While I can appreciate the Democratic calls for college education subsidized by the government and understand that many parents would rather spend time on their careers instead of raising their children – and that many have no choice in this matter, I have a question about “people like us”.
First, me. I went to college, but never really enjoyed it. In fact, after the sixth grade, I did not like school. I like to learn and to this day at the age of 64, I’m still reading, researching, learning, but school was not for me and college even less so. I’ve been working since I was 16 and for the most part, with a few exceptions, always enjoyed my jobs, none of which required a college diploma. I do have a college diploma but it’s a BA in History. Why History? It held my interest but I never, ever saw it as my ticket to a paycheck. I’ve been in sales, restaurants, been a truck driver, ran a small advertising agency, been a service dispatcher, and lately, a produce clerk at a food market; a job that I find to the the most enjoyable of any job I’ve ever had.
Instead of giving people like me “free college”, how about giving us better wages, wages that can support a family – or is it the contention by the party that only college grads with specific areas of study deserve a sustainable wage?
Next, my wife (and me). We had two children and never used any sort of child care with the exception of a baby sitter on the occasional weekend night out. We arranged our schedules so that even when my wife worked, I would be home. My wife works part time and for the first year of each child, she did not work at all. It was not easy and it meant agreeing to priorities that were different from many of our friends. No new furniture, no fancy vacations, hand-me-down clothes for the kids, and Disney World? Forgetaboutit.
Instead of free child care, how about giving us a bigger tax deduction if we choose to stay home and watch our own kids? Yes, this should be a choice and yes, it should apply to moms or dads, and of course, it should be limited to certain income levels, but if we are going to help those who want free child care, would fair ask for help for those choose to take a different route?
There is classism at play. The college degree is increasingly becoming a socially-acceptable proxy for determining who is “deserving” of a good job. That makes sense for jobs requiring specialized training. But if we are talking about entry-level jobs that require only high school-level skills, then the distinction is artificial.
I don’t know that it is ‘classism’ as much as cold hard efficiency: a high school diploma is not a guarantee of literacy and/or numeracy. In fact, a large number of people may come out of high school functionally illiterate/innumerate. I know this because when I was in college I either tutored a number of them in basic literacy, maths, etc or help grade their papers as a TA. A college degree may not be perfect either, but it is more of a guarantee than a HS diploma.
Businesses want employees who can read and write and understand maths. Public high schools simply don’t guarantee that. This might be due to ‘social promotion’ or ‘teaching to the test’ or overcrowding or politics football or religious stupidity or just plain incompetence, or the fact that the original impetus for public schooling is closer to ‘warehousing’ in the aftermath of obliterating child-labor laws than a precis on literacy and mathematics…. but it is a real and large problem, today, that a significant portion of HS graduates are not fluent in basic reading, writing and ‘rithmatic. Businesses, by and large, have defaulted to college-as-arbiter of this. It’s not fair. It’s not right. But it is what it is.
JohnTMay exists on the upper end of the spectrum and he did well in school, though he didn’t ‘like’ it. There are many many more students in the middle and lower end of that spectrum who struggle. And before you jump on me for enabling the situation, let me state, unequivocally, that no, the answer is not ‘college for everyone’ — I’m all in favor of fixing public school education and making a diploma exactly about literacy and numeracy — and making the public schools do the job, comprehensively, they are supposed to do.
. Then let’s fix the problem with high school education.
Well, that’s been attempted. Several times, in fact.
Because of the attempt(s), there is now two problems: first, the actual problem of needing to fix HS education and; secondly, lack of confidence on the part of business and industry in either HS education or the fixes attempted thereto…
If we can agree that people are being discriminated against for the sake of “efficiency,” then that’s bad enough. And if efficiency alone were the highest value, I can think of far more efficient ways to prove one’s literacy than to plaster the wall with diplomas. Let’s not forget, job-seekers are paying-off student loan debt, for the privilege of not being discriminated against.
I’ve known some very literate, smart, hard-working people who could not tolerate institutionalized learning. Discriminated against them is not just wrong, it is a loss for our society.
Well, ‘discrimination’ ascribes intent and I’m not sure that’s the case here. I mean, I guess you can say all jobsearch websites ‘discriminate’ against people who live in central Africa without internet access? But I doubt there’s some web-designer laughing at how thoroughly he’s screwed the job seekers of central Africa…
Well, efficiency alone might be an important heuristic over the entire job market. But individual employers are simply looking to maximize their investment and aren’t in the business of proving anyones anything. Do you blame them for this? A college diploma is a better signal of literacy/numeracy than a HS diploma. Sucks that that’s true but it is true.
If you want someone to blame, don’t blame the businesses that are simply dealing with what they are giving, blame the givers: the school boards that wastes its time on denying evolution or requires their teachers to be efficient test givers and not efficient and effective teachers or doesn’t fund their school properly because it might help black students or who won’t pay their teachers adequately because unions or any of the number of other problems with our public school system.
I think anybody who is truly literate, and hard-working, would (like JohnTMay) coast through the “institutionalized learning” (whatever in the blue funk that’s supposed to mean) without being, in the least, fazed. Try again.
My primary interest was to identify the problem, not assign blame. The simplest solution would be to have some sort of rigorous exam for HS graduates, which measures literacy to the satisfaction of employers. But there first needs to be some agreement that there is a problem, before we see something like that happen.
Some people learn well in classroom settings and some don’t. I did very well in a classroom setting — I found getting my BA degree to be even easier than HS. So like you, I find it hard to understand how any half-way intelligent person would fail to get a college degree. But there are definitely smart people who struggle with college.
