Peter Bromberg's UnBlog

1) Only 1 Percent Of The U.S. Labor Force Earns The Minimum Wage 2) Teenagers Comprise The Single Largest Age Group Of Minimum Wage Workers 3) Most Minimum Wage Workers Are Under The Age Of 25 4) A Majority Of Those Who Earn The Minimum Wage Work In Food Preparation Or Sales 5) Less Than 5 Percent Of People Who Earn The Minimum Wage Work In Construction Or Manufacturing 6) A Majority Of Them Also Worked Less Than 30 Hours Per Week 7) Less Than One-Third Worked Full-Time 8) A Full-Time Minimum Wage Worker In 2014 Will Make 24 Percent More Than The Federal Poverty Limit 9) One-Third Of Minimum Wage Workers Either Dropped Out Of Or Never Attended High School 10) There Are Nearly Six Times More Minimum Wage Workers Today Than In 2007 11) A Change In The Minimum Wage Often Triggers Union Wage Hikes And Benefit Renegotiations In truth, there is only one way to regard a minimum wage law: it is compulsory unemployment. The law says: it is illegal, and therefore criminal, for anyone...

A clever man (or a clever city or state government) can survive and even appear to prosper for awhile on very limited resources. He can live on borrowed money, shifting from creditor to creditor as bills come due, going ever deeper into debt. Promises flow from him, and plans for recouping his fortunes and producing great wealth. Many will extend credit to him because he puts up a good front, weaves fascinating justifications for his failures, and paints seductive word pictures of his prospects. There comes a time, however, in the affairs of the cleverest of such men when their confidence game no longer works its magic. A "credibility gap" appears; the promises, instead of attracting further credit, have all become notes falling due. Notes are presented for payment; credit is not extended; the debts cannot be paid. When that happens, a man is bankrupt. Any resources he has are taken from him to satisfy, as far as they will, the claims of his creditors. Such is the plight of...

When the President, his Vice President, his Secretary of State and others deliberately lie to American citizens about the tragic killing of an American ambassador and three of his staff, the nation has reached a point where decisions need to be made on Election Day. What disturbs me the most is the utter disdain for the truth that has marked the presidency of Barack Obama. It has been nearly four years of repeated lies about the steps that were taken to respond to the financial crisis; the so-called “stimulus” which wasted billions, and the literal explosion of entitlement programs. The administration literally seized control of General Motors and Chrysler, which were then in the normal process of bankruptcy, claiming to save the jobs of auto workers. What they really did was bypass the legitimate creditors and investors. They arbitrarily discontinued GM’s relationship with hundreds of auto dealerships, adding their employees to the unemployment lines. They then insisted that GM inve...

I grew up in a middle-class Jewish (but not religious) family where most everyone was - surprise - a Democrat, and voted Democratic. As I was growing up and into my teens and early 20's nobody really talked much about politics. It was basically, XYZ president or politician promised me this, and and I like him/her and I'm going to vote for him. Little if any critical independent thinking was devoted to "how" Mr. XYZ intended to PAY for whatever he promised. In my 20's I decided I needed to broaden my horizons, and traveled to Israel to live on a Kibbutz for about a year. I had a great time. I also worked hard (you HAVE to work on a kibbutz, period!). But I also learned that the kibbutz mentality is very socialistic, and not quite as capitalistic as many may think. I also learned a lot about the Jewish culture, morality, and history and how Christians and Jews are "joined at the hip". After all, Jesus Christ was born - and lived - a Jew. S...

Socialism in Europe and in this country always starts the same way – promise people free health care and free retirement and free housing and whatever free stuff wins political favor and gets you reelected. This is what progressive liberals do and what Obama is doing. And people keep voting for them because they love "free stuff".  They don't care where the money comes from.  Some claim that the "rich" will pay for it all. But, the rich do not have enough money. They may have enough to pay for the very poor, but not for everyone. So, the socialists borrow the money. That way, they are still giving the populace free health care. But, at some point you can't borrow the money anymore because the people you are borrowing it from realize that they will never be paid back. This is the tipping point at which socialism fails. Past this point, you have to tax the people to whom you promised the "free" stuff in order to pay for their "free" s...

