'Tis the Season

It's Christmas time again. It seems like it keeps coming around earlier and earlier every year. Sales galore, complete with ruder than usual motorists, crowded stores and mall, not to mention some amazingly nasty bargain hunters who could put Army's Rangers to shame. I think I saw my first Christmas commercial this year just before Halloween; of course that doesn't include the perennial "Christmas in July" sales. Nothing says "Christmas" better than a good sale on appliances or a new car. As for me, I was never much of a Christmas person. Yeah, I know..."Scrooge"...."Grinch". I've heard it all before believe me.

At Christmas, people go into hock to buy the latest gizmos or the most popular toys, which everyone knows will either be outdated or fade with the next "big thing" within the next two or three months. America, despite its failing government and political influence globally, is still a land of plenty. Yes, our quality of life is in decline. No question about it. This present generation is the first in history not to equal or exceed its parents, and the next generation is expected to do worse. We have no one to blame but ourselves....and Washington which has consistently ignored the people with its debt prone policies and bailouts of the uber-rich ruling class which comprises the oligarchy under which we now all live. But, I digress.

America is still the land most people want to come to. We're not the most popular nation in the world. That honor falls to Germany. No, we are not the freest people on the planet. Far from it. That honor goes to tiny Estonia on the Baltic. In fact, America isn't even in the top ten freest nations. When Obama took office, the US was ranked tenth. Now, we're ranked 12th. That means there are 11 other countries with more personal and economic freedom than we have in the good ole US of A (kinda scary isn't it?). In terms of academics, we don't fare much better. We're 17th in the world in academic performance, yet we spend more money per student than most of the 16 countries above. In math, we're a dismal 25th; 17th in science, and a pathetic 14th in reading.

So, who's on top? That would be Finland, South Korea, Hong Kong, Japan, and Singapore. Latvia, Chile, and Brazil are making academic gains at three times the rate of US students while countries like Slovenia, Columbia, Poland, and Portugal are making academic gains at twice the rate of the average US student. At this rate, it's a good thing Velcro has caught on. Shoelaces may soon prove to be too much. Meanwhile, the US spends the second highest on children's toys, with an average of $371.00 per child. Wahoo! The Brits win honors for spending the most on the little tikes at a whopping $438.00 each. France comes in third at $338.00 each on their little Napoleons and Josephines. Spain came in last. They only spend $176.00 on their little ninos y ninas.

Of course, the other side of the coin, while American's spend an elf's ransom on Christmas toys, we're nowhere near the top when it comes to spending money for Christmas. Americans tend to spend up to 5% on their annual income, the Greeks and Russians will drop 6% of their income, but even they aren't first. So, who's number one? Well, as hard as it is to believe, the "Christmas Consumer Award" goes to the South Africans who spend an insane 15% of their annual income (adjusted to US dollars) on Christmas. No wonder Nelson Mandela was always smiling in all those pictures!

Yet, despite all this spending, America still has a poverty rates comparable to any third or second world nation. The bad news is that our national poverty is 14.5%, the good news is that it's down for 15% from 2013. The poverty rate for children is down by two million to 19.9%, or about 14 million children from a previous high of 21.8%. However, with Obama's attempt, apparently unconstitutionally, to grant executive amnesty to some 5 to 6 million of the 12 million illegal immigrants currently in this county, the poverty rate will likely increase as those individuals will now officially be counted (many had previously avoided the census in years past) and struggle to find work openly.

The backbone of this county, the middle class, has also seen its number decline with the average income level remaining steady despite annual inflation growth (adjusted for inflation, the average purchasing power for the middle class is equal to 1975 rates). The one group that's done well is of course the elites; the top 5 percent, whose numbers include the oligarchy that is now America. Their incomes have increase 14% since 1995 (since 1979, the top 1% have seen their incomes grow by 200% compared to the middle class, which has seen a growth of 67% while the bottom 20% has seen a growth of just 47%). If we forget about just income and look at overall wealth, we'll find that the top 3% controls 54% of the wealth in this country, and it's growing. So much for the economic "diamond" model most of us learned in school which showed a small group of poor and rich at the bottom and top and a large middle class in the center.

So what does any of this have to do with Christmas? Well, first is that we should be grateful for what we do have. While there are some who are doing way better than us, there are many more doing a lot worse. We need to reach out to those who are in need and not give them a handout as much as we should give them a hand up. We must find ways to return America to the land of opportunity it once was. Everyone of us has needed some help at some time or another. That's fine. There's nothing wrong with that, nor is there anything wrong with offering a helping hand. If anything, that's about as "American" as it gets, but so it helping someone get back on their feet so they can get on with life.

Christmas should be about helping others, not going overboard with toys and gadgets. Maybe it's time to make a point of adopting a star off of an "Angle Tree", making a donation, or volunteering somewhere a family tradition. Maybe too we should loudly demand those in our state capitols and in Washington start listening to us for a change. Let's penalize companies that ship jobs overseas yet continue to get tax breaks. Let's end corporate welfare and cut red tape for small businesses so they can hire more local workers.Let's make sure the super rich pay their fair share of taxes, and speaking of taxes, let's overhaul this outdated tax code to make it more fair for the poor and working poor, which includes what was once known as the middle class. Let's take money out of politics, especially corporate money so that our votes actually count for something. And let's get politics out of the classroom and get back to teaching students what they need to know to be productive citizens, and that includes civics, volunteerism as well as restoring discipline, and while we're at it, we need to invest in trade schools again. Not every job requires a college education and not everyone is cut out to go to college. That concept seems to have worked pretty for Germany, Japan, and South Korea. By investing in our children's education, we're investing in America's future. What better Christmas wish could there be than a stronger and compassionate America?

Happy Chanukah and Merry Christmas from Another Opinion.



U.S. Drops From Top 10 Freest Countries in 2014
http://www.nationalreview.com/corner/368410/us-drops-top-ten-freest-countries-2014-index-economic-freedom-alec-torres

Best Education in the World
http://www.huffingtonpost.com/2012/11/27/best-education-in-the-wor_n_2199795.html

Amount Spent on Toys by Country
http://www.statista.com/statistics/194424/amount-spent-on-toys-per-child-by-country-since-2009/

Christmas spending gone global
http://www.usatoday.com/story/money/business/2014/12/12/ozy-christmas-spending-gone-global/20281179/

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