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Mary’s story looks different to different people. Within the ghoulishly cheerful Lyft public-relations machinery, Mary is an exemplar of hard work and dedication—the latter being, perhaps, hard to come by in a company that refuses to classify its drivers as employees. Mary’s entrepreneurial spirit—taking ride requests while she was in labor!—is an “exciting” example of how seamless and flexible app-based employment can be. Look at that hustle! You can make a quick buck with Lyft anytime, even when your cervix is dilating.
[...] It does require a fairly dystopian strain of doublethink for a company to celebrate how hard and how constantly its employees must work to make a living, given that these companies are themselves setting the terms. And yet this type of faux-inspirational tale has been appearing more lately, both in corporate advertising and in the news. Fiverr, an online freelance marketplace that promotes itself as being for “the lean entrepreneur”—as its name suggests, services advertised on Fiverr can be purchased for as low as five dollars—recently attracted ire for an ad campaign called “In Doers We Trust.” One ad, prominently displayed on some New York City subway cars, features a woman staring at the camera with a look of blank determination. “You eat a coffee for lunch,” the ad proclaims. “You follow through on your follow through. Sleep deprivation is your drug of choice. You might be a doer.”
[...] At the root of this is the American obsession with self-reliance, which makes it more acceptable to applaud an individual for working himself to death than to argue that an individual working himself to death is evidence of a flawed economic system. The contrast between the gig economy’s rhetoric (everyone is always connecting, having fun, and killing it!) and the conditions that allow it to exist (a lack of dependable employment that pays a living wage) makes this kink in our thinking especially clear. Human-interest stories about the beauty of some person standing up to the punishments of late capitalism are regular features in the news, too. I’ve come to detest the local-news set piece about the man who walks ten or eleven or twelve miles to work—a story that’s been filed from Oxford, Alabama; from Detroit, Michigan; from Plano, Texas. The story is always written as a tearjerker, with praise for the person’s uncomplaining attitude; a car is usually donated to the subject in the end. Never mentioned or even implied is the shamefulness of a job that doesn’t permit a worker to afford his own commute.
(Score: 2) by Unixnut on Friday March 24 2017, @04:07PM (22 children)
> So let's say the fry cooker at McDs (the device, not the operator) requires 10 KW to operate. What would you say to the manager if he said it's only worth 5 KW, let's crank the voltage down to 60? How about he further argues that it's up to the rest of society to provide the other 5KW?
I may be missing an analogy here, but the way I read it, this makes no sense what so ever in relation to the original post.
The cooker needs 10KW of energy to operate, that is a constant energy demand. It has no bearing of price of said energy.
Whereas the "worth" of a salaried employee is directly related to how many other potential employees are out there who can do the job for the same or lower price.
A better analogy is saying the cooker needs 10KW to operate, however there is another cooker out there that can produce the same amount of output using 5KW of energy (because efficiency improvements, for example).
Now imagine that there is no capital cost of switching cookers (i.e. it costs you almost nothing to switch cookers), what manager (or business owner) would say "No, I will keep my old 10KW cooker". Most would go for the 5KW cooker. All it takes is one to make the jump, and the others must follow in race to reduce costs (which can result either in increased profits, or reduced prices for end customers as the business fight over market share).
That is how it works with unskilled labour. By definition of being "unskilled" (in the sense that it doesn't make much training to do) the "switching cost" is almost zero. The equivalent to "energy cost" is the salary, which is a function of how low the person is willing to work for.
If all burger flippers collectively said "No, we will not work for less than $X per hour", then there would be no choice for the employers but to either pay that salary, find an alternative (robots?) or go out of business.
This however, does not happen, so salaries are a function of demand for burger flippers, coupled with supply. If salaries are going down it either means:
a) more and more people are desperate for a job, any job, for lower wages than their competition. -- This is usually a sign of high unemployment levels, i.e economic troubles
or
b) less and less people are buying burgers, meaning there is less demand for burger flippers. Fewer positions == more applicants per position == more wage competition == lower wages. Another sign of economic trouble.
Either way, the above situation is a symptom of underlying economic problems, rather than the problem itself. Using regulation to "force" certain salaries masks the problem by treating the symptoms.
(Score: 0) by Anonymous Coward on Friday March 24 2017, @04:14PM
Please, see my reply [soylentnews.org].
(Score: 2) by sjames on Friday March 24 2017, @06:50PM (20 children)
The employee needs enough to cover food, clothing, shelter, and healthcare or he will die (and do no work at all). If we had no social safety net at all, the poorly paid would die and not show up for work (or end up homeless and show up for work smelling like they haven't had a shower in a month). Since we have one, the manager thinks it is society's responsibility to support the worker-unit so he can continue under-paying him.
If the manager would prefer to provide the food, clothing, shelter, and healthcare directly, I would be OK with that as long as it was all up to standards and included at least some decent amount for discretionary spending.
It's amazing the number of people who clearly understand that a machine requires what it requires but think a person can live on polluted air and filtered sunshine alone.
(Score: 0) by Anonymous Coward on Friday March 24 2017, @06:54PM (1 child)
Please, see here [soylentnews.org]
(Score: 3, Interesting) by Unixnut on Friday March 24 2017, @07:51PM
Because you are an AC, which means I don't get message notifications of your replies. It is only by happy accident I saw this one. So, to respond.
