Sunday, May 29, 2011

Remedy for American Crime: no-lead gas, abortion or rebalancing our labor market?

My comment to Angry Bear post "Get the Lead Out II" at

For those of you who have not spent enough time in New York's slums and other badlands (Times Square was the a**hole of the world in early '70s) here are the origins of crime -- which led paint or abortion may or or may not add to or subtract from -- where it begins.

Five esoteric things in a row on juvenile delinquent boys:
Boys until 18 1/2 are in the emotionally dependent stage -- for all practical purposes -- as much as if they were 12.
This turns off over a week's time in my personal observation -- pure social instinct thing.
THE CORE: If they perceive nobody cares about them (wrong about half the time) they literally wont care about themselves -- no penalty can deter them. Any street temptation at all, they are gone.
This is easy enough to accept with a badly neglected 12 year old -- just as crazily true for an 18 year old who has simply been out of control for a long time -- every bit as hysterically alienated as I call it.
Unlike the decades of positive socialization it takes to wind down the paranoia underlying heavy heroin or alcohol addiction -- only 5 to 6 weeks of normal adult attention (teaching to drive) -- slowly brings the kid into the normal supportive orbit (have to kiss his toes and tell him everything he wants to hear first 7=10 days) -- but the crime doesn't slow one bit until a new kid wakes up one day (invasion of the body snatchers day ???).

Very simply the Crips and the Bloods could not whip a decent paying Ronald McDonald.

While reading When Work Disappears by William Julius Wilson and American Project by Sudhir Alladi Venkatesh side by side I noticed that after Wilson's book ended the project only descended into a completely gang infested hell as the minimum wage dropped in half from LBJ's peak -- as average income doubled.

BOTH OF THE ABOVE -- certainly and totally the latter -- CAN BE BLAMED ON AMERICA'S AMAZING, INCREDIBLY SQUEEZING LABOR MARKET. A $15 minimum wage would add about 3% (earlier figuring here *) to the cost of living (not counting other wages pushed up -- good), give half the country a raise and send a lot more low end customers (me ;-]) to McDonalds. Needless to say with a labor market where the median wage grew 20% while average income doubled and left a quarter of the workforce below LBJ's minimum wage by early 2007 (under performing Malthus) many more fatherless homes(massively more in our inner cities) leads to many (massively) more neglected or thinks they are neglected, hysterically alienated kids (for those of you who have not spent enough time in the badlands). *

America's great wage depression also leads to schools that don't work because nobody can be bothered trying to excel when they know they are not going to get paid anything like adequately when they leave school to finally go to work -- according to a professor Martín Sánchez-Jankowski who spent 9 years on the street observing in 5 inner city neighborhoods (slums): read his book Cracks in the Pavement.

So to me crime in America all boils down to what to me almost every other problem in America all boils down to: the totally missing bargaining power (or even any awareness of the need to bargain) of down at the heels American labor. And to me the answer is the only answer that has worked all over the better paid world: SECTOR-WIDE LABOR AGREEMENTS. Never, ever hear this spoken anywhere in supposed progressive forums though this answer is the only one guaranteed to work and everything else put together is guaranteed not to work. When are you going to wake up and start discussing legally mandated sector wide agreements progressive so you can wake up everyone else?

Women in combat: my comment in Washington post

My comment to:

Eighth grade math:
If 10% of the police force doesn't handle 5% of the time -- even if it comprises 50% of the job -- the public will have a difficult time observing this.
If the NYC fire department hires almost 30 women a year for 30 years and there are still only 30 left on the job (half indoors?; 12 of the first 38 ever opted for light duty, e.g., public relations, right out of the academy) the public cannot see them not perform.
If half the prison guards cannot perform the public will never see it. The part of Rikers Island I used to visit weekly -- the 16 to 20 years old -- is now totally out of control (see recent story in "New York Magazine").
If half the court officers cannot handle the job prisoners must enter the courtroom in chains. In my years of going to court in the Bronx in the '70s they were brought in for arraignments in street clothes. 4 NYC court officers recently injured when judge insisted on removing chains.

Of course the rigor and aggression required of a Marine grunt pales compared to that needed to be a big city court officer.

Wednesday, May 18, 2011

(still in rewrite) MY VERSION OF: The Real Social Security and Medicare Problem (and a Doable Fix)


"Looking at Social Security, we see spending rising from 4.8 percent of gross domestic product to 6.2 percent by 2035, an increase of 1.4 percentage points."

