Reinke Faces Life

http://hfcn.blogspot.com/

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I was part of the problem by failing to recognize the significance and the relationship between poverty and unemployment, as it affected community. While I have worked many long hours to support the troubled industries and regions affected by natural disaster, I overlooked the affects of poverty, where the situation was grim.. Recent census numbers showed that in my own state, poverty is at record proportion.

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I read your Labor Day comment and was moved by your question. I think it’s our government that makes us all poorer. Let me give you what I think is evidence.

The government makes us poor by:

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(1) its monetary policy (i.e., inflation)

By inflating the currency, it’s a hidden tax on the stored value role of money. It hits hardest on the poor and those on fixed incomes by raising prices. The poor can’t go in and demand higher wages. So how do they adapt to a 5% annual inflation (and, I’d argue it was higher)? The answer is they don’t they slip down the economic ladder as the tide is rising.

(2) its misguided attempts to help (i.e., the war on poverty)

In the 60’s, LBJ declared a war on poverty. It basically broke the backs of the poor. It raised taxes and went into the “charity business” pushing aside the family, the churches, and the true charities. It sucked out the vigor. Welfare, the dole, is demeaning and demotivating. We know have generations that have grown up on it and don’t know any other way. Even the reforms (welfare to work) are subverted by bureaucrats who like things the way they are. Government welfare is immoral, ineffective, and inefficient.

(3) its misguided attempt to change human behavior (i.e., the war on drugs)

Another of the great ideas in government that something happens when they pass laws. So they outlaw drugs and think they’ve done something. All they’ve done is create a black market with violence and death. There have always been drug addicts. There always will be drug addicts. We didn’t learn from Prohibition. Outlawing something means (a) crime will supply the product; (b) People will die either from gang wars or bad products; and (c) the overall use rate will go up. As a libertarian, I want all drugs to be sold at WalMart without a a prescription. A lot of smart people predict: the rate of addiction will go down, we will empty the prisons of non-violent offenders, the number of drug related deaths from bad drugs will drop to zero, the drug dealers will literally disappear overnight since competing with WalMart is a losing proposition, and we will all be better off. They can NOT keep drugs, weapons, and violence out of their prisons. Why do we believe they can keep it out of our neighborhoods?

(4) its intrusion into the free market for labor (i.e., minimum wage) and products (i.e., price supports for milk and sugar)

I have ranted about the minimum wage which has a terrible impact on the poor. The government can’t give the poor the skills needed to earn more but when they raise the minimum wage they ensure that they will not earn anything at all. They enact zoning and licensing laws which mean the poor can’t start a business. Zoning says you can’t sell crafts from your kitchen table. Licensing says you can’t braid hair in your living room. Don’t use your car to drive someone somewhere; there’s a slew of rules agianst that. And, your grandmother’s famous recipe for <insert favorite ethnic food>, forget trying to make and sell that to people, you might kill them. And, when you but soemthing made with milk or sugar, the government ensure that you have to pay more for it by having “price floors”. And, if they have “price ceilings”, then that just ensures your won’t be able to buy it legally at any price. It just makes us all poorer!

(5) its definition of poverty

It defines poverty so that we will always have poor people. Many economists point this out. My favorite example of this was when the TV interviewed an immigrant trying to get to America. His answer to “why do you want to come” was “I want to live in a country that has fat poor people”. Absolutely priceless. The economists point out that people who are poor don’t necessarily stay poor. Just as those who are rich don’t necessarily stay rich. The government defines the poor by an income level selected so it represents the bottom percentage of the population. Let’s say the bottom 20%! Then they declare a “war on poverty” so we can have big programs where their friends will win lucrative contracts. And, since we will always have a bottom 20%, they can continue to exploit the misfortune. Arghh!

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I got tired and skipped over: government public skools, high taxation, the social security ponzi scheme, government unintended consequences, and affirmative action. These too are government frauds perpetrated on the poor. But as I said, it makes me frustrated to keep on ranting.

I hope that this is perceived not as a rant but an attempt to put the blame where it belongs. I too look for “effective compassion” as defined by http://www.acton.org/ppolicy/compassion/. Personally, for the last decade, I try to help a private non-religious group that focuses on moving people from poverty to a normal life by specific help. http://www.homefrontnj.org/ I think they have had a significant impact. Maybe when I retire, I can take their org as a template and bring it to my own county. I think the key finding that they made was that the government welfare programs were not designed to move people off poverty and onto the future. When you chat with the people who were involved with the organization in the early days, they found the government welfare people and programs were downright hostile to the idea that these “clients” were people that deserved better. I personally believe that it was when the government got into the “charity business” and pushed out the churches, fraternal organizations, and the non-profits that the situation got bad.