> If the manager raised prices on patrons, he might lose patrons, so this forces the manager to find other ways of reducing costs, perhaps leading to a more energy-efficient device.
Exactly. However if there was a floor where nobody could drop wages further, then the managers would all have to raise prices by an equal amount, keeping the relative competition between them equal.
It might reduce demand (inflationary pressure), so there is a downside. The situation is very complex.
> Yet, this motivation is removed: The government's coercive powers mean that the welfare programs guarantee a subsidy for underpaid employees; thus, why bother putting resources into improving the device?
Agreed. That is a problem with the way you have set up welfare/regulations. I didn't realise it worked like that in the USA, and it seems ass backwards, because essentially welfare becomes a subsidy for unskilled labour, allowing companies to bring wages to the bone in the knowledge the government will pick up the tab,
> As a result, innovations stagnate; there is no incentive to search for innovations.
Also agreed.
(Score: 2) by Unixnut on Friday March 24 2017, @07:43PM (15 children)
> The employee needs enough to cover food, clothing, shelter, and healthcare or he will die (and do no work at all).
If there is no work for the person to do, will them dying really affect the workforce that much? So at best a neutral effect on the situation (while admittedly sucky for the individual involved)
> If we had no social safety net at all, the poorly paid would die and not show up for work
Which would result in reduced supply for a job (with relatively fixed demand), driving up wages until a livable equilibrium is achieved.
> (or end up homeless and show up for work smelling like they haven't had a shower in a month).
I doubt that would be tolerated for very long. If there are others out there who are capable of basic hygiene to replace them. Some places I worked at have provided employee showers, primarily because quite a few people cycle in to work, and the office can really smell rank in the morning. However it would be a solution to other personal hygiene problems that you mentioned.
> Since we have one, the manager thinks it is society's responsibility to support the worker-unit so he can continue under-paying him.
This I don't get. Admittedly where I live (the UK) you only get benefits while unemployed. So you will get income support, and "jobseekers allowance" to help you survive while looking for a job, however once you get a job all benefits stop.
This does mean employers cannot cut salaries to the bone and have the government make up the difference in welfare. It does however result in a negative incentive to find work.
If a person is receiving the equivalent of minimum wage while unemployed, and the only jobs they can find pay minimum wage. Their choice is either:
a) take the job, get paid the same amount of money as if you were unemployed, but a harder life.
b) not take the job, get paid the same amount of money as if you were working, but with all the free leisure time you want. Plus the more kids you get, the more money from the government, so an incentive to have very large families.
c) Not take the job, get paid the same amount of money as if you were working, then find "cash only" black market jobs, which gives you tax free cash income + the welfare. Not so much time to have large families because you are actually working, but benefit of more money.
The lazy poor take option (b), the hardworking poor take option (c), and the honest poor take option (a) . Funnily enough, very few in the (a) group, and people in the (b) group are multiplying far faster than anyone else. In this situation, wages for those unskilled jobs would have to rise because it makes more sense to just live off welfare than work, meaning nobody would be willing to do the jobs, and the positions would remain unfilled unless wages rose.
The problem in this case is globalisation, because the employer has an option to just hire freshly arrived migrants, who don't usually qualify for benefits, keeping wages down, all while building generations of families who live only on welfare.
Of course, if we didn't have globalisation, then automation would be the risk to rising wages. Either way it is a complex situation that has no single answer to how it can be solved.
>If the manager would prefer to provide the food, clothing, shelter, and healthcare directly, I would be OK with that as long as it was all up to standards and included at least some decent amount for discretionary spending.
>
> It's amazing the number of people who clearly understand that a machine requires what it requires but think a person can live on polluted air and filtered sunshine alone.
I guess it is fundamentally because a machine is not a conscious entity. It is not capable of survival unless maintained. A person is a conscious entity, and can decide for itself how much crap it wants to take for a particular job, and how to maintain themselves in other ways (including moving away to a place with better prospects).
Hence, it is the responsibility of that person and them alone for their well being.
It is the same reason we take care of children up until they are deemed fit and capable of taking care of themselves. Eventually they have to become adults though, and that involves taking responsibility for themselves, their choices, actions, etc...
(Score: 2) by sjames on Friday March 24 2017, @08:36PM (14 children)
Which would result in reduced supply for a job (with relatively fixed demand), driving up wages until a livable equilibrium is achieved.
Yes, it would. So let's skip the letting people die part and go directly to paying the livable equilibrium wage. It would seem to be a more ethical approach and much less likely to drive crime through the roof.
(Score: 2) by Unixnut on Friday March 24 2017, @10:04PM (13 children)
> Yes, it would. So let's skip the letting people die part and go directly to paying the livable equilibrium wage.
So say we did that. Say that at current prices, a livable wage would be $15 an hour. So from now on nobody will earn less than that. What will happen is that salary costs will increase. As a result, prices will rise, making the "base tier" of the economy more expensive.
This will in return increase prices across the the other tiers, resulting in increases across the board (i.e. everything getting more expensive by a similar ratio).
End result; Now that everything is more expensive, that $15 an hour is once again not a livable wage.
The price of the labour has gone up, but not its value, so relative to other value in the economy, nothing has changed (except inflation has gone up).