My brother, for example — he could not make it through even one semester of college, in spite of my parents’ begging. So he jumped straight into the job market and has done fine, thanks to his literacy, intelligence, and leadership qualities. At the same time, I have seen first-hand how many opportunities he has missed-out on, simply because he lacked a college degree.
I think society has an obligation to make college accessible to people who have the ability and inclination. In an earlier time, America led the world in making a quality high school education available to every American. I think we now need to do the same for a college education — including graduate school.
It is perhaps worth mentioning than one of the more effective ways to reduce the advantage accrued by having a college degree is to increase the number of people with college degrees. Increasing the supply of college degrees will reduce the marginal value of those degrees.
You would reduce the advantage of having a degree vs other people with a degree. But for someone like my brother, who has no degree, the problem is that certain positions require a degree, just to be considered.
Indeed, not having a college degree will always be a disadvantage, just as not having a high school diploma will always be a disadvantage.
America has a long tradition of supporting public education, because Americans determined early on that America as a whole benefits from an educated population.
People like your brother may choose to ignore the opportunity, just as some people choose to drop out of high school. Such choices do, however, have consequences — and always will.
No sustainable government can roll back the law of supply and demand, and no sustainable government can eliminate the central role of personal responsibility in life.
Decisions have consequences.
Believe me, my brother is just wired differently. At least when he was younger (it seems to be mainly young men who fall into this category), textbooks and lectures made his brain shut down. But put him in a job and he did fine.
With maturity, my brother has become more tolerant of book learning. At this point, I am sure he could get a college degree, if he chose to pursue one. But he established himself in a workplace that gives him a good enough income without it, and at a certain point, it does not make sense to start over. And of course his time is far more precious, now that he has a family. But had he not had this barrier early in his career, he would be in a better position right now.
A college degree should only be required, when the position requires college-level skills. If we need some way to weed-out poorly educated HS graduates, we could find an easier way to accomplish that. There are enough real barriers in life — we should not be in the habit of creating artificial ones.
I’m not sure how you can prohibit employers from requiring a degree. If I’m a hiring manager even if we didn’t require it if I have two resumes in front of me one with a degree and one without I’m still likely to look more favorably on the one with the degree.
@ requiring a college degree:
This is an example of how the much-maligned affirmation action laws helped all of us.
Employers often used a requirement like this to exclude minority applicants, so that firms with disproportionately few minority employees often had whites with no degrees filling positions that had been advertised as requiring a degree, and complaints showed that black applicants were rejected because they lacked such a degree.
Employment laws were therefore changed so that if a “requirement” was stated for a given position, an employer had to be able to show, upon request, that it had no employees in that position who lacked the stated requirement.
The net result was to make it easier for those without college degrees — or “five years of experience”, or “professional certification” and so on — to obtain good jobs.
In my field, my colleagues and I always got a good laugh from want-ads (remember them?) in the Globe that said they were looking for programmers with “five years experience programming Foobar” when Foobar (“Java”, “C++”, “Javascript”, etc) had only existed for three years.
For me the catch-22 is, if every job wants experience how does anyone ever get experience?
When I was a truck driver for a major food company and spent my days delivering frozen pizzas to grocery stores in the Boston area, there was an opening for a supervisor position that I was encouraged to apply for. I was not really interested but was told that “because you have a college degree, you are the only driver in the department that can apply, and they would prefer a former driver”. I had been on the job for less than a year and all that I knew was taught to me by a co-worker who had been there for years and could run circles around the rest of us. He would have been the best choice, if you asked any of us, but he lacked a college degree.
In the end, I left the company when they consolidated a few of the routes and I was faced with the choice of applying for the supervisor position or leaving the company because my route was eliminated. The supervisor position required two overnight days a week because of travel. I was not about to leave my family that often with two children in school.
@Johntmay Exactly. Degree requirements often prevent the people making hiring decisions from choosing the best person for the job.
Call it “classism” if you like, but straightforward supply and demand is a simpler answer.
Sites like this observe that EVERY corporate job opening attracts 250 resumes. Of those, 4-6 candidates will be called for an interview.
So a given application has about a 2% chance of even getting an interview.
If most of those applicants have a college degree — any degree, in any field — and some do not, the ones with a college degree are FAR more likely to be invited for an interview.
The premise of this entire line of argument is preposterous. Our society has the ability to provide college for anyone who has the ability and desire to attend. We should make a college diploma (any diploma, including graduate degrees) just as available and affordable as a high school diploma.
Again you repeat this canard.
You are the only source I’ve heard, anywhere, who relentlessly repeats your canard about “deserve”. A car that attempts to go around a 30 MPH curve at 90 MPH does not “deserve” to crash. Inanimate objects do not “desire” to reduce their velocity (even though medieval-era observers once thought so).
Cars that go too fast crash because the laws of physics predict that they cannot make the curve. In a competitive economy, most people without college degrees receive lower compensation because the laws of economics (such as supply and demand) predict that. There are no evil manipulators deciding that “only college grads with specific areas of study deserve a sustainable wage”. Jobs that are more profitable require skills that are harder to find. That means that those who have those skills are paid more than those who do not.
You relentlessly complain about the law of supply and demand, as if some evil conspiracy created it. You might as well complain about F=mA.
The answer to your perhaps rhetorical question, therefore, is again “No”. That is NOT the contention of any party.
Your last paragraph essentially asks the government to subsidize the already-comfortable at the expense of those who don’t have the luxury of making the choices you and your wife made. The two of you made those choices decades ago, when such choices were an option for middle-class families. My family made the same choices, by the way. I enthusiastically agree with you that having a parent in the home is better for the child(ren) than ANY paid day-care provider however that day-care is paid for.