Again, I think that putting the blame where it belongs is CRITICAL to solving the problem.

So what’s my solution? Can’t just rant, you have to have an answer.

(1) Rant agianst government. Try to convert people to the libertarina view that we are best served when we are left alone by government. This doesn’t mean that the poor will starve. America is a charitable country. Even with all the current taxes, we still gave a grazillion buck to the Tsunami victims, the Katrina victims, and on and on. Instead of sending a buck to the government where they waste 99 cents, I’ll send it Connie Mercer at Homefront where she’ll figure out how to get 21 nickels worth of value out of it.

(2) This year, I’m going to open a checking account and start putting in a hundred bucks a month. From that checking account, I am going to give to worthwile causes and people. It’ll be my version of the Rockafeller Foundation. I’m going to do that in addition to the regualr charities I support like HomeFront, Salvation Army, and “my” church. Regardless if I get a tax deduction or not, everything in that account will be spent on “charity”.

Maybe this will spark other to do the same. We don’t need government to do our “heavy lifting”. We can’t afford it.

imho

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=49917

Professor Williams points out the folly and deceit in the minimum wage discussion.

When we raise the minimum wage, who does it hurt? The fellow who loses his minimum wage job. The taxpayer who funds the dole. And, the usually small business man who has a need but can’t afford to fill it. Good job gummamint! Who wins? The politicians!

Allow me to recount a personal story that demonstrated what I call “pulling up the lowest rung of the economic ladder”. It’s a well-known often-predicted aspect of increasing the minimum wage. So let’s look at the operation of this foul piece of government interference in the free market for labor.

At that time, AT&T was big New York employer. It was known to be a plum job. Remember this is back in the days of Japanese style life time employment. If you showed up on time, did your job, didn’t get drunk, steal, or mess with the opposite sex on company time or company premise, then you were pretty assured of a long career ending with a good pension. If you took advantage of the various savings plans, then the average worker would have literally a million dollars at retirement. They pushed savings bonds, stocks, and financial education.

AT&T hired lots of people. High school graduates were started as glorified gophers with a pay grade of N (November). Non graduates could get unskilled jobs with a pay grade O (Oscar). After six months, all O’s were eligible for promotion to N. After 12 months, all O’s were AUTOMATICALLY considered for promotion. Even if the person was not promoted, they were well treated. They were sent for training, special assignments, and rotated thru other O level jobs. Those that managed of the pools of O’s were evaluated on many factors. One of those factors was how they “developed” the O pool. Move them up, move them out, or rotate them were all acceptable plans. It was OK for someone to be an O for a lifetime, but they wouldn’t treated badly at all. So, one of the O level jobs was elevator operator. You literally needed to just show up and they would teach you to “run” an elevator. These elevators were all push button. So, you had to wear a uniform, be pleasant, and refer all questions to your “starter”. I knew the honcho who ran the 195 Building and asked why they did this. His reply was that it was a great way to get talented people into the organization who did do well in school. I know one O who eventually wound up in Bell Labs in an R&D position. She was trained, grew, matured, went to school on the tuition refund program, and became a valuable asset.

Now to my cousin. I’d respectfully say, with as much Christian charity as I can muster, that she was not the brightest bulb in the bin. She accepted an elevator operator’s job and she was lucky she wasn’t fired. This in the lifetime employment company. She messed up a lot. She “lost” her elevator a few times. [How do you “lose” an elevator?  Remember these are really automatic elevators like we have today, staffed for other reasons. If the operator was out of the car, say holding the door open to talk to the operator in the next car, hand slips, and the doors close, then the elevator would do what elevators do. Go to where they are summoned. Hence the operator was said to have lost her elevator. Very bad!] She got caught chewing gum a few times. All sorts of stuff. She was destined to be a 45 year employee, retiring as an elevator operator. But she’d have been employed for all that time and have earned a pension.

My cousin’s world crashed when the government raised the minimum wage.

The economics changed drastically. O’s would have to make more. But that wasn’t so so bad. It was “only” a quarter an hour over what they were making already. What really hurt was that all the pay grades had to escalate up also. That was a lot of money. The Bell System had over 1.5 Million people. Give everyone a fifty cents per hour raise translates to $20 per week or $1040 per year. That times 1.5 million people is 1.5 billion dollars. It change the economics of the industry.

So my cousin being displaced by automation. To fully automate these almost fully automated elevators cost $250 per elevator. SO the elevator operators were history. And it was the same everywhere in the city. Every company was doing the same thing.