> It would seem to be a more ethical approach and much less likely to drive crime through the roof.
The reason that the "people dying will increase wages" thing I mentioned works, and your idea doesn't, is precisely because by removing people, the value of the remaining people increases (because there is less of them). As a result, prices increase to reflect that, and they increase relative to the rest of the economy making those left better off.
Your idea involves Increasing the price of people when their value to the economy is the same (As the supply of them is the same) which is inflationary. Removing number of people in existence has the effect of reducing supply, increasing value of the remainder, and hence increasing the price they can ask.
There is historical proof of this. When the Black death hit Europe, it wiped out almost all the peasants. As a result lords didn't have enough workers to work their land. They couldn't grow the crops they needed to sell to pay for their armies and for their tithe to the King.
As a result the remaining peasants were in such high demand that their value increased measurably. They could cease being tied to their lord, and could "shop around" for the lord who gave them the best privileges and benefits/pay. The mass death due to that disease allowed the masses to finally break free of serfdom and become independent. The first formation of middle classes. These independents could own land , get better pay, and in time acquired education and skills to become the middle classes. This then allowed the increase in skill sets, the eventual creation of engineers, thinkers and scientists, and the future the upper classes. This resulted in the Enlightenment, Renaissance, Industrial revolution, usurpation of power, and in some cases (e.g. France) actual overthrow of the Royals.
I am not advocating we start mass killings to solve the unemployment problem, and like you mentioned not having welfare will just allow crime to shoot through the roof (all life has the goal of self preservation and self replication at its core, few humans would just curl up and die. Most would decide to either take what they need by force, or decide to go out with a bang rather than quietly into the good night) and general destablising of society..
The point of me showing this in a candid an analytical way it so show how complex and difficult a problem this is to solve (if we want to retain some ethics and humanity). If it was as simple as price fixing a minimum "livable" wage everywhere, this problem would have been solved a long time ago.
Generally, the way (in modern times) this was solved, is by having a war. As soon as there were too many normals in the world, the elites would kick off a war and "thin the herd". This was fine for most of modern history, but WWII showed that we have reached a dangerous technological level ("total war") and now such global warfare is far more likely to wipe all life off earth. The elites (most of them at least) have self preservation of them and their wealth as a goal, so I suspect we are destined to muddle through as we are for a while until something breaks.
Then again, lots of poking of different power blocks going on round the world, so maybe some sort of limited "middle level" warfare is planned. The "Low level" warfare in the middle east (and other places) is not killing people fast enough to match global birth rates, so the problem is still there. Ain't the world lovely :-)
(Score: 2) by sjames on Friday March 24 2017, @10:36PM (12 children)
The part you're missing is that the higher the floor wage goes, the more incentive there is for those far dfrom the floor wage to take just a little less and reap the benefits of being the price leader.
Keep in mind, labor prices going up do not necessarily raise the other costs in a business. Some are backed by jobs that already pay well more than the minimum wage, some are backed by sunk investments in machines that won't suddenly have to be paid for again.
If your argument that all prices will move in lock-step with the minimum wage is true, we should set all wages to zero so everything will be free. The same factors that make that silly also mean prices will not quite rise to eat away at the advantages of increasing the minimum wage.
In the past, minimum wage was actually about $15/hr in 2017 dollars. Somehow, society survived. Since then, advances in efficiency and automation have pumped a good deal of money into the economy, but it certainly hasn't trickled down.
Long term, I suspect UBI will need to come along to replace the minimum wage, but we need a stopgap while we wait for the old guard to die off.
(Score: 2) by Unixnut on Friday March 24 2017, @11:16PM (11 children)
> The part you're missing is that the higher the floor wage goes, the more incentive there is for those far dfrom the floor wage to take just a little less and reap the benefits of being the price leader.
Depends on if there is enough slack to take it up I guess. I can see small business being more willing to forgo extra profit if possible. However the big public companies are beholden to shareholders, who demand the best returns on their investment as possible. They are not really going to be willing to "take a little less" in return for higher minimum wage.
Thing is, the "profit" is not there just to enrich the owners. That profit is to be used to reinvestments as well, possibly paying off of debt. If you reduce your profit margins you may find down the line that your competition is able to outspend you in investments, eventually pulling ahead of you.
Being the price leader means having the lowest prices, but that isn't always the most profitable course of action.
To take an example of the big company. Say there is a hike in minimum wages. big_corp_A says they will reduce their profits, cut down on investment pools and pay out less dividends as a result, but they will keep all their staff with the increased wages (so, happy staff at least). big_corp_B says they will reduce headcount until costs match what they were, look towards outsourcing/automation so fewer workers can do more, and will keep their investment plans and dividends at the same level they are now.
Which of the two corps do you think will investors go to, on the pretext of longer term success?
> Keep in mind, labor prices going up do not necessarily raise the other costs in a business. Some are backed by jobs that already pay well more than the minimum wage, some are backed by sunk investments in machines that won't suddenly have to be paid for again.
Why wouldn't it raise other costs? Other wages at least. To give an example. Say you have a fast food joint. Few employees, and a store manager. Employees making maybe round $7.50 an hour, manager making $15 or so. Suddenly you hike the minimum wage to $15.
