Economics

Kansas Proves That Trickle Down Economics Doesn’t Work

The actual state flag of Kansas.

The actual state flag of Kansas.

I interrupt your long week of freaking out over weird poll results—seriously, you can stop reading the news right now—to highlight this very important Los Angeles Times piece by Michael Hiltzik. As you probably know, Governor Sam Brownback’s leadership in Kansas is the most straightforward example of trickle down economics that we have in the United States right now. Brownback and a supermajority of conservative state legislators have done everything in their considerable power to enact into law the three main pillars of trickle down economics, which I will recount for you right here:

  1. Tax cuts for the rich.
  2. Deregulation for the powerful.
  3. Wage suppression for everyone else.

Brownback immediately cut the income tax for the wealthiest Kansans and passed “business-friendly” laws like exempting pass-through business income from taxes.

The thinking with trickle down economics is that when government redistributes the wealth to the top one percent, that money trickles down—ugh, that image—to everyone else. This is why Republicans refer to really rich people as “job creators.” No other state has gone this far in the effort to create a trickle down economy; Kansas is in uncharted waters, here.

So how’s it going? Hiltzik says the state’s income tax collection has fallen by more than 20 percent, and even the Brownback administration’s own financial report…

…painted a “doom and gloom scenario” in which the gross state product had declined from 2014 through 2015, and that growth in personal income, nonfarm employment and private industry wages all trailed the region and the country as a whole. Sales tax collections were up, but that’s because Brownback enacted two sales tax increases to compensate for his other tax cuts. The general effect was to burden the middle class and poor with costs that wealthier Kansans escape.

Huh. So it looks to me that when you take money from the middle class and give it to the richest people in your economy, the richest people tend to keep that money. Who would’ve thought?

Seriously, look at the map at the top of Hiltzik’s story and tell me everything in Kansas is fine.  It’s got the worst economy in the nation—far worse than all its neighboring states. The results of Brownback’s trickle-down experiment are coming in sooner than anyone could’ve expected.

Meanwhile, states with economies that grow from the middle out are thriving. Washington state, birthplace of the $15 minimum wage and hopefully soon to adopt a statewide minimum wage of $13.50, is booming. So why we should believe conservatives when they say that the minimum wage is a job-killer and the wealthy are job creators? Governor Brownback’s Kansas conclusively proves them wrong.

WHYY Duped by Fake Research Director at Fake Think Tank Citing Fake Poll

No one takes the Employment Policies Institute seriously

I grew up in Philadelphia, so I’ve got a ton of respect for WHYY, the local NPR and PBS affiliate (perhaps best known nationally as home to Terry Gross’ award-winning Fresh Air). Which is why I was so sorely disappointed to see WHYY’s “Newsworks” website give op-ed space to fake-think-tank anti-minimum wage shill Michael Saltsman: “Op-ed: Raising minimium wage won’t flip the Senate.”

I mean, for chrissakes, why not just print a goddamn press release?

Saltsman claims to be the research director at the mendaciously-named Employment Policies Institute, which likes to describe itself as a “non-profit think tank” while in fact being neither. Indeed, Saltsman’s faux-think-tank is actually just one of several profitable front groups run out of the DC-offices of lobbying and PR firm Berman and Company. And if the editors at WHYY think I’m exaggerating, they might want to listen to this 2014 interview with Terry Gross, in which the New York Times‘ Eric Lipton explains how this scam works:

LIPTON: Yeah, I was – you know, set up an interview with the research director. I got the address of his office. I went to the eighth floor of the building on Vermont Avenue, like four blocks from the White House. The elevator opens, and it’s Berman and Company. And I go in and, you know, there’s a bunch of awards on the wall, advertising awards, public relations awards that Berman and Company has won for its work, you know, doing ad campaigns on behalf of various industry groups.

And so I didn’t see any evidence at all that there was an Employment Policies Institute office. And in fact when I started to interview the people there, they explained that there are no employees at the Employment Policies Institute and that all the staff there works for Berman and Company, and then they sometimes are just detailed to the various think-tanks and various consumer groups that he operates out of his office.

And he bills them, sort of like a law firm would bill various clients.

Wow. What a great scam. And it has been from the Employment Policies Institute’s start. (Note: I refuse to refer to the organization by its three-letter abbreviation, EPI, because it was obviously named to sow confusion with the real EPI, the pre-existing and pro-minimum wage Economic Policy Institute. Hell, not-EPI even apes EPI’s favicon, causing me to repeatedly click on the wrong browser tab.)

A Tale of Two EPIs

What a bunch of shameless trolls.

