How The Economics of the Left Destroys the Poor

One can point to three policies on the hands of the left that have done more to hurt the poor than anything they've ever accused the conservatives of doing.

1 - Minimum Wage:

The idea of minimum wage is the perfect boondoggle. The argument: Everyone wants people to make more money, right? Let's mandate that they get some. Yay! The fault: reality. Anyone who works at a minimum wage job will, of course, get a raise. Assume, for sake of argument, that minimum wage is being raised from $5 to $6 (easy numbers). The $5 worker will now make $6. He's gotten a nice raise. But what about the worker making $5.50? He'll make... $6. And the worker making $6? Likely to stay at $6. Why? Because that is all that is mandated. Those wage increases are only on the lowest wage workers. And look what the increase has done - it has actually created more workers who are at minimum wage. It has broadened the class of minimum wage workers very quickly and devalued the earnings of anyone earning more than $6.

Now suppose all companies decided to give every worker a benefit out of the increase - raising all wages by the $1 increase. Again, everyone gets more money, Yay! But, consider where that money must come from. The company's overhead has now increased, and that increase gets passed along to the product or service involved. If the increase is only for the old-to-new minimum wage workers, prices all around go up, but not as much. Still, the broader class of minimum wage workers has to pay more for the products they buy. If the increase is for everyone, you've simply created inflation.

So, increasing the minimum wage not only does nothing to help the poor (because their cost of living goes up as well), it creates more poor people. But they all feel really good about themselves and vote for the people who gave them more money without holding them accountable for the increased cost of living.

#2 - Fuel and Energy Taxation

The argument: Let's save the earth by making electricity and gasoline expensive. The fault: Energy consumption isn't optional and the cost falls very hard on the poor. Suppose, for example, we have two individuals - one makes $10,000 per year, the other makes $100,000 per year. For the sake of argument, we'll assume that the person making $10,000 per year has enough to meet his basic needs (which I know is not the perfect assumption, but I like numbers that are easy to work with). We know for a fact that the other person can meet his basic needs for $10,000 or less. Why? Because one person is able to, the other should be as well. Now, using our two people, let's raise the gasoline tax to prevent pollution and save the environment.

The person making $10,000 per year must now figure out how to make do with the extra expenses. Anything that is transported by ground will cost more to transport. That includes anything at its most basic - like food, which gets hit twice as the cost of using the machinery that raises the food goes up as well. That multiplies as things put raw materials together - the price of cotton, which uses machinery to produce, goes up as the cost to transport it to the cotton mill rises, which then gets transported to a textile mill (adding more cost) before being made into clothing and transported to the stores where we buy it. Anything made of metal or any other raw material must cost more because the cost of production goes up as well as the cost of transport. Not to mention any costs in transportation necessary to earn that $10,000.

The story becomes similar if you raise the tax on electricity or one of its component fuel sources like natural gas or coal, which energy helps produce those products and which energy goes into heating or cooling the houses involved.

The individual making $10,000 gets his already tight budget squeezed even tighter and makes his life almost impossible to pay for. The individual making $100,000 has $90,000 more cushioning to meet his needs. The end result is a horrible squeeze on the poor while the wealthy have plenty to make do. Save the environment? On the backs of our poor, apparently. But again, the benefit feels so good and the price is so far removed that the whole process is spun as an attack on the rich - and even the poor buy into it and vote for those who are making their lives hell.

#3 - Extended unemployment.

Suppose you lose your job. The government assists in providing you a safety net through cooperation with your employer and mandated unemployment insurance. The argument: A safety net to keep people on their feet while they look for work. The fault: Human nature. If you get paid to look for work, the only work you're going to look for is just enough to keep you paid to look for work. If the unemployment requirement is to apply to two jobs per week, the majority of people will apply to no more than two jobs per week. And those who apply to far more than that would do so whether they were paid or not.

