Monday, February 3, 2014

Captain's Log - I'm Tired, So Tired

So we're getting ready to hit the debt ceiling again?  I'm so tired of the talk that hitting the debt ceiling is default.  IT IS NOT.  I say this every few months, but default would be not being able to meet interest payments, and we have enough tax income to pay interest.  It's not default, it's just not spending like a drug addict.  Like I said last summer, the whole debt ceiling debacle is just theater.  You know they're going to raise it because we don't have  a debt ceiling in any real sense.  They may delay for a few weeks, but it always gets raised.  And if they make it nice and dramatic, they get to claim to be heroes. 
(source is clearly

The other thing I'm tired of is the "raise the minimum wage" argument.  I'm tired of that subject, and I'll bet that you are, too, but the WSJ ran an article last week that "Almost Everything You Have Been Told About the Minimum Wage is Wrong".  Elizabeth Warren (Princess Fauxcahontas) has argued that to keep up with worker productivity increases, minimum wage should be $22/hour.  There's a few problems with that, but the biggest is that she's lying.  Let's be charitable a minute: she's as wrong as first grader doing fractions.  She's comparing the productivity of other workers, not workers on minimum wage.
Taking a longer view, from 1987 to 2012 the same BLS data show that worker productivity in the food service sector rose by an average of 0.6 percent per year. In limited service restaurants, the gains were slightly lower, only averaging 0.5 percent per year. Meanwhile, unit labor costs have risen by an average of 3.6 percent. Over this period the minimum wage has risen from $3.35 to $7.25 per hour which is an average annual increase of 3.1 percent. In other words, at least in food service, the minimum wage has risen at a rate five or six times as fast as justified by the gains in worker productivity. [Emphasis added - SiG]
That says the fast food worker on minimum wage is overpaid now.  Or, as the WSJ says,
These numbers reveal not just the selective statistics employed by the proponents of raising the minimum wage, but also that the debate has little to do with helping the poor. Instead, this is really a debate about income redistribution. Raising the minimum wage is actually just an attempt by liberals to punish a subset of business owners by redistributing a share of their supposed wealth to their employees. It is just another attempt at class warfare.
Wait... it's not about helping the workers, it's about income redistribution?  And the people who eat at fast food restaurants and are therefore going to be hurt by the inevitable price increases are frequently the people who work at minimum wage jobs?  It's just about political power and agendas?

What's next?  You going to tell me to expect the sun to rise tomorrow?


  1. It's about appeasing your base, in this case the low information voters, and changng the subject away from his high crimes and misdemeanors.

  2. Couple of ways of looking at this (simply playing devil's advocate):

    Henry Ford implemented a (non-legal) "minimum wage" for his workers in 1913 of $5/day. His reasoning may have been to get his workers to give it back buying cars, but that's not the point. In 1913, those workers did not pay income tax. Furthermore, a $5 coin was roughly 1/4 oz gold. I would not mind being paid 1/4 oz gold tax free per day today ... (about $96k tax free per year???)

    In 1964, the minimum wage by law (as we still know it) was $1.25/hr. This could be paid as 5 quarters per hour, each of which was 90% silver or roughly $3.15 each in today's value (Feb 4). This could imply an equivalent minimum wage today of $15.75/hr.

    Of course, "official" inflation is ... 2%?, while unofficial inflation - for those of us that have to actually buy stuff - is 10%.

    The issue is much more complicated ... but any way one looks at it, it boils down to votes


    1. Yeah, but... what Ford did wasn't a "minimum wage" - he had no force of law. He simply declared his starting wage. Any company can define their starting wage (only today it can never be less than some mandate), and make it as high as they want, if they think it attracts better workers. Or they can raise the ante with other benefits: the company I work for grants three weeks vacation instead of the usual two for new hires (I had to wait five years to get that). Setting your own pay rate to attract candidates is rather different from the government fixing the price of labor.

      But, sure, it's based on votes: low information, class-warfare politics. It's all lies.

      There was a case (in Las Vegas?) a few years ago, where a guy actually paid his employees in US Mint gold coins. The trick was that the coins are fully legal tender, and the face value is $50 but they're worth many times that. So employees were paying taxes based on, say, face value of two coins a day ($100) but the coins were worth more like $2000. The guy was convicted of tax fraud for this. (Hey! I found it!)

    2. I didn't intend to imply Mr Ford paid a legally mandated minimum wage, just that he established a minimum standard for his workers (I wonder what his engineers made?)

      The article you refer to is interesting in itself. Of course the law is whatever those with the guns say it is, but I'm told my pre-64 coins are only worth face value by the bank. If I'm a 1099 contractor and agree to work for 2 $50 coins per day, then I don't expect tax withdrawals from my client - nor does the IRS. They expect >me< to pay those taxes. So be it. I take those two coins to the bank - regulated by the government - and they credit me with $100. Now I'm sure some teller or other bank employee would slip a $100 bill in so the books would balance, but legal tender is still legal tender - that coin is only "officially" worth $100.

      Unless the IRS wants a cut.

      I would think the same analogy could hold for today's pennies. They seem to be "worth" about double their face value. Does this mean if I chose to get paid in pennies, the IRS will tax me at their metal worth rather than the official worth?

      Of course they can have it both ways ...