Legally, not-EPI is registered as a tax-exempt 501c3 (or, illegally one might reasonably argue), so it doesn’t have to report the names of its funders—though it’s safe to assume its money mostly comes from the restaurant, accommodations, and retail industries. As for how it spends its money: “more than half” of its multi-million dollar budget is paid to for-profit Berman and Company for staffing and operations, an “atypical” arrangement that prompted Charity Navigator to issue a “Donor Advisory.”

For WHYY to allow Saltsman to misrepresent himself as a “research director” at an “institute” is just out-and-out irresponsible. He’s a PR flack, period. And as for the content of Saltsman’s op-ed, well, that’s just as bullshitty as its author.

Saltsman argues that Republicans shouldn’t run away from their longstanding opposition to the minimum wage, based on the thesis that opposing the minimum wage didn’t hurt them 2014. Oh please. First, even without Trump tearing apart the fragile Republican coalition, 2016 was always going to be an entirely different electorate than 2014; Democrats simply turn out in far greater numbers during presidential elections than they do during the midterms. Second, there has been an undeniable and dramatic shift in public opinion over the past couple years in favor of substantially raising the minimum wage.

Those are just facts. There’s no disputing them. Which perhaps explains why Saltsman felt forced to resort to inventing a poll:

This matters. My organization used Google’s consumer survey tool to survey 500 Pennsylvanians who plan to vote this fall. Over 40 percent of respondents said they were no more or less likely to vote for a candidate based on their opposition to minimum wage.

Well, if his PR firm conducted an online poll, I guess we should just take his word for it. It’s almost as ridiculous as his anecdotal citation of a single business closure in booming Brooklyn as evidence that a higher minimum wage is wreaking havoc on the New York economy.

I can sum up Saltsman’s “research” in six words: No data. No methodology. No credibility.

Saltsman is nothing more than a fake “research director” at a fake “institute” citing a fake “poll.” WHYY and other media outlets should be ashamed for allowing him to present himself as anything other than what he really is: a paid spokesperson for the hospitality and retail industries.

 

The Free Market Knows How to Save Lives from Distracted Drivers. It Just Chooses Not to Act.

giphy

I want to make sure you didn’t miss Matt Richtel’s stunning New York Times story in the media juggernaut’s run-up to the debate. It’s about texting and distracted driving, and the first paragraph is horrifying:

The court filings paint a grisly picture: As Ashley Kubiak sped down a Texas highway in her Dodge Ram truck, she checked her iPhone for messages. Distracted, she crashed into a sport utility vehicle, killing its driver and a passenger and leaving a child paralyzed.

Richtel continues, “With driving fatalities rising at levels not seen in 50 years, the growing incidence of distracted driving is getting part of the blame.” In his report, AT&T admits that texting while driving “has addictive qualities, meaning drivers cannot help themselves.” As any pedestrian commuter in a major American city can tell you, the driving-while-distracted epidemic is out of hand. Spend more than five minutes a day on city sidewalks and you’ll soon have a story about nearly being killed in a crosswalk by a driver who was senselessly taking a corner while staring at his iPhone.

This is a problem that is not going away, and the free market will not solve it. In fact, the free market has already devised a solution. Richtel explains that Apple has already patented software which would identify when a phone user is driving and disable text messaging and other apps that ping drivers, who often can’t bring themselves to resist an alert sound. They’ve had this software for years. But they haven’t released it to the public. Why? Well, as road safety consultant David Teater says:

“If you’re at Apple or you’re at Samsung, do you want to be the first to block texting and driving?” he said. “A customer might say, ‘If Apple does it, then my next phone is a Samsung.’”

This is the free market at work.

But of course the libertarians over at Reason.com are doing whatever they do when the free market fails to solve a problem: try to convince their readers there’s no problem at all. In a post titled “New Round of Fearmongering Over Texting and Driving” from earlier this month, Ed Krayewski argues with the sentiment that more people are dying. Krayewski points out that traffic deaths have declined since 1985. While he allows that “technological advancements…have made cars safer to drive” in the intervening 30 years, he concludes that “the numbers don’t support the idea that smartphones are contributing to a rise in traffic fatalities, nor the contention that catching so-called distracted drivers ought to be a high law enforcement priority.”

I wonder what Krayewski would consider to be a priority. Mahita Gajanan at Time noted back in August that…

…A new report from the National Safety Council, a nonprofit group devoted to using research and data to prevent deaths, found that fatalities from traffic incidents were 9% higher through the first six months of 2016 than during the same time period last year.

