The Same Lie Since 1932

The mean hourly wage in the United States, in 2019, is $24.34.

The daily food intake recommended for the mean weight male... 198lbs... is appx 2180 calories.

100 years ago, in 1919, the mean hourly wage, was appx. $0.56 per hour... appx 1/44th todays wage... which works out to about $0.0093 per minute... less than a penny.

2019s $24.34 average wage works out to about $0.41 a minute.

In 1919, that daily recommended calorie count in say... diner cheeseburgers... would have cost you about $0.45 (not including tax)... or about 49 minutes of work. Honestly... not that bad. Better than one might expect really.

Today, in 2019, the same calorie count in say... Mcdonalds triple cheeseburgers... is about $12 (not including tax), or about 29 minutes...

... Less than half an hour, and only about 60% of the labor it would have taken in 1919.

... But, perhaps cheeseburgers are an anomaly... after all, food prices have actually fallen in relation to income significantly more than say... housing, or energy costs... right?

Well... general consumer pricing adjustment for purchasing power parity...

$1 u.s. dollar of purchasing power in 1919, is equivalent to approximately $15.26 in purchasing power in 2019.

So... parity in wages with 1919 would be $8.55... but the ACTUAL mean wage in 2019 is $24.34... that's 2.85 times as much... Rather a LOT better.

... And yet, somehow,  the left are always claiming that the average american is worse off than they used to be... that only the rich are doing better... that  "the rich get richer and the poor get poorer"... which is utter an complete crap.

... Ok, well... that's 100 years ago... what about say... 50 years ago in 1969?

That's a particularly good example, because it's when the left claims that the poor and middle class started losing ground the fastest. They love calculating the minimum wage from 1968 for example, because 1968 and 1969 are the highest the minimum wage has ever been in terms of purchasing power, and it is the last year of the great post WW2 wealth creation and expansion boom.... and just before the mass inflation of the 70s hit (it actually started in late '68, but didn't really ramp up dramatically until 1971... then went into over drive with the '73 oil crisis).

Ok... mean wage 50 years ago, in 1969... $3.04 usd

$1.00 usd in 1969 purchasing power, is appx. $7.07 in 2019 purchasing power. That would make parity wage $23.26... but the actual wage is $24.34... making 2019s wage about a 5% increase in actual purchasing power.

Not a lot... but remember, 1969 was just off the peak year in the biggest boom in history.

Oh and just for fun... let's compare minimum wage purchasing power, from the literal highest point of purchasing power the minimum wage has ever been... at $1.30 in 1969. 

Parity minimum wage in 2019 would be $9.12... a fairly significant increase over the current minimum wage of $7.25...  

...Except that 1968 and 1968 were massive historical anomalies... Congress had actually just passed a 30% increase in the minimum wage. Only two years before, the minimum wage has been $1.00... which, funny enough, when parity adjusted, is just a few cents less than the minimum wage in 2019. 

If we look at the minimum wage when it was first passed at $0.25 in 1938, the parity minimum wage in 2019 would be $4.49... Just 62% of the actual minimum wage. 

Oh and the mean hourly wage in 1938 was appx. $0.84 an hour... about 3.35 times the minimum. Lessee... $7.25 time 3.35 is $24.29... amazing... just 5 cents less than todays mean hourly wage... Funny how that works out.

... So much for the myth that the minimum wage is supposed to be a living wage. It wasn't under FDR, it never has been, and it was never intended to be...

Ok... well, how about 40 years ago, in 1979?

Mean U.S. wage 40 years ago, in 1979... $5.55 usd

$1.00 usd in 1979 purchasing power, is appx. $3.69 in 2019 purchasing power. That would make parity wage $20.48... but again, the actual wage is $24.34... making 2019s wage an almost 16%  increase in actual purchasing power.

... Ok... 30 years ago?

Mean U.S. wage 30 years ago, in 1989... $9.73 usd

$1.00 usd in 1989 purchasing power, is appx. $2.08 in 2019 purchasing power. That would make parity wage $20.23... but again, the actual wage is $24.34... making 2019s wage an almost 17%  increase in actual purchasing power.

