Uncomfortable Proportions and the passing of Milton Friedman

We've heard it all before, the infamous 'it only takes one person to change the world' schpeel. Though apparently knowing that isn’t enough because every sort of political talk I've gone to, one of the final question cards passed to the speaker concerns what the individual can do to aide in positive change. Without a doubt, 10 minutes of wasted time will be spent pacifying people into believing that by coming to the event they've already succeeded, oh and by staying educated. Puh-lease. Take a look at this guy:

At the respectful age of 94, Milton Friendman died this past Thursday. Friedman’s theories govern every aspect of our world today and leave no land untouched. More than the polite attention of his friends and family, Friedman had the influential ears of presidents and politicians alike. Pioneering globalization as we know it, Friedman advocated with divine rhetoric arguing for individual choice. These advocations diminished the role of the government as protector of the people, and alternatively placed it in the hands of individuals, or more telling, in the grips of transnational corporations. Where has this left us?

• The top one percent of Americans now make more money than the bottom 40 percent.


• Twenty percent of the population owns 84% of our private assets, leaving the other 80 percent of the population with 15.6 percent of the assets.


• The gulf between white and African-American incomes has hardly narrowed at all. In 1968 – the year of Martin Luther King's assassination -- blacks earned, on average, 55¢ for every $1 of white income. By 2001, they were getting 57¢—a gain of 2¢. At that pace, parity could be achieved in another 581 years


• Aside from being the richest most powerful country in the world, the US now ranks 30th behind the likes of Cuba and Chile in Life Expectancy

Friedman's arguments won, the government has stepped back as the provider of life's basic necessities. If globalization is to continue 'as is' we can only expect things to get worse. At the next progressive event you go to, please spare us all the dreaded question even though you run the risk of leaving without that warm fuzzy feeling in your stomach. Indeed perhaps it is those last 10 minutes of dialogue that will spark a massive global transformation.

The People vs. Dead Millionaires

Tomorrow at the booths in Washington State we'll be asked to vote on I-920, the repeal of the Estate Tax.

Technically speaking, the Estate Tax is a tax “on the transfer of an estate of a deceased person if the taxable value of the estate is at least 2 million dollars”. This initiative seeks to repeal this tax.

In other words the estate tax is a tax on dead millionaires. When a person dies and their estate is worth more than 2 million dollars, a tax is imposed before their heirs assume ownership (my apologies to Paris Hilton). Directly the Estate Tax has nothing to do with 99% of us in Washington, it is a tax on millionaires.

Indirectly, the impact of this tax is huge. Aside from this tax being, “an important component of a fair tax system”, if repealed “there would be billions in lost federal tax revenues”. In Washington for example, where K-12 class sizes are among the largest in the nation, a repeal of the estate tax would halt any effort to reduce class size by removing $100 million from public education.

How will all this lost money be made up? Can your paycheck foot the bill?

All in all: This is one of the fairest taxes out there; people with more wealth should pay more taxes. Done and done.

Should this measure be enacted into law?
Yes [ ] No [ X]

The Stark Picture of Globalization's Success in America

Globalization is defined by the World Bank as “the growing integration of economies and societies around the world”. It has become an increasingly debated subject in the past decade and a glance at Wikipedia’s description of the term exposes the heat of the dispute. It is seen as either “economically and socially positive” or “economically, socially and ecologically negative”. While defendants of the first portrayal claim that globalization brings “an increased standard of living…and further wealth to the first world”, trends in the US following the onset of globalization, provide insight into the level of success it has afforded the majority of Americans.

• In 2004, compared to 1980, worker productivity increased 68%
• Over the same time period the stock market rose 793%.
• Thanks to workers producing more, CEOs saw an average pay increase of 743%.
• In 1980, CEOs made 42 times what the average worker did, in 2004 that number jumped to 431
• Between 1980 and 2004, the typical worker's hourly wage after adjustment has seen absolutely no change at all
• The top 1 percent of the population makes more money than the bottom 40% combined
• Experts agree that there is a less chance of moving up the economic ladder now than there was 2 or 3 decades ago.

Sources:

1. Fair Economy “The Growing Divide, Inequality and the Roots of Economic Insecurity” United for a Fair Economy 2005
2. Inequality.org

Thoughts on Minimum Wage

After adjustment, the buying power of a minimum wage income is at a 51-year low! In June CNN.com reported on the Senate’s decision to refuse a proposal that would raise minimum wage over the next 26 months from 5.15 an hour, to 7.15. Ironically, in a separate report published the same day, CNN.com remarked on the 262 fold difference between average CEO pay and what the typical worker makes. (June 21, 2006)

One of the biggest reasons for people being against a raise in minimum wage is the belief that higher pay means fewer jobs.

The mission of all businesses is to make profit. In the most basic terms, a company makes its profit by subtracting costs (how much money is used in the manufacturing of a product/service) from sales. A raise in the minimum will increase the costs of a product. To compensate for this, the price of the product may be increased. However, this lessens the ability of businesses to remain competitive in their respective industries. Not to mention, if all businesses compensate in this manner, all consumer goods will see an increase in price implying that those benefiting by the raise will see no ‘real’ difference in their income. Based on this idea, opponents of raising the wage minimum theorize that any increase will diminish employers’ ability to employ as many workers as they now do, because they will compensate for the loss in profit by decreasing the number of those employed.

The simplicity of this model is its gravest mistake. If profit is to remain the same or higher, then yes costs must be kept at a minimum. However we have neglected the second variable in this equation, sales. The Economic Policy Institute (EPI) has investigated the former theory and found that alternatively in areas where minimum wage has been increased, employers have seen not only a rise in worker productivity, but "lower recruiting and training costs, decreased absenteeism, and increased worker morale" allowing employers to absorb the costs of a wage increase.

Benefiting from an increase would be “an estimated 14.9 million Americans”, and their associated families, health, and happiness.

Cheeseburgers and Visas

The CDC reports that an estimated 30 percent of U.S. adults aged 20 years and older - over 60 million people - are obese" and that "an estimated 65 percent of U.S. adults aged 20 years and older are either overweight or obese".

Okay, we knew America was fat, but that fat? On Friday the Washington Post reported that the American Psychiatric Association is debating whether to add compulsive buying to its list of psychiatric disorders. (link) This began after a study concluded that 2-16% of consumers are impulsive buyers, feeling regret, anxiety and despair after their purchases. What does this have to do with the Obesity epidemic? Well, deliberations are also being cast as to whether or not obesity ought to be classified as a disease.

These are unquestionably legitimate problems that can spawn serious impacts, but classifying them as diseases may unleash a whole other can of worms. For one, the way Medical Institutions in the States deal with diseases, typically ignoring root causes, will land some millions of people on prescription medication. Although I have no personal bone to pick with medicinally treating conditions, I question this route when it requires turning ones cheek in the face of blatancy: perhaps more complex explanations.

Have millions of Americans spun so out of control that they can’t manage what’s going into their bodies, and what’s coming out of their wallets? What are the other possible explanations for people eating and buying so much that it’s causing them physical and pyschological harm?

(Added 1/31/07) For Answer see: http://depts.washington.edu/eqhlth/