And Angie Schmidt wrote for Streetsblog USA that traffic fatalities “hit a seven-year high in 2015.” And while every method of transportation saw fatality increases in 2014, pedestrians and bicyclists saw the largest rise, according to this graph from the National Highway Traffic Safety Administration:

trafficfatalities

 

Now, of course we can’t attribute all of these fatalities to distracted driving, but it seems likely that distracted driving is responsible for some of them. Most of the year-to-year conditions—traffic laws, the technological advancements that Karayewski cites in his post—tend to lean toward fewer or similar results. There is no way to definitively prove a connection between distracted driving and the increases in fatalities two years ago with the data available now, but smartphone adoption has increased dramatically over the last four years. If I were investigating the rise in traffic fatalities, distracted driving would certainly be an issue I would want to examine.

But that’s not even my point. When you get into a pedantic argument with libertarians about statistics, you’ve already lost. At issue is the whole libertarian philosophy, which, as always, is predictably glib and doesn’t stand up to any sort of serious philosophical investigation. How many fatalities would Krayewski and his libertarian crowd consider to be too many? How many people would have to die before the free market finally steps in and corrects the situation?

The goal should always be zero fatalities, even as we keep in mind that accidents, realistically, can and will happen. (There is an organization devoted to the idea of zero traffic fatalities, and they do excellent work.) The whole concept of a functioning society is that it operates with the public good in mind; the moment when governments decide to willfully abandon citizens to die is the moment when you see the social contract begin to break down. Yes, people die. No, we don’t always get it right. But to give up trying? That’s downright monstrous.

Let’s be clear that I don’t love every regulation. To point out a recent example, this new California law about collectible autographs, for example, was undoubtedly created with good intentions in mind—an attempt to curb forgery—but it seems to create unintended consequences that would hurt small businesses like bookstores, collectors, and antiques dealers. But to look at a clear and obvious public health risk like distracted driving and then to use it as an example of why the market should be allowed to run free strikes me as dangerous and poorly considered. It’s obvious that the free market isn’t going to save the lives of pedestrians from distracted drivers; the businesses in question have a solution to the problem and they just choose not to employ it. Moments like this one are when the government should intercede on behalf of the public good.

 

Why An “Objective” Economist Attacked Me On Twitter

The fight continues!

The fight continues!

Yesterday, Daniel Beekman at the Seattle Times reported that city councilmember Kshama Sawant sent a sternly worded letter taking issue with aspects of a recent University of Washington study of Seattle’s minimum wage. Sawant had two main areas of contention: first, she questioned some of the methodology of the study, including its approach of frankensteining together a hypothetical “Synthetic Seattle” where the minimum wage didn’t go up. In the real world, Seattle saw lots of good news—higher pay, more jobs, more hours worked—but this imaginary “Synthetic Seattle,” which was compiled together out of lower-wage parts of Washington State, did even better.

But Councilmember Sawant also had a problem with the “anti-minimum wage editorializing” by UW Professor Jacob Vigdor. In a letter signed by all the UW researchers, Vigdor and the other professors responded:

 With regards to Dr. Vigdor’s public commentary, we are very aware that the value of this study rests entirely on the perception that it is an objective, nonpartisan effort. We are also aware, however, that our work product is a public document, subject to partisan interpretation. As you know, selected findings from this study have been used to promote both a positive view of the minimum wage (as in the Bernstein piece) and a negative view (as in the Monson piece).

Dr. Vigdor and other team members have conducted interviews across the media and political spectrum, with full knowledge that anything said can be edited or taken out of context. This is a risk that we can only avoid by refusing contact with the media. As the most misleading representations of the report have been authored by individuals who did not contact any member of our study team, we do not feel that a withdrawal from public commentary on our own work would enhance public understanding.

Hmmm. Who could they be talking about in that second paragraph—the bit referring to the “most misleading representations of the report” and so on? Gosh, I wonder. I wrote the first summary of the UW study back in July, before Professor Vigdor presented it to the City Council, and he famously went ballistic in response, leaving comments on the article, in our Facebook feed, on Twitter, and over email. To my knowledge, Vigdor hasn’t responded as vigorously or as ferociously to anyone—on the left or the right—in the time since.

I stand by my interpretation. Unlike many of the conservative commentators who misconstrue the study as definitive proof that Seattle lost jobs due to the minimum wage, I acknowledge the “Synthetic Seattle” model in my write-up. (Plenty of second-hand conservative sources now repeat the lie that employment is down in Seattle without ever mentioning that employment is only down when considered in relation to the even-higher numbers of the imaginary Synthetic Seattle.) And in fact, in real Seattle, as I said, “wages are up, low-wage employment is up, and the number of hours worked are up.” So what could Vigdor’s problem be? Why hasn’t he tackled these conservative pundits with the same ferocity that he brought to my report?

