Economic Equity, the Working Class, and Social Security

[TahitiNut]

We are faced with a crisis. It is not, as some would argue, a crisis in the Social Security System per se; it is a crisis in how we, as a people, systemically balance the rights and entitlements of labor and ownership. It is a crisis in our nation's social security in general. It is, I assert, a reflected in how we frame the justification for accumulation of material wealth. The questions, I believe, are fundamental. They are:
To what degree is the accumulation of wealth resulting from one's own labor legitimized? and
To what degree is the accumulation of wealth resulting from wealth itself (ownership), and the labors of others, legitimized?

It is my assertion that the balance has shifted, unhealthily and immorally, toward the establishment of entitlements and privileges of ownership and away from the the rightful entitlements and privileges of labor. I regard the following as axiomatic:
All wealth is created by labor and the value of productive property exists solely as a result of the existence of available labor.
Wealth, in and of itself, has no inherent rights. Entitlements, of which ownership is one, are a function of governance. Privilege is a function of power. No system of governance is morally supportable unless it continually strives to establish justice, both social and economic. A just system neither pillages legitimately accumulated wealth nor affords it a cancerous entitlement to grow. 'Profit' is justified only to the extent that it offsets risks, solely the risks of loss in its deployment to the benefit of society; there is absolutely no moral justification for unbounded profit. (There ain't no such thing as a free lunch. Somebody always pays.)

There is probably little or nothing that engenders greater panic and frantic denials by the entitled and privileged (and those who aspire to be) than the above perspective of economic justice. It is, I believe, an inescapable moral posture. Its denial is wholly based on myths, false beliefs, and childlike delusions. When we sacrifice the lives of our weakest (our children, our poor, and our aged) upon the altar of such false beliefs, we are doomed.

The long-term viability of our current Social Security system is contingent upon our assimilation of these truths. It is a system that is wholly dependent upon the equitable compensation of labor - labor that's the sole source of all wealth. It is the 'payroll tax' that's the source of Social Security funding, an allocation of the economic compensation for labor. As labor is less and less equitably compensated, our Social Security is, in a very real, general, and extensive sense, jeopardized. That a steady erosion of justice in the compensation of labor has proceeded for the last 30 years is evident in the following chart:




That this injustice is being perpetrated for the sake of increased entitlements of ownership, profit from the labor of others, is evident from the following chart:


(Even God only asks for a 10% tithe - while the plantation owners get over 14%? Who is our God?)

The myth that our overall economic well-being is benefited by such inequities in the distribution of wealth created by labor is dispelled by the following chart:




It is my firm contention that the funding mechanisms of the Social Security system must be preserved; that the only path toward continued Social Security, both specific and general, is one which fairly and equitably compensates labor, ceasing the idolatry of wealth.


A great deal can be learned from a study of the Trustee's Report on Social Security. The long-term economic viability of the is premised on three major economic factors. By far, the major economic factor is aggregate employee compensation (both real wages and breadth of employment). Life expectancy and fertility (birthrate) are secondary economic factors.

Average life expectancy has two impacts. As death and disability rates decline for younger workers, the Social Security system is better supported and less burdened by the disabled. Reduction in mortality rates for younger persons have a far, far greater impact on "average life expectancy" than reduction in mortality rates for older persons. (Each person whose life expectancy is extended by 40 years due to lower rates of suicide, war deaths, and highway accidents increases the "average" ten times as much as an older person living 4 years longer because of lower rates of Alzheimer's.) Thus, while increases in "average life expectancy" have a back-end increase in OASI benefits, those increases are offset both earlier and in greater share by participation in the workforce. The path to increased average life expectancy is paved by having Universal Health Care.

Thus, all that is needed for permanent Social Security, both general and specific are economic policies that honor labor (full and fairly compensated employment) and the enactment of a Universal Health Care system. Neither are policies of the current "ownership" regime - a regime whose attitudes are a cancer in our body politic. (An immediate increase of the Federal Minimum Wage to $6.50/hour would have one of the most positive effects on Social Security.)





</end> I really tire of the moral idiocy that argues for making plantation owners wealthier.

[ikojo]

1. Excellent post...nominating for the front page

There IS a class war of the rich on the middle class and poor. In centuries past the ruling class wanted a strong middle class to act as a buffer between the wealthy and the poor.

[Karenina]

2. Seconded.

:kick:

[Jim__]

3. I agree, excellent post - I do have a question

You say:

I regard the following as axiomatic:
All wealth is created by labor and the value of productive property exists solely as a result of the existence of available labor.

I think that you can make your case without this axiom; I also think that if you base your case on this, then attacking this axiom undermines your case.

I guess it depends on definitions; but, I have always considered property to be a form of wealth, and some property is productive without labor; for instance, fruit grows in the wild. So, I think anyone who has a claim on property can have wealth without the existence of labor. You can argue that the allocation of property involves labor; but even if we accept that, the product of the property (e.g. fruit) is independent of any labor.

I think your charts on Ratio of Quarterly Profits to Employee Compensation and Quarterly GDP Growth go a long way toward making your case. If these charts can be extended to show consistence over the long term and consistency across various economies; it would be extremely difficult for anyone to disagree with your argument.

[TahitiNut]

4. "All wealth is the product of labor." - John Locke

Adam Smith saw wealth creation as the combination of materials, labor, land, and technology in such a way as to capture a profit. But what is the source of "materials"? What is the source of "land" and by what process is it made productive? What is the source of "technology"? This is where Locke steps in.

More significantly, however, we're not speaking of a 'common weal' but of private wealth - a partitioning of wealth to which a title is established. A title is solely a function of government, whether that title be 'Baron,' 'Prince,' or 'owner.' A title does not exist in nature; it is solely a contrivance of man.