“Trickle down” is of course a disingenuous misnomer invented by the left to stigmatize conservative supply-side economic policies. It implies favoring the rich—that doing so will “trickle down” to everyone else. Nonsense. Conservatives don’t care any more or less about the rich than do liberals. The point for conservatives is not to help the rich, but to limit the harm done to incentives by tax policy so individuals have greater opportunities to become rich. President Obama misrepresents supply-side economics and then goes on to misinform his audience that it’s never worked. People are entitled to their own opinions, but they’re not entitled to their own facts.    Every time supply-side economic policies have been tried, tax rate reductions were applied to every income group — lower-income, middle-income, and upper-income alike — giving everyone a better shot at success. This is true regarding supply-side policies of the 1920s, 1960s, 1980s and 2000s. Economist Thomas S...

Romney is making this election about Barack Obama. Considering the current state of the economy, Barack Obama has a record that he simply cannot run on. This is why the "Generic Republican" did so well in the primary season polls against Obama.  Republicans are putting forward a contrasting vision, but the election is ultimately a referendum on Obama.  Romney is correctly focusing on that issue. Romney has a history of turning things around. With the economy still limping along, only a 63 percent labor force participation rate, and American debt dangerously spiraling out of control, this country absolutely must have a change in direction.  Fixing entities that are in trouble is exactly what Mitt Romney has spent much of his life doing. As CEO of Bain Capital, Romney oversaw the investment and renovation of numbers of struggling companies, with an 80% overall success rate.  He successfully led the effort to save the 2002 Winter Olympics, which...

1. Higher taxes lead to higher spending, not lower deficits . Evidence from Europe shows that politicians almost always claim that higher taxes will be used to reduce red ink, but the inevitable result is bigger government.  2. A value-added tax would be a disaster . The statists won’t be able to impose a European-style welfare state in the United States without first imposing this European-style money machine for big government. 3. A welfare state cripples the human spirit . 4. Nations reach a point of no return when the number of people mooching off government exceeds the number of people producing . The welfare state, unchecked, inevitably leads to fiscal collapse. One need only look to Greece to see this in action. 5. Bailouts don’t work .   Imagine how much better things would be in Europe if Greece never received an initial bailout. Much less money would have been flushed down the toilet and this tough-love approach would have sent a very positive message to...

  UN? Here’s how to get your mojo back on global warming: (1) Stop holding sustainability conferences in the world’s most exotic locales, like Rio, and stop booking yourselves into five-star hotels on everybody else’s dime. People’s BS detectors are pretty much set on “high” all the time these days, given the beleaguered state of the global economy. When you preach that everyone else needs to adopt a more modest lifestyle while living high off the public teat and emitting enough greenhouse gases to choke a whale, you undercut your credibility. (2) Stop organizing conferences attended by 50,000 people. Seriously, 50,000? That’s a fuster cluck, not a meeting. (3) Stop pushing ways to make fossil fuels more expensive (through carbon taxes and the ineffective and corrupt cap-and-trade market in Europe) and start pushing ways to make renewable energy less expensive. The economics are simple. Tell people your entire plan for saving the planet means they have to go ...

I’ve seen several pieces over the last week that maintain this as economic fact: http://www.forbes.com/sites/johntharvey/2012/06/17/job-creators/ http://whowhatwhy.com/2012/05/27/rich-guy-on-how-middle-class-are-the-job-creators/ http://www.dailykos.com/story/2012/06/17/1100766/--The-Only-Real-Job-Creators-Are-Consumers I think what happens here is that some liberal blogger, professor or pundit writes something like this and then everybody else jumps aboard and starts echoing the meme without doing any critical thinking. Consumers do drive an economy, but these authors miss the mark. Lots of businesses happen to be consumers of other businesses. So when you tax businesses and pass legislation that makes it harder for business to succeed, businesses stop buying things, which ultimately hurts consumer spending. All of this does not even touch on the fact that small businesses are the true engine of growth for this country. And, most small businesses are taxed like individuals...