... One more shot at being even slightly true... 20 years ago... 1999.

Mean U.S. wage 20 years ago, in 1999... $14.74 usd

$1.00 usd in 1989 purchasing power, is appx. $1.53 in 2019 purchasing power. That would make parity wage $22.55... but one last time, the actual wage is $24.34... making 2019s wage about an 8%  increase in actual purchasing power.

So... the left, as is almost always the case, has lied entirely and completely about the economic situation of the American poor and middle class.

Yes, for a few years, starting 50 years ago, purchasing power did fall... from the end of the biggest wealth creation boom in history, through the worst peacetime inflation in U.S. history for 16 years from 1968 to 1984... It fell almost 12% over those years in fact, and stayed mostly flat another 10 years or so, until between 1992 and 1994.

However, from 1994 or thereabouts to today, it has been steadily increasing again (even including the 2009-2012 recession. Wages and purchasing power didn't fall at all in that period... though employment did fall, average wages still increased).

ALL Americans.. poor, middle class, and rich... are better off than they were 100 years ago, better off than 50 years ago, and 40 years ago, and 30 year ago, and 20 years ago... and even 10 years ago... 

... Of course, democrats can't actually win, if they don't convince you that the poor and middle class are worse off, and the rich are gaining at everyone else expense...

It's been the same lie they've been telling since 1932... and probably will be telling for as long as the democratic party continues to exist.

A valuable lesson in how not to govern a state

So... if you weren't paying attention... and most haven't been and have little reason to... the state of Connecticut is in serious trouble. They're effectively not just bankrupt, they're in the hole so deep they can't even see the top.

20 years ago, they were in great shape, and looking to get better...

So, what the hell happened?

Basically, Connecticut has been a textbook case for "how to kill your economy with government".

...This is gonna be a long one, because I'm not kidding, it really is a by the numbers lesson of exactly what not to do...

CT is in trouble explicitly because of its government.

This is one that even the liberals can't deny... and if you've read much from regional media, even they are generally placing the blame, at least close to where it belongs.

This all started about 20 years ago...

After some rough years in the 70s and 80s while their legacy manufacturing and fishing industires dramadically contracted, and 10 years where their core insurance and financial aervices industries had plateaued; Connecticut went through a huge economic boom in  the mid 90s (as with most of the country, but as a percentage more than anywhere other than MA, CA and TX)

This was primarily due to massive expansion in the financial services sector; as well as the overall technology boom and .com bubble, and smaller booms... or at least swells... in biotechnology and pharmaceuticals, certain elements of the communications, defense, aviation, aerospace, and light manufacturing sectors; and a HUGE boom in the high end commercial real estate and development sectors; all of which CT has traditionally been strong in.

In response to this, the state and local governments very rapidly spent...not just their increased revenue... but decades woth of future revenue as well.

They made revenue and growth assumptions, based on continued growth at that explosive boom rate; creating legislation and programs that depended it... and worse, taking on HUGE amounts of debt, with the assumption that it would be easily paid back with future revenue growth.

At the same time, they made regulations that made it much more difficult and expensive to do business in the state... Because, after all, business was booming, and they could afford it, right?

Well, actually, no.

The state and local governments had increased the burdens of doing business so much, that they made it  nearly impossible for those businesses not in a boom.

They made it particularly difficult for small and medium businesses not primarily driven by discretionary consumer spending; which form the long term economic base of a healthy local and regional economy (about 30% of all private sector employment in this country is from businesses of this type).

Local property taxes and assessments shot up precipitously. Insurance rates skyrocketed. Business to business overheads went up without increased productivity. Legal ahllnd compliance costs went way up. Various individual and business taxes and fees on both the local and state level went up far faster than inflation, or income and revenue growth.

Commercial property costs and new commedical property development went way up in "desireable" areas (even though there wasn't a big increase in demand in most areas). Worse, even though occupancy rates remained stagnant or even crashed, costs still increased significantly in most "less desireable" areas as well.