When you contend that property can be productive without labor and offer the example of wild fruits, we immediately enter the Lockean descriptor of 'property' as a natural resource with which a man's labor is mingled. Fruit in the wild is common weal - available to hunter-gatherers. A fruit becomes 'property' when it is harvested - i.e. labor is mingled with it. We then have the questions of equity where the transformation of common to private calls for some upstream equity compensation. Such discussion is beyond the scope of this single post, I believe.

When we use the example of a home or residence as 'property' we're speaking of a capitalization process where the value is extracted in the form of habitation and the labor is that of the inhabitant - an "owner-operator." Clearly, the notion of a "workman's lien" reflects the interest of labor in property with which that labor is mingled.

So, I'd say that the philosophical discussion regarding the nature of wealth and property are extensive and exist within the relevant literature. For the purpose of my posting, I believe the axiomatic stance is warranted.

For more, I commend the following brief essay as a starting point: http://www.thegreatideas.org/apd-prop.html


"It is labour indeed that puts the difference of value on every thing." - John Locke

[DebJ]

49. Wow. What a great quote. Thanks again.

"It is labour indeed that puts the difference of value on every thing." - John Locke

[bloom]

5. It seems to me that people would have rotten fruit without labor

or no fruit if the animals all ate it.

There might be some way for someone to get money without doing anything - but fruit isn't one of those ways.

[TahitiNut]

6. Yup. Nature's use for fruit is reproductive.

And human beings engage in fruit contraception. :silly:
(Heck, we don't even scatter the seeds in fertile feces.)

[TahitiNut]

17. About the "Ratio of Corporate Profits to Employee Compensation"

I've included the quarterly figures for the years 1957 through 2004 ... nearly an half-century. The Bureau of Economic Analysis offers quarterly figures since 1947 and annual figures since 1929. I chose to show figures since 1957 both because it was the last Eisenhower administration and because the time-frame is congruent with other analyses that I do. I've examined prior years and find that they're consistent with the latter years, so no anomalies show up. The WW2 years, however, show an economic system under the exceptional stress of WW2. Nonetheless, the ratios stay within the bounds of latter years, with the exception of the precipitous increases we're now seeing.

What's probably most foreboding is the ratio for 1929, the year of market crash and the year before the beginning of the Great Depression. The ratio in that year is the highest of all the years for which data are available from the BEA: 18.4%! The equities market feeding frenzy that led to the Great Depression culminated in a year where labor was being royally screwed - to feather the nest of the ownership class.

[Debs]

7. Superb Post

[TahitiNut]

8. Thanks. (Maybe it'd get more reads if I called it "Sex! Sex! Sex!")

:evilgrin:

I worked hard on it after mulling it for weeks and weeks. It has taken me a looong time to come to grips with this perspective after years of using terms like 'property' and 'owner' and 'investor' and 'entitlement' without REALLY understanding what they mean. It takes a paradigm shift for me - out of Disneyland and into the real world.

The "American Dream" was once owning one's own land in order to support one's self without also supporting the Lord of the Manor and his greedy spawn. Now it's wanting a piece of the sharecropper action - becoming wealthy from the labors of others. I feel like I was seduced by some evil demons into thinking it was a moral aspiration. It's not.

[JanMichael]

9. You're right about the "sex" factor. You also could have used religion...

...to get this really great thread some attention.

It's nice to see abother person coming to grips with the load of crap that we've all been programmed to believe.

Like the word "Land Lord"...How F'ed up is that??? At least it's honest but criminy so few people actually "get" what it means.

[TahitiNut]

13. Indeed. "Landlord' was one of the words I thought of listing.

It's so, so, so heavy-handed. We've preserved the word-symbols of aristocratic entitlement in so many ways. Consider the words "lady" and "gentleman" which really have nothing to do with etiquette and everything to do with being a privileged member of a class that performs no labor to support itself. Even the common honorific of "sir" embeds the abominable practice of "god-given" entitlements in our language ... and our minds. Words are the atomics of our ideation and, thereby, shape our thoughts more than we can know. (I envy the incremental mental freedom of the broadly multilingual.)

[bunkerbuster1]

66. A southern custom: Sir and M'aam out of the mouths of children

I started hearing that a LOT when I moved down to GA from the Northeast. A lot of born/bred Southerners insist on having their children show "respect to their elders" this way, and while I accept that they're not willfully oppressing others by this practice and just think they're imposing discipline on their kids...

It gives me the willies. I don't care how much it alienates me from my peers, here, I will NOT have my child bow and scrape like that.

[DebJ]

50. I've found that 2 words get great response on DU: Howard Dean

Suddenly everyone starts posting like mad people!:toast:

[lovuian]

10. The trouble is coming and its a Depression

its a fact that keeps getting ignored when a country's assets is owned by 80% of just a few billionaires then we are headed for a Depression!!!

A country can't have that Europe has centuries of Worker uprisings and we are heading for another one soon!!!

[Lady Effingbroke]

11. Excellent post, TahitiNut!

The sacrifice of our poorest and weakest to feed the gluttonous appetites of the entitlement class has already begun, and, in fact, has been occurring for quite some time.

Nominated!

[Lady Effingbroke]

12. oops! dupe.

:silly:

[unkachuck]

14. Wow!

TahitiNut....great post....you are what educationally-challenged people like myself truly need, someone who can make an intellectual argument for what we all know/feel is 'inherent truth'....

Keep up the good work TahitiNut and makes us a new coherent ideology....