Meanwhile, jobs that pay poorly go unfilled because they actually pay less than you receive on unemployment. Why would you work for $200 per week at a potentially permanent job when you could make $250 per week "looking" for a job? The internet meme that is floating around about the national park service requesting people not to feed the animals because they become dependent on the easy food describes the phenomenon very well. As does the Danish study that people eligible for 3 years of unemployment tended to find jobs after about 3 years while people with 6 months of unemployment tended to find jobs after 6 months. The issue isn't that jobs aren't out there, the issue is that the jobs out there are crappy and no one wants them.

So, by handing out free money, especially long term, the left looks great to voters (again, free money, yay!). But its preventing them from getting jobs simply through human nature. The system creates a rational incentive to not work and to keep themselves out of the workforce. By being out of the workforce, these people become less and less attractive to employers and may fall into a downward cycle of dependence and unemployment, especially in the best of times.


It's all smoke and mirrors and those hurt by the game aren't quick enough to see who is really hurting them.

 

It all comes down to paying attention to the consequences of each action, not how each action feels while doing it. And these are examples of how feel-good politics can do far more harm than what they feel like they will do.

 

Feel good politics? My my, my, my, my..............you mean to tell me that we right all along in calling libs the touchy-feely crowd? Perhaps we could throw in their 'Give Peace a Chance' bumber stickers when we seek to win a war overseas as being a viable solution to war. We all know its the thought that counts.

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Feel good politics? My my, my, my, my..............you mean to tell me that we right all along in calling libs the touchy-feely crowd? Perhaps we could throw in their 'Give Peace a Chance' bumber stickers when we seek to win a war overseas as being a viable solution to war. We all know its the thought that counts.

 

I'm pretty sure life was much worse for the poor before minimum wage laws. Also the Great Depression, with out unemployment benefits, welfare, etc caused horrible problems to the poor people. Mass starvation, food lines, etc. I think you honestly have no clue what you are talking about and you are a conservative detached from reality.

 

I admit I am a conservative, akphidelt. But let's be honest about this - are these programs good for the poor? Your response was not any type of argument at all, merely an assumption. Your first assumption is that I am saying these things are evil of themselves. I am not. What I am saying is that both minimum wage and unemployment have been bloated beyond reason, and that anything beyond the bare minimum necessary to provide some sort of safety net is harming those who it intends to help. Do you disagree with that? If you do, tell me why.

Your second assumption is that things before the Great Depression were worse than they are today. Maybe they were, maybe they weren't. But the important question is whether these particular items had any influence on the change. I would argue that they hold us back more than they help us. I would argue that there were far more important things that were changed to prevent the industrial revolution from reinstating a new form of slavery.

 

Sure. Because there was no Great Recession. It's just that 8 million Americans all got lazy and decided to live off those luxurious Govt benes at the same time.

Conservatives make sense. If you ignore reality.

 

And despite 3 recovery Summers, more and more people stop looking for work, the labor force participation rate stays at a record low, all while the population continues to increase.

 

Good point. We've got to stop the redistribution of wealth to the 1% and get that $1.3 trillion a year back to the middle class so they'll have money to spend to drive a robust economy.

 

That 2% payroll tax hike on the middle class that you supported will surely help to accomplish that. Granted, it won't be as helpful as the tax hike the middle class will get if all of the Bush tax cuts were repealed, another policy you are in favor of.

Back to pretending you care about the middle class?

 

That I supported? Fabricating so early again, are we?

I favor making the payroll taxes lower and eliminating the SS cap to pay for it.

If that is what it takes to reduce the deficit. I favor raising the tax rate to 50% like Reagan had it most of his term. And making investment taxes the same as income taxes. Like Reagan had it.

Back to fabricating?

 

Liberal solution, just stick the bills to the rich. Problem solved.

 

Like how Obama deftly insisted to Joihn Boehner ... We don't have
a spending Problem. Now over the weekend Nancy Pelosi insisting
the same thing.Complete lunacy.
BTW ... what color Kool-aid are you On today.
Sky-Blue-Pink

 

Who said anything about spending?