The AT&T management tried to get a place for everyone, but she and many others were at their level of competence. She, as many others, was terminated with a severance package and tears. It was traumatic.

She never worked again. She was crushed. There was a not a lot of demand for unsuccessful operators, remember there was LOTS of them, and she eventual became one of those “discouraged; no longer looking” unemployed.

What this is illustrating is that a government action hurts those at the very bottom rung whose contribution is not worth the higher wage.

(I wish I was as eloquent as Walter Williams, Tom Sowell, or others. Maybe I’ll send this to Doctor Williams for help.)

Raising the minimum wage is like pulling up the bottom rung of the economic ladder.

(I envision a fire escape where the bottom run is unreachable from the street that descends to the street from above when under load. However in this case, let’s imagine the ladder is reachable by every passer by. Each time we raise the minimum wage it get pulled up a little higher. Until it out of reach of everyone but the basketball player. And, eventually it’s out their reach as well. Crazy!)

If a worker can’t make a contribution greater than the cost of his employment, then he doesn’t work. He then is trained to turn to the government for welfare, unemployment, or other relief. Envision the teenager, educated in the government skools, trying to contribute more than he earns. No wonder minority unemployment is huge. No wonder youth unemployment is huge. No wonder the government keeps it this way. You have to look at the margins.

That is why I “like” that elevator operator story. Government imposed a hidden tax and big business looks like the villain.

The Liberals, Conservatives, and Churches in my strongly-held not-so-humble opinion err when they gets into tactical details of the minimum wage. They can say with all their authority that we as individuals in a society have to provide effective compassion for the poor. No argument there! They are well within their area of expertise or common sense. But, the minute they say “raise the minimum wage” they are now into the Economist’s area of expertise.

I believe that we can demonstrate:(1) raising the minimum wage hurts poor people; (2) is used by politicians to give money to the labor unions bosses; (3) is used by politicians to increases the amount of money that they get in taxes; (4) transfers the benefits of effective charity from us as individuals to the government; and (5) trains the citizens to look to government as the savior and protector.

(1) HURTS  I believe this is shown by the anecdote about my cousin being displaced by automation WHEN the government raised the minimum wage. Illustrating that government action hurts those at the very bottom rung whose contribution is not worth the higher wage.

(2) UNION BOSSES Politicians, via the mechanism of raising the overall wage rate of the employment ladder, funnel more money into their contributor’s pockets. Raise the minimum wage. All wages rise to keep the ladder. The side effect is marginal business fail. Union members get a raise. Union dues go up. Thus, politicians have funneled more money into the hands of the union bosses who turn around and contribute to their favorite politicians. Business, who are really just transfer agent, have to raise prices to cover their increased labor costs, if they can. Labor, in general, is now priced higher and at a competitive disadvantage to other political jurisdictions. Can anyone spell “outsourced to India”? No wonder the minium wage is increased very year. Oh yeah, it does. No wonder why some states have higher than the federal government minimum wage. Oh yeah, some do.  No wonder, we’re on a treadmill.

Mental experiment. The politicians raise the minimum wage to $7 per hour. Why not $10? Why not $100? The answer is? The Communist Socialist experiment call USSR demonstrated that politicians can’t manage squat! The reason that America is an economic engine is the relatively free economy, at least by comparison to the rest of the world. Markets enable people to make choices. The market economy ensures that everyone who makes a contribution gets rewarded. Big contributions, big rewards. Little, little. When the government inserts itself into free exchanges, then we have problems. Why not say everyone has to be paid 200k like a politicians? Because there would be no service that anyone, almost anyone, could offer that would be worth that 200k. Oh yeah, maybe hitting a baseball 500 yards. But who’d be in the seats?

(3) TAXES Oh yeah, when you earn your $1 an hour more, 40 times 52 = 2080k per year, guess what happens to the old 1040 next year? Yup, you betcha, you’ll give more to the President, the Governor, and the Mayor. Now when the costs in the federal government, state government, county government, town government, and skool system go up, guess what also will go up? Yup, taxes. And when everything goes up, prices will go up. So who takes it in the tush? Yup, the marginal employee, the fixed income senior citizen, the poor, and businesses that don’t have the ability to raise their prices. Don’t ya just wish they took a gun and robbed you? Oh yeah, they are.