[Mike Niendorff]

15. Excellent post, TN.

In particular, your point about a declining mortality-rate among the working-age population (as opposed to simply the post-retirement-age population) is extremely interesting. Thanks for taking the time to put this together.


MDN

[TahitiNut]

16. Thank you. It should be noted that WAR also "prunes" the labor force.

By death, disability, and lower FICA payments (due to military compensation), the supporting current workforce is weakened. Included in the term "war" I would include the "War on (Some) Drugs" and the atrocious prison population. Anything that hurts the workforce hurts Social Security. On the opposite side of the ledger, workplace health and safety standards, education and training, and even stress reduction helps improve the long-term viability of a labor-supported Social Security system.

Any time we hear corporatist politicians propose any degree of abandonment of a labor-supported Social Security system, we're hearing a Declaration of War against the working class! The economics of the Social Security system is a "canary in the coal mine" - a harbinger of programs and policies designed to decimate the working class.

[sadiesworld]

18. kick

[Radical Activist]

19. This sounds like Huey Long

who was one of the strongest early advocates of social security, he pressured the Roosevelt administration to adopt it. He also had very strong feelings about the concentration of wealth into a small number of hands. I'm reading a biography of him right now and your post immediately looked familiar.

Personally I don't feel the regressive Social Security tax should stay them same. My deepest concern is not whether young people in my generation will get social security benefits. My concern is that the already large portion of my paycheck that is going to support senior citizens is going to dramatically increase in the coming years.

We could be approaching a situation where a third or more of the money earned by young moderate income workers will be taxed to support social security and healthcare for the elderly. Its income redistribution based on age. When I think of a large baby boomer population retiring soon that votes in much higher numbers than younger workers the term "tyranny of the majority" comes to mind.

[TahitiNut]

20. "income redistribution based on age" is what children are about, too.

Quite simply, the reason the Social Security system is being starved of funds isn't primarily because of seniors (or disabled); it's primarily because the working class payroll base itself is being starved by a shift to plantation economics.

I've used the phrase "plantation economics" quite often on DU. It's descriptive of a small ownership class living off the labors of a large working class, taking an ever-increasing portion of the wealth created by the field hands and sharecroppers. Using this paradigm, the argument is often posed that the burden of caring for the elderly shouldn't be borne by the already-overburdened working class, but should be borne by the ownership class as well. But what's ignored is the fact this can be accomplished either by taxing the income of the ownership class, or by adjusting the very economic system itself and shifting the share of income back to the working class. The economic burden, I argue, should be offset by economic strength! (You can bet your sweet ass that this would be the 'argument' posed by the ownership class in grabbing an even bigger slice of the income pie!) To shift the 'burden' moreso to the ownership class merely feeds the beast - providing that ownership class an even greater motivation to consume a bigger slice of the income pie - or to ablate that 'burden' by decimating the beneficiaries. (What's the 'retirement age' of a slave?)

There are about ten million fewer people with jobs right now than merely an average increase in employment seen for the last 50 years. When the specious argument is made that fewer people are needed in the workforce due to increases in productivity, the circularity of that argument is ignored. The fact of the matter is that when the 'lower 50%' are impoverished, they not only contribute less to Social Security, the also reluctantly leave many markets for goods and services. When they leave the market, the market is deprived of their dollars. That, in turn, reduces the (dollar-equipped) demand and so on, and so on, and so on.

From 1980 to 2000, the share of the economic pie allocated to the 'bottom 90%' (which, loosely speaking, is the Social Security funding base) shrank from 67.9% to 54%. That's a 20.5% smaller piece of the income pie: decimation twice over! The 'bottom 50%' share has shrunk from 17.7% to 13%, a 26.5% smaller piece of the income pie.

Notice the size of the decrease over a mere 20 years. Both 20.5% and 26.5% dwarf the size of the OASDI 'payroll tax' burden: currently 12.4%.

This is the message conveyed by the Gini Index, a measure of income distribution I've mentioned many times on DU, and one that few people apparently appreciate. The United Sates is becoming a Banana Republic, controlled by Banana Republicans. (A 'Banana Republic' is a nation immersed in Plantation Economics.) The Gini Index (also called the Gini Ratio or Gini Coefficient) most often used is one that measures the income distribution by family and, thus, tends to mask the reaction to economic repression of two-earner (or more) families.




Unless and until this trend is reversed, "Social Security" may be the least of our problems! As I said before, the projected viability of Social Security funding is a canary in our social coal mine. Replacing the canary with a snake does not serve our economic health; it merely ignores the warning.

[mistertrickster]

22. This is really fascinating and true! I'm going to forward this post et al

to Paul Krugman. There are several columns worth of material here, I would think.

I've often wondered how long it would take before management's screwing of labor would come back to haunt them--in the form of nobody can buy their products.

Wasn't it Henry Ford who believed that his employees should make enough that they could buy a new Ford?

Looks like we've got our answer--the hollowing out of the middle class has already begun, with serious negative effects to the economy.

[mistertrickster]

25. You notice how the graph trends up under Repubs and down or

steady under Dems?

At least starting with Kennedy in 1961--down

Johnson 1963--down

Nixon 1968--up

Nixon Ford 1972--steady, trending upward

Carter 1976--steady, trending upward

Reagan 1980--up like a flippin' rocket, rising to and exceeding 1947 levels

Bush I 1988--down, then up stratospherically

Clinton--down or steady

Gee, I wonder what the index is going to look like for the last four years? Any guesses?

Heh.

[TahitiNut]

27. I've updated the Gini graph (refresh to see it) to include other countries

It occurs to me that people might look at the graph and like to have some visual basis for comparison. So, I added comparable (Gini Index for families) data points for other countries in recent years. It's pretty clear, I think, that the economies we'd prefer to be compared to are the one's we're distancing ourselves from.