Sadly, only a tiny handful of families have that option today. Ms. Warren herself has given several lectures where she lays out in great detail how our economy has taken away those options. In today’s world, both parents need to work in order to provide basic essentials of life — shelter, food, medical care, transportation.
The young people who benefit from Ms. Warren’s proposal are not squandering their money on new furniture, fancy vacations, new clothes for the kids, and Disney World. They are instead paying rent or desperately struggling to save for mortgages, heating bills, food bills, keeping old cars on the road (most can’t possibly afford to live near public transportation that works), and so on. Too many have no chance at all to save for retirement. Too many have crushing student debt burdens, imposed as the ante for the entry-level job that doesn’t pay the bills even without the student loan debt. Young people without college degrees struggle even more.
The underlying assumption of your final paragraph is as insulting as the old Republican canards about “welfare moms” and pink Cadillacs.
Low wage jobs pay low wages because the individuals doing those jobs lack political power. That’s no canard.
The problem is low wages, not a lack of child care.
It’s the same with the “housing crisis” in Boston. We hear day after day that ordinary non-college working class people are being priced out of the market. That is because their wages have been stagnant for 40 years.
Why have their wages been stagnant for 40 years? Pro Tip: They lack political power.
Low wage jobs pay low wages because the market doesn’t value the work product, and because any given worker is easily replaced with another. The canard is your vocabulary — terms like “deserve”.
It’s true that organized labor can increase political power by reducing the labor supply — union workers refuse to work for less than union scale, and thereby raise the price of the labor. The response is generally to find ways to break the union and simultaneously reduce or eliminate the need for the worker.
The work product is low-margin and low-profit. Employers may choose to leave the business in response to raising the cost of that low-margin and low-profit work product.
I notice that it was your wife who didn’t work at all during the first year, and part time other than that. You presumably worked full-time. Once again, you seem to generalize your opinions as a older white male to today’s population in general. I think Ms. Warren and her staff have a better handle on what today’s economy — and electorate — looks like than you.
Child care most certainly IS the problem for mothers today — and fathers who love their wives and children. So long as men earn 30% more than women, the father’s income is going to be harder to give up than the mother’s. The result is a vicious cycle that keeps women trapped in the role of breeder and care-giver and men trapped in the role of provider.
Breaking that cycle requires:
1. Access to contraceptives
2. Access to child care
3. Access to health care
4. Access to education
5. Equal pay for equal work for women and men
The bottom line, that you resolutely refuse to admit, is that two incomes are absolutely necessary in today’s economy. That is especially so for families where one or both parents lacks a college degree.
You are demanding that the wages of our least productive and least valuable workers be increased the most, so that those unskilled and marginally profitable workers can still live a middle-class life with just one parent working. Good luck with that.
Your concluding sentence is a circular argument. Unskilled and marginally profitable workers lack political power because, like it or not, we live in a capitalist economy that uses supply and demand of workers to allocate the wealth our economy generates. Wealth is power, including political power. Political power will not be shared in any meaningful way until wealth is shared in a meaningful way. Wages do not make anybody wealthy. Hence, raising wages will NEVER increase the political power of unskilled and marginally profitable workers.
Ms. Warren is proposing to tax wealth. She is proposing to use the resulting revenue to address the most crushing issue that young families face today.
You are arguing against that proposal. Your “support” for Ms. Warren seems to be approximately as reliable as your support for the Democratic party in the 2016 election.
Although I think his point all along has been that every job should pay a living wage, with which I very much agree.
@ living wage: That requires a definition of “living wage”.
He argues that a minimum wage worker should be able to live a middle-class lifestyle — home, cars, children, spouse at home with the children — on that minimum wage.
I think most proponents of “living wage” assume that the worker will have a roommate or working partner/spouse. I think most assume that home ownership will be rare for “living wage” workers, even with both partners working.
I think that access to affordable child care and contraception is therefore a fundamental requirement of any such living wage.
I’ll call on Adam Smith to define a “living wage”:
A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon occasions be somewhat more; otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation.
I see no mention of roommates or two parents working. That’s all part of the world that we have built, together in a world where employers externalize the real costs of labor with government subsidies to fill in the gaps.
One of my favorite Bill Clinton quotes reads: “If you see a turtle on a fence post, you know it didn’t get there by accident.”
There is a reason why a two parent family without a college degree and one parent employed cannot sustain itself and it’s because we put it on that fence post.
@turtle on a fencepost:
You’ve offered one possible explanation of who put the turtle on the fencepost. There are others.
Funny that you should offer such an explicitly sexist quote in this context.
When that was written, only men were allowed to work. In the world of Adam Smith, women existed to make babies, please the men around them, perform household duties, and silently obey whatever the men around them demanded.
That is not today’s world.
There is a relatively long list of reasons why a two parent family with a college degree and one parent employed cannot sustain itself. Elizabeth Warren herself made a compelling enumeration of those reasons in her 2003 Berkeley Lecture that I think you’ve referenced here before.
Those reasons explicitly excluded the things you mention in your thread starter. As a percentage of family income, the following expenses went DOWN for a two-parent two-child family between 1970 and 2000:
– Clothing: -32%
– Food, including eating out: -18%
– Appliances: -52%
– Per-car cost: -24%
In fact, ordinary consumption went down or stayed about the same.
What went up?