So now the employees (some of which might be new starters) are making $15 an hour, same as the store manager (who might have worked up for years to reach his position). Do you think the manager will be happy with this reward for his work? Or would he then demand his wage increase by the same amount? Chances are he will use the situation to demand his wage increases by a consummate amount. All well and good, but now he is earning as much as the regional manager per hour, who themselves will not be happy about this situation, etc....
And so wage rises go up the chain, presumably to the people who have most of their income from profits/shares/etc... rather than salary, who might be willing to sacrifice a bit. However the initial "low sacrifice" of increased wages for the bottom end might actually end up costing the company a lot of money in wage increases all round.
Not sure how sunk costs in machinery makes a difference here. That cost will not change if the wage goes up or not. It is fixed cost, and a depreciating asset. Even then, eventually those assets will be replaced. So at best you have won a delay of the inevitable.
> If your argument that all prices will move in lock-step with the minimum wage is true, we should set all wages to zero so everything will be free. The same factors that make that silly also mean prices will not quite rise to eat away at the advantages of increasing the minimum wage.
Actually no, setting wages to zero would not mean everything is free. There would still be costs of the materials, energy, etc.... And most importantly, the people involved. If the people are willing to work for free, yes you would be able to produce stuff for very little money. Rather than inflationary it would be deflationary. Meaning things would go down in price rather than up, so people could buy more with their money.
The situation is not silly. Very unlikely (because I doubt you will convince people to work for free), but based on the same logical rules so still feasible. Hell, that was one of the cornerstones of Communism. You don't get wages that reflect your ability, but you get your needs provided (from each according to their ability, to each according to their need). Living in that system is a whole other topic that is probably too tangential to the current one, so I will skip the monologue :)
> In the past, minimum wage was actually about $15/hr in 2017 dollars.
Fair enough, I haven't a clue what the actual minimum wages are in the USA,. I am just using prices as examples.
> Somehow, society survived.
Depends when in the past. In the olden days there wasn't so much debt (with interest) that needs to be paid. If we are talking pre-71 then the USD was gold backed, and deflationary.
> Since then, advances in efficiency and automation have pumped a good deal of money into the economy, but it certainly hasn't trickled down.
It has increased productivity, but gets eaten up by debt. Most of the productivity gains have gone towards financing ever larger debts, rather than to improving quality of life for normal people.
Essentially we are now paying for debts incurred by our parents and grandparents, while the debts being taken out now (on the back of our productivity) will have to be paid for by our children and grandchildren (who will have increased productivity compared to us, but the same struggle because the extra productivity benefits go towards financing our debt).
The whole fiat/debt based system is designed to control and eck out as much profitability out of people. Usury was banned for a reason by religious texts. However increasing the minimum wage will not deal with that cause, at best it handles the symptoms temporarily.
> Long term, I suspect UBI will need to come along to replace the minimum wage, but we need a stopgap while we wait for the old guard to die off.
How would the UBI be funded though? More debt? Higher taxes?
(Score: 2) by sjames on Saturday March 25 2017, @12:09AM (10 children)
The debt business is nonsense. The government owing itself a few trillion doesn't affect McDs ability to pay $15/hr in the slightest. The depressing effect on the USD just means imports from China cost more than they did in 1971 when they were practically non-existent anyway.
Sure, the manager will also want a raise so he's making more than a new hire, but that effect will dwindle up the chain. Surely the CEO won't demand an extra $1/hr to keep ahead of the new hires.
The UBI could be paid for by rolling back the tax cuts in the highest brackets to 1950s levels.
(Score: 2) by Unixnut on Saturday March 25 2017, @12:39AM (9 children)
> The debt business is nonsense. The government owing itself a few trillion doesn't affect McDs ability to pay $15/hr in the slightest.
Most US debt is held by others, not the US government. If they feel the debt is unsound or that the USA in future will not be able to pay it back, they may start liquidating their holdings. This will result in a fall in USD value to the point that even paying $100 per hour will not yield a livable wage.
> The depressing effect on the USD just means imports from China cost more than they did in 1971 when they were practically non-existent anyway.
And imports from the rest of the world, of which it seems America depends on far more than vice versa. Yes, that includes China. America would have to quickly discover how to become self sustainable, which, interestingly enough, would help solve the lack of demand for jobs and stagnant wages (increasing demand, due to import substitution, meaning more locally produced goods == more local employment == more demand for workers == higher wages).
> Sure, the manager will also want a raise so he's making more than a new hire, but that effect will dwindle up the chain. Surely the CEO won't demand an extra $1/hr to keep ahead of the new hires.
Indeed I doubt the CEO would, but there is enough movement up the chain that the initial minimum wage will cost far more than people expect. It is essentially a multiplier effect. And couple this rise in costs across all companies (because by being mandated at a federal level, everyone has to increase the wages) means that the effect will be inflationary on the economy as a whole.
I suspect that by the end of it, $15 an hour (or whatever the minimum wage is artificially set to) will end up not being a livable wage. Sure, there might be a lag of a couple of years before this is reflected (perhaps long enough for the politicians who proposed it to move on, and not be left holding the bag when it goes tits up), but when push comes to shove, nothing has been fixed. 5 or so years down the line, those same people will find their new minimum wage is not enough to survive, and will ask for another hike, and so on and so forth.