You ask if I have any guesses about the last four years. Well, I suspect my guess is similar to yours. I'm guessing it's worsened to around 0.45 or worse. There's no question in my mind that the current regime has had a devastating impact on economic equity in the US.

This is the real problem in the US; Social Security's projected fiscal health is symptomatic of these systemic issues in our economy.


I think it's also noteworthy to regard the improvement (decline) in the Gini Index in the post-WW2 years. It's impossible to overestimate the value of the economic policies of those days, where the GI Bill was more than emblematic. The GI Bill was an awesome demonstration of the power of "trickle up" economics. The college and university system doubled! The workforce became more educated and more productive. With the lessons of the Great Depression fresh in their memories, 'enlightened' businessmen adopted (with some coercion) a grassroots focus, realizing that a healthy, well-compensated workforce created a healthy business. The New Deal was in full force.

[Radical Activist]

38. Actually I notice a large spike in '93

When Clinton raised the payroll tax, including Social Security, to cut the deficit. It was very regressive.

[TahitiNut]

52. The last increase in the 'payroll tax' rate occurred in 1990

The rate increased from a combined rate of 15.02% in 1989 to 15.3% in 1990, due to an OASDI rate increase from 12.12% to 12.4%. There has not been an increase in the payroll tax rates since then. The prior rate increase was in 1988, from 14.3% to 15.02%. Prior to that, it was from 14.1% to 14.3% in 1986. The wage base increases/decreases are automatic and reflect inflation.

I do not believe the payroll tax has had a material effect on the recent year-to-year changes in the Gini Index as reported in the Current Population Survey, Annual Demographic Supplements, as obtained and developed by the U.S. Census Bureau.
For more information, contact the Housing and Household Economic Statistics Division's Statistical Information Staff at [phone].

While there's no question in my mind that the nation's overall tax structure is becoming more regressive, the CPS belies a contention that it has quite yet become so. The figure below indicates that the post-tax Gini Coefficient has been below the pre-tax Gini Coefficient throughout the mid-90s by 0.033, 0.034, 0.033, 0.032, 0.030, and 0.026 during 1993, 1994, 1995, 1996, 1997, and 1998 respectively. While it's difficult to assess the statistical significance of this differential, I think it clearly supports the contention that our overall tax structure is becoming more regressive.



It's really quite fascinating to explore the abundance of relevant statistical information available online.

[Radical Activist]

57. I checked and I got it confused with the increase on

Social Security benefits and other tax increases Clinton put in place.

Another way to easily deal with the problem you're talking about is to eliminate the social security tax and make it part of the regular progressive income tax. That would solve the funding issues that result from income inequality you mention and eliminate one of the most regressive taxes we have.

I favor doing that and making Social Security a need-based system like most other welfare programs. I don't see any justification for a large portion of my paycheck being taxed to pay for the retirement and healthcare of seniors who have more than enough to provide those costs for themselves.

[Radical Activist]

40. Parents choose to have children

Children don't choose their parents' retirement plan.

Yes, I'm sure Social Security would be fine if the average working person made more money, and thus put more into the SS fund.
So how do you suggestion we make this large-scale income redistribution happen?

My primary method would be making it much easier for the service professions and white collar workers to form unions and thereby securing better wages and benefits on a massive scale. The GI Bill was very important in creating a stable middle class, but I would argue the formation of the CIO and unionization of industrial workers in the 30's and beyond was even more significant. The shrinking percentage of the workforce in unions has much to do with the declining wages and standard of living.

This is the same economic problem Huey Long talked about (I'm still reading that book) when he started his "Share the Wealth" Clubs. He pointed out that 85% of the wealth belonged to 1% of the people and that rather than wait for an improving economy to lift everyone up, we should redistribute the wealth we already had more fairly. Among other things he wanted the nation to adopt Louisiana's inheritance laws that split property up somewhat equally between all heirs. That way the wealth was split up and dissipated over the years instead of becoming more concentrated. That's a strong contrast to eliminating the inheritance tax altogether as Bush has done.

[DebJ]

51. TahitiNut, would you please explain the Gini Index a bit more?

For example, what does the .25 for Japan mean?
thanks.

[TahitiNut]

55. It's a measure of distributive inequality.

Definition: The Gini coefficient is a number between zero and one that is a measure of inequality. An example is the concentration of suppliers in a market or industry.

The Gini coefficient is the ratio of the area under the Lorenz curve to the area under the diagonal on a graph of the Lorenz curve, which is 5000 if both axes have percentage units. The meaning of the Gini coefficient: if the suppliers in a market have near-equal market share, the Gini coefficient is near zero. If most of the suppliers have very low market share but there exist one or a few supplies providing most of the market share then the Gini coefficient is near one.

In labor economics, inequality of the wage distribution can be discussed in terms of a Gini coefficient, where the wages of subgroups are fractions of the total wage bill.

---

The Gini Coefficient (aka Gini Index and Gini Ratio) is a number between 0 (zero) and 1 (sometimes expressed as between 0 and 100) that indicates the degree of inequality in a distribution.

For the purposes of this thread, we're talking about the distribution of Family Income. If the Gini Index were 0, it would indicate perfectly equal income distribution, with every family having equal incomes. If the Gini Index were 1, it would indicate that one family receives ALL the income and all other families receive none.

When we see a Gini Index of 0.25 for Japan and a Gini Index of 0.50 for Mexico, we can conclude that there is double the inequity in distribution of income among the families of Mexico as there is in Japan.