– Housing (mortgage payments): +76%
– Cost of employer-sponsored health insurance: +74%
– Child care: Infinite (new expense)
– Taxes: Much higher (second earner pays higher marginal rate)
– ER costs have skyrocketed
– Health care costs — after health insurance — have skyrocketed.
Single-parent households with children are even worse.
I don’t know about turtles on fenceposts. I do know that two-parent households are here to stay.
How in the world is JTM’s last comment or quote sexist?
@ sexist quote:
It’s the quote.
Do you not even notice the pronouns?
Adam Smith wrote of a world where women were literally invisible — written out of the very language of the day. It wasn’t “just language”, either. It took until 1920 to amend the US Constitution so that women could vote.
My mother inherited small share of a Louisiana land grant (worth a few thousand dollars) that was being sold in the 1980s. My mother had to obtain a notarized signature from my father in order to close the sale, because Louisiana law did not recognize the signature of a married woman on any property transfer. Bear in mind that this was property inherited by my mother from her family. My father never set foot on the land, had no ownership interest in the land, and played no role in acquiring the property. Yet my mother could not sell her own property solely because of her gender. There were no such restrictions on married men.
Try the above quote a different way:
Words matter.
I am misremembering the date of my mother’s property sale, it was during the 1970s. The relevant Louisiana Head and Master Law was repealed by LA in 1979.
To be honest I didn’t dwell on the pronoun gender because the way my brain works OF COURSE masculine pronouns especially when used in Smith’s time can be interpreted to apply to either gender if there is no other reason from context to restrict application to literal males. Likewise, when the Declaration of Independence proclaimed that all men are created equal I think the 21st century mind reads it as all people are created equal without even a conscious thought. Sure your rewrite to use feminine references works equally well today, but the thought never even crossed my mind.
I think it means not living in poverty if you work full time, but we may need to revisit what constitutes poverty too.
I share your understanding that it means not living in poverty. I think that also means living with roommates if single or with a working spouse if married.
The Federal poverty guideline for 2018 is $25,100/year for a family of four — about $12/hour.
I think it should be for a single person to live out of poverty, neither assuming that roommates/family will make up the difference nor that a single wage needs to support a whole family.
From the same page, the federal guideline for a single person is $12,140/year — $5.84/hour For that single person, 200% of the poverty limit is $24,280.
The usual rule of thumb for how much a person can afford to spend on rent/mortgage is 25%-33%. So that single person at the federal poverty line is able to spend about $250-300/month on housing.
That’s perhaps enough for a room in a rooming house.
I’m not sure we can call that a “living wage”, though. A few years from now, the new Massachusetts minimum wage will be $15/hour — $31,200/year. That’s more than twice the federal poverty limit.
Elizabeth Warren offered $22/hour a few years ago, but I think that have been in a rhetorical context (“Even if the minimum wage was $22/hour …”) rather than an actual proposal.
The minimum wage was raised to $1.45/hour in 1970 for non-farm workers. That’s about $9.30/hr in 2018 dollars. I don’t think a minimum wage worker in 1970 could live much better than a minimum wage worker in 2019.
Perhaps it makes more sense to look at what sort of job a typical first-home buyer had in 1970. Then look at how many of those jobs are available today, at what compensation, and with what qualifications.
I realize that this seems random in the context of the conversation, but the ‘law of economics, such as supply and demand’ are a total farce and are simply a projection of order on something which does not exist. Since this assumption occupies such a central role in the perception of truth, justice, equality etc., it actually makes truth justice and inequality impossible, since these magical ‘forces’ act as a relief valve for anything unpleasant or does not jive with desire or expectations. It is an intellectual tarpit.
The reason we are still arguing over taxes and trade and equality 200 years after the revolution is because there are multiple tar pits that people are stuck in.
What is missing from johntmay’s post is that fact that a single income is widely inadequate. While this is in part due to our advanced consumption (i’m typing on a computer and using the internet, two expenses that didn’t exist a brief 30 years ago, with a cell phone in my pocket that is equally capable and doubles my consumption. Of course, anything anybody suggests for any reason can be viewed as ‘unfair.’ In our advanced world everybody is a victim. While few will stage their victimhood with an attack and a noose, our basic political indoctrination begins with being a victim of the King and has no limit. John says he would prefer better wages, but what are fair and adequate wages in a ‘supply and demand’ marketplace where everybody is expected to exploit their neighbor for selfish advantage? We are living in an absurd world.
Like John, I too was a history major in pursuit of knowledge and truth. Ideas rule the world, not men. Men are simply the vessels that carry the ideas. Because so many bad ideas are so widely accepted, things are a mess.
I don’t know why Warren chose to make childcare a central issue at the start of her campaign. It was her second clumsy move. The first being the millionaire tax. Neither will fundamentally fix anything. While the perfect is not the enemy of the good, I would have hoped for a more direct strike at the root. Two simple things would be to impose wage parity within companies (say 8:1) and to rescind the Rule of 7/8’s in lending, which gives bankers a huge advantage over borrowers. Income inequality and wealth concentration is an accounting phenomenon, based on the numbers we write down. If we write down different numbers, then we will get different results, but it is all based on our belief systems. The hypocrisy of the rich is no different than the hypocrisy of the middle-class.
The law of supply and demand is no farce and is straight forward to derive. It assumes a finite supply of a particular product and finite supply of money. For most commodities traded in a competitive market, it is straightforward to graph the resulting relationship between demand and price. One good example is local gas prices.
Absurd or not, no business has the ability to print money. That means that if there are more candidates competing for a given job, the wages required to hire one are lower than if there are only a few candidates.