 

Why would Obama on the one hand persist in his demanding of Fairness
and lifting up the Middle Class and then on the other hand Demand more Tax
revenue.Because there are TWO Obama's.
The Obama as Brand { Lives to seem like such a nice " Daddy " who
wants to help the Middle Class } and then the Real Obama { behind closed
doors or at lavish Parties enjoying being a perceived Icon who can do whatever
he wants,including Conning the public and literally screwing any American Dream }.

 

Because we have a large deficit and the Tea Party of Grover controlling the House and doing every thing within their power to protect the special low tax privileges of the richest.

Why else?

 

Um ... Obama to Boehner and Pelosi yesterday { Fox News Sunday }
stating " America does not have a SPENDING problem ".
Kinda like how Violent the Tea Party probably was,according to her Shrewness.
Why not write down on a napkin the definition of Y'all's - REALITY -.

 

You've said many times that the payroll tax cut was a temporary stimulus effort. That implies that you are in favor of it ending. How does that help the middle class?

How does enacting a large tax increase on the middle class help the middle class obtain the 1.3 trillion you are referencing?

Why would you want that? Clinton had lower tax rates than 50% and significantly reduced the capital gains tax rate and investment had never been higher. Do you not want people to have incentive to invest?

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The richest actually pay the highest effective tax rates.

 

No ... It was ALL an eloborate Plot to Con the Masses.
As the Hannity feature - Boomtown - explained.
Obama isn't concerned about the riches of the 1%.
Obama and Washington Elites are actually Creating another 1% wealth
class or new Permanent Political Class of Aristocrats.
Obama says one thing and does another.
There is Obama the Brand { how he cons the Masses with Doublespeak }
and then the real Obama { a not very nice person at all,hellbent on Transforming
this Great Country into a nation of Sheeple via a Big Brother Nanny State }.
Now go finnish yer Kool-aid and danish.

 

Interesting, this thread took all of four or five posts before it went back to "soak the rich."

All of these so-called caring policies, if you actually look at them, really hurt the people they profess to care about. Why? Because if you hand a man a poison and call it a cure, the man comes back to you when he starts to feel ill again.

Obama and Pelosi are in power precisely because they hurt the poor. But they do so in a way that the poor don't think about, seeing instead that someone is paying attention to them.

 

The poor can't understand that they are simply the grass in which the elite progressive establishment grazes on.

 

Utter bull(*)(*)(*)(*). It "implies" no such thing.

It doesn't. That is why we should raise the top tax rate to 50% like Reagan had it most of his term. And make investment taxes the same as income taxes. Like Reagan had it.

Clinton didn't have 8 years of an irresponsible Bush administration running up trillions more debt and leaving the economy in shambles.

Depends on how you define the richest. The very richest don't. E.g. Mitt Romney only pays about 14%.

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You mean the elite conservative rich.

 

Oh, well if Hannity explained it.

Thanks again for enlightening us on conservative think.

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Sure, because the Great Recession was all Obama and Pelosi's fault.



Say it bleatingly.

 

Honestly, I love the image, so I'll leave it in.

Complete red-herring argument, Iriemon. You bring up the recession as if that is exactly what this is all about. Could the recession be (in part) about jobs lost overseas? Because that could be tied back to minimum wage and global trading. It could also be about union extractions of benefits that outpace the willingness of global workers to demand the same. As the international trade-barriers faltered, our American workers were exposed as extremely overpaid for the work they perform in the global economy. The rational and logical result was to move those jobs out of the country. Did that contribute to the great recession you continually want to throw in our faces? Or how about the disincentive to find replacement jobs when those other jobs went overseas? Sure, Joe Factoryworker could go back to school and become an engineer (or other higher-paying job whose earnings are more in scale with the global market), but instead, he can sit on unemployment for 99 weeks (26, if you want to go pre-recession).

Let's weigh this out - Joe Factoryworker has two options: one involves working hard to better himself, the other to stay at home and get paid for a while. One is a lot of up-front work for a later reward, the other, no work for an immediate reward. Think about human nature for a minute. Which would most people choose (and I won't pose the question as you in particular, because I don't know you)?