The fact that "lower is better" (at least in the ranges we're looking at) should be culturally obvious in the graph I presented, since the Gini Index for "White" families is lower than for "Black" or "Hispanic" families.

[mistertrickster]

64. OMG, this means income distribution in the US is more like Mexico

than Japan.

Mexico, the country that made the word "peon" famous.

That's sickening.

[TahitiNut]

67. Here's a Lorenz Curve (and Gini Indices) I calculated for ...

... individual income distribution in 2001.



The data in this graph cover 221,591,000 individuals - the 15-and-older population of the United States in 2001. This portrays the distribution of individual income (not family income or household income) and is a good visualization of what a Gini Ratio means. As the "belly" of the curve gets bigger (deeper), the Gini Ratio is higher. I tend to think of the Gini Ratio as a measure of the "belly of the beast."

[brokensymmetry]

21. Great post!

:kick:

[donkeyotay]

23. Thanks for this post

Working class people have been deluded into voting against their own interest by listening to the propaganda on tv.

Example: FUX has "the cost of freedom." No one seems to know what this means, exactly, but presumably it means that surviving on shitty wages without health care or retirement is some type of moral triumph over godless communism.

This is the same struggle our country has always had - the class conflict between capital and labor. I thought America's genius had been to balance the two sets of interest, and it is the balance that's been lost - just as the balance between liberal and conservative politics has been skewed too far to the right.

Great work you did. Too bad most people will never get anymore info than wretched corporate television feeds them on this or any other topic of greatest import to our freedom and economic well-being.

[mike_c]

24. kick for an excellent post....

:kick:

[DemocracyInaction]

26. Excellent and needed post---I'd like to add one thought to it

I believe there is something else now in the 'mix' in this nation that the citizen is totally ignorant about and is what is rapidly propelling us into areas you are mentioning in your post (basically the wealthy devouring the other classes for their sustanance)-------the people don't realize how heavily "foreign" investment and ownership in this nation is. We've been taken over in so many ways without a shot being fired and this is by people who are of the entitled classes of the "world" who have been raised in countries were there are the privileged, inherited, unearned wealthy and peons with nothing in between. Thus, there is NO interest on their part in the American worker or the American economic structure with it's middle class. And, unfortunately, these greed bags don't understand that if they kill off all below the rank of 'inherited rich' in this country, their investments will fall through the sewer in an nation where the economy is 2/3 based on consumer consumption. The people better figure out fast who is sticking it to the American worker----if they ever figure out the foreign element in this, they will go wild---and that is why that info is carefully kept from them.

[El Biggo Doggo]

29. Good framing of Social Security as a pure product of the work ya do

We need to simplify this message, so it can be exploited and defended. Great charts! they'll be hanging in my classroom soon.

[hunter]

28. The plantation owners are out on the beach, amazed by the sudden low tide!

Ooooh! Aaaah! Look at the treasures God has bestowed upon us! (And many of their servants, and slaves, and serfs are out there on the beach with them...)

If anyone complains that a comparison of our precarious economic situation to the Tsunami are insensitive, I dare say an economic disaster of the sort TahitiNut's figures imply will take away the lives and livelihoods of many more people, rich and poor, than the Tsunami did.

We find ourselves in the same situation as the physical scientists who realized immediately after the earthquake that a Tsunami was likely, even imminent: Who do you call?

I think a large part of the problem is that people who might remember firsthand the causes of the Great Depression have mostly passed away, and the rest of us are mostly ignorant.

[alaintex]

30. I wish I was smart enough to understand this stuff.

I read the whole article and most of it went right over my head. The statement about the Federal Minimum Wage caught my eye though.

<An immediate increase of the Federal Minimum Wage to $6.50/hour would have one of the most positive effects on Social Security.>

I'm not a minimum wage earner (though one of my sons is). And I can't for the life of me figure out why the minimum wage wasn't indexed to inflation, but my question is, "If $6.50 is better than $5.25, then wouldn't $7.75 be better than $6.50, or $10.00 even better yet?" $6.50 sounds arbitrary, is there a "right" number?

And why stop at "minimum wage"? If we increased everyones wages by 20% or 50%, wouldn't that have even more positive effects on Social Security?

[TahitiNut]

31. Well, I suggest $6.50 since it's about 80% of the recent maximum.

That's just based on gut feel ... and the understanding that it'd still be lower than the state minimum wages in New York and California. (I think.)

The effect of raising the minimum wage percolates up the wage scale fairly rapidly. It also has the medium-term effect (I assert) of increasing employment, since people spend that money.

"Cheap labor" conservatives and misguided (imho) small businesspersons resist such increases, always arguing they can't afford it, that the job isn't "worth" that wage, and that it'll cause unemployment, particularly of teen-agers and other casually employed people. This, I believe, is more than offset offset by the more mature and experienced people in the workforce such an increase attracts. Employees very often have value above and beyond the minimum perceived requirements of the job. Human beings have to be disincentivized to perform at levels they're able.

In my firm opinion, the practice of devaluing a wage by arguing about the value of the work performed (which is always understated for profit-making motives) misses the most important point: it's the human being that has value - the work will always reflect that.

At some point, in my opinion, we would be well-advised to establish a Federal Minimum Livable Wage and place firm limits on the kinds of jobs eligible for the lesser Federal Minimum Wage akin to the definitions of exempt vs. non-exempt (which also need to be made stricter). Our Labor Standards have taken a real beating in the last 30 years, and they need to be renovated.

[alaintex]

33. Good point about the distinction of Living wage vs. min. wage

In fact don't we already have that in some ways in the some industries?

I think waiters can be paid as little as $2.00/hr. whether they make a tip or not.