Similarly,  housing costs and new development shot up in "desireable" areas, even though there wasnt very much overall population growth (CT lost population over the decade), and costs in "less desireable" areas still rose even though occupancy rates fell.

A lot of small businesses, struggling business, and less established businesses just failed. Their costs just became too high for marginal operations to remain viable. At the same time, a number of large legacy business that had been barely viable, became non-viable and finally folded (or in a lot of cases were acquired for short money, then operations were relocated to lower cost markets, contributing both to unemployment and population los).

It became difficult even for established and successful businesses outside of the boom to grow, and very difficult for new businesses outside the boom to get established. The barriers to entry and costs to grow, we're just too high.

In fact,  as early as 1998, it had been noted that in some areas, costs were too high, even in comparison to neighboring or nearby Massachusetts, New York, and New Jersey (with few attractions and advantages to offset those burdens).

The government forgot something critical... They forgot that things change, and people and businesses change and move, in response to changing conditions and incentives.

They forgot basic economics.

Businesses need incentives to stay, that are greater than their incentives to leave. They need incentives to start or grow in one place, that are greater than the incentives in another place. Otherwise they're going to go elsewhere. Simple as that.

When your state is more expensive and difficult to do business in than New York, Massachusetts, New Jersey, and California (every state other than Hawaii in fact)... You're doing something very very wrong.

So, businesses started leaving... or were started elsewhere... or expanded in other states.

The big employers and established big revenue companies were able to leverage their size, power, and government relationships, to get some relief from certain burdens (particularly in the defense, financial, and pharmaceutical industries)... and in general were better able to absorb them... So, for as long as the booms lasted, they were happy to keep doing business. But they weren't actually making sustainable long term business growth and investment in Connecticut.

This of course made the government keep thinking that everything was good, and they kept running up their tab, and tightening the screws on businesses and citizens.

...and then the boom slowed

New and small business development essentially halted. Larger established businesses did not bring more business into Connecticut or grow their operations in the state, and started contracting and relocating operations elsewhere. Businesses outside the state chose not to bring new operations there...

...Unless of course they could wangle a legislative favor and get some incentives and relief...

Which of course the government were all too happy to continue doing... After all, it gave them more power, and more money, and more secure political positions.

And from the government's point of view, all was still rosy...

But those companies still made preparations to move their operations out of state the second anything changed... and they expanded operations anywhere other than CT.

... and then the boom ended.

It actually ended right around October of 2000 or so... though most didnt notice it until mid to late 2001, when both companies and governments, came to the inescapable conclusion that actual realized revenues as of the end of q1 and q2 (as opposed to booked revenues, which may be commonly booked from 30 to 180 days before they begin to be realized... or longer... or in many cases never) were down well below their estimates for 2000, and were tracking lower for the rest of 2001 and into 2002.

... and then September 11th happened...

At the same time, the fed cut interest rates to effectively nothing (anything lower than inflation is actually effectively lower than nothing... which they've mostly been at since then by the way, minus a couple years at "slightly more than nothing" from the end of 2004 to the beginning of 2008. It's been at an actual 0% since 2008), and the property boom that had started in 1996-7 with the .com bubbles halo "wealth effect", suddenly kicked into ludicrous speed.

Between 9/11 and the property bubble... somehow people didn't notice that we were actually in a recession in every sector not dependent on the "wealth effect" or debt driven consumer spending.

After the .com bust and 9/11, most American and international big businesses (outside of certain elements of the financial, mineral extraction, energy, transportation, housing, consumer goods, luxury goods and retail sectors, all of which were riding the bubble), changed their operational patterns dramatically to cut costs and reduce risk (as had happened in the early 70s and mid to late 80s in response to major changes in the marketplace). 

At the same time, small business growth slowed dramatically across much of the country, in response to shifting geographic patterns of development, increased risks, and higher costs of doing business. Small businesses that were not driven by the "wealth effect", were largely stagnant. The startup market collapsed, and outside of a few momentarily hot sectors and minibubbles, became nearly dormant in comparison to what it had been between 1989 and 2000.