I couldn’t tell you for sure, but I do find it interesting how the UW team acknowledges that they value “an objective, nonpartisan” stance; they seem to blame any partisan slant that may be attributed to their team as “edited or taken out of context.” Jud Lounsbury has reported at The Progressive that Vigdor has a professional relationship with at least two conservative think tanks, both of which have done considerable work to discredit the minimum wage. Further, Seattlish dug up some of Vigdor’s own old blog posts from 2014 where he wrote that the minimum wage is at once “a lousy anti-poverty program” and “largely a tax on food.” These posts are not edited or taken out of context and they are decidedly not “objective” or “nonpartisan.”

Look: I think objectivity is bunk. Everyone has an agenda. I wouldn’t even be upset if Vigdor just admitted his preconceptions. When scientists perform experiments, they always carry expectations about what’s going to happen. The trick is to be transparent about those expectations, and to report honestly on the findings. This is what we expect of our scientists, and it should be what we expect of our economists.

But for the researchers behind the UW study to claim objectivity as a goal in the same letter that they gloss over Vigdor’s personal failure to be objective is more than a little suspicious.

My lack of objectivity is a matter of record. I believe that when people who work in restaurants make enough money to eat in restaurants, we all do better. I believe that people who threaten the end of the world when the minimum wage goes up are trying to intimidate workers out of the money that they’ve earned. And I believe that everybody’s got an angle, and the people who say they don’t have an angle are the people you should trust the least.

The Seattle Times Editorial Board Gets Everything Wrong on Secure Scheduling

The Seattle Times: protecting our beloved sloughs from the menace of popular public transit since 1891.

The Seattle Times: protecting our beloved sloughs from the menace of popular public transit since 1891.

On Monday at 2 pm, the City Council will finally vote on secure scheduling. A majority of the council has already voted the bill out of committee, so the legislation is expected to become law. This is great news for workers in Seattle, who will finally enjoy predictable scheduling, allowing them to balance their work and personal lives. It will enable them to plan doctor’s appointments, family time, school schedules, and all the other everyday activities that so many Seattle office workers take for granted.

Secure scheduling makes sense from a business perspective, too: this law will allow these workers to reinvest themselves in their communities as consumers who can plan their finances more than five days in advance. We’ve already agreed in Seattle that when restaurant workers have more money, that’s good for restaurants. Secure scheduling is a continuation of that idea; it ensures that restaurant workers have the time (and the sense of financial stability) to spend their money in restaurants. It’s just good sense.

So, naturally, the Seattle Times Editorial Board fucking hates it. They published an editorial this morning titled “Seattle’s scheduling rule is counter to our innovative business culture,” and it’s so packed with bullshit that I have no recourse but to fisk the thing—go through line by line to unspool all the lies and misdirections stuffed inside. Ready? Here we go, from the very beginning:

Mayor Ed Murray and the Seattle City Council are moving at breakneck speed, for them, on new legislation this month.

This push for legislation started back in February, so it’s not exactly the 2 Fast 2 Furious frenetic road race that the Times is disingenuously depicting here. There have been plenty of committee meetings where citizens on both sides of the issue have spoken out, there have been community events, there have been many opportunities for everyone to comment.

 Not to finish police reform or fix infrastructure overwhelmed by growth and traffic.

Such a lazy attempt at misdirection. You want city leaders to be able to handle a variety of issues at the same time. That’s literally why we have a government: we don’t want leaders to just run around trying to put out whatever fire is supposedly burning the hottest at any given moment, we want them to make the city livable on a variety of levels.

 No, the legislation flying through City Hall this month will instead dictate scheduling policies at a narrow slice of companies operating within city limits.

Note the “flying”—you could conceive and give birth to a child in the amount of time it’s taken this legislation to come to a full vote—and the “dictate,” here, both of which are highly misleading. There’s a difference between regulations and dictatorial demands. Does government “dictate” that five-year-olds can’t work in factories?

And this is the first instance of a weird dichotomy in the piece: first the Board complains about the law, and then they complain that it only affects a small number—or, in this case, a “narrow slice”—of employers. Which is it? Do you hate the law, or do you want it to apply to small businesses?

In this case, secure scheduling only affects food service or retail businesses that employ over 500 workers worldwide, or sit-down restaurants with over 40 locations worldwide. It’s basically the same structure as our minimum wage adoption schedule: big chains with CEOs who make tens of millions of dollars a year are held to a higher standard. And it makes sense to take the same tack with secure scheduling: these chain stores already have the sophisticated scheduling technology to easily handle a few additional scheduling requests.

