Public Policy and Governance – Page 280

A Conservative Argument for Raising the Minimum Wage

The American Conservative has a lengthy article arguing for a raise in the minimum wage from a conservative perspective. A couple of highlights:

Although the direct financial benefits to working-class Americans and our economy as a whole are the primary justifications for the proposal, there are a number of subsidiary benefits as well, ranging across both economic and non-economic areas.

First, the net dollar transfers through the labor market in this proposal would generally be from higher to lower income strata, and lower-income individuals tend to pay a much larger fraction of their income in payroll and sales taxes. Thus, a large boost in working-class wages would obviously have a very positive impact on the financial health of Social Security, Medicare and other government programs funded directly from the paycheck. Meanwhile, increased sales tax collections would improve the dismal fiscal picture for state and local governments, and the public school systems they finance.

Furthermore, as large portions of the working-poor became much less poor, the payout of the existing Federal Earned Income Tax Credit (EITC) would be sharply reduced. Although popular among politicians, the EITC is a classic example of economic special interests privatizing profits while socializing costs: employers receive the full benefits of their low-wage workforce while a substantial fraction of the wage expense is pushed onto the taxpayers. Private companies should fund their own payrolls rather than rely upon substantial government subsidies, which produce major distortions in market signals.

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Public policy experts sometimes glorify complexity, proposing intricate, interlocking systems aimed at a desired result. But such structures are only as strong as their weakest link, and a proposal too complex to fully understand is also too complex to fix. Our government has sought to ensure a decent living for American workers through an enormous array of income subsidies, public benefits, training programs, and educational loans; at this point, many of these components have accumulated powerful and parasitic side-beneficiaries while leaving the working class behind.

Since this vast and leaky conglomeration has failed at its intended goal, perhaps we should just try raising wages instead.

Reducing the quoted material to its essence, the argument has 3 parts. First, raising the minimum wage will help the economy and the federal budget by increasing demand and tax revenues, by reducing the amount government pays out in various subsidies, and by strengthening social programs like social security. Second, it will be simpler and less costly than the ungainly patchwork of programs necessitated by poverty-level wages.

Third (and in my opinion most compelling), it will require employers to pay their own workers (and not so incidentally, compete with others in the market on equal footing) rather than depending on taxpayers to subsidize those wages as we do now.

Back when the GOP was a genuinely conservative party, it would have understood–and embraced–these arguments.

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Gambling on Gambling Was Always a Bad Bet

The Indianapolis Business Journal recently reported that the state’s gaming revenues are declining.

The money the state collects from casino taxes has dropped from a peak of nearly $876 million in 2009 to about $752 million in fiscal 2013, according to figures from the Indiana Gaming Commission. Indiana’s three casinos near Cincinnati have seen big declines since a downtown casino opened in the Ohio city last year.

In recent years, Indiana’s casino industry has pleaded with state legislators for economic protection from the increasing state competition.

Let’s recap: the Indiana legislature (like those of many other states) lacked the cojones to raise taxes. In the mid-1990s, lawmakers turned to gaming to fill the state’s coffers. Many of us pointed to the irony involved: the same moralists who had passed strict limits on private gambling (it’s sin, you know…) somehow saw nothing wrong when government was promoting that sin.

At the time, I said this was upside down: the government has no business telling people they can’t have a poker night at their club, and it likewise has absolutely no business making money off gambling venues that are effectively a tax on poor people.

The New York Times recently editorialized about a proposal for additional casinos in that state. Their reasons are equally valid here: a wealth of studies show that gambling is a regressive tax that takes its highest toll on those who can least afford it; the experience of states and municipalities that have depended on gambling have not been positive (construction jobs aren’t permanent, and–as we are now seeing in Indiana–competition from other states quickly erodes revenues).

Indiana Senate President David Long says he supports assigning the issue to a summer study committee.

I have no problem with study. But I would have a huge problem with any proposal to “bail out” Indiana’s casinos–and I think most Hoosier taxpayers would agree with me.

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One of the Many Reasons Elections Matter

Yesterday’s post focusing on GLBT rights reminded me that we’re heading toward June and Gay Pride. As we prepare for the annual Pride celebrations, two things are clear: 1) GLBT Americans are winning the fight for civic equality, and 2) the nature of the remaining threat to that equality has changed.

I won’t belabor the first observation; anyone reading this blog can recite the “wins.” Same-sex marriage is recognized in more and more states, Fortune 500 companies are falling over themselves to be welcoming–to extend benefits and institute policies mandating fair treatment. Popular culture and even pro sports are accepting their no-longer-closeted celebrities.

All of these indicators point to a sea change in the attitudes of average Americans, and that change is confirmed by survey research. The days when coming out meant risking ostracism from friends and families, or difficulty getting a job, aren’t altogether over, but we’re getting close.

The threat today comes from the Neanderthals we keep electing–the theocrats who insist that America is a “Christian Nation,” who reject science, who believe women should be “subservient,” barefoot and pregnant, and that GLBT folks should be closeted (or worse).

Just a couple of examples:

A couple of days ago, the Indianapolis Star revisited a controversy that arose a couple of years back over allegations that a Ball State University Assistant Professor was teaching creationism, aka “intelligent design.” BSU’s President, JoAnn Gora–somewhat belatedly–issued a letter confirming the institution’s commitment to science, and its recognition that intelligent design is religious dogma, not science. (To do otherwise would have massively degraded the value of a BSU degree.)

Subsequently, the Indiana legislature’s God Squad made threatening noises; the explicit message was that requiring faculty to teach real science in science classes “violated Academic Freedom” (!) and the implicit message was that it would cost the University when the time for state appropriations rolled around. Last week, the Star reported that the professor involved was promoted. Whether he is still teaching Intelligent Design is unclear.