"Another way to think about it is that the long term Social Security deficit is 1.2 percent of G.D.P., or 3.6 percent of taxable payrolls."

"Thus we could raise the Social Security tax rate from 12.4 percent, which it has been for the last few years, to 16 percent immediately and forever, or we can assume general revenue financing for the unfunded liability and would have to increase federal income taxes from 6.2 percent of G.D.P. to 7.4 percent, about a 30 percent increase in the amount of income tax revenues the government needs to collect."
I've always said that if the so-called trust fund peters out (it wont; a 5-year fund needs to be maintained -- all ever needed -- see below) the same tax payer money that was cashing bonds with income tax to feed retirees will simply switch to a higher payroll tax (with accompanying drop in income tax). Instead of 75% payroll tax and 25% income tax, retirees will be paid through 100% payroll tax -- only difference, a bit less progressive.

The only practical effects of the trust fund as far as I can see is that it allowed politicians to set on payroll tax rate for 60 years so they would not have to face endless raises and tax payer wrath which payroll tax surpluses on the front (when average income was lowest) made overall taxes more regressive (capped, flat tax paying for on-budget outlays) and more progressive on the end.

Average income doubles twice as fast as population (over 40 years compared to 80 -- worker-to-population ratio stabilizes after 2050) so there never was any retiree revenue crisis. If there is any funding problem it is cause by the average worker's (median) income growth not keeping even close pace with overall income.

For instance, my Social Security payments are supposedly calculated factoring in income growth. But my 1968 income is not credited as double my $25,000 to $50,000. I get credited for only $33,000 because the formula uses average persons' wages instead of overall growth. In the unbalanced US labor market median income only grew 20% as average income doubled! The minimum wage actually halved by early 2007!! Get the American labor market back in balance and payroll taxes will overflow.

BTW, While we are throwing all those trillions of dollars around let's remember that doubled population and quadrupled per capita income 80 years out means GDP looks to be 8 X $15 trillion = $120 trillion EVERY year by then.

"Part A pays for hospital visits and is financed by the Medicare portion of the payroll tax, which is 2.9 percent. (That leaves the total payroll tax rate, at 15.3 percent, ignoring the temporary cut enacted last year as a stimulus program.)"

"The 2009 report, before passage of the new health care law, had estimated a long-run unfunded liability of $36.4 trillion, which is equivalent to 2.8 percent of G.D.P. forever and would have required a payroll tax increase of 6.5 percent. (Also Table III.B10.)"

"The long term general revenue contribution to Medicare Part B is estimated at $22.4 trillion or 1.5 percent of G.D.P. in perpetuity. (Table III.C15.)"

"The unfunded cost of this program is estimated at $16.1 trillion, or 1.1 percent of G.D.P. in perpetuity. (Table III.C23.)"

"To put these programs on a sound footing, federal income taxes would have to rise from 6.2 percent of G.D.P. to 10 percent, an increase of 61 percent."
Doctors' incomes have not DOUBLED in real terms since 1968 while average (per capita) income has. So doctor's incomes cannot be blamed for the doubling and re-doubling and re-redoubling of health care. As one doctor put it to me: in his other career as a Navy helo pilot everyone can see the three engines and the sixty miles of wiring in the "new beast" Black Hawk, but when they go to the hospital all they see is the bed.

Where the money is going to come from is another question. The average person's (median) wage only grew 20% while average income doubled. The minimum wage actually dropped in half by early 2007 (now $3/hr lower than under LBJ after the "big" Demo raise). Meantime, the linebackers and TV news anchors and CEOs who now get paid 25X what they made back when (instead of only 2X) don't have 25X as many livers and bones to mend.

Like most problems in this country it comes down the the totally out of balance -- as in thoroughly de-unionized -- US labor market. Decades old proven answer: legally mandated, sector wide labor agreements -- standard practice all over the better paid OECD world, not to mention the second-world (Argentina), even the third-world (even Indonesia). Supermarket workers and airline workers would kill for sector-wide agreements -- good political place to start.

Doctors fees are 20% of Medicare (not overall economy's). Private insurance costs (whole economy) quoted as high as 30%? Where to start cutting? :-)

Sunday, May 15, 2011

The real American "misery indexes" -- my comment on "Angry Bear"

This post on the "misery index" -- seemingly meant to be taken as a realistic comparison of, well, economic misery on this side of the Pond compared to the other side -- is almost enough to make me give up forever on ever getting the slightest bit of common sense out of our economic (supposed?) progressives.

I mean this with all of my heart -- ready to give up on you all.