 Seattle Mayor Ed Murray and the City Council are emulating San Francisco, which passed the nation’s first “secure scheduling” legislation in 2014. They presented a Seattle version on Aug. 9, hustled it through committees and expect to finalize the rules on Monday.

“Hustled.” You’d think this legislation broke land speed records. There’s nothing unusual about the process secure scheduling has taken; would the Board prefer a city where no law ever passed? Is the Seattle Times a huge fan of the dreaded Seattle Process?

 The rules require companies to provide at least 14 days notice of work schedules, offer existing employees additional hours when they become available and pay extra when schedules change.

One of the few true sentence in the whole piece. They don’t mention, of course, that the “extra” pay is a single hours’ wages, and they also don’t mention the part of the law that affects “clopening” shifts, which require employees to work late at night and then turn around and come back early in the morning. Probably they don’t include that bit because everybody thinks clopening is a terrible thing to do to an employee. Clopening is so unpopular that Starbucks itself announced that they were abolishing it chainwide it a few years ago. They still do it, though, which is a great example of why we can’t trust these companies to self-police.

 Before rushing this through, Seattle officials should consider the long-term effect of these rules and their other efforts to micromanage business operations at the behest of national labor organizations.

“Rushing.” The Board really broke out the thesaurus for this one. It should be mentioned that the Board also complained about Seattle rushing into the $15 minimum wage, and into expanding transit. Basically, any legislation they dislike moves too fast for them.

The terrific thing about the political process is that it does take in all sides, and business interests have had plenty of input in the secure scheduling law. Just this week, the City Council adopted several amendments which address problems that large corporations had with the day-to-day realities of the secure scheduling law, making it easier for them to comply. The city isn’t dictating employee schedules, it’s not micromanaging anyone’s operations. It’s setting standards for businesses, the same way they establish health and food safety standards and, uh, a minimum wage.

 Seattle’s current success is due in large part because the city’s been an incubator of disruptive retail companies that are now household names.

And when those disruptive retail companies were very small, the secure scheduling laws would not apply to them. What’s your point?

 As companies such as Starbucks, Costco and Nordstrom extended their brands far and wide, they also projected Seattle values — including service and benefits that raised the bar in their markets.

The “benefits” in that sentence is important because it accidentally highlights something the Times is gently avoiding here: Those businesses succeed, in part, because they demonstrate the Seattle value of being great places to work. Costco is famous for its great employee retention numbers. I talked with Starbucks employees who fought for secure scheduling, and they all told me that they love their jobs and their coworkers—they just needed more security in their scheduling so they could balance their jobs and their lives.  Secure scheduling instantiates those Seattle values into law, because we know that the economy requires everyone’s participation to succeed. Without food service employees who make decent money and have the time to spend it, the economy suffers.

 Seattle must fiercely protect its reputation as a place of business innovation and agility. That provides far more jobs and opportunity than being a sandbox for special interests’ regulatory experimentation.

Seattle, in case the Board missed reading it in their own paper, is not hurting for jobs. The $15 minimum wage has not killed the economy as the Board repeatedly threatened; in fact, it’s strengthened it.

It’s a question of balance — providing the flexibility and level playing field businesses require while protecting workers from unreasonable practices.

That’s almost exactly what supporters of shared security have been saying since the beginning. More than halfway through the piece, the Board still hasn’t made the case that shared security hurts business—they’ve just thrown around some scary insinuations.

 Some companies have used new scheduling technology in ways that cause such erratic schedules, making it untenable for those at the first tier of the retail workforce. Starbucks, notably, was shamed by press coverage into improving its scheduling policies in 2014.

And again, Starbucks failed to improve its scheduling policies. And so here we are.

But Seattle officials’ response is questionable. The proposed rules single out particular companies, applying burdensome regulations to some but not others. They won’t benefit the majority of retail workers in the city, who mostly work at small- to mid-size companies.

Again, secure scheduling follows roughly the same standards established by the $15 minimum wage rollout, which is working just fine. Large retailers like Starbucks and Target already utilize scheduling software that enables them to plan their schedules months in advance; this will not be an undue burden on them. The legislation has language that requires the city to reinvestigate secure scheduling two years from now, with studies to examine its effects. Presumably at that point, the employer size regulations will be reinvestigated. This is how good policy works.

Only affected are national retailers, coffee chains and restaurants with at least 500 employees and 40 or more establishments globally.

True.

Retailers in general are struggling to compete with Amazon.com, yet it’s mostly exempted. The rule only affects Amazon workers in physical stores, which so far are limited to roughly 15 employed at University Village.

