All posts by shekenne

File Under Told You So

A recent story in the Indianapolis Business Journal confirms what rational observers have been saying for quite a long time: keeping wages low is bad for business, and hurts the economy.

When significant numbers of workers are struggling just to make ends meet, they don’t have discretionary funds to spend in the market. That depresses business activity–and is a further drag on job creation. Most people with even an elementary understanding of market behaviors had figured that out.

What many of us probably didn’t realize is that, according to both the IBJ and that well-known bastion of socialism, Standard and Poor, low wages also threaten state budgets.

Indiana has tied its fiscal wagon to a mule. The biggest source of revenue for the state is its sales tax, which at 7 percent is among the highest in the nation. But the slowdown in wage growth for most Hoosiers means they’re not spending much more money than before. And our wealthiest residents tend to save a greater share of their income and spend it on untaxed services.

Standard and Poor report that the widening gap between the wealthiest Americans and everyone else has made it more difficult for the economy to recover from the Great Recession. Their report attributes the sluggish recovery primarily to low wages; that’s because consumer spending fuels about 70 percent of the economy, and weak pay typically slows economic growth.

This isn’t rocket science. People can’t spend what they don’t have. Economic growth–for better or worse (and that’s a different debate)–requires consumer spending.

That’s the reason that evidence fails to support all those rosy promises about economic growth being triggered by Right to Work laws, and that’s the reason that the economy actually improves in places that raise the minimum wage.

When poorer people have more money, they spend it. What a concept.

Clueless and Mean–Not an Attractive Combination

Ah, Arizona! You do seem to produce some outstanding examples of defective humanity.

The recalled Arizona senate president who proposed the state’s controversial anti-immigration law said he could fix public assistance programs by forcibly sterilizing women who receive aid and by requiring drug tests for all recipients.

“You put me in charge of Medicaid, the first thing I’d do is get Norplant, birth-control implants, or tubal ligations,” said Russell Pearce on his weekly talk radio program. Then we’ll test recipients for drugs and alcohol, and if you want to [reproduce] or use drugs or alcohol, then get a job.”

He suggested drastic cuts to food assistance for needy families, reported Phoenix New Times, and he urged strict limits to items that could be purchased with what little help was available.

“No cash for Ding Dongs and Ho Hos, you’d only get money for 15-pound bags of rice and beans, blocks of cheese and powdered milk – all the powdered milk you can haul away,” Pearce said. “If you want a steak or frozen pizza, then you’d have to get a job.”

Speaking of ding-dongs, this particular one evidently believes that unemployment is a choice– that jobs are plentiful and folks without them simply don’t want one. There is ample evidence to the contrary (most unemployed and underemployed people are desperate for work–and their incidence of drug use is lower than among the population at large), but I get the distinct impression that evidence is a foreign concept to this repellent excuse for a human being.

Punishing people for being poor seems to be the flavor of the day among the clueless and cruel political demographic.

Pearce’s delusions evidently aren’t restricted to the job prospects and drug habits of poor folks: Pearce, who served as first vice-chair of the Arizona Republican Party until the furor over these remarks prompted his resignation, and who lost a 2011 recall election over ethics concerns and his sponsorship of the controversial anti-immigration law, claimed on his most recent job application that he attended graduate school at the University of Arizona. Arizona begged to differ; the school had no record of him attending. He also claimed to have “attended graduate school” at Harvard University’s John F. Kennedy School of Government. I guess you could consider that technically true; Harvard reported that he once attended a three-week seminar there. And then there was this:

Pearce accepted but didn’t report nearly $40,000 in paid junkets and college football tickets from Fiesta Bowl officials while helping them receive state subsidies.

Maybe instead of sterilizing and starving poor people, we should sterilize and starve the unethical and soulless influence-peddlers living off the political fat of the land.

 

 

 

Time for a New GI Bill

I’ve been thinking.

There are a number of policy changes that would make a big difference in the lives of poor Americans. There is no doubt in my mind that we need to raise the minimum wage. We also need stronger banking regulations, better and lower-cost day care availability, and improved public education in our poorer neighborhoods, just for starters. These and many other measures would help narrow the wide gap between rich and poor.

But I want to suggest a more sweeping—and admittedly somewhat audacious—policy. I want to advocate for a new GI Bill.

Here’s my proposal: upon graduation from high school, students would enroll in a one-year program of civic service and civic education. Upon completion of that year, the government would pay for two years of college. The program would be open to everyone, but marketed heavily to the poor and disadvantaged.

Here’s my justification: we have massive amounts of research confirming that most Americans—rich or poor—know embarrassingly little about the economic and governmental structures within which they live. This civics deficit is far more pronounced in poor communities, where civics instruction (as with other educational resources) is scarce. Because civic knowledge is a predictor of civic participation, one result is that poor folks don’t vote in percentages equal to those of middle-class and wealthy Americans.

