Category: political visions

Equity and Equality

Leave a comment

This week the debate over the minimum wage continued in the Senate, on C-Span, other news outlets and social media. The Wall St. Journal presented the minimum wage in Big Mac terms. In 1968, it took 18 minutes of minimum wage to buy that iconic hamburger. Today, it takes 30 minutes of minimum wage. Using that as a guideline, the minimum wage should be at least $12.

Why don’t Democrat politicians propose a minimum wage that varies according to each region’s cost of living (COL)? According to survey data, Colorado’s COL is 73% of California’s COL (MERIC, 2021). Using that as a guideline, Colorado’s minimum wage would be about $11, the same as the current minimum. Missouri’s minimum would be $8.35, which is LESS than the state’s current minimum of $8.60. Many states have implemented a $15 COL-adjusted minimum wage.  

Advocates for a uniform minimum wage argue that they want to erase some of the disparity between urban areas and low paid rural regions, many of which are black or Hispanic. Those in rural areas worry that small businesses will lay off workers, driving the unemployment rate higher than it already is. Others worry that businesses will raise their prices, making it more difficult for those on fixed incomes. In that case, the minimum wage would benefit some at the expense of others.

Twenty years ago, an analysis of minimum wage increases and employment data found only one statistically significant correlation: increases had a minimal effect on teenage employment (Burkhauser, Couch, & Wittenburg, 2000). Other studies have found no effect on employment in the fast-food industry. A recent study examined minimum wage increases in the states and found that increases greater than a $1 had a negative impact of 1% on low-skill employment (Clemens & Strain, 2018). Smaller increases had either no effect or a positive impact. How can we have an informed debate if history does not provide a clear lesson?

Since Plato’s time 2500 years ago, we have wrestled with equality, equity, and justice. Equity measures by outcome, varying the inputs until the outcomes are about the same. Equality measures by inputs; if everyone gets the same chance, the same inputs, then equality is satisfied. Plato argued that justice was an individual functioning well within community. Some of his companions in The Republic argued for alternate versions of justice: that it was the interests of the stronger, that it was helping friends and harming enemies, or telling the truth and paying your debts.

John Maeda posted a Tony Ruth graphic that depicts these concepts of inequality, equality, equity, and justice (2019). Two kids stand on opposite sides under a leaning apple tree so that one kid below the overhang gets most of the apples that fall. That is inequality. They are both given a ladder of equal height; since they each have the equal tools, that is equality. The kid below the overhang is given a shorter ladder to compensate for his better opportunity at picking apples; that is equity. Justice is the equalization of opportunity and tools; using braces and ropes, the tree is straightened, and each kid is given the same size ladder. Justice is both equity and equality.

As a society we often can’t straighten the tree; if we could, who pays for the labor, braces, and ropes? Who owns the ladders? Writing 500 years ago, Machiavelli said that a republic is the best form of government because the two main political classes of society constantly wrestle with these issues. The two groups may be labeled nobles and common people, or Republicans and Democrats, but they are essentially a tug of war between these notions of equity and equality. One group champions equity over equality; the other fights for equality as a priority above equity.

As we listen to debates in Congress, the workplace, and our households, we can identify those two elements. The argument then evolves into the particulars of process, and this is used to justify either side of the equity / equality debate. Machiavelli wrote that people make fewer mistakes when they focus on the particulars. In working out the details we uncover the broad issues that we tussle over. The road of history is curved; to keep from running off the road, we adjust the steering wheel left and right, repeatedly correcting our previous course corrections. This is a time for correction.

//////////////

Photo by Splint on Unsplash

Burkhauser, R. V., Couch, K. A., & Wittenburg, D. C. (2000). A reassessment of the New economics of the minimum Wage literature with monthly data from the current population survey. Journal of Labor Economics, 18(4), 653-680. doi:10.1086/209972

Clemens, J., & Strain, M. R. (2018). The short-run employment effects of recent minimum wage changes: Evidence from the American community survey. Contemporary Economic Policy, 36(4), 711-722. doi:10.1111/coep.12279

Maeda, J. (2019, March 11). Design in Tech Report 2019 | Section 6 | Addressing Imbalance. Retrieved March 06, 2021, from https://designintech.report/2019/03/11/%F0%9F%93%B1design-in-tech-report-2019-section-6-addressing-imbalance/

MERIC. (2021). Cost of living data series. Retrieved March 06, 2021, from https://meric.mo.gov/data/cost-living-data-series

A Policy Pivot?