This is such an obvious concern-troll misdirection; do you honestly suppose that the Seattle Times would be in favor of a law demanding that Amazon’s programmers enjoy the same protections that the current legislation stipulates? Why bring Amazon into it? While it’s true that Amazon is a retailer, most of the people it employs in Seattle are not directly involved in the service industry. And besides, if Amazon’s current expansion plans follow through, they will likely be required to follow the current secure scheduling guidelines soon enough.

Unionized retailers are excluded from the layers of new regulation and potential penalties, even if their contracts provide fewer worker protections than stipulated.

Union workers are better-paid than their non-union counterparts. They enjoy better benefits than non-union workers. Union workers are much more likely to be full participants in the economy, which is the goal of this legislation.

The rules are so complex and difficult for companies to follow without incurring penalties. The path of least resistance becomes unionization.

This is ludicrous. The law is not complex and difficult to follow. Believe me; speaking as someone who has had to sit through a number of anti-union training videos for at various shitty retail jobs, no huge retail corporation would prefer unionization to entering a few additional restrictions into its scheduling software.

This legislation is not onerous. It is not complex. It’s easy to imagine the Board saying the same thing about food safety laws, if the City Council were passing a hand-washing ordinance today: “Does the city honestly expect employers to stand in the bathroom with employees and supervise them as they wash their hands? This confusing job-killing legislation will cause restaurants across the city to shut down.”

 That raises a question about the legislation’s intent and primary beneficiaries: Is it more about improving conditions for workers or encouraging unionization of large companies?

Wow. So now it’s all part of a conspiracy to unionize Starbucks? Again, this isn’t going to happen. If there’s one thing big retail chains hate more than paying their employees, it’s unionization. This is the same kind of scare tactic the Board employed in 2013, when it warned that raising the minimum wage in SeaTac could kill the hotel industry near the airport. (And besides, given that union employees make more money, enjoy more benefits, and are generally treated more humanely than the average work-for-hire employee, I wouldn’t be that opposed to this scary fictional outcome that the Board is waving around.)

Seattle voters should ask their elected officials who they are truly representing here and what they’re doing to nurture the city’s business climate.

Respectfully, I’d argue that Seattle Times readers should ask the paper’s editorial board who they’re truly representing with this article and what they would define as a healthy business climate for Seattle. Because the Board has been on the wrong side of just about every good legislation we’ve seen in the last few years, from raising the minimum wage to supporting public transit. Increasingly, the Seattle that the Editorial Board promotes looks nothing like the Seattle that I see when I walk down the street every day. Why do they waste valuable space in the paper promoting the trickle-down interests of the one percent when it’s clear that Seattle is choosing a different path?

Donald Trump’s New Economic Agenda: More Food Poisoning, More Government Subsidies of Low-Wage Employers

food

Donald Trump unveiled a new economic agenda today, marking his third attempt at a tax plan in less than a year. But this was more than just taxes—it’s an “agenda” that aspires to serve a bunch of conservative masters while never once aspiring to coherence.

It must be said, though, that Trump’s conservative masters are pretty happy with the plan. The Wall Street Journal has gone gaga over it, running an editorial from Michael Saltsman titled “Don’t Raise the Minimum Wage: Trump Has a Better Plan.” That better plan? It’s to increase the Earned Income Tax Credit, which basically would pay out based on how much or how little a taxpayer earns. According to Saltsman, this is a pro-business idea. Which is true, but artificially so. By not raising the minimum wage and offering a higher EITC in its place, government is basically subsidizing low-income employers. (Nick Hanauer wrote about this at length back in May.) So much for small government. So much for the free market.

Anyway, as I just told you yesterday, proponents of trickle down economics employ three major tactics to ensure that the top one percent benefits from inequality:

1. Tax cuts for the rich.

2. Deregulation for the powerful.

3. Wage suppression for everyone else.

You’ll see these three tactics throughout Trump’s economic agenda. Especially the deregulation bit. Here’s the part of the plan that’s getting the most attention right now:

Specific regulations to be eliminated include: …The FDA Food Police, which dictate how the federal government expects farmers to produce fruits and vegetables and even dictates the nutritional content of dog food. The rules govern the soil farmers use, farm and food production hygiene, food packaging, food temperatures, and even what animals may roam which fields and when. It also greatly increased inspections of food “facilities,” and levies new taxes to pay for this inspection overkill.

Yeah, you read that right. Donald Trump wants to save government money by cutting the regulations that keep our food safe to eat. If you’ve listened to the interview with food safety super-lawyer Bill Marler in our podcast on paid sick leave, you know that this is a terrible idea. Even with the regulatory framework that we already enjoy, there have been way too many produce-based salmonella and listeria outbreaks in the last few years.