(4) CHARITY I always cite http://www.acton.org/publicat/books/transformwelfare/olasky.html for the principals of effective compassion. If I pay a dollar in tax, then I know a huge percentage is wasted. I give every month to HomeFrontNJ http://www.homefrontnj.org/ to help the poor. I know that Connie Mercer, the director can make 21 nickles out of every dollar that comes in the door. I feel better about that contribution because I know it is being used to make a difference. My taxes go to yet another phony war on poverty. If it was funded by government, they’d take a chunk of my contribution for handling. It’s estimated that 95% of every dollar we give the government is wasted.

http://www.acton.org/ppolicy/compassion/

How are the poor best aided? After a thirty year governmental “War on Poverty” failed to reduce poverty in America, a consensus developed that the centralized entitlement approach of the federal government created more problems than it solved. Consequently, in 1996 welfare reform and its “Charitable Choice” provision paved the way for more involvement by the private sector, especially by faith-based institutions, in helping the poor make the transition from welfare to work. The welfare reform law of 1996 was a first step away from direct federal control of help to the poor and toward private sector solutions-but it was only a first step. The Acton Institute envisions a revivified civil society that is energetically involved in transforming the lives of the poor with a minimum of government intervention. I’d say the government at ALL levels should get out of the charity business.

(5) TRAINING All this government assumption of “space” trains the American population to look to the government for answers. We are as conditioned as sheep ready to be shorn. The pioneer spirit is drained from the average Joe or Jane as more government “help” increases the load we have to carry. The American Revolution was over pennies on the dollar. We have been “baloney sliced” to death. No single slice (i.e., the inflation of our currency, the phony war on drugs, the victim disarmament laws, the wars of aggression, welfare, medicare, medicaid, and “social security”) could be fought, and cumulatively it all loads up the camel.

I know that this is a long. But, it hits a nerve. I am afraid that we may have already killed, or will soon kill, the golden goose of the American dream. We certainly did it to my cousin!

Others have said it much better:

http://www.conciseguidetoeconomics.com/minimumwage/

My bottom line: When some one says “raise the minimum wage”, remember my cousin and what the government stole from her!

http://www.populist.com/06.16.kalet.html

GRASSROOTS/Hank Kalet
Securing Social Security

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President George W. Bush is once again targeting Social Security. But rather than the full-frontal assault he waged against the retirement system shortly after being sworn in for his second term in 2005, he appears to be planning an end run.

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Bush’s way of dealing with Social Security? Privatization. The Bush plan would allow workers to shift a significant portion of their annual Social Security contributions into private accounts that could be used to invest in mutual funds. The president claims the accounts would give workers more control over their retirement money and a better return on their investments, but his plan really would do nothing more than phase out the current system and leave us all at the mercy of an increasingly volatile market.

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Herb, Herb, Herb, what are we going to have to do to convince you that the “great program” of FDR is nothing more than an inter-generation Ponzi scheme that steals from everyone while transferring funds from poor minority men to rich white women?

As you know I have no use for either big government socialist party.

But you can’t just chastise Bush and Kean Jr without mentioning that the other side of the aisle won’t do any better. Menendez refuses to even admit there’s a problem. Any Presidential candidate from either side of the aisle worth their salt will promise to “save” it without any details.

But not to worry, nothing either side of the aisle is going to do will prevent the eventual crack up of Social Security Insurance, Medicare, and the vaunted prescription benefit with the doughnut hole.

Ask any young person about Social Security and they will tell you that they aren’t counting on it. Good! Because it has always been a demographic time bomb. It’s just a socialist welfare program that will evaporate of its own defects as they tinker increasing the age, raising the taxability (Remember the promises that it would never be taxed!), and lowering the “benefit”. Eventually it will just be welfare for old folks.

It’s not insurance. As is often said, if an insurance company executive did what the government did, then all of the executives would be in jail.

Assuming that the various socialists can’t possibly let people save for their own retirement, then we should have true privatization like Chile did in the 70’s.

Recognize that for the poor, their “social security insurance” forced savings might be their biggest asset. That’s why this fraud is so wrong. So fraudulent. So un-american. They are forced to kick in money that they really need, only to have it stolen from them.

Note, I want Chilean privatization, not the Republican ersatz privatization that leaves the government with the keys to the “lock box” (You remember that fiction!).

The interesting example of Chile is that it was done with an illiterate uneducated population with similar deficits and unfunding. You would think, with our First World government educated literate population, we could do as well. I, on the other hand, think we will allow the politicians and the press to fool us into thinking that one side or the other of the aisle cares enough to solve the problem.

Like most children’s tops, the system will eventually go to a lower energy state. That is flat on the table. Woe to any who have to depend on SSI. It’s a government fraud!

Sorry, but I think you are engaging in “wishful thinking” at best, or blatant political bias at worst. Either way, social security insurance is a Katrina style disaster in the financial dimension. The only question is how much death, physical / emotional pain, and civil unrest that we will have to endure.

It’s a national disgrace.