Of course, when people don’t vote, their interests aren’t represented.

As I’ve previously noted, Ferguson, Missouri, a town that is two-thirds African-American and has a virtually all-white power structure, reported a twelve percent voter turnout in its most recent municipal election.

Poverty explains more of this than race.

Poverty is a reliable predictor of low political participation and efficacy. Giving students from disadvantaged backgrounds an opportunity to go to college—an opportunity they may not have otherwise—and conditioning that opportunity on a year of civic learning and civic service—would do two extremely important things: it would give those students the civic skills they need in order to have a meaningful voice in the democratic process; and it would reduce the nation’s currently unconscionable level of student loan debt.

The need to borrow money in order to afford college keeps many young people from getting the education they need. It keeps others from taking lower-paying jobs with nonprofits and humanitarian organizations after they graduate. Our high level of student loan debt has been identified as a substantial drag on the economy, because payment on those loans is preventing many recent graduates from setting up households, buying homes and appliances and even starting families–all activities that keep the economy humming.

As with so many other aspects of contemporary American life, the burdens fall most heavily on those who can least afford them.

A new GI Bill along these lines would enable informed civic participation and give voice to the currently voiceless; and it would simultaneously addresses our horrific levels of student loan debt.

What’s not to like?

 

Is Charity in the Eye of the Beholder?

A friend who works for a charitable foundation sent me an interesting article a couple of weeks ago, describing an upcoming, invitation-only conference to debate whether the rules that currently govern such enterprises are actually promoting the common good.

Some of the questions to be discussed were intriguing, to say the least. They ranged from “should donors get a bigger tax benefit if the charity to which they contribute helps vulnerable people?” to whether foundations should be required to spend more than 5% of their assets, as they are currently required to do, to a re-examination of the different legal treatment of private foundations and public charities.

These are all important issues in philanthropy, but if I had to choose the most significant item on the conference agenda, it would be “Does the law adequately delineate what makes an organization ‘charitable,’ given that some nonprofits (like hospitals) operate in a way that is indistinguishable from their for-profit counterparts?”

Actually, what sorts of activities are appropriately labeled “charity” is less obvious than we might think. Feeding the hungry? Sure. Building a wing on the church? Maybe. A Lexus for the nonprofit’s CEO? Probably not. And there are plenty of nonprofit, tax-exempt entities that are not “charitable” in the usual sense–arts organizations, professional associations and the like fall into a different category.

Any lawyer who helps new organizations incorporate can attest to the blurred boundaries between far too many for-profit and non-profit enterprises. Take the hospital example cited in the article: CEOs and upper managers at purportedly “nonprofit” hospitals take home salaries that are the envy of many for-profit businesspeople; meanwhile, the hospitals pay no taxes–including property taxes to local governments– and enjoy other benefits of a tax-exempt entity. The amount of “charity” they engage in is an open question.

Hospitals are hardly the only entities taking advantage of the opportunity to do well by purporting to do good. A corporation with a mission that is arguably philanthropic can forego “profit” by the simple expedient of paying money that would otherwise be considered profits as salaries.

Americans as a whole are a charitable lot. We give a lot of money to causes we care about, with the expectation that we are thereby making our communities and our world a bit better. If antiquated rules and dubious behaviors make us cynical, and less charitable, we’ll all suffer.

A good hard look at these issues is in order, and I’m pleased to see that it’s occurring.

 

Things That Drive Me Crazy…

The comments over the past couple of days have been weighty (and a bit heated), as readers have debated serious issues and explored consequential attitudes. I haven’t participated in those discussions, although I’ve followed them, because I had to fly to Washington, D.C., on Thursday for business meetings.

That trip once again involved something very trivial but very annoying, something that really does drive me nuts–partly because I just don’t understand it. Not a “heavy” issue, just an aggravating aspect of modern American life.

Here’s the thing: if you drive down America’s highways, you pass sign after sign advertising inexpensive motels. Many offer free breakfasts; more offer free wi-fi.

When I attend conferences at fancy, expensive hotels, however, as I did on my quick trip to D.C., I am almost always charged for wi-fi. At the J.W. Marriott it was 12.95 per day for the privilege of connecting my laptop to the internet.

Can anyone explain to me why a Comfort Inn on the interstate charging 39.95 a night can offer free internet, but a “chi chi” hotel charging 350+ a night feels entitled to nickel and dime its patrons for the privilege of doing digital business?

Granted, this is what we might call a “First World” problem. But it is very irritating.

Any hotel owners out there with an explanation?