The other regulations Trump wants to cut involve environmental protections and regulations on the energy industry, which would likely mean more fracking, less safety in our oil extraction methods, and more environmental mayhem. Combine that with artificially low wages supported by government and a tax plan that benefits the super-rich Trump family with an end to the estate tax and a dramatic lowering of corporate tax rates and you’ve got a plan to turn America into a theme park: Trickle Down Land, where the one percent thrives in luxury and everyone else has to fend for themselves.

Uh, OK: The Republican Running for Governor of Washington State Wants to Regulate Regulations

Yesterday morning, we woke up to great news: household income in the United States has finally begun to rise, after eight years of stagnation. Reuters reports:

The Census Bureau said on Tuesday that median household income surged 5.2 percent last year to $56,500, the highest since 2007, in large part due to solid employment gains. The jump was the biggest since record keeping began in 1968.

But that’s not all: the poverty rate saw its largest drop since 1968, among other assorted pieces of good news. And today we learned that Seattle’s jobless rate is now lower than it’s been in eight years.

Of course there’s more work to be done—housing costs are out of control, we have decades of inequality to overcome, and the fact that we still have as much poverty as we do in the 21st century is ridiculous—but the numbers indicate that we are finally, eight years after the financial collapse, on the right track. More people, and not just the top one percent, are seeing more income.

This is a man who can appeal to audiences of dozens on Facebook Live. (Bill Bryant's Twitter profile photo.)

This is a man who can appeal to audiences of dozens on Facebook Live. (Bill Bryant’s Twitter profile photo.)

So yesterday was kind of a rough day for Washington state Republican gubernatorial candidate Bill Bryant to deliver a jobs speech. But that’s what he did, and it was broadcast on Facebook live to an audience of somewhere between two and three dozen people. I was one of those viewers. Between frequent drops in the streaming service and the crappy sound quality of the stream, I was able to discern that Bryant offered a six-point plan to improve jobs in Washington state. And if you’ve been paying attention to any Republican gubernatorial candidate in Washington state over the last four decades, you know what it contained.

As Nick Cassella recapped this morning in Daily Clips, the three demands of candidates who promote trickle down economics are as follows:

1. Tax cuts for the rich.

2. Deregulation for the powerful.

3. Wage suppression for everyone else.

And that’s exactly what Bryant offered. Aside from some bizarre side-rants, including a call to add lanes to our congested highways and a weird waffle on whether we need public transit or not, he mostly stuck to the trickle down script. Bryant railed against Initiative 1433, the initiative that will increase Washington state’s minimum wage to $13.50 (and which will also provide paid sick leave to workers). He railed against taxes, calling them business killers. And he really, really hates regulations.

Bryant has famously and repeatedly called for a “moratorium on all new regulations,” and he renewed that call in this speech. He argued that “regulations accumulate one on top of the other,” creating a morass. Of course, a moratorium on regulations is short-sighted and dumb. Don’t we want government to be able to adapt to new developments? What happens if there’s an emergency, or if a regulation needs reworking during the moratorium period? Regulations save lives. They protect us from food poisoning. They’ve kept our great statewide experiment in marijuana legalization safe and sane. Unless Bryant is a strict libertarian, he has to agree that some regulations are important.

So how does Bryant separate the supposedly good regulations from the supposedly bad ones? As Fox Q13 explains, during this moratorium, a theoretical Governor Bryant “would require agencies to define objectives and success of current regulations and to determine whether they are still working or necessary.” In other words he would, uh, regulate the regulations, causing the same agencies that create regulations to justify those regulations, in what sounds like a Trickle Down American Idol. Only the strongest regulations get to live!

But the truth is, there’s already a process to review regulations in place. This overdramatic attempt to examine every single regulation in the state would be an immense waste of time and taxpayer money. It’s not a serious proposal. Why not just focus on the regulations that Bryant feels need a serious review? Because that wouldn’t be as flashy as a moratorium and a total review. And Bryant, in case you can’t tell, is a decidedly un-flashy candidate who needs to capture voter attention if he’s going to make any kind of a dent in this race.

Really, as someone who had a lot of trouble watching Bryant’s speech yesterday (the man has all the charisma of a bag full of silt) I can understand that need. Bryant is clearly flailing. He knows that the trickle down agenda pushed by Paul Ryan doesn’t work. He got hammered for months because he wouldn’t say if he supported Trump or not, and then he finally came out against Trump, which undoubtedly cost him some ardent Republican supporters in the eastern part of the state. He’s got to do something.