My parents ran the only cafe in a small town when I was growing up and they always worried about the minimum wage.

[TahitiNut]

54. In most states (and possibly federal?) food service personnel ...

... must be guaranteed a combined pay and tips equal to or exceeding the minimum wage. Nowadays, tips are reported. (Yeah, I know.) Members of my family have been in the restaurant industry for years.


Let's get real. There's no way on God's Green Earth that a sane person is going to wait tables (as a legal worker) and earn less than minimum wage. That's a tough job and requires both grooming and logistical skills, not to mention public contact and basic marketing. Fast food industry? Nonsense. Check out the wages paid by the major chains.

[tx_dem41]

36. Well, there is the "law of diminishing returns". n/t

[alaintex]

41. ??? How would the law of diminishing returns apply here???

I understand that increasing the minimum wage from $5.25 to $6.50 is an increase of about 25%, and since social security taxes are taken as a percentage of income, it would stand to reason that social security revenue would go up by 25% for those workers. Increasing the wages of all workers by 50% would increase social security revenue by 50%.

It's just math.

But the way I understand the law of diminishing returns, it's a production issue (i.e. you can only put so many workers on a job, one man can chop down a tree in 10 minutes, but 10 men probably can't chop it down in one minute, and 100 men certainly can't chop it down in 6 seconds.)

[tx_dem41]

44. At some point, a raise in mininum wage will...

yield less and less employment and result in less jobs. At some point, it will also be inflationary. This will cause the outgoing SS benefits to need to be raised to match inflation and mitigate any increase in income flow.

[alaintex]

45. This goes back to my earlier question...

Is a raise in the minimum wage a good thing or not good?

<At some point, a raise in minimum wage will yield less and less employment and result in less jobs. At some point, it will also be inflationary.>

If you raise the minimum wage by 25% and loose a proportional number of minimum wage jobs, there is no gain in SS revenue.

It seems like a no-win to me.

[tx_dem41]

46. I think small raises (at least linked to inflation) are good...

...after that I don't know.

[TahitiNut]

53. "loose"? (Hmmmm.) There is absolutely no evidence to indicate this.

The minimum wage has been raised at both the various state and federal levels many times in the past sixty years. There is an abundance of statistical data (and analyses) covering those years and those analyses have shown there is absolutely no discernable correlation between increases in the minimum wage and increases in unemployment. None. Nada. Zilch. Nichts. Zippo.

Insofar as any claim that an increase in the minimum wage will result in increased prices for goods and services or result in inflation, the diminishingly small portion of the price for any broad measure of goods or services attributable to labor costs at minimum wage puts that boogeyman to rest. It just ain't so. No way. No how.

[VioletLake]

32. Great post.

How do you feel about unions, TahitiNut? It seems to me that without unions, labor is at the mercy of wealth.

[TahitiNut]

37. As long as there are Manufacturer's Associations ...

... and other "business unions" (even like the Chamber of Commerce), I can see no earthly way that unions aren't needed. From a merely philosophical standpoint, it disturbs me that we so often resort to an adversarial model as the means to achieve "justice." Our criminal justice system, for example, is based on this model. The problem is obvious. There's no assurance that the outcome is "just" when the adversaries are not equitably matched. It's a "Catch-22" ... some degree of equity is necessary to achieve equity. The degree to which a mismatch in the criminal justice system yields an unjust result is evident in the Innocence Project, where about 130 people have been exonerated of capital crimes, not merely by belatedly establishing 'reasonable doubt' of guilt but by clearing the far more stratospheric hurdle of proving innocence beyond a reasonable doubt.

Walter and May Reuther were personal friends with my family. I come from a predominately blue collar, union family. My paternal grandfather was involved in the unionization of the coal miners, and was black-balled as a result. I'm somewhat familiar with the abuses on both sides.

I think I'd prefer we had a real Labor Party and a viable multi-party system ... since the Democratic Party doesn't seem as committed to working class equity as they once were, and the mere fact that unions are what lit the fire under the Democratic Ass would indicate to me that such an advocacy does not and did not spring naturally from the shared core ideology of the Democratic Party. Even this, however, is a means to end, where the idealist in me would wish that democracy itself would assure progress toward greater equity without additional means. The motivational problem, as I see it, is the seduction of the ownership myth. It corrupts us. People are seduced into believing that enrichment from the labors of others is a laudable aspiration. This is what erodes working class political incentive - self-hatred. It's a belief that "having to work for a living" means the person isn't "successful." That's the core false belief that infects our culture more every day.

[VioletLake]

39. Thank you.

I'll take my time to savor it.

[unpossibles]

47. well spoken

"This is what erodes working class political incentive - self-hatred. It's a belief that "having to work for a living" means the person isn't "successful." That's the core false belief that infects our culture more every day."

I have tried to think of a way to frame this argument for a while now, and you've done it. I need to reread it critically, but I like what's going on here.

One thing I have always said to the RWers who argue that the rich have a greater burden is that they do not get rich in a vacuum, that they make a LOT of their money on the backs of poor laborers, many who cannot afford to eat or clothe themselves properly (especially when including foreign labor sweatshops).

This is an interesting angle on that same argument.

[shondradawson]

34. Delete

[shondradawson]

35. The Great Scythe

I enjoyed your post and should like the opportunity of running my fingers through your mind, if you'll pardon the expression.

Your opening paragraph is strong: we are faced with a crisis. It is a crisis we, as a people, have faced throughout the rise of civilization, where you will find very few if any examples of a sytematic balance between the rights and entitlements of labor and ownership. Indeed, the concept of ownership rising in the first human civilizations is exactly what created the imbalance in labor, not in ownership, that has consisted remained 1-2% of the total population of any given country at any given period in history.