Please do a graph which shows the doubling of average income as one line on the chart going up at a 45 degree angle contrasted to the 20 percent increase in the median (average person's wage) going up at a 9 degree (?) angle over the same 43 years. Not to mention the complete political disempowerment that goes with a unionless work force (ever hear of legislatively mandated SECTOR-WIDE LABOR AGREEMENTS -- airline and supermarket workers would kill to get them; good place to start, but somebody's got to tell them about the possibility).

Please do a Malthusian chart tracking wages dropping 33% as population increased 50% since 1968 contrasted to the drop in the US federal minimum wage of almost 50% by early 2007. Not to mention the Crips and the Bloods couldn't whip a decent paying Ronald McDonald ($15/hr minimum wage -- mere 50% increase as per capita income doubled -- would raise the price of what in the poorest part of the country?).

Call them the "Nakba" indexes (or the "Great Wage Depression" indexes).

We -- Americans below 90 percentile income are suffering alright. Do you guys know anybody below 90 percentile income? What the deuce is wrong with you?


Endless reports of violence and non-performance in Berkeley public schools? Does this concern the Berkeley economic faculty? Not really their world right? Why, then, could anyone expect them to be concerned about poor side of town high schools in Detroit -- though I am sure their interests would perk right up about the goings in any elite high in Detroit -- or France.

I worry about the tragedy of poor side of town schools in New York and Chicago (core problem: nobody will prepare hard for a labor market that offers them nothing now and less for more work later if things keep going on that way on this side of the Pond). You would accordingly expect me to worry about troubles in Berkeley schools -- from thousands of miles away.

Get the "psychological" point. All the learning does no good if you don't know what to care about -- midbrain motivates forebrain to get what midbrain desires; not the other way around.

Monday, May 2, 2011

The answer to the American labor "Disaster" is not a floor under inadequate incomes


Re: Economics Principals

Here we go again. David Warsh -- a commentator whose breadth of understanding normally dazzles me -- quoting this as a good summary of what to do about so called "inequality": “The only things that can possibly address inequality of a magnitude that will soon be judged to be unacceptable in this country are much higher levels of taxation on the well-to-do and a negative income tax for the poor.”

If, first, our progressive elite understood that it is not about wan "inequality" but more like what the Palestinians call the "Disaster", they would understand that what American workers need is not a guaranteed floor under inadequate incomes but the median wage to double over time whenever average income doubles, not grow only 25%, for the minimum wage not to drop in half (by early 2007) over the same doubling per capita span.

We, American workers, would like to earn $25/hr on the average with a $15/hr minimum wage in the poorest parts of the country (the latter with all of 2% direct inflation*). We American (Chicago) cab drivers do not want the mile rate on our meters to get one (1!) 30 cent increase over the course of 16 years (81-97) period, at which mid point the city began adding 40% more cabs while cutting the business nearly in half with subways to both airports, unlimited limos and (the coup de grace) free trolleys between all the hot spots downtown (fine transportation progress, but what's with 40% more cabs?!).

What American workers need is the power to protect themselves in the market place -- and in the legislature. Of course nobody in America from cab drivers to dazzling progressives has any idea anything is so fundamentally out of whack.

I caught the answer to the Disaster (A.K.A., Great Wage Depression) -- assuming anybody in apparently brain isolated America knows there is a question -- the first time I saw it; wondered why I never thought of it myself, so obvious from the purely theoretical point: legally mandated, sector-wide labor agreements. The one and only answer to the race to the bottom. Canada has a lite version right next door: is Canada like the South Pole?

See these two books for how it works so well in Germany, undoubtedly the leading example of a successful capitalist economy:
Union of Parts: Labor Politics in Postwar Germany (Cornell Studies in Political Economy) by Kathleen Ann Thelen

Reply to myself -- just another insight of a sort, not yet sorted out itself:

The presumably (supposedly?) avant guarde Berkeley economics faculty feels no personal responsibility at all (as far as I know) for the violent goings on at their public schools. If they don't feel any personal responsibility for making Berkeley public schools safe (attended mostly by poor minorities?) -- especially safe -- good learning places we cannot in the least expect them to take serious responsibility for the poor side of town(s) across America.

OTW, if you are from the poor side of town where you live we can expect you to be seriously anxious about what is going bad in Berkeley public schools thousands of miles away.

It's not what you know -- that makes you useful -- it's apparently who you identify with -- that makes you useful -- think LBJ v. Obama. As I would say midbrain outflanks forebrain (no matter how dazzling) again and again.