But this moratorium on regulations just isn’t the answer. Bryant is facing an improving economic climate by pushing the same policies that got us into this mess. Now is the time for leadership: if he really wanted to get the attention for voters, he’d come up with a conservative economic plan that didn’t embrace the failed trickle down agenda of the last forty years. But Bryant apparently lacks that essential something—maybe it’s courage, maybe it’s intellect, maybe it’s creativity—to reposition himself.  This is a shame. I’m a fan of Jay Inslee—I think he understands the economy, and I love the way he leads on environmental issues—but this state would be better off if we had two strong choices on the ballot this fall. Unfortunately, Bryant just isn’t a strong choice.

Are You Ready for the Trickle Down Economics Comeback Tour?

Remember how this guy's policies almost destroyed the economy forever? Some folks are arguing that the only way to fix the problems in the economy are by bringing this guy's policies back.

Remember how this guy’s policies almost destroyed the economy forever? Some folks are arguing that the only way to fix the problems in the economy are by bringing this guy’s policies back.

“Supply-side economics has been discredited since the Bush tax cuts failed to boost economic growth, but there is another way of thinking about the problem,” Bloomberg’s Tyler Cowen writes in his review of Edward Conard’s new book. That other way? “It is not enough for funds to be left in the hands of the wealthy; rather they must be invested in risk-bearing equity capital, focused on innovation.”

Conard argues in his new book The Upside of Inequality: How Good Intentions Undermine the Middle Class that trickle down economics—he calls it “supply-side economics,” but they’re the same thing; “supply-side” is just a fresh coat of lipstick on a pig—is still the best way to boost the economy. The trick, Cowen explains, is to put the “concept of risk-bearing at the core” of trickle down, which means encouraging the top one percent to invest their money in the economy rather than dumping it in offshore accounts or sealing it away in illiquid accounts.

But forty years of trickle-down policies have proven that when you give money to the top one percent, they keep it and figure out new ways to hoard even more of it. How do you supposedly encourage the wealthy to undertake risky investments? Cowen proposes ending the “bureaucratization of society” and “excess regulation,” which are, in fact, the same goals that trickle-downers like Ronald Reagan, Paul Ryan, Mitt Romney, and George W. Bush have been aspiring toward for generations.

The concept of trickle down economics has been propped up for all these years by three core strategies: trickle-down clowns demand tax cuts for the rich, deregulation for the powerful, and wage suppression for everyone else. As we’ve seen, Cowen has already made the case for deregulation. Where does he stand on tax cuts?

While we shouldn’t rely on tax cuts, they may still play a role in this debate. Cuts in marginal tax rates became overrated after the Reagan recovery years of the 1980s, but maybe after the failed Bush experience they are now somewhat underrated.

Uh-huh. So he’s arguing that tax cuts are a part of the solution to the problems caused by tax cuts. Cowen also refers to wages as “only one small part of a much bigger story,” which is as close to a capitulation to reality as we’ll find in this piece. (When even Donald Trump admits that the minimum wage should be increased, you know it’s well past time to raise the minimum wage.) If trickle-downers get their way, this crack in their paradigm will be easily spackled over by a tiny increase in the federal minimum wage—maybe adding two or three quarters to the current $7.25 minimum—whereupon pundits like Cowen will declare the mission accomplished and move back to cutting taxes and regulations like usual.

So what, in a perfect world, would be the end result of this zombie trickle down economics? Let’s pretend for a moment that cutting taxes and regulations would inspire a bunch of risky investments, even though they clearly won’t. Cowen drops this doozy of a best-case scenario:

You may recall that the iPhone made its debut in 2007, and it sold very well during the tough economic times that followed.  Had there been more innovations of import, a simultaneous growth of production and market demand could have been self-validating and pulled the economy out of recession more quickly.

This is…not good policy. This is the equivalent of someone taking over a failing Hollywood movie studio with a simplistic plan of making more big blockbusters like Titanic and The Avengers to repair the studio’s finances. While there will always be outlying successes like the iPhone and Amazon and Avatar to lead a particular field,  you simply can’t rely on or even plan for that outsize success. You can’t build an economy on one or two huge winners; you have to foster an environment that creates more winners up and down the income scale. By embracing policies that encourage more people to have an opportunity to succeed, you’re not taking away from the success of companies like Apple, you’re creating a positive environment for everyone.

Still, I do find a small amount of hope in reading Cowen’s post. It marks an important stage in the lifespan of trickle down economics. For many decades, we couldn’t get conservative politicians and policy-makers to even begin to admit that trickle down wasn’t working. Now that Cowen is trying to repackage and ever-so-slightly reformulate trickle down, perhaps this is a sign that conservatives are finally ready to move toward a new economic model? After all, admitting that you have a problem is the first step toward bettering yourself.