Wednesday, March 16, 2016

Dayton's MN Budget Proposal

From MP Dayton's Proposal...
"Mr. Gotzman left out a word. It would appear that the Governor's motto for this budget cycle is "Tax and Spend and Save for a Rainy Day." I'm fine with that, personally.
As a senior living on a fixed income that's significantly lower than the median in Minneapolis, I dislike crumbling roads and bridges as much as anyone. If raising the tax on gasoline – whether at the wholesale or the retail level – is what it takes to keep the region's (and state's) roads and bridges in safe operating condition, so be it. There ain't no free lunch…
While I'm not wedded to the specific figure of $15 an hour as a minimum wage, I do think that the current minimum wage is far too low. $10 an hour, which is, I believe, still somewhat above the current minimum, yields an annual income of less than $21,000. It appears, based on online sources, that average 1-bedroom apartment rental in Minneapolis is just over $1,000 a month – out of an income, at $10 an hour, of just over $1700 a month. It's nearly 60% of that monthly income, and for an "average" 1-bedroom apartment. Add another $100+ for utilities every month, toss in $200 a month for food, and there's not much left with which to take part in a "consumer economy," no matter how broadly it's defined.
I do agree that it's going to be an interesting election cycle." Ray
"Living Large. I will never understand the 1 bedroom apartment concept on one income as the standard.
Back when I was making minimum wage I had 5 room mates with who to split the rent, utilities, etc. Then of course I moved into the marriage stage of my life where we had 2 incomes to support the 1 bedroom apartment.
I believe the idea is to make living on minimum wage relatively uncomfortable so that people are encouraged to improve their earning potential. Unless you would prefer for them to stay trapped at the bottom rungs of the work force.
This article has some good data.  Atlantic Raise Min Wage?" G2A
"I think we've passed the point where people are merely "living uncomfortably" and are to the point where it's unsustainable. Yes, people can cram a lot of bodies into an apartment and split the rent, but that only delays the issue as wages continue to stagnate and productivity gains are funneled to the wealthiest Americans.
Most cities have housing codes that only allow so many people per house. What do you do when five people no longer cuts it and ten is illegal? It's better to take action now than wait till it becomes a crisis." Todd
"I agree. Let's take action.
The goal needs to be to increase the quality / capability of and the need for American workers, not just their wages. Increasing the cost without increasing the value will just encourage more American consumers to buy even more from overseas, and drive companies to automate more positions.
If you really want to help, how do we as a society close the achievement gap and develop a culture where Americans are willing to pay more for High Domestic Content Products and Services. Now who is willing to give up their Subaru, Hyundai, Kia, Samsung, LG, Sony, etc, etc, etc?" G2A


John said...

From MP

"Anyone who does a search on some variation of "U.S. productivity growth and the minimum wage" will find a raft of "interesting articles" that all say the same thing. Although I have no hope of it making a dent I suggest you give it a try sometime.

Here, for example, is a relevant and seemingly appropriate snip from one of the many articles that come up:

"The median worker saw an increase of just 5.0 percent between 1979 and 2012, despite productivity growth of 74.5 percent—while the 20th percentile worker saw wage erosion of 0.4 percent and the 80th percentile worker saw wage growth of just 17.5 percent.

"Conservative economic ideologues look at that information and conclude that the fault lies with American workers. Too lazy, bad choices, uneducated know the litany." Ohio Blog" Bill

"I know I sound repetitive, however here we go.

Though some workers are somewhat at fault. I mean just think of all the kids who can not meet the basic K-12 graduation standards, or the modern kids who think many of the good paying jobs are too dirty, too distasteful, too hard, etc. Many of my peers started out driving a fork lift, assembling, working road construction, etc and moved into the office and up with time.

The real problem is that American Consumers want low cost high quality products and services, and they really do not care who designs, builds, and/or provides them as long as it saves them money. The Catch 22 here is that Americans want to make more, more, more... While paying less, less, less...

Just imagine the impact if American consumers chose to buy only vehicles that scored a 50 or better on this index.... Especially those folks who want jobs kept in the USA and American Unions kept strong.
KOGOD Index" G2A

jerrye92002 said...

I still think you're pushing on a long string. Americans buy foreign products because they cost less and are often higher quality. So why not work to make American products cheaper and higher quality? Why not use capital (including human capital, educating people) to increase productivity and reduce costs, reduce regulatory costs, reduce taxes and let America do what it does best?

John said...

Apple Details

John said...

Now that I have a minute. The point of my link is:
- Sure Apple could move jobs here, however most American consumers would not be willing to pay anymore for the devices.
- Therefore the margins would be squeezed and their R&D budget would suffer. Very quickly Samsung etc would dominate that market.

- Americans live very large compared to most people in the world. My College Educated professional peers in China are very okay living in a 3 bedroom condo with their Parent(s) and child. And owning 1 car in the household is a luxury.
- Compare that to most American dual professional income households in America.

As I say again and again... Americans want the highest incomes & quality of life in the World, while paying the absolute least they can get by with...

And then they wonder why their products, services, etc come from somewhere else, and why there are fewer good jobs here.

John said...

CNBC Cramer on Trump and Apple

jerrye92002 said...