According to Keynes, the root cause of economic downturns is insufficient aggregate demand. During  World War II and it's immediate aftermath, Keynes was immensely influential. By the 1970's when the great inflation was unfolding,even Keynes' chief critics such as Milton Friedman or Robert Mundell still retained many Keynesian assumptions. With the crisis of 2008, Keynesian policies came back with a bang and reoccupied center stage. Following the Crash of 2008, these policies are no longer satisfactory. If the entire global economy is to follow Keynesian medicine, which requires more money printing, spending, borrowing and bailing out - on top of all the money printing, spending and borrowing that preceded the crisis, then we need to look at them with fresh and critical eyes. The place to begin is with what Keynes actually said. First of all, Keynes did not believe that fiscal stimulus alone could ‘kick’ the economy into full employment equilibrium as many of his mode...

People are often confused with biased media reports that "unemployment" is going down, and that's supposedly a good thing. There's much more to the picture - but you'll never hear it from the media. The number of jobs needed per month to keep up with population growth depends on the rate of population growth, and the labor participation rate. CBO estimates show we need 260,000 new jobs per month just to keep pace with population growth (new Americans entering the labor force). It would take 187,000 jobs added per month over the next year to hold the unemployment rate steady if the participation rate rises to 64.6%. If the participation rate stays steady, it will only take 95,000 jobs added per month. If the economy does start adding more jobs per month, one would expect more people will then join the labor force - keeping the unemployment rate elevated. Of course more people could give up, and the labor force participation rate could fal...

We get a lot of confusing information from the media. One important figure that consistently gets under-reported is the Labor Force Participation Rate . This is the percentage of working-age persons in an economy who: Are employed, or Are unemployed but looking for a job Typically "working-age persons" is defined as people between the ages of 16-64. People in those age groups who are not counted as participating in the labor force are typically students, homemakers, and persons under the age of 64 who are retired. The Labor Force Participation Rate is currently at a 30 year low. We just had the largest absolute jump in 'Persons Not In Labor Force' on record...and biggest percentage jump in 30 years: When the Labor Force Participation Rate starts going back up, and unemployment rate goes down, then you have a real economic recovery. Right now we aren't even adding enough new jobs each month to keep up with population growth. The numb...

Here's how they do social security in Chile according to Cato.org. Workers are given the choice as to whether they would like to stay in a pay-as-you-go plan (like we have in the U.S.) or a new system in which they can put their entire payroll tax into a retirement account. That way, they can benefit from compound interest. 93% of Chileans elect to participate in the new system. It's run by 15 private companies. Here's how the country's former Secretary of Labor, Jose Pinera explains what has happened: We guaranteed benefits for the elderly -- we told those people who had already retired that they had nothing to fear from this reform. We also told people entering the labor force for the first time that they had to go to the new system. Today, all workers in Chile are capitalists, because their money is invested in the stock market. And they also understand that if government tomorrow were to create the conditions for inflation, they would be damaged because s...

In a free market, demand is a function of price: the higher the price, the lower the demand. These rules apply equally to both prices and wages. When employers evaluate their labor and capital needs, cost is a primary factor. When the cost of hiring low-skilled workers moves higher, jobs are lost. Despite this, minimum wage hikes, like the ones recently set to take effect, are always seen and reported as an act of governmental benevolence.  Before bringing on another worker, an employer must be convinced that the added productivity will exceed the added cost (this includes not just wages, but all payroll taxes and other benefits.) So if an unskilled worker is capable of delivering only $6 per hour of increased productivity, such an individual is legally unemployable with a minimum wage of $7.25 per hour. Low-skilled workers must compete for employers' dollars with both skilled workers and capital. For example, if a skilled worker can do a job for $14 per hour that two unskil...

