What is a fair wage?

Via Crooks & Liars, lowpayisnotok found a site that McDonald's put up to help its employees with budgeting.  It might shock you to learn that, on that site, McDonald's implicitly agrees that it doesn't pay its employees enough money.  In fact, it implies that they need $15/hr, even after assuming they have ridiculously cheap healthcare and no heating bills (and rent that is absurdly cheap for any city).

Maybe this can be the start of some real work to get big companies to actually pay a living wage.  Kudos to all involved in this.

Government kills private investment?

I'm still working my way through Mauldin and Tepper's Endgame, but I still wanted to talk about a couple of parts of it that I've already gotten through.

The first thing I wanted to mention is that they talk about how bigger government crowds out industry. I don't know whether that's true or not, but their argument is certainly unconvincing. Their figure 3.5 (p 59) does nothing to convince me, for a couple of reasons. One is that I've seen a graph of the US economy, over an even longer period, showing annual GDP growth versus top end marginal tax rate. I don't know about causation, but they certainly correlate well (that is, higher taxes seem to go hand in hand with higher GDP growth), and that graph (I'll try to find it again) was since WWII, so it covered a much longer period than Mauldin and Tepper's.

Another problem with that is that French medicine is socialized (more or less, I did read somewhere that that is not quite, technically, correct), and run by the government. That means that they have better controls on costs, so there is less GDP growth there, and that's a good thing for their economy.

A final issue I take with it is that it implies that GDP is the be-all and end-all of economic analysis. If you allow corporations to run rampant, the water, food, and air will all end up poisoned, and the cost of added healthcare will more than offset the higher GDP growth. And that's ignoring what happens to infrastructure when nobody will care for it (actually, it's kind of odd to miss this, as they do talk about how bad the US' infrastructure is a little bit later in the book). It also ignores things like worker safety (how much worse would the Upper Big Branch mining disaster have been if Massey Energy hadn't had to consider government safety regulations?

Moving on, I mentioned that they talked about infrastructure a bit later. It seems quite weird to me that communications infrastructure was ignored (yes, not the fault of the authors, I realize); you know, the phone system and internet. I think they're a very important part of any discussion of infrastructure.

Anyway, the reason I bring htis up is they talk about raising gas taxes by 2-3 cents a gallon each month until we stop needing to import oil. And all the funds raised would be invested in infrastructure. I have mixed feelings about this.

First, I wonder if the amount is too low. The good of that is that it isn't a huge shock with a large jump at once. The bad is that we know that it will need to be raised by (at least) a couple of dollars, so that will take a long time to get there. But maybe that time will make it more politically feasible.

Second, I do like using that money to invest in infrastructure. One important part of that infrastructure would have to be public transportation. Because, otherwise, you're just forcing people out of their cars without giving them an alternative, and that would never work.

Well, that's about all I have to say about the book for now; I just wanted to get it down before I forgot what I wanted to say. I'm sure I'll talk more about the book later.

Greed is Good?

I was looking at this Crooks and Liars post, and had a few thoughts on it.

First of all, greed (in the abstract) can be good. It gets people to work harder and be more creative. The problem is when that greed leads someone to short-change (or outright cheat or injure) other people. And that's where it goes to sh*t for everyone. As this post demonstrates, that happens a lot.

Second, Steve Jobs is a horrible example of what he's trying to show. One, the evidence is that Steve, despite being non-technical, is intimately involved in design at Apple, so it's actually possible that he is worth an outsized pay package. (For further example, look what he managed to create at Pixar. And then look how he managed to buy the parts of Disney that most people think ARE Disney, and he got Disney to pay for it.) Two, look at the size of Steve Jobs salary (hint: I make more in an hour than he has made in salary over the 13-14 years since he returned to Apple as CEO. After taxes). I think we can all agree that he earns that salary.

Is his point generally spot on? Yes, I believe it is.

Hmm... finally read the second point in that article. There's definitely some truth there, and I think it hints at why an awful lot of lottery winners go broke or otherwise ruin their (and their family's, usually) lives. The only point I want to make about that section is the theory about CEOs investing in their business; I think that only happens when the CEO is also the founder. I really don't think it does happen, outside of that. And probably not nearly always with founders, at least of founders whose company has grown big enough to have an IPO.

Economy in our Lives

I do computer programming for a living. But for some reason, I recently bought several economics books. No, not like economics textbooks; all three look to apply the lessons of economics to everyday life.

The books are Predictably Irrational, The Logic of Life, and Freakanomics. I suppose I should, perhaps, add The Undercover Economist to complete the collection.

I've read a bit less than half of Irrational, but did finish Freakanomics last night. They're the sort of books that appeal to me, perhaps on an irrational basis. I love reading them for the ideas they throw out, but they're hard to read for any length of time, because I get preoccupied with those ideas and want to delve into one of the ideas without moving on to others.

Economics, to me, is a pretty weird discipline. There aren't many other fields (actually, I don't know of any) where two completely incompatible theories can both have wide acceptance. Part of that is that much of economics, when applied to things more complex than "simple" supply and demand, deals with issues that can't be studied in isolation, and for which there just isn't enough data to conclusively prove one theory to be correct.

But it does encourage a scientific approach to inquiry of all sorts, and Freakanomics shows some of the diverse issues into which that can give some insight.

I'm really not sure how useful having read the book will turn out to be, but the issues that it looked into (the KKK, drug dealers, abortion, child naming, parental influence in education, etc) were all fascinating to me. Some of them I knew a little bit about, some I didn't, but I learned quite a bit about all of them. And most of them I learned to look at a bit differently than I had before.

I'll have to write some more about this when I finish one of the other books, but this is a fantastic book, easily worthy of the plaudits I'd heard before I bought it.

A Couple more notes on "Class Warfare"

I don't really have too much to add to these links. The first is from Daily Kos, and it talks about the dangers of considering government to be a business. This is something I've been wanting to talk about for a while, but I haven't taken the time to put my thoughts down in any coherent way.

This manages to touch most of the main points I was thinking about, but phrased better, and adding some other details I didn't realize were applicable.

In addition to that, here's an excellent piece from EJ Dionne about the moral fecklessness of the richest people in the country. It also touches on how that recklessness is stupid, as well as evil, and even brings Teddy Roosevelt into the picture (always a good addition, in my book).

deflation is healthy?

I ran across this graphic earlier today, which is both interesting and informative. It overtly says that fighting wars is a bad idea; I certainly agree with that. It should never be other than a last resort (as in, 'I need to keep this person from killing me', not as in, 'If you don't clean your room right this instant').

It also strongly implies that inflation is a bad thing, and weakly implies that deflation is a good thing. If the latter is true, well, that certainly doesn't gibe with opinions I've heard from any economist. It's certainly true that a lot of inflation is a bad thing, but a little bit is generally a good thing.

Why is that? Because most people are debtors to some degree (granted, some are so by choice, rather than necessity, but that's an awfully small category). And if you owe money, a small amount of inflation reduces the burden of that debt. This is also why deflation is bad: it INcreases the burden of debt. Think about that for a minute. Think that mortgage is expensive now?

The graphic ends with the thought, how would it feel if your dollar went twenty times as far as it does? Well, that would be nice, but unless you've been holding on to that dollar for over a century, it's not relevant.

Yeah, I'd love for my dollar to go twenty times as far as it does, but if it did, I'd also make 1/20th what I make now (probably; certainly something close to that). So really, what's the point?