When looking at a graph of price vs demand for a particular product, it is easy to see peaks and valleys in the curve. Producers look to keep their price at or near such a peak, because they make more money than if they they charge too little. Producers look to avoid a valley, for the same reason.
Supply vs price curves can also be drawn, and analyzed similarly.
The intersection of the demand and supply curve is an equilibrium point. The market will tend to stabilize at that price point.
There’s no magic involved in this part of the discussion.
Wage parity within companies is irrelevant to wealth concentration, because the people who hold nearly all of the existing wealth and nearly all of the newly created wealth are not affected by wages.
It has been illegal for US lenders to use the rule of 78s for loans of longer than 61 months since 1992. There is no evidence that said elimination has made any difference at all in whatever advantage bankers have over borrowers. Most revolving debt, such as credit card loans, use an “average daily balance” method to calculate interest.
In short, I suggest that your focus on the rule of 78s is misplaced.
It sounds as though you’re arguing that wealth concentration is an “accounting phenomenon” and therefore not real. That’s a more “magical” assertion than anything else on the entire thread. Wealth concentration is real and has immediately and devastating real impact.
Economic suffering is epidemic throughout America, even while our economy generates more wealth than ever before in human history and even though all the metrics our government and media use to talk about economic performance say the economy is healthy and thriving.
If you think the pervasive economic suffering is not real, I suggest you take a walk through downtown Fitchburg MA, downtown Cumberland MD, Detroit MI, or pretty much anywhere else in America.
You may be right about the rule of 7/8’s, but if you do a loan extrapolation in most calculators it appears to be still present. Maybe straight interest itself is bad enough to create what I thought was caused elsewhere. And 7/8’s is worse. That said, she would have been better off attacking interest rates generally then. The rich get rich mostly off unearned income. It should be taxed considerably higher and interest rates lowered. Credit cards at 30% is loansharking.
The supply and demand theory is a justification for screwing people because there are no established norms for profit margins. Whatever you can get away with is acceptable. But, we are all buyers and sellers, so we must live with the consequences of our own actions. All profit is someone else’s expense. Adam Smith said that a nation with the highest rate of profit goes to ruin the fastest. He was absolutely correct. Pricing should be based on cost, not the recklessness of greed. America is the richest country in the world because we are also the poorest. Profit divides and concentrates wealth, whereas the “wealth of nations” is found in equality. That is what the revolutions (American, French and Russian) were about. We have replaced the goal with false economic dogma. Goethe said none are more enslaved than those who think they are free. America to a T. We are enslaved by false capitalist theory and both Marx and Smith have been twisted beyond recognition. The same thing happpened to Jesus.
The original post is nothing more than WIIFM. What’s in it for me. Because of this baseline of hypocrisy no problem can get addressed because nobody has an interest in the problems of others. It’s “give me more and they won’t have a problem.” But that is the baseline of capitalism, too. No “more perfect union” is possible with these approaches.
I share your criticism of the original post (“nothing more than WIIFM”).
I suggest that the objections you raise in your second paragraph are not to “supply and demand theory” as much as to our collective willingness to allow the resulting consequences to go unchecked. Let me return to my car-on-curve metaphor — we do not wail and gnash our teeth about how unfair “mass and acceleration theory” is, we impose a speed limit.
What you are calling supply and demand theory is a description of a mathematical system. There is no need for an “established norm for profit margins” because the system drives supply and demand to whatever the equilibrium point is based on all the factors involved.
Nobody says that the result is fair or desirable — to the contrary, there is compelling evidence from sources like Laszlo Barabsi that the result of an unregulated free market is extreme and painful wealth concentration.
I suggest that instead of objecting to “supply and demand theory”, it is more constructive to use government authority to intervene in the supply and demand curves to move the equilibrium points to places with more appropriate profit ratios (or whatever the desired measure should be).
I think the key message from Ms. Warren’s proposal is to tax wealth itself rather than changes in wealth. One of the drivers for today’s high interest rates is higher demand for borrowed money than we saw in earlier generations. One of the reasons for THAT is that our ultra-wealthy have sucked so much wealth from the rest of us that the rest of us (the tail of the wealth distribution curve) don’t have enough wealth to live sustainably. The most effective way to address that is to transfer enough wealth from the ultra-wealthy to the rest of us so that we lower the demand for borrowed money. Most consumers do not borrow from credit cards at 30% interest rates unless they feel compelled to do so.
Finally, just a comment about the second-to-last sentence of your first paragraph (“The rich get rich mostly off unearned income”). The overwhelming majority of the ultra-wealthy inherit their wealth. At the levels we’re talking about, it is straightforward to manipulate portfolios to move wealth into instruments that avoid generating whatever kind of income (interest, yields, short- or long-term gains, etc) we choose to tax. This one of the fallacies of attempting to tax income instead of wealth.
The primary impact of steeply progressive income taxes is to make it far more difficult for people to become wealthy. THAT is one of the lies that “liberal” Democrats have been telling for generations. The Kennedys prefer to keep the riff-raff far away from their Hyannisport neighborhood.
Most of the ultra-wealthy are born into their wealth. That’s why we kept the top estate/gift tax rate at 76% from 1940-1976, and that’s why the GOP slashed that top rate to 40% as soon as they could. That’s why the GOP is so eager to repeal the estate/gift tax altogether.
The most effective and sustainable (in the long term) way to solve wealth concentration is to tax generational transfers (gift and estate taxes) so that extreme wealth (such as the portion of estates above $50 M) is transferred to the public rather than to the progeny of the deceased. For example, a 76% rate on the portion of an estate above $50M and a 95% rate on the portion above $1B (to use Ms. Warren’s wealth thresholds).