> The UBI could be paid for by rolling back the tax cuts in the highest brackets to 1950s levels.
Ok, so raising taxes in the highest brackets. Why wouldn't these people just leave then? Or move their wealth offshore? Problem with rich people is they are rich enough that they can up sticks and move relatively easily. The rest of us are tied down by mortgages, or jobs, etc...
In the 1950's Globalization had not taken hold, Europe was devastated by WWII and not a fit place to live, half the world had joined with the USSR under communism and they would have just confiscated any wealth you brought in "For the people".
I suspect the filthy rich decided that sitting put, shutting up and paying the US taxes was the best deal at the time, hence you could notch up the rates to eye watering levels and they would not go anywhere else.
Plus the USA was booming on loans and manufacturing output for the reconstruction of Europe, so the growth rate was phenomenal, and even after taxes, the returns and growth was still the best in the world. That isn't the case anymore.
Not to mention they still had ways to avoid paying most of that tax, usually through funds, trusts, and other machinations.
The world has changed since then, notch up the taxes to 1950s levels, and I think all the rich would just vacate the country. Of course, maybe in the long term, getting rid of the filthy rich might actually be a net benefit for the USA.
You're welcome to try, if you can manage to put someone in the White house who will actually do it (and survive long enough for it to take effect) it would be interesting to see if things get better from thereon.
(Score: 2) by sjames on Saturday March 25 2017, @02:31AM (8 children)
Naturally, $15/hr won't solve the problem until the end of time. It'll have to keep up with inflation. Just like $5/hr wasn't the final answer. Big deal, we just have to increase it from time to time or index it to inflation.
As for higher taxes and UBI, where will they go when they renounce their U.S. citizenship (necessary if they don't want to pay U.S. taxes), Greece? Perhaps China just as it's taking a big hit in it's exports due to the shake up in the U.S.? Yeah, not all that attractive either. Do you really think they'll hold a fire sale on their U.S. assets (also necessary to dodge U.S. taxes)? Meanwhile, Warren Buffet has actually suggested raising taxes on people in his own income bracket. He believes that in the end it will work out better for him as well as everyone else. The U.S. does import a lot, but don't forget, we are a net exporter of food and oil. Meanwhile, most of the imports are only because they're slightly cheaper, not because we can't make them here. As you say, it might even be a win for us.
Agreed, the biggest obstacle to any of that is Washington D.C.
(Score: 2) by Unixnut on Saturday March 25 2017, @08:03PM (7 children)
> Naturally, $15/hr won't solve the problem until the end of time. It'll have to keep up with inflation. Just like $5/hr wasn't the final answer. Big deal, we just have to increase it from time to time or index it to inflation.
There is one problem with that. Say you have an increase in minimum wage of 1%. The inflation generated by that would be >1%, so it isn't a one to one relationship. Say for example the multiplier is 1.5. That 1% min wage increase results in 1.5% inflation after a couple of years, so next time you increase wages by 1.5% percent to keep up with inflation. That causes inflation to be 2.25%, so increase wages by 2.25%, but then inflation becomes 3.375%, and so on...
So in actual fact, it is a big deal. You end up in a inflation cycle that will ruin the country in the long term, while (in the interests of helping the poor) you actually make the rich richer and drive more people into poverty (especially people on fixed income, like pensioners, and prudent savers) while rewarding those who own assets (the actual real "capitalists" in capitalism, because assets can't be inflated away like you can print money) like property, stocks, shares, bonds, etc... .
Not to mention higher inflation will force higher interest rates, resulting in people defaulting on large debts they own, which could cause a credit crunch like was seen in 2008, if not worse.
> As for higher taxes and UBI, where will they go when they renounce their U.S. citizenship (necessary if they don't want to pay U.S. taxes), Greece? Perhaps China just as it's taking a big hit in it's exports due to the shake up in the U.S.? Yeah, not all that attractive either.
Most of them seem to be moving to New Zealand from what I have heard. Relatively low taxes, beautiful country, great weather, easy to get citizenship, land and property is quite cheap (by their standards), they speak English and have a similar culture.
Saying that, London is filling up with Americans who have renounced as well, and brought a lot of their wealth with them (as a result, sustaining the high house prices in the city when the rest of the country is in a crisis). Americans tend to stick to places that speak English natively and have culture somewhat recognizable to their own, (so ex-commonwealth mostly).
This is ignoring the obvious low-tax rich bolt holes like Monaco, Luxembourg, etc... which (unlike in the 50's) are nice places to live again, and even Switzerland is popular (but you have to renounce for that, due to recent events w,r.t the IRS).
Don't forget, they don't have to renounce their US citizenship. Very easy to set up a trust for their offshore wealth. Basically they can claim that assets abroad are not theirs, but held in a foreign trust for other beneficiaries who are not US citizens. Et voila! Tax avoidance, perfectly legal. That doesn't even scrape the list of other ways (both fully legal and some shady/gray methods) of not paying IRS dues.
If the screws were tightened further in the USA, would not surprise me to find rate of citizenship renouncements would increase as well.
> Do you really think they'll hold a fire sale on their U.S. assets (also necessary to dodge U.S. taxes)?
They don't need to. If they renounce citizenship then they are just foreigners who own US assets, not unlike me for example (despite never setting foot in the country). I have to fill in a form to the IRS confirming I am not a citizen of the USA, and I get everything tax free (it gets taxed by my country of residence instead).
