board are cash strapped. Many municipalities and states are staring financial insolvency in the face like death at the door. We got a full court press on to cut and tax everywhere at a time when no one, literally no one, can afford it. So, I guess kudos of sorts needs to go to Arizona for a unique, though impractical, partial solution to their financial problems. Arizona legislators are looking at taxing that Whooper and fries you’re setting there eating (or maybe, it’s that pizza and beer).

Arizona is considering a $50.00 tax per year on fat people. Why only $50 bucks and not by the pound, is beyond me. I suppose the legislators don’t want to appear too greedy in grabbing their “pound of flesh” (sorry, couldn’t resist). However, according to the Arizona Health Care Containment System, individuals who are obese, smoke, or even have diabetes, could face the annual $50 charge if it was determined that they’re not following their doctor’s instructions to develop better health habits. Arizona’s legislature has been trying to come up with $500 million dollars in cuts to reduce its $1.5 billion deficit. Taxing people with unhealthy life styles is one option being considered given their cash strapped Medicaid program.

It’s no secret or great revelation that people with unhealthy lifestyles are more prone to diseases or illnesses than people who take care of themselves. Businesses penalize individuals who engage in unhealthy or unsafe behavior while those who do comply are generally rewarded with either additional benefits, or benefits at a cheaper cost. I see two issues with this move by Arizona’s legislature.

First, individuals have a right to make specific behavioral choices for themselves. In doing so, they must bear the responsibility of their actions in terms of cause and effect (bad things will lead to bad results), and their associated costs. In the private sector, businesses try to spread the costs among its participants, but more often than not, companies are requiring individuals to bear the financial costs of their habits through higher premiums, limited or even denied coverage. It’s a choice issue. Others shouldn’t bear the costs of your choices. Fair enough right? But, what about government?

Putting aside for the moment whether or not government should be in the healthcare business, the issue of whether government has the right to regulate your lifestyle choices. Two points must be understood before we can go further. One is that government does not generate money. The argument that the government is paying for it doesn’t hold. Government, at all levels, derives its income from you and me through taxes and hidden taxes known as fees. In short, government takes from us and redistributes to others, allegedly, for the betterment of society as a whole. Sometimes it’s with our consent; sometimes not. Now, secondly, individuals who engage in unhealthy behavior use more (and more expensive) health care services, and over longer periods of time. That costs us more money. This is Arizona’s argument.

However, should, in the name of eliminating these extra costs, government be able to dictate specific behavior to us? If you want to set on the couch and stuff your face while watching Oprah, that’s your business. If you want to eat foods high in transfats, that’s a personal decision right? What about smoking? You know it’s stupid. You know what you’re doing to your body. But it isn’t anybody’s business but yours right? You and you alone should be expected to bear the costs of your actions. But, what about diabetes, heart disease, arthritis, or high blood pressure? What if you are trying to get these under control but can’t? Should you be fined? At what point does government have a right to impose any type of control on your behavior? Should government mandate a minimum amount of daily exercise? Where does it stop?

Well, government does, in fact, impose controls on your behavior already. It’s called laws, and they’re enforced by the judicial system. Some of these are health related, such as drug and alcohol use and abuse, food, water, and air standards, as well as clean and safe work areas or age restrictions. Even sex is regulated! There are penalties for violating and enforcing these rules which you and I pay for as taxpayers. So, there is some legal precedence for what Arizona is considering. But, it still doesn’t address the issue that, while possibly legal, is it justified from an ethical perspective? Just because you can do a thing doesn’t mean you should do it.

There is one more factor to consider. A disproportional number of individuals who use government services, and who lead unhealthy life styles, are the poor; the very people who could least afford to penalized any amount of money. So, does government require these individuals to see a doctor (at taxpayer cost) and enroll in some sort of modifying behavior program (again at taxpayer cost), and who'll monitor them (we can already guess who’ll be paying for it). One could argue that if they can afford a carton of cigarettes every few weeks, they can afford a $50 dollar fine once a year. But is this what we want government to do; to become our “mother”?

Since you and I are paying for the welfare of our fellow citizens who use government services in the form of taxes, we should have a say in how our money is spent. Recipients should be allowed to buy only healthy items (many states already require this). That is means no unhealthy snacks or drinks, and certainly no booze or cigarettes. Recipients should be required to perform some type of public service if they aren’t actively looking for a job or preparing for a job (like school) while they’re on the public dole. Random drug and other screenings should be required. Three strikes and no benefits for 90 days; no exceptions and no excuses. Yes, we would still have to pay for it, but the numbers (and costs) will be lower and the uncertainty of coming up for a test would serve as a deterrent. Conditions which are genetic should be exempt. If you aren’t a US citizen or in the process of becoming one, you receive no taxpayer based assistance. Of course, you can always choose to opt out altogether.

On a related note, healthy habits are generally acquired young. Schools should remove all soft drinks and unhealthy snacks from vending machines. School cafeterias should serve only healthy foods (perferably bought locally) and some sort of exercise programs should be required. Informational flyers (aimed as much for the parents as anyone) about preparing healthy meals, snacks and exercise should be sent home often. It’s not a perfect solution, but I think it’s better than the alternative.