No, the only imbalance to be found is in labor as a force in past and present empires, a force that has been hopelessly exploited and manipulated within the hands of power and wealth, the "owners" of the world.

Wealth, in and of itself, has no inherent rights, granted. But 1-2% of this country can (and haven't they?) convincingly argue that labor, in and of itself, has no inherent rights, either.

This is why I must dispute your claim that no system of governance is morally supportable unless socially and/or economically just. Social and economic justice is exactly what we have, according to the present wealthy and powerful. Be it "ordained by The Holy Father" or simply "survival of the fittest," our present "balance" makes absolutely just if not perfect sense to the "owners" of the world.

The "owners" recognize labor as only the support structure or the great mechanism to their wealth. The more the laborers labor for the "owners", the stronger become the "rights and entitlements" of the wealthy and the powerful, and so the weaker the "rights and entitlements" of the laborers become, and so on and so forth...which is what your charts reveal.

You are right: Social Security is the least of our problems. I like your "canary in a coal mine," image. The canary of Social Security is slipped in to estimate the future pressures that can literally suffocate the labor force. Unless the canary is choked immediately by the pressures, the mine is presumed to be fine, both the mine and the pressures that simply will take longer than "immediately" to ultimately choke the labor force, too.

[TahitiNut]

68. There are some who claim the system is 'just' merely because ...

... the outcome is the outcome. In other words, whatever happens is de facto "justice" because the only legitimate criterion is the system itself. That's a little bit like saying an airplane that crashes must be OK because that's what it did - it ignores the original moral justification behind the system's design and rejects the principles and values held most dear by those under whose authority the system exists in the first place.

In a more limited sense, this is what's fundamentally flawed in assessing our "system of (legal) justice" ... when people ignore fact in favor of process. No system can be tolerated that's not subject to a "Total Quality Management" process and monitoring outcomes as symptoms of malfunctions. This is the attitude that gave us the Dark Ages - an authoritarian subservience of even human conscience to the exaltation of the system-as-God.

[dbsherri]

42. Try this on

I suggest you consider canceling your cable service on or around Inauguration day as a protest about the way we hear the news. I rarely watch the news, but the reporting of the Tsunami disaster sent me over the top. Only the US used it as a way to further a political point of view. The US is a world leader in giving, and on and on. It made me sick.

Try this on:

What if LESS THAN one quarter of the people who voted for Kerry cancel their cable television service to protest the news media? Let’s say 250,000 households.

On average, cable costs $2/day. That’s HALF A MILLION DOLLARS PER DAY.

Keep it off a month, that’s 15 MILLION DOLLARS

If you don’t think that will have an economic impact on cable television, you’re wrong.

YOU CAN MAKE A DIFFERENCE. KILL YOUR TELEVISION SERVICE. GET TO KNOW YOUR KIDS, GET TO KNOW YOUR PARTNER, GET TO KNOW YOURSELF. READ MORE. GET MORE EXERCISE. LISTEN TO THE RADIO, PLAY MORE MUSIC, RENT A MOVIE IF YOU MUST WATCH TELEVISION.

MOST IMPORTANTLY, SEND THE MONEY YOU SAVE TO DISASTER RELIEF.

IF YOU WANT THIS COUNTRY BACK, YOU HAVE TO TAKE IT BACK.

[alaintex]

43. Like you, I rarely watch the news, or TV at all, but...

why would hearing that the US is a world leader in giving make you sick?

I think that's sort of a good thing.

[DebJ]

48. One of the best posts I've read in my 15 or so months on DU.

Thank you very much. I will be bringing a copy of this to the attention of my local political activist group!

[TahitiNut]

56. Thank you. I was getting EXTREMELY frustrated at the interminable

... and simplistic discussion of Social Security "issues" on DU and the degree to which those discussions were succumbing to the Fascist Siren Song of "send us your money ... send us your money" and employing the false paradigms of the corporatist rhetoric. Not even honest enough to employ half-truths, the Mighty Wurlitzer is peddling eighth-truths and sixteenth-truths.

What has been glaringly absent from these discussion is the fact that the Social Security funding mechanism is the only one in this country that relies on fair labor compensation and full employment policies rather than ownership profiteering or the Greater Fool mechanisms of the equity markets. By proposing an abandonment of that reliance on fair labor compensation and full employment policies, the Corporatist Reich is effectively proposing an unhindered exploitation of labor itself. It is, in every sense, a Declaration of War on the working class.

And I'm a capitalist. :shrug: Go figure.

[Zookeeper]

58. Thank you, Tahiti Nut....

for an excellent, well-researched post!

I haven't been on-line much lately, so I haven't seen the other threads you mentioned. However, I did read a LTTE recently that made the excellent point that Social Security shouldn't be viewed as an investment that can be shopped around (privatized) for a better return. Actually, it is more like insuranceagainst a worse-case scenario.

I confess to only doing enough research on the subject to know that privatization would be a BushCo gift to their corporate cronies. And I do think it's reasonable to consider means testing, although I could see that creating its own backlash if high-income people decided it looked too much like welfare.

Having a similar background to yours (from what you stated), I'm totally with you on the Union issue. I can't believe people are so blind to the benefits Unions created for all workers. I have a bumpersticker that says, "Unions. The folks that gave you the weekend." The 80's "Greed is Good" motto is still with us. No one seems to see anything wrong with doing whatever it takes to get rich, short of street crimes.

Is it just me, or does it appear to anyone else that Americans have lost the common understanding of a more noble purpose to (or at least ideals of) our democracy?