If they don't renounce citizenship, they can just liquidate hard assets slowly, besides, most wealthy people have a lot more wealth in places other than hard to liquidate things like property. Quite a lot of have stocks and shares, which have no problems moving round the world.
> Meanwhile, Warren Buffet has actually suggested raising taxes on people in his own income bracket. He believes that in the end it will work out better for him as well as everyone else.
That is fine, because one of the great things about being rich, is you can alter how much income you actually make. I have seen them do it, they can make their income so low that rather than paying taxes, the government can owe them money. I know rich people who make 10 times more than me, then pay less than 10% the tax I do (all done legally). It isn't even because they can hire better lawyers and tax accountants. I asked those same accountants what they could do for me, and they said "basically nothing, as you are a salaried employee". Not working for a company (or working for your own company) opens up a lot of flexibility when it comes to tax and income, which is denied to those of us who have to work for others.
He suggested it, knowing that a) it placates the masses, b) makes him seem more caring, all the while c) making not a jot of difference to how much tax they would actually pay.
> The U.S. does import a lot, but don't forget, we are a net exporter of food and oil. Meanwhile, most of the imports are only because they're slightly cheaper, not because we can't make them here. As you say, it might even be a win for us.
True, and with inflation, it imports would get more expensive, and exports cheaper. Question is, if exports got cheaper and imports more expensive, would you overall be better off? If yes, then Trump's tariffs on imported goods should be a good idea anyway, as it would have a similar effect to dollar devaluation.
> Agreed, the biggest obstacle to any of that is Washington D.C.
Indeed, but it is also all the other statelets within the USA as well. you are in a federation after all. There are not enough proponents of UBI and other radical ideas to allow this concept to ever see the light of day.
Might be worth concentrating on a single state that seems the most likely to go for these ideas, and trying to just get that state to do it as a trial. If other states see it is a good idea, I am sure they will follow.
The only state that comes to mind is California. Plus they apparently have a really good economy (if it was an independent country, it would be the worlds 5th largest economy or something), so might be a good place to try it.
(Score: 2) by sjames on Saturday March 25 2017, @08:33PM (6 children)
Your factor of 1.5 is completely unsupported and quite unlikely as well. That would presupose the price of everything being dominated by the minimum wage. It has been increased in the past with no such gloom and doom coming to pass. I see no reason it should now. Particularly when an increase in the minimum wage will result in at least somewhat lowered costs for social services (for example, SNAP) now that more people will make ends meet. In that sense, it is simply internalizing an externality.
As for interest rates, the prime has been hovering around 0 for a long time now. Other interest rates have been dominated by potential returns on Wall street for about as long.
Stocks, bonds, and rich people can move around the world fairly easily, but if they touch the U.S. at any point, they're a scratch of a pen away from being taxed. The U.S. market is too bid for them to be willing to write it off.
It wouldn't take long for a mass exodus to drive up prices (and the temptation to tax) in all of the countries you mentioned. Ask Mr. Dotcom how well that New Zealand citizenship shields you from the U.S. Government (not saying that was right, just stating the fact).
(Score: 2) by Unixnut on Sunday March 26 2017, @12:10PM (5 children)
> Your factor of 1.5 is completely unsupported and quite unlikely as well.
Of course it is, I pulled it out of my backside, hence I said "for example". I don't know what the real multiplication factor is, but it would be lower than that. I set it high enough to show in 3 steps what change it would do to the economy. If the factor was really 1.5x the first min wage rise would snowball into an economic crisis, which doesn't happen.
> That would presupose the price of everything being dominated by the minimum wage.
The price of everything is dominated by the floor, which includes things like cost of energy units, and minimum wage, and a few other things. For example if you decreased the cost of energy and increased minimum wage by the same amount, it would have no effect on the wider economy.
> It has been increased in the past with no such gloom and doom coming to pass. I see no reason it should now. Particularly when an increase in the minimum wage will result in at least somewhat lowered costs for social services (for example, SNAP) now that more people will make ends meet. In that sense, it is simply internalizing an externality.
Well, that is for a few reasons unique to the USA. Specifically it is the current holder of the worlds reserve currency, allowing you to export inflation onto other countries. This allows you to have crazy debt levels (20 trillion, was it?). This is an increasingly untenable position, as other countries don't like their wealth being stolen in this way. As a result the USA has to enforce the status quo on the world via its large military apparatus, causing much death and destruction round the world.
If you raise the minimum wage, and just borrow the money, then it won't have much effect on your inflation rate. However that debt gets added to the pile, and eventually you will have to pay it back, or you will have to have a massive world war to wipe out the debt (if you wipe out your creditors physically, the debt becomes nullified).
> As for interest rates, the prime has been hovering around 0 for a long time now. Other interest rates have been dominated by potential returns on Wall street for about as long.
Yes, but that is political. When inflation is at (for example) 3%, you should set the interest rate to 3%, so that peoples savings and pensions keep up with inflation. The rate is deliberately kept near 0% while inflation increases, taking wealth from these people and transferring it upwards.
The hope is that by dropping interest rates they will spur economic growth, but all they are doing is inflating another massive credit bubble, as people go into further debt to survive. It will collapse at some point, and I intend to be as far away from it as possible.
