Sunday, December 15, 2013

Left and right knee jerks

If I'm playing devil's advocate, it's because the liberal arguments put forward for raising the minimum wage have not been pro-labor. I'm thinking of these two: it will stimulate the economy (Stiglitz and Reich among others) and it will disburden the taxpayer who is subsidizing the welfare safety net for minimum wage earners (even Occupy's Cathy O'Neil seems to buy this argument). There's even the argument that Wal-mart and McDonalds would benefit by a raise because their employees would spend more money there (the Henry Ford business model). The only pro-labor argument points to the fact that a family can't survive on minimum wage. But the raise that Obama has proposed is not enough of a raise to solve the problem for minimum wage-earning families. 

It seems clear then that Obama's proposal is intended not to improve the welfare of low-income wage earners -- especially those with multiple jobs who will lose their medicaid or food stamps -- but to provide a mild stimulus to the economy without increasing unemployment (small increases in minimum wages have been shown not to increase unemployment, as studied by Card & Kreuger -- I've posted their work before here and here -- and more recently, Dube, Lester & Reich) and without increasing federal spending or taxes. In other words, Obama has found a expedient means to appear progressive without alienating conservatives -- and without actually being progressive. An expansion of the welfare net would be truly progressive, especially if it were met with a commitment to free public housing (Occupy has been working on this by occupying foreclosed properties) and free higher education.

This nation is incredibly wealthy despite its long relative decline, its dependency on dollar devaluation and debt financing. It's instructive to me that the current recession was not caused by a business cycle but by deregulation and overspeculation. It wasn't caused by higher taxes (they had been lowered, in fact) or spending (the economy was growing through two hugely expensive wars). That suggests to me that the economy can withstand all sorts of Keynsian measures including both higher taxes and more government spending. 

Transformation requires a shift from playing the political-economic game to demanding change, and that requires a shift in our discourse. In a world of knee-jerk conservatism, knee-jerk libertarianism, knee-jerk liberalism and knee-jerk leftism, that's not likely outside obscure blogs that don't matter. 

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