What is your objection to the free market? If China can produce things cheaper than us INCLUDING the cost of shipping them here, why should any American consumer buy something of lower quality and at a higher price? It makes no sense. The truly free market solution is to get government out of the process and let American businesses compete, and they CAN given the chance. More government (tariffs, etc) isn't the answer.

John said...

I am fine with the free market and natural consequences. They are logical.

If we want to get the governments out of the way, I assume the standard of living across the world will trend towards some relatively even level. After working with people all over the world for decades, I realize that they are equally smart and capable. The question is will this be acceptable to the US citizens who are accustomed to living large.

By the way, please notice that I have never never never proposed instituting trade barriers. I simply note that if American citizens want to be paid more for their efforts, they will need to be willing to pay more for their Products and Services. Demanding the highest pay in the world while demanding the least expensive Products and Services in the world is illogical.

John said...

Also, demanding more high paying American jobs while choosing to spend their money to employee workers in Japan, China, Korea, Taiwan, Mexico, etc is also illogical.

Finally, demanding higher paying jobs for low skill workers while promoting that the USA allow millions more low skill workers into the country is illogical.

Anonymous said...

"...they will need to be willing to pay more for their Products and Services."

And we should start by gutting the omnibus ag bill. Our food costs are relatively low due to government spending. Let's do away with all the subsidies to Agriculture.


jerrye92002 said...

" Let's do away with all the subsidies to Agriculture"-- Joel

To the extent that these subsidies (minimal though they are compared to the rest of the world) do NOT serve their intended purpose of preserving the family farm (already it should be on the Endangered Species List), I would agree. But food is cheap here because of the incredible productivity of our farmers.

The same would be true of our manufacturing and service industries, except for government overburden in the marketplace.

jerrye92002 said...

"If we want to get the governments out of the way, I assume the standard of living across the world will trend towards some relatively even level." -- John

Having seen something of the world myself, I'm not sure I agree. It is true, as I heard in China, that they gauge progress by "what the family wants." 30 years ago, it was a bicycle. 20 years ago, it was a refrigerator. Ten years ago it was a condo. Now, it is a passport and cell phone. But all of this is opportunity. We aren't planning to lower the US standard of living but to bring everybody else up, and that means growing economies everywhere. Milton Friedman tells us that the key to this global prosperity is that everybody does what they do best, and trades. Cameras would get made in Japan, because they have the technology and the right kind of glass. Cars would get made in the US because of productivity and raw materials, and being close to the primary (for now) market. Spain, it seems (from our experience) is expert in the design of discrete electronics. The result is that EVERYBODY gets the lowest prices, the best wages and the highest standard of living (even though the US will be higher in per capita spending). My experience says most of the world will be satisfied to be more modest. Also, that the US advantage always WAS and could be again, freedom and entrepreneurial spirit that the rest of the world would have difficulty matching. Why should we compete with that advantage kept from us by government? We've got the lightest jockey and the fastest horse, but government wants to tie a 100-lb anvil around his neck.

John said...

"the US advantage always WAS and could be again, freedom and entrepreneurial spirit that the rest of the world would have difficulty matching"


This idea of "Americans Being Better" is fascinating. It reminds me of PHC and an previous Supervisor of mine... He was certain that our facilities Engrs were so much better than those of our sister divisions... Maybe it is hubris...

"Well, that's the news from Lake Wobegon, where all the women are strong, all the men are good looking, and all the children are above average."

jerrye92002 said...

I don't think there is much question. I've seen it personally and professionally. For example, tech companies frequently outsource tech support to India. It makes sense because they're awake while US employees sleep, they are well educated and speak English (some better than others). But every time I talk to one, I get this step-by-step checklist of things to try that, I suspect, would eventually find and even fix my problem. But when I talk to a US person, they most likely grasp the problem quickly or immediately, seem to take it on as their own, and take a direct path to the solution. That's why fewer and fewer Indian techs seem to be getting my calls.

Professionally, I can't tell you how many times I've heard "we never thought of doing it that way" or "we've never done it that way," especially from foreign business colleagues. Americans think differently, more aggressively, more risky and entrepreneurial, because they have (had?) the freedom to get rich from a good idea. It's baked into our "unbridled capitalist"/"yankee trader" genes.

And look at history. Sure, America was blessed with (and stole) great natural resources, but catapulted that advantage into the highest standard of living in the world, in just 200 years. Something is different, and it seems reasonable the "American Experiment" is the reason.

John said...

I wrote a beautiful response and then accidentally left the page.... I'll try again later.

jerrye92002 said...

One other: Our travel group hired a cab driver in Lima, Peru. At the end of the day we asked for his restaurant recommendation ("somewhere near the beach") and when we arrived, we asked him to join us, our treat. "No thanks," he said (in Spanish), "I would rather have the money to take home to my family." We explained he was going to get the same tip regardless, and we would like to have him join us. Later, during the meal, he mentioned that he was hired by all kinds of tourists-- Germans, Italians, English, etc. but that he much preferred Americans. The others treated him like hired help, he said, while Americans (obvious as he sat with us) treated him as an equal. The American culture is DIFFERENT.