The only alternative they can see, is to push into negative interest territory, basically a tax on anyone who has money deposited anywhere. If they did this, people would just take money out of the banks and into cash ( a so called "bank run") because between given the choice of having a monthly percentage of their money taken by the bank as negative interest, vs keeping it in cash which is 0% interest by name, people will take the cash and run.
So before they enact negative interest rates, they need to get rid of cash, hence the massive push towards a "cashless society".
> Stocks, bonds, and rich people can move around the world fairly easily, but if they touch the U.S. at any point, they're a scratch of a pen away from being taxed. The U.S. market is too bid for them to be willing to write it off.
So they just won't touch the US. It isn't hard. Once upon the time the US market was seen as too important to ignore, but more and more that isn't the case. A nation of indebted servants who struggle more and more to afford things? Not a good long term bet. Sure, for now it it still a big market, but the writing can be seen on the wall. Might be a few decades yet though.
Still, like I said, you can earn money in the US market, but not pay tax there, as long as you are not a citizen. I could even go visit the USA if I wanted to get fondled by strangers at the border, and still would not get taxed.
> It wouldn't take long for a mass exodus to drive up prices (and the temptation to tax) in all of the countries you mentioned. Ask Mr. Dotcom how well that New Zealand citizenship shields you from the U.S. Government (not saying that was right, just stating the fact).
Actually, tax havens work on the concept of keeping tax low to attract the rich. Their logic being getting 2% tax on their billions is a better absolute return than demanding 70% tax from the working poor. They see the rich as the goose that lays the golden eggs, they won't kill it by raising taxes. The exact opposite. there is a race to see who can attact the most rich people, by offering the lowest taxes or the best benefits (security, discretion, entertainment, etc... ) for them.
London's recent influx of rich Americans has got them thinking about reducing taxes further, which is has has resulted in much teeth gnashing from other tax havens, and as a result I think it has been suspended, but there is competition to attract the rich.
Mr. Dotcom got into sticky mess because he has an arrest warrant against him. He is a suspected criminal, and New Zealand has an extradition treaty with the USA. As a suspected criminal Dotcom was stupid to go to a country which could extradite him back. He should have gone to any one of the countries that don't extradite their citizens to the USA. Assuming he knew he was a criminal, which (even if he isn't) he should have known he pissed off some very powerful people who want to extract revenge upon him.
(Score: 2) by sjames on Sunday March 26 2017, @01:27PM (4 children)
Of course it is, I pulled it out of my backside, hence I said "for example". I don't know what the real multiplication factor is, but it would be lower than that. I set it high enough to show in 3 steps what change it would do to the economy. If the factor was really 1.5x the first min wage rise would snowball into an economic crisis, which doesn't happen.
Well if we're going to have a conversation based on whatever we pull out of our backsides, I say we should raise the minimum wage to $200/hr so the wish unicorns will descend from the clouds and pay off all the debt and give us candy.
Since you now acknowledge that a rise in minimum wage doesn't actually create a crisis, I see no reason not to do it. The few places that have done it have seen an improved economy as a result in spite of the doom and gloom conservative pundits were pulling from their backsides.
As for the value if our dollar, I'm pretty sure China would be awfully upset if it devalues. too much. You should be more worried about them. The "99%" here in the U.S. would probably benefit from a little devaluing since it would make manufacturing here more profitable.
(Score: 2) by Unixnut on Sunday March 26 2017, @06:39PM (3 children)
> Well if we're going to have a conversation based on whatever we pull out of our backsides, I say we should raise the minimum wage to $200/hr so the wish unicorns will descend from the clouds and pay off all the debt and give us candy.
If you can't tell the difference between reality and a theoretical example, then yes, your argument makes sense.
However unlike your example, my one is founded in logic and how things actually work, and has been shown to happen in countries around the world that tried to dictate prices politically rather than letting the market set them. No wishing, unicorns or other magic required.
> Since you now acknowledge that a rise in minimum wage doesn't actually create a crisis, I see no reason not to do it. The few places that have done it have seen an improved economy as a result in spite of the doom and gloom conservative pundits were pulling from their backsides.
Don't put words in my mouth. I never said it would cause a crisis straight away, but it will cause one down the line. Also it would take a hike across the entire USA, equally, before it makes an effect on the US economy (because if a county gets too expensive, people just shift to another country with lower burdens, and still contribute the same amount to the federal economy).
Also, at this moment it will be hidden by unique position provided by the USA reserve currency position. However when that ends all hell will break loose. Signs are indicating that the system is faltering already. Trump is just a symptom of the underlying malaise, and (at least based on what I have been reading in the news) the US population has never been more divided and combative.
> As for the value if our dollar, I'm pretty sure China would be awfully upset if it devalues. too much. You should be more worried about them. The "99%" here in the U.S. would probably benefit from a little devaluing since it would make manufacturing here more profitable.
Why would I be worried about them? They already are aware of what the situation is, and are hedging accordingly, trying to decouple from the USA (and are liquidating treasuries at quite a pip). The Chinese have been around for many thousands of years in one form or another, I am sure they will be around for many more.
Hmm, for the 99%, devaluation would make their labour and savings worth less, increase their debt load, all the while making the land/asset owning 1% richer. Yes, it would make US exports cheaper, so they would be working more, unemployment will go down, but they will be able to afford less for the work they do.