Leave a comment

February 21, 2021

by Steve Stofka

Climate change induces more erratic weather patterns. More dry and wet; colder and hotter. California has been hit by persistent drought. Texas and other southern states got walloped this week. Several dozen Texans lost their lives when electricity generation failed for several days this week. For two decades, Texas has adopted a relaxed regulatory policy that does not incentivize or require power generators to prepare for unusual events like this week’s cold snap. Texas legislators argued that these policies reduced costs and lowered bills for Texans. Other states with more stringent regulations weathered the cold snap because power operators beef up their generation system to withstand extremes.

Natural gas supplies 46% of Texas’ electricity generation. The valves and regulators on those lines froze because of a lack of heating equipment. Wind turbines supply 23% of Texans electricity but had no heaters installed as they do in other states. Because Texas has its own electricity grid, it has no power balancing arrangements with other states. Texans pride themselves on their self-reliance to the point of arrogance. They are the Lone Star State, Texans first, Americans second.

Through district gerrymandering a minority of Republican voters in Texas control policy. The state has a constitutionally weak governor with little power. The legislature promotes someone to the post who will be agreeable. Politics is heavily influenced by the oil and gas industry whose rights are senior to property owners. If a gas company wants to run a pipeline through someone’s property, an owner has a difficult fight.

Because Texas was part of Mexico until the 1840s, its laws and culture are influenced by the hacienda system set up by Spain in Latin and South America during the 17th century. In that colonial period, the Spanish monarchy took control away from parliament, imposed a uniform religion and a rigid centralized bureaucracy. Land in the Americas was parceled out in large tracts called haciendas to those who were loyal to the crown. This promoted a system of personal relations among landowners, people over principle, and a lack of growth and technological improvement. Like cuttings on a plant, the culture of white settlers in Texas were grafted onto this system. Texans adopted the “good old boy club” that has plagued politics in Latin America for centuries and made it their own.

Northern states were initially settled by colonists from England. In the 17th century, the English Parliament took power from the monarchy, a power shift opposite that in Spain. Religious and political diversity carried over from the motherland to the colonies and became institutionalized. Property rights, and the products of property could be conveyed to others. This encouraged a system of principle over person, a more impersonal exchange that fostered technological development.

Texas culture relies on tradition more than innovation, but the state provides a fertile and friendly atmosphere for innovative businesses from other states. Business growth relies on a flourishing human capital. Texas’ K-12 schools rank in the middle of the 50 states and above California, both with large immigrant populations and low English fluency (McCann, 2020). However, a state that cannot manage its power grid is not an attractive environment for business.

Will this crisis spark a shift in policy? Texas has long been captured by special interests, who are antagonistic to change. The past few years Texas politicians have stood proud, calling to California businesses, “Come here and get away from those regulations.” That cheery welcome has been tarnished this week. Business executives might wonder if Texas has other infrastructure problems. Texans hope that the fast-moving news cycle will turn its attention elsewhere.

//////////////////////

Photo by Alexander Schimmeck on Unsplash

McCann, A. (2020, July 27). States with the best & worst school systems. Retrieved February 20, 2021, from https://wallethub.com/edu/e/states-with-the-best-schools/5335

Alt Belief

Leave a comment

December 6, 2020

by Steve Stofka

Cognitive dissonance controls our political sensibilities. We speak in cryptic code and listen only to those whose code we understand. Our understanding is the standard by which we judge all other versions of reality. There is a dedicated band of people determined to preserve out of fashion ideas and explanations. Life would be easier if the people who disagreed with us would change their minds.

Listening to Washington Journal on C-Span this past week, I realized why my sensibilities lie with the Democratic Party. I can argue with their ideas, some of which I do not agree with. A Republican Congressman said that the government has no right to dictate the personal behavior of people, even though that behavior might kill people. On the other hand, the government does have the right to dictate the personal behavior of women on the chance that they might kill their fetus. My head exploded and I moved on to something else.