I doubt we disagree in substance politically, but please allow me to split a few hairs here because ultimately all political progress gets stalled on slight obstacles of perception, even at the extremes of left and right wing politics. Everyone thinks money is ‘real’ (it isn’t) and that there is a finite amount (there isn’t) and that the problem with the system is the behavior of other people (rather than one’s own views and behaviors based on those views). Even worse, in areas where there is wide agreement, there is the greatest error. Democracy is an attempt at a quantitative solution to what is a qualitative problem.
Supply and demand theory are actually four (4) different farces. Your explanation of the price equilibrium is just one of the four. Every transaction has a buyer, a seller, the product and money. Plus there is the price and the government which establishes a widely accepted money. (people won’t take monopoly money, foreign currency with the same numbers or colonial greenbacks). For everyone one of these elements there is a school of economics: monetarists, supply-siders, communists, libertarians, Keynesians, etc. All are simply using a supply and demand theory paradigm but focusing on one element, rather than seeing how all pieces fit together and how each element is itself a matching paradigm repeating in a geometric pattern. For example, a business will buy low and sell high, but this is based on having both a supplier and a customer, who are also doing the same thing. As the product moves to the final consumer, lets call this the Consumption Point, the process stops. The price of the commodity inflates all along the the process, and the final consumer pays all the profits for everyone who touched the product. When that buyer ceases his buying habit, a bust ensues, because now nobody in the supply chain can do anything. Demand has evaporated, and the capacity for supply is dormant. Boom has become bust. When everyone was buying, the effect rippled through the economy, when one person stopped buying, the bust likewise rippled through the economy. This is because there was never an equilibrium, real or imagined or theoretical.
Your suggested solution that government can fix the problem is only true if it understands what it is trying to regulate. In fact, government is a huge part of the problem by its very existence. But, if it didn’t exist, the problem would continue, because the problem stems from valuation itself. For example: how many eggs should a chicken cost, if we were to trade? There is no ‘right’ answer to this question. Sure, two people can agree, but that does not make a system that people can rely on. So the greatest breakthrough is in recognizing that we don’t have an answer to basic questions, and that we can only treat symptoms caused by the attempt at valuation.
To this, we add a generational problem, since everyone is born into a world where all the rules, property and education/indoctrination are controlled by the previous generation. If the previous generation drift towards idiocy, then ‘the sins of the fathers’ really do fall on the next seven generations.
When you compound multiple generations of errors, you end up with America in 2019. We have instant communication in vast quantities of absolute idiocy, which is generally matched by an opposing vast quantity of absolute idiocy. Or, in the case of economic theory, four idiotic versions of supply and demand theory, none of which can separate the tree or the forest.
The macro and micro theory should be mathematically obvious and provable. The fact that we have a $30Trillion accounting adjustment known as the National Debt, and that most people and businesses are in debt, as well as most/all national governments, is one hell of a pile of empirical evidence that is being ignored. It can’t be seen because of the belief in a natural hand of make-believe that is guiding the system, rather than an analysis of cause and effect.
You wrote
which is 100% FALSE. I have been self-employed most of my life. The price is whatever I say it is. When I create profit, I create money. What I create in my accounting records is no different than if I took a $1 dollar bill and added two zeroes to it and called it a $100 dollar bill. The difference is that I have the buyer as a co-conspirator because of their need for what I am selling. This is what I meant earlier by widely held misconceptions or assumptions that categorically false. Gambling was terrible, until the government decided to tax and profit from it. The same as with mariquana.
The nations of the world have, more or less, settled on a system with exchange rates and widespread acceptance of currencies (Brexit notwithstanding) but beneath this foundation is a system of make believe accounting where a select few can add zeros at will, and others cannot. But even the ability to add zeroes has its limitations, which is why the banks needed a bailout in 2008. Even unearned income has limits of exploitation. If the slaves don’t eat, then they can’t work. The system is mathematically absurd at its heart, and supply and demand theory is just another layer of absurdity.
The problem with Warren’s approach is that it leaves the system and the thinking unchanged. Obviously better than most of the others, but it will be another wasted opportunity to lead while protecting the status quo from critique. FDR must be turning over in his grave, based on what the Democrats are offering the nation.
I’m sorry, but there’s just too much to unpack in your comment and too many assertions that I find either false or incomprehensible.
There is nothing illusory about currency. It can be bits of shell, bits of gold, bits of silver, or paper promises of same. The point of currency is to provide an alternative to barter exchanges. It is most definitely real.
Currency does not have to be issued by a government, as the the various blockchain currencies demonstrate.
“The price is whatever I say it is. When I create profit, I create money. What I create in my accounting records is no different than if I took a $1 dollar bill and added two zeroes to it and called it a $100 dollar bill. ”
I find this to be entirely content free. I have no clue what you are talking about. Whatever you write in your accounting records, if you want to buy something that costs $100, your seller is unlikely to accept a $1 dollar bill with your hand-written zeros on it.
“… how many eggs should a chicken cost, if we were to trade? There is no ‘right’ answer to this question”
This is precisely the problem that currency solves. Currency, in this context, must be finite. There is no requirement that it be issued by a government. Instead, there is a requirement that the buyer and seller agree to use whatever currency is chosen.
For a given choice of currency, a market of egg and chicken buyers and sellers will emerge. Some chicken sellers will demand 23 oyster shells. Others will demand 15. some egg sellers will demand 17 shells per egg others will demand 3. Over time, the market will reach an equilibrium price for both eggs and chickens. That’s an emergent property of the system. It is nevertheless very real. Let me remind you that the pressure exerted by a gas on its container is an emergent property of the collection of molecules inside the container. If you think it’s not real, try heating a propane tank with a blowtorch.