Venture capital went into a strange mode where capital pools were building, and risk aversion and command and control mindset dominated... But at the same time, in an effort to drive market beating returns, crazy amounts of money would be pumped into anything analysts thought would be a market maker or primary sector driver, without regard for underlying value... Chasing issues up high and fast, and then dumping them hard once profit taking hit (essentially a legal form of pump and dump).

Everyone's risk tolerance went WAY down, except for those in active bubbles.

Most big businesses started aggressively reducing their exposures to risk, and slashing their legacy and high cost operations, especially in high cost markets like the northeast. High cost low margin operations and businesses were divested or shut down. Big companies got bigger, seeking to leverage scale and reduce risk by acquiring viable but marginal operstions, and small but growing operstions. New development was directed to lower cost, lower risk markets like Texas, Florida, south Dakota, and to a lesser extent Georgia, North Carolina, and Virginia.

Meanwhile,  collectively, Americans were going insane, and running up a massive property and debt bubble,  peaking at the end of 2006 and just kinda floating there til 2009, before popping completely, in the banking bust.

... And during this time, the CT government spent even MORE and took on even more debt, and turned the screws even tighter on businesses and citizens...

...all in expectation that the "prosperity" of the property and consumer spending bubble would result in significantly increased revenues.

It didn't.

In fact, the insurance and other financial services industries that had long been the core of Connecticuts revenue base were damn near destroyed between 2005 and 2009.

Discretionary consumer spending driven businesses had massively over expanded in the bubble, and suddenly began to contract, or fail, wholesale.

Most of the legacy heavy industry of Connecticut manufacturing cities was killed off in the previous 20 years, except those dependent on government contracts.

The fishing business had long been non-viable because of poor catch rates, high costs, and crippling regulation.

And of course, the property development business completely collapsed.

Between 1997-9 or so and 2009, most viable medium and large businesses (outside of a boom industry) that could leave... did.

Well... unless they got a special incentive from the government to stay (Pfizer... you wouldn't even believe....)

Basically, the entire states primary industries and major private sector employers; failed, contracted dramatically, fled the state, or got special considerations which made them revenue neutral (or even net negative due to state spending or subsidy comittments).

Between this and the collapse of consumer spending, small business failures and contraction, high unemployment, and all of the other ripple effects; Connecticuts economy has contracted by between 11% and 15% overall from its peak in 2006-2008 (depending on how you calculate it and  whose numbers you believe).

That's the worst in the country by a large margin by the way.

The picture is much worse when you look exclusively at the private sector economy, which has contracted over 20% (it may be more than 25% or even more depending on whose estimates you believe)

Excluding those companies in the financial sector and other large businesses whose revenues are primarily realized out of state, and those with negotiated tax breaks... Who knows...

The states taxable revenue base has certainly fallen dramatically, by any measure.

... but the government kept spending as if the state were growing, while massively increasing state debt year over year. In fact, state employment and state expenditures INCREASED EVERY YEAR since 2006.

After 2009, any sane government would have slashed the burden and expense of doing business in their state in order to promote growth and attract new business. That's exactly what most of the states I noted above did (all but Virginia, which made it harder, but boomed on increased government spending).

After 2009, any sane government would have looked at their situation and said "hey, those big expensive projects and new spending that we'd planned on? Yeah, we have to put that on hold".

Again, that's what most states did, outside of the "stimulus money".

Not Connecticut.

From 2008-2010, Connecticut lost 120,000 jobs... about 8% of total jobs in the state. During those same two years, government sector employment (outside of indian gaming industry employment, which is counted as government employment) ACTUALLY INCREASED BY 9%

In the face of total collapses in private sector employment and revenues, and an already overwhelming debt burden, Connecticut actually INCREASED spending, and acquired MORE debt... Counting on state and federal government spending to "stimulate the economy" and Kickstart growth.

It didnt.

Then... and this is my favorite bit....

....when some folks both at the city and state levels, finally woke up and tried to restore some rationality and sanity to the situation... cut spending, layoff non essential staff, cancel new programs, reduce scheduled spending increases, put pending projects on hold etc...

THE GOVERNMENT