Damnant quod non intellegunt    --They condemn what they do not understand America's central bank, the Federal Reserve, is engaged in a bailout of European banks. This operation is going pretty much unnoticed here in America. The Fed is using what is called a "temporary U.S. dollar liquidity swap arrangement" with the European Central Bank (ECB). There are similar arrangements with the central banks of Canada, England, Switzerland and Japan. The Fed trades or "swaps" dollars for euros. The Fed is compensated by payment of an interest rate (usually 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange rate fixed at the time the original swap is made, then lends the dollars to European banks of its choosing. Why are they doing this? The Fed could  lend directly to U.S. branches of foreign banks. It did a great deal of such lending to foreign banks under var...

There is considerable political noise surrounding the idea of job creation. The right wing uses the “job creator” argument to push the position that increasing taxes on the rich will burden job creators and deter from future job creation.  The other side tries to show that we should increase taxes on the rich and reduce taxes on the real job creators – the consumers.  This is another common case of filtering economics through a political filter in order to validate a preconceived bias.  A capitalist economy has, in the extreme aggregate, a theoretical level of infinite demand.  Entrepreneurs and capitalists meet that demand by creating goods and services with the hopes of generating a profit.  Importantly, the consumer and supplier are two sides of the same coin.  Henry Ford doesn’t exist without demand for automobiles.  Apple doesn’t exist without demand for iPhones. If there is no demand for the goods and services in a capitalist economy then the...

This NYT Graphic keeps coming up repeatedly (it's been so widely reproduced, many don't even realize that the Times is the original source!) It's really emblematic of the mindless leftist FUD about economics. Just for starters, this thing represents the "Bush Tax Cuts" as a "cost" . What they fail to understand is that tax rates and tax revenue are two different things. Since the Eisenhower administration in the 1950's federal tax revenue as a percent of GDP has averaged about 18 percent. It didn't matter whether top tax rates were 92 percent (yes, they were that high!), or as low as 30 percent. Tax "rate" differences are not a "cost" item that you can just stick in some chart and say, "See! Bush cost us more money than Obama!". Tax "Cuts" (or in reality "current tax rates", whatever they may be) are not really a cost at all. What we need to measure is revenue to determine if curr...

The People's Bank of China's surprise announcement Wednesday of a half percentage point cut in banks' required reserve ratio is an admission that the economy is facing stiff headwinds. Consumer price inflation remains relatively high at 5.5%, and the true level of inflation as reflected in the GDP deflator is probably closer to 10% The reason? After the 2008 financial crisis, China embarked on a Keynesian stimulus program that by GDP standards, was three times the size of ours here in the US. The country is drowning in unproductive investments financed with credit. The government spent 15% of GDP largely on public works projects in inland regions, financed with loans from the state-owned banks. Investment as a share of GDP soared to 48.5% in 2010, and the M2 measure of money supply ballooned to 140% that of the U.S. Now comes the hangover. Worsening inflation forced the government to put on the brakes this year. As with most property busts, transactions dried up,...

Unemployment Rate vs Total Employment Yes - the unemployment rate fell to 8.6 percent in November, but it also masks a startling shift in the job market. The Labor Department said Friday that employers added 120,000 jobs last month. With that, the unemployment rate dropped to the lowest level in more than two and a half years. But a key reason for the drop was that hundreds of thousands of people who could work had stopped looking for work . The report showed 487,000 people left the labor force in November -- for the Labor Department's purposes, they are not counted as unemployed. What's important is total employment, which has barely budged. This means we're still facing a NET LOSS of over 2 million jobs since president Obama took office in 2009 - an absolutely abysmal performance, considering all the taxpayer money the government has thrown at the problem. Source: Bureau of Labor Statistics The above chart simply takes the total US employment number b...