Anyway, thanks again for the great post! It would be great to see it on some other sites as well.

[TahitiNut]

60. You're welcome, m'lady. I'd like to make one small quibble.

Social Security isn't just "like" insurance; it is insurance. If you pay premiums on a policy from Prudential that pays off if you die and it's called "Life Insurance," then Social Security could be called "Death Insurance." It's a policy that pays off in an annuity if you live. Just like any other insurance, the premiums you pay go to pay current claimants. Also just like any other insurance, the insurer keeps a "reserve" against claims and that "reserve" is invested. But more important, it is also just like any other insurance since it doesn't do "means testing" before paying a claim. Prudential doesn't turn to your beneficiary after you've died and say "Well, since you don't need this we're not paying."

The abbreviation OASDI stands for "Old Age, Survivors, and Disability Insurance." We, the workers, are the insured. We, the workers, are the insurer. Quite frankly, I'm not at all interested in the privatization of Social Security, a privatization that cannot possibly do the job for less than the 1% administrative overhead we're currently paying and still make a profit so a few fat cats get even wealthier - until they then declare bankruptcy and turn over their claimants to We, the workers, to pay.

[Zookeeper]

61. As usual, you've made some good points....

Although I'm thinking that Prudential couldn't stay in business if it did means testing, since their life insurance is a product they have to sell. Workers are required to contribute to Social Security and society at large benefits from not having starving, homeless elders. Even though means testing would be changing the rules, if it is true that the system is not solvent, as BushCo is claiming, it would be one way to address the issue of more money being paid out, than paid in. I can't imagine completely eliminating payments for anyone, but perhaps there could be a cap depending on income. Of course, as I said in my above post, I'm sure many on the right would then view it as a welfare entitlement for people they consider "poor planners."

This really is an important issue and I'm glad you've brought it to DUer's attention. My eyes glaze over pretty quickly on the subjects of business and finance, so it's good to have a little nudge! :dunce:

On Edit: Perhaps Prudential actually does a sort of "means testing," by screening customers before selling them policies, thereby eliminating risks to their profits. It's like the difference between Public and Private schools. Private schools can pick and choose their students and Public schools have to take everyone.

[mistertrickster]

65. I'm a capitalist too--what alternative is there, heh?

But capital markets can only thrive under a strong central government that protect everyone's interests. Otherwise, energy producers could just burn coal until the air turned to sulphuric acid and corporations could merge until Microsoft owned the entire country.

Why is it that the US does so much better than Mexico? Because our environmental laws are less restrictive? Hah! Our labor and anti-trust laws are so much more lax? Our tort 'reform'?

None of the above. It's because our gov't has traditionally protected the middle class and aided upward mobility.

This is what your argument is showing has been losing ground to the neo-capitalists.

[Zookeeper]

59. Kick! n/t

[cosmicdot]

62. "Entitlements, of which ownership is one, are a function of governance."

"governance" ... is that at the core of the struggle we're facing?

"We can have a democratic society or we can have the concentration of great wealth in the hands of the few. We cannot have both."
-- Louis Brandeis, Supreme Court Justice from 1916-1939.

:kick:

The gropinator is bringing the governance issue to California (we're going to be fighting this on all fronts), i.e., CalPERS. I think what they plan for SS is similar to what they have plan for programs like CalPERS ... the bottom line is the sucking of every possible penny out of the lower economic classes leaving them, in the end, a large 'have nots' class ... and funneling that loot it into corporate coiffures. The whole ownership show ...

The Radical Republican panzer divisions are out there 'in-process" and in force. They got rid of CalPERS' president, Sean Harrigan ... 'a hit' ... got him out of the way ... someone who is "one of the nation's most outspoken advocates for corporate governance reform" ... silence the voices ... all part of the control freak attack tactics. The "Radical Republicans" or neocons or the Council for National Policy or whomever is masterminding their effort seem to have every detail mapped out with assignments made ... just like they seem to have with everything else these days. Their think tanks have been prepping and preparing them for a good number of years ... tax exempt "non-partisan" ideology factories, natch. The public house been softened up through a.m. talk shows and the Faux propaganda machines.

"The dismissal of Sean Harrigan from the presidency of California's giant public employee pension fund, CalPERS, is just the latest skirmish in the corporate governance wars.
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=1125160#1125409



I expect **shrub to repeat the 2001 tax cut magical mystery tour when he took the talking points to arenas in safe red areas, arenas holding at least 10,000 people ... attendees bused in to cheer-lead ... and, a venue which allows, on taxpayer dime, repetition 24/7 in the spin room echo chambers of corporate media ...

why can't the Democrats hold similar rallies to augment an TV ad/media blitz to 'Save Social Security'? Nader, I think, too, used that venue concept in his 2000 effort. Jim Hightower et al had something similar with its Rolling Thunder Downhome Democracy Tour, which could be a model (we need more of Jim Hightower in the spotlight ... he can deliver the msg in terms people 'get'... he'd be a good DNC leader).

We know that we'll have to fight for every second of air time we get ... clear channel and faux aren't going to be fair nor helpful ... so, we have to become the Media ... but, we need some coordinated effort so resources are not watered down in individual efforts ... and the state and national politicians need to get on board and in sync. If they don't want to lead an opposition, fine ... move out of the way and let true leaders take the role. If any plan to "work" with the Panzer division of the Radical Republicans ... they should just go ahead and switch parties ...

I'm not that smart on things, but appreciate the moment 'to vent'; and, by doing so kick the thread. :)

Great post, TH ...

[mistertrickster]

63. Kicking again for another go-around. This is a "must read."

nt