Supply and demand is a very real phenomenon of micro economics. Changes in money supply, money velocity, the multiplier effect of banks and governments lending money, the difference between hard and soft currencies, and so on are phenomena of macro economics. The two fields — micro and macro economics — are different. Your conflation of them only obfuscates whatever assertions you’re attempting to support.
Well, I guess it is no surprise that you find me incomprehensible. The line ends around the corner.
Yes, money is more convenient than barter, and it can be whatever product we choose. However, there is no ‘finite amount,’ there is only a finite amount for individuals, which is why micro and macro economics need to be unified, not separate spheres as you imply. The ends are the means, just as the goal is the process which is the system. This artificial duality is what Orwell would call doublethink, others called hypocrisy, double-standards, etc., but I see it more just as contradictions. We are all confused by our dual role of buy and sell. Since we cannot think clearly about our own selves, how can we possible fit our thinking within the whole? The hardest thing to recognize is our own errors.
You may be thinking. “There is a finite amount of gold, you idiot!” But that would mean you still don’t grasp the role of price in the value of gold. Gold itself has a price, and can be inflated in proportion to everything else that is inflated. Remember when Ron Paul got his way and did an audit of the gold holdings of the Federal Reserve? What a comedy. The value of the gold has been changing for 200+ years. Just like the discussion of making a $1 billion dollar coin during the 2008 meltdown as a solution. All the numbers are made up, whether it is an apple, an egg or a chicken. While there may be a finite amount of dirt, the value of that dirt is infinite in our accounting procedures. (see the real estate market, which is the baseline selling of all dirt, and the source of all our consumption).
If we are trying to replace barter (which I think we are because the division of labor yields many benefits), then the system needs to be internally and externally consistent for everyone. That is not the system we currently have. Not because people don’t want stability, peace and prosperity. Everybody does. But, unfortunately, everybody is thinking incorrectly about money. Too many contradictions and false assumptions.
To use your analogy of the scientific pressures of gas in a closed container, numbers growing IS THAT PRESSURE. What I am suggesting is scientifically sound, is a cause and effect sequence, it can be easily measured, tracked and predicted, and has social consequences. The economy is numbers. Inflation and debt are numbers. Wealth inequality is numbers. Boom and bust are numbers in motion.
Describing a pricing equilibrium based on cause and effect is pure projection, like alchemy and the emotional value of certain stones and planets. The Earth is flat because where I am standing is flat. IMO, there is no invisible hand. There is only cause and effect. While we can make unconscious choices, they have real consequences. The only difference between the foolish and the wise is a level of consciousness regarding those choices, of seeing how all those pieces fit together. To some degree, we are all trapped in a false belief system, because the division of labor forces us to interact with others in order to survive. Philosophy won’t get you a hamburger at McDonald’s, but man can’t live by hamburgers alone. We are the society we create. Or as Gandhi put it, you have to be the change you wish to see.
It is much harder to unlearn our bias than it was to adopt them in the first place. Or as Mark Twain put it: it is easier to fool a man than to convince him that he has been fooled. Trump’s continuing popularity is proof of that. That is the challenge for Warren and all the democrats, but if they remained fooled by the same neo-liberalist economic dogmas of old, then they can’t really lead anywhere but in circles. Don’t confuse motion with progress.
Well, I think part of the problem, as described in another comment on this post is that a HS diploma is not a guarantee of literacy and/or numeracy. Far from it. Is it of any surprise that businesses and industry tends toward the literate? Is it any surprise that some of the largest enrollments in college courses are in remedial coursework? My experience in this is extensive and I have a great deal of respect for many of these people. It’s not their fault the public schools failed them.
(Although I met a fair number of whom were merely sitting through college as the price of a sinecure at Dad’s firm.) And it’s not their fault that colleges are willing to remediate their skills.
Your experience is that of a man who can read and write and make analysis (though I’ve complained of your math skills prior) who received an education and profited by it (without ‘liking’ it, as you say) but that is not the comprehensive experience of every HS graduate. I would go so far as to say yours is, in fact, a minority experience.
If the problem is as I describe and we are graduating functionally illiterate students, what will be the worth of giving them ‘better wages’ if they can’t read or write? Can they fulfill what we think of as ‘better wage’ job? Will they be able to actually do better jobs? Consider the jobs you’ve held: would you have been able to do them without the level of literacy you’ve enjoyed your entire life?
Let me put it this way: Consider a young couple with no college education. They are married, have a three year old child with one on the way. Dad works and makes enough to cover the rent and the rest. Mom loves staying home, taking care of the family. She works part time, seasonally, but just to buy extras and they do not want to fall into the two parent trap.
WHAT does the Democratic Party have to offer this family? Both of them are too old to go back to college and/or don’t have the time/interest to do so. They have no use for subsidized child care.
What does the Democratic Party have to offer them?
His wages used to be 1/20th of the CEO of his company….now his wages are 1/270th of what the CEO makes.
Elizabeth Warren and others are offering to tax that CEO’s wages and give the revenue to anyone who wants to go to college OR anyone who wants to put their baby in day care.
How does that help those who do not want college or day care?
It may not help them at all. Why does it have to? Such a family as you describe, cultural values in the here and now being what they are, might be a small minority of families.
College is very popular. A lot of people go to college. A lot of people aspire to go to college. The number of people who go to college or aspire to go to college might be larger than the number of those who don’t go or don’t aspire to go.