Indiana’s legislators aren’t the only ones waging war against genuine academic freedom, diversity and modernity generally. South Carolina’s not-ready-for-this-century lawmakers voted to slash funding for two of the state’s largest public colleges in retaliation for the introduction of books with gay themes into the schools’ freshman reading programs.

In February, the South Carolina House of Representatives voted to cut $70,000 — the entire cost of the offending programs — from the College of Charleston and the University of South Carolina Upstate.

These two incidents—which, unfortunately, are anything but isolated—should sound alarm bells.

Red state legislatures are dominated by frightened old heterosexual white guys whose unspoken motto is “Stop changing the world, I want to get off.” The broader society is making its peace with complexity, diversity and inclusion, but these lawmakers, and the Rabid Righteous base that elects them, is waging a last-ditch effort to turn back the clock.

These guys—and they are almost always guys—are able to be elected thanks to a combination of voter apathy, vote suppression and gerrymandering. Those who go to the polls in states like Indiana and South Carolina are opting for candidates who reject science, progress and inclusion in favor of a constricted and literalist religiosity.

In 1966, Richard Hofstadter wrote Anti-Intellectualism in American Life. That anti-intellectualism–characterized by the elevation of sloganeering over analysis and “biblical truth” over complexity, evidence and education—is still with us; it characterizes the Tea Party and too much of today’s GOP.

It poses a threat not just to GLBT folks, but to all of us; it’s a formidable barrier to our ability to create a sane and tolerant society.

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Don’t Drink the Water

Welcome to Indiana, where taxes are low and regulations are lax. Just don’t get sick unless your employer provides health coverage, because we aren’t about to extend Medicaid, and by the way, you might want to boil your water before you actually drink it.

I’d been hearing concerns about Indianapolis Power and Light’s Harding Street plant for quite a while, so I finally investigated. What I found was disconcerting, to say the least. That plant is the biggest polluter in Marion County.

IPL burns coal in order to generate electricity, and it dumps the residue– toxic coal ash– into unlined ponds next to the Harding Street plant. The plant is close to White River, and sits on an aquifer that serves a number of south side neighborhoods.

It won’t surprise anyone who has lived in the Hoosier state to discover that Indiana’s environmental regulations are among the weakest anywhere, and that the state does absolutely nothing about this–or about the other plants that produce coal ash. And we evidently have a lot of them; we rank second in the nation in the amount of coal ash we generate and we have more ponds than any other state.

We don’t inspect the dams and embankments that keep Indiana’s coal ash ponds from spilling. We don’t even require operators like IPL to monitor their own ponds and report what they find.

Meanwhile, the coal ash contaminates the groundwater we drink. A geologist hired by the Hoosier Environmental Council found concentrations of arsenic at twice the EPA standard for drinking water and mercury levels at 20 times the standard. Boron results were three times what the EPA says is safe for children.

Evidently, keeping business taxes low and regulations minimal–getting government “out of the way,” as the saying goes– is a much higher priority than clean drinking water.

“Let them eat cake” is so last century.

Let them buy Evian.

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Who Gets What–And Why

Joseph Stiglitz–a Nobel Prize-winning economist–recently testified before the Senate Budget Committee about America’s growing inequality.

As disturbing as the data on the growing inequality in income are, those that describe the other dimensions of America’s inequality are even worse: inequalities in wealth are even greater than income, and there are marked inequalities in health, reflected in differences, for instance, in life expectancy. But perhaps the most invidious aspect of US inequality is the inequality of opportunity. America has become the advanced country not only with the highest level of inequality, but is among those with the least equality of opportunity—the statistics show that the American dream is a myth; that the life prospects of a young American are more dependent on the income and education of his parents than in other developed countries. We have betrayed one of our most fundamental values. And the result is that we are wasting our most valuable resource, our human resources: millions of those at the bottom are not able to live up to their potential.

Stiglitz made several important observations about the situation in which we find ourselves: first–and perhaps most importantly–he pointed out that our current levels of inequality are the result of policy choices we have made, either deliberately or inadvertently. Stiglitz identifies our education system and the manner in which it is financed, our health system, our tax laws, bankruptcy and anti-trust laws, the functioning of our financial system, corporate governance…. and he says that existing policies in each of these areas help enrich the top at the expense of the rest.

Stiglitz also pointed out that the folks currently enjoying their status as members of the 1% are “not those who have made the major innovations that have transformed our economy and society.” They are disproportionately the manipulators and rent-seekers, the speculators and financiers–not the entitled producers or “makers” they evidently believe themselves to be.

Stiglitz noted that “trickle-down”–the belief that gains at the top will eventually raise the prospects of those on the bottom–has been thoroughly discredited. He explained that the recent Great Recession has exacerbated–but not caused–our growing inequality. He underlined what should be obvious to all of us by now: jobs are not created when wealthy individuals get to keep more of their money–they are created by demand, and when middle-class folks don’t have discretionary income, demand remains weak.

In a recent column, Paul Krugman–also a Nobel prize winning economist–explained why improving demand is so critical:

Economists who took their own textbooks seriously quickly diagnosed the nature of our economic malaise: We were suffering from inadequate demand. The financial crisis and the housing bust created an environment in which everyone was trying to spend less, but my spending is your income and your spending is my income, so when everyone tries to cut spending at the same time the result is an overall decline in incomes and a depressed economy. And we know (or should know) that depressed economies behave quite differently from economies that are at or near full employment.

Stiglitz also talked bluntly about the likely consequences for the country–both democratic and economic– if we don’t change the policies that are feeding, rather than curing, the problem.

His entire testimony is both depressing and illuminating, and well worth reading.

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