I guess it is a win if you consider the 99% working more for less money while the 1% get richer a win. I however, get the impression this isn't what you had in mind with your proposal :-)
However you are free to try to increase the minimum wage politically, go for all it. This discussion was just to show how things work, and what will happen in the eventual end. Personally if you want to go for this, I would include in that packet of minimum wage increase some welfare reform. Something more akin to the European model. As things stand, your welfare acts as a "top up" for poor wages, allowing companies to offset their labour costs against the government.
Quite frankly, I think if you just reformed welfare, you would see a jump in minimum wages because suddenly nobody will want to work on jobs where their total income isn't enough to survive. The companies would have no choice but to up wages to attract someone willing to do the job. You got the worst of both worlds right now.
(Score: 2) by sjames on Sunday March 26 2017, @11:04PM (2 children)
Well let's see, the minimum wage has been raised several times over half a century or so and the gloom and doom never happened, so it seems my wish unicorns are about as likely (that is to say, not at all) as your gloom and doom. You even admitted that there was no realism to your number, but then spun a whole economic armageddon from it and expect me to (apparently) accept it on faith. I'll go with the historical record, thank you.
And no, there is no logic in creating a disaster scenario based on a number selected to be disastrous and then attempt to apply it to reality. If you like, I'll grant that if the number was 1.5, it would be very very bad.
The 1% would see their savings devalued. The 99% would see their debt devalued.
(Score: 2) by Unixnut on Monday March 27 2017, @08:25AM (1 child)
> Well let's see, the minimum wage has been raised several times over half a century or so and the gloom and doom never happened, so it seems my wish unicorns are about as likely (that is to say, not at all) as your gloom and doom. You even admitted that there was no realism to your number,
Well, I tried to explain what will happen, using as much logic as reason as I can. However if you are not interested in rationality I can't help you there. The point of my examples was not to give you a prophecy, I am not Nostradamus. I was trying to explain to you that the problems are more systematic than "oh, raise minimum wage and everything will be peachy". There will be consequences of doing that, some of the human costs, some economic.
And I will point out that over the last half a century, the US economy has been going down the toilet while its debt load has been going up.
> but then spun a whole economic armageddon from it and expect me to (apparently) accept it on faith. I'll go with the historical record, thank you.
No need to use faith, just look at history. Loads of countries that tried to dictate prices. Most of the USSR tried to do that as well, we can see how well that worked out. As I mentioned above, the US economy has been suffering for roughly half a century, basically when you went off the gold standard and started printing money to sustain yourselves rather than increase your economic output.
By all means start controlling prices, it all worked so well before, plus if I am honest, making the US economy less competitive is in my benefit, so go right ahead.
Problem is you don't have to convince me, but the rest of your country that it is a good idea, and there are a lot of people in the USA who understand how economies work (being one of the founders and main proponents of Laissez-faire capitalism after all), so it will be a tough sell.
The world economy is really really chaotic and complex. In my mind it is the most complex system on earth, alongside the climate. And like the climate, there is a lot of slack built in the system, there are some points of resistance where you can push against, but there are point where you can kickstart corrections and feedback cycles that can either be constructive and destructive.
Most people on this board can understand this when it comes to climate, and understand that just because we are pumping out tons of CO2 right now and the world hasn't come to an end, doesn't mean it won't cause problems 10-20 years down the line. Yet somehow they can't understand the same situation applies with the economy?
(Score: 2) by sjames on Monday March 27 2017, @02:00PM
Well, I tried to explain what will happen, using as much logic as reason as I can.
No, you pulled a crazy number with no backing out out of your backside and extrapolated it to death. If you really think that constitutes reasoning about the situation, you need help. The only useful thing about your exercise, given that minimum wage was implemented half a century ago and your scenario didn't play out, is that your first guess of 1.5 was too high. Run the numbers again with a lower guess until you get something that looks like the historical record, and we'll talk.
Your next step appears to be jumping directly to the extreme example of fixing all prices by central committee. I'll go ahead and agree that that never works out well. It caught up with the Soviet Union slowly and has caught up with others quickly. It's a good thing we're not planning to do anything that extreme.
Unlike your scenarios, AGW is supported by actual evidence. The various coefficients have been selected based on actual measurement and actual measurements correspond well with the models. The physics behind the mechanism is well settled for over a century. Further, the models have been shown to have predictive power.
Get back to me with your scenarios when you have actually done the work.
(Score: 0) by Anonymous Coward on Friday March 24 2017, @08:05PM (1 child)
Sounds to me like you are one small step away from advocating for the company store. [wikipedia.org] Perhaps you are OK with debt slavery but I'm not.
(Score: 2) by sjames on Friday March 24 2017, @09:52PM
The company store charges money. In fact it charges just enough money to indebt the workers in perpetuity. I certainly do not advocate that. If the employer were to provide those necessities directly, it would have to be as part of the pay, not requiring any additional payment.Compensation would also need to provide cash to be spent as the employee desired. In practice, I would also require an extensive grace period after termination so nobody would get fired and homeless on the same day.
But really, it was just a way to simplify the problem so even the nimnuls who would treat a piece of equipment better than a human being might understand.