As usual, Max Keiser very succinctly (and almost nonchalantly) pierces through the mumbo jumbo and hopium to the very essence of the crisis facing not only the U.S., but also the world (quote below starts at approximately 12:04 in the video above):
“It’s a battle between assets and wages. And wages are being sacrificed to pump up asset bubbles. Just like a game of musical chairs, when the bubble pops, a few people have a chair, they make money. They’re the new winners, whether it’s Facebook or the Google guys…and then there are millions of people who are castigated into permanent poverty as a result of that. They could very simply do the exact same thing, but for wage earners—and they would have a more equitable society. But they’re rolling the dice, that society won’t rise up and have them all burned at the stake. And so far they’re winning.”
Quite well said. Keiser has also suggested tying the minimum wage to the money supply, since that is the only defense the wage-earner (i.e., the vast majority of people in the world) has against the inflation created by the QE, ZIRP, and bailouts given to the asset-holders (i.e., the very small minority of people in the world).
But wage-earners have been brainwashed that they should not only be happy with their pittance of a wage (when adjusted for inflation: “Median Family Income Is Lower Today Than In 1989“), but they should also be against any hike in the minimum wage because any increase in it only makes things cost more because the cost of it is passed on to the consumer.
Elizabeth Warren debunked that last point very effectively in this exchange from earlier this year:
WARREN: If we started in 1960 and we said that, as productivity goes up — that is, as workers are producing more — then the minium wage was going to go up the same. And if that were the case, the minimum wage today would be about $22 an hour. So my question, Mr. Dube, if the minimum wage is $7.25 an hour, what happened to the other $14.75? It sure didn’t go to the worker…
WARREN: During my Senate campaign, I ate a number 11 at McDonald’s many, many times a week. I know the price on that. $7.19. According to the data on the analysis of what would happen if we raised the minimum wage to $10.10 over three years, the price increase on that item would be about four cents. So instead of being $7.19 it would be $7.23. Are you telling me that’s unsustainable?
BUSINESS OWNER DAVID RUTIGLIANO: Senator Warren, not all restaurants are created equal. I’m in a full service restaurant business. McDonalds has efficiencies and they operate completely differently than I do. I have many jobs, many jobs that pay well above minimum wage. We have a retirement plan. We offer health insurance to our salaried employees. So my business is a little different. I can’t raise a four cent price. I mean I don’t have, I don’t operate like a fast food restaurant. I would hope you appreciate the distinction.
WARREN: I do appreciate the distinction and I’m not going to be in the business of being a McDonald’s representatives but they would talk about having some higher paid jobs and some opportunities for management and advancement as well. But I get your point, maybe it’s only four cents on $7.19. But if your entrees are $14.40 we’ll see how fast I can do the math — are you telling me you can’t raise your prices by eight cents?
RUTIGLIANO: You know, typically, when costs rise we don’t actually raise it just four cents, we might actually go a little higher. It has an inflationary effect on the economy, so, you may actually be taking away the money you just gave that employee, through the minimum wage increase on raised prices throughout the economy…
WARREN: I have to say, you’ve now switched your argument from what it was going to do to your business to what it’s going to do to the economy, and I think Dr. Dube, you’ve looked at the inflationary effects of increasing the minimum wage, can you just give us a quick summary on this data?
DR. DUBE: I think it is uncontroversial amongst economists that a minimum wage increase of this sort would not have a noticeable impact on the overall price level, because just the math doesn’t add up, the number of people aren’t getting the raises, there’s not enough for it to show up in some kind of a wage/price spiral, so the effects on the overall price level? Very small. (emphasis from Crooks and Liars, where it is worth watching the video of this exchange)
Further, what one never hears argued is the natural converse of the “minimum wage causes inflation” trope. That is, no one ever suggests that if there was no minimum wage, then prices would go down. And that, of course, is because prices would not go down if there were no minimum wage because minimum wage is not even close to being the biggest driving factor behind inflation. But that’s a post for another day…