Several decades ago, Republican voices used to make more sense. Either the party has changed, or I have. Is this any way to discover my political allegiances? American politics is driven more by disaffection. The enemy of my enemy is not my friend, but more like my foxhole companion on the political battlefield. Both sides of the political aisle would benefit more if they cooperated, but it pays to compete, or to defect as it is known in Game Theory. If the other side says 2+2=4, then our side will claim the answer is 5. Rally ’round the flag, boys. In this prisoner’s game, the American public is forced to play along.

The American people and the members of Congress, but especially the Senate, live in different realities. Many families cannot pay their rent; the lines at food pantries stretch for many blocks; 20% of retail businesses have closed their doors; depression, drugs and suicide are increasing. Lounging in their Roman baths, our Republican Senators argue the ontological points of another aide package. Republican led states, dependent on energy or tourism, are begging their party for help. Senate Majority Leader McConnell wraps his white tunic about him, bids his slaves to draw his bath, and refuses to budge.

It’s always the other fella who is living in an alternate reality. When Einstein first noticed that, he built himself a theory. Some people thought he was living in an alternative reality, but after a century, most agree that his explanation was a good one. E=mc2 is as well-known as the 2600-year-old Pythagorean theorem a2 + b2 = c2.

Many alternate realities die as people come to agree on things. There are a few people who won’t let an explanation die. The earth is still flat. The moon landing was a hoax. So is Covid. Massive voter fraud gave Joe Biden a 7 million vote victory over Donald Trump. I used to think that ideas changed one death at a time. Now I’m not so sure. Some ideas are stubborn.

People and mules have much in common. We respond better to carrots in front of us instead of whips behind us. Why then do people on each side of the political aisle whip each other with words? Did we all run out of carrots?

People fix their minds on something and never change. That’s a conservative. Facts will not budge them from their ideological foxholes. The economist John Maynard Keynes said that he changed his mind when presented with new facts. That’s a liberal. They respond to the whip of facts and the carrot of something better.

We begin life with no fixed ideas. Our parents and the people around us put their ideas in our heads. Some of them grow, some fall out. People get mad at us when the ideas they planted don’t take hold in our minds. As adults, we learn that lesson at the Thanksgiving dinner table.

We are more comfortable when we are with those who share a common perspective. Perhaps we think God controls every detail of our lives, or that [insert name here] is part of a conspiracy that controls every detail of our lives.

No matter how different political and religious institutions are, they want us to believe what they believe. That is the problem: getting others to believe what we believe. We believe that what we believe is not a belief, but reality. Your belief is a belief. You see that, don’t you?  

/////////////////

Photo by K. Mitch Hodge on Unsplash

The Political Battle

Leave a comment

October 16, 2016

State and local governments provide the infrastructure of our daily lives, from the streets we drive on to the legal and judicial institutions that maintain a sense of order within our communities, yet we pay far more of our paychecks to a distant capital in Washington.  Why?  To understand we must look at a two century long battle of  opposing ideas, two ideological forces fighting for power.

We can judge the pervasive impact of state and local government by the amount of taxes that they collect to provide that infrastructure.  I’ll count the primary taxes –  sales, corporate and peronal income and property tax.  In the past four quarters, state and local governments collected $1.2 trillion, about 6.5% of the nation’s GDP.

On the other hand, Washington has a much reduced impact in our lives and, we might hope, an accordingly smaller tax bite.  Unfortunately, that is not the case.  In the past four quarters, the Federal Government collected almost three times the state and local amount, close to $3.6 trillion. (Chart link).  For the past eighty years, the Federal Government has assumed an ever larger role as a national insurance company. In the past year, the Federal Government collected $1.2 trillion – the same amount as primary state and local government taxes – in pension and medical insurance receipts alone. (Graph link)

The two major political parties in this country have different ideological approaches.  Democrats prefer to have the bulk of tax collections come into a central authority like the Federal Government, where a number of central committees decide on the allocation of those funds.  Republicans favor a system where the majority of tax collections come into the states.  Decisions over the allocation of those tax funds should be more responsive to the voters in that state.
 
In the Democratic system representatives from each state in both the Congress and Senate must vie with each other for access to tax funds under an ever growing number of programs that the Federal Government oversees.  States are administrative and geographical branches of the Federal Government and have limited autonomy. In the House, this competition exists within a system of seniority so that junior members must compete for favors from senior members who control committee assignments and access to discretionary funds.

The Republican system recognizes state borders and autonomy to a greater degree that promotes competition among states for the hearts, minds and pocketbooks of businesses and individuals.  Within each state, elected members of both parties should compete with each other for tax funds.  Because each state must adhere to a balanced budget by law, spending has more constraints than the Democratic system.

The responsibilities and powers of the Federal Government are more constrained under the Republican system.  When Article 1, Section 8 of the Constitution gives Congress the power to provide for the “general Welfare of the United States,” Republican politicians and conservative justices read the clause literally, that this provision applies to the states, not the people in the states.

Democratic politicians and liberal justices interpret the clause as meaning that the Federal Government has a direct responsibility for the welfare of each citizen within each state and gives the Federal government greater oversight of state and local communities, which are more easily influenced by local economic interests and disciminations. These two competing interpretations were hotly debated at the drafting and ratification of the Constitution so it is likely that the argument may never be resolved as long as this country exists.

Again let’s come back to that pot of money that makes our cities and counties go.  In the current system we take that same amount and give it to the Federal Government, which spends most of it on older people.  This massive transfer of resources from younger generations to an older generation is likely to permanently hobble our economic growth. Under a broader scope of social insurance programs, the people in European nations have reluctantly accepted the tradeoff of economic growth for increased sense of security in their personal lives – more health, job, educational and child rearing protections.  French people have become accustomed to a 10 – 12% unemployment rate.  In the U.S. such a high rate provokes political upheaval.

Do Americans want to follow the European model?  Half of the citizens of this country say yes, half say no.  What we do know from the European and Japanese models is that, as social insurance programs get larger, the transfer of money from the productive element of society to the less productive segment of society hampers growth.  This in turn makes it more difficult to fund those  insurance programs. There is a tried and true maxim that applies here – what can’t last forever, won’t.

Older Americans should understand that there is no social contract other than the informal contract of the ballot box.  Each generation pays into “the system” and waits until it is their time to collect.  Each generation relies on earlier generations to honor the promise but, just in case, the older generations vote far more than younger generations because they want to insure that pension (Social Security) and health (Medicare) benefit laws are protected.

Insurance companies must keep assets in order to pay future claims.  The Federal Government is not an insurance company and keeps no assets to pay future benefits.  Instead, it collects taxes under the Social Security system and puts those funds in the general pot of money, leaving a little slip of paper in the Social Security fund that says “We owe you.”  Really, it is little more than this – an accounting entry. From that big pot of money, benefits are paid.  This is a cash based system called “Pay Go” or “Pay As You Go.”  The lack of an asset base for future benefits means that it is extremely difficult to convert the current system to another type.  Former President George Bush learned this harsh lesson ten years ago when his political talk of privatizing Social Security ran into the harsh realities of actually making the transition. Oops.  Bush dropped the idea.

This election season is another episode in a continuing series, a battle between the forces who want the Federal Government to take an ever greater role in our individual lives, and those who want to roll back national control in favor of state, local and private solutions.  The election will take place shortly before the debut of the next Star Wars movie.  Some Republican voters see the Democratic vision of the political system as the Empire of rigid Federal oversight and conformity, where everyone must come under the authority of a central command.  Some Democratic voters may see themselves as part of the Rebel Alliance, fighters for the vision of the Old Republic, a constitutional democracy of worlds that is similar to the European Union, and, like the EU, was bogged down in bureaucracy.

On November 8th, 130 million people will unsheath their political swords and continue the battle. (Presidential election stats http://www.presidency.ucsb.edu/data/turnout.php).  Starting December 15th, more than 80 million people will fire up their light sabres at the coming Start Wars movie. (Star Wars box office stats).  En garde!