Day care is very popular. A lot of women (and their husbands) want to have children and a career and our present situation, ostensibly, allows them this opportunity. Are you upset that they take it?
Please get your facts straight.
Elizabeth Warren is NOT proposing to “tax that CEO’s wages”. Elizabeth Warren is proposing to tax the wealth of ultra-millionaires.
You have assumed away today’s reality.
1. Your hypothetical young couple doesn’t exist today.
2. Women working part time “just to buy extras” were destroyed 40 years ago.
3. LOTS of women have careers that they love. They also love their children.
4. A HUGE number of men and women, with children, are saddled with enormous student loan debt. Lowering the cost of college and finding ways to protect young people from predatory student loan lenders helps virtually ALL of them.
I agree that the 17 families in America who meet your criteria might not find a lot to like in Ms. Warren’s proposal.
I don’t much like the tone of much of this, but it seems to me that John’s history degree was pretty useful to him.
Indeed.
He benefited from that degree for a lifetime, yet passionately argues against making a similar path available to those less fortunate than him. He benefited from being married to a woman who was willing to stay home and take care of his children while he pursued his career, and now passionately argues against policies that offer women and families other choices.
My prediction is that his support for Elizabeth Warren will wane as he realizes just how radical she truly is.
But enough about me……okay?
Agreed, sorry.
….thanks. And while I admire your version of my life, I never pursued a career, my wife and I shared the raising of our children, and I fully encourage everyone to further their education, though not necessarily through conventional pathways. I see education as a enhancement of life, not as a way for financial wealth.
I responded to this (emphasis mine)
sales, restaurants, executive — sounds like a career to me.
However “shared” it was, you’ve written yourself that it was your wife who did not work at all (outside the home) for the first year of each child.
That’s what I referred to.
Nope. You read so much into what I write, even to the point of using the “That’s Sexist!” if I dare quote Adam Smith…..
I’ve enjoyed working, but never felt as if I was in any sort of career path. My resume is proof enough of that. I’m just a blue collar working class citizen. I recall a day in high school when we were asked what career path we would choose. I said then as I say now, I did not have one. It’s not an important part of my life. I appreciate that is it important to some.
My wife stayed home for the first year after each child was born because of biology. I suppose you will call that a sexist comment as well. Go ahead, I’m getting used to it.
My wife was also not much of a career path person. We’ve always put our family first. Yes, that meant that we never advanced much at our respective places of work, never made the big bucks, never had a shot at the corner office, but that’s fine with us and for those who desire such things, good for them, they do not have us to compete with.
However, if we are going to use government revenue to assist the aforementioned in their quest for improvements in their careers, all we ask, as the title of this page says, is “What about People Like Us”? We do not want money for college or child care. If our government is going to raise taxes on the rich, do we get any of it? If not, why not?
However you want to characterize it, you went to work every day and your wife did not. There’s nothing biological about that — tens of millions of working moms go to work every day (including my daughter) with a three month old baby at home.
The fact that you passionately refuse to admit the sexism of your commentary does not reduce or address that sexism.
People like Elizabeth Warren are telling you why other people who have suffered MUCH more than you are going to get the new tax revenue before you. You just don’t like the answer.
You objected to the equal-pay law in Massachusetts because you observe that it meant women would likely get larger raises than men until pay equity is established. Yes, that’s probably true.
An entire nation with hundreds of millions of working class men, women and children is suffering. Like it or not, you and I are among a very fortunate elite, based as much on our race, gender, and heritage as anything we did. We were born on second base (not third) — we didn’t hit a double.
So I think that the reason why white men — especially older white men with college degrees — are not going to be at the front of the line to receive revenue from Ms. Warren’s wealth tax (or from Mr. Sander’s new estate taxes) is that we have already collected FAR MORE of society’s benefits than the rest of the people in line.
The last shall be first, and the first shall be last.
Sigh, still commenting on me. Please stop. It’s a distraction and I doubt any readers want to get caught up in your personal feelings about me.
Warren notes that her plan could also benefit higher-earning families. A married couple with two kids under the age of 5 and a combined annual income of $125,000 in New Hampshire could send their children to daycare under her proposal for no more than $8,750 a year — which is more than $12,500 less than the average $21,267 cost of daycare for two children in the Granite State.
Again, under this plan, couples making $125,000 a year will benefit from a tax on the wealthy by allowing both to work full time and place their children in day care.
However, the couple who decides to not place their child in day care and get by on one salary of $68,000 (for example) gets nothing.
Explain how this is fair.
@still commenting on me:
I’m responding to comments you’re posting. If you don’t want to talk about you, then stop talking about you.
@How is this fair:
Choices have consequences. A family that chooses to not use day care also chooses to not receive a tax benefit for day care expenses.
This is fair for the same reason that it is fair that a family that chooses private school for their children doesn’t receive a tax credit because they aren’t taking advantage of the public education that is provided by government.
Is it fair to childless taxpayers that the government subsidizes children by offering a per-child tax exemption? Is it fair for a government to subsidize marriage by making the household tax rate paid by married couple lower than if the same two people were not married? Or, conversely, to penalize marriage by making the same couple pay more if they are married?
Government policy generally aims to do the most good for the largest number of people at a given level of public spending. There will always be people who benefit and people who do not benefit from government programs, that’s the nature of a government program.
So unless you oppose government programs altogether, then your “fairness” argument is empty.
Bye Tom. It’s time for me to take a break from you. Please do me a favor and do not reply to my posts if at all possible. I will refrain from replying to yours.
I’ll continue to comment on any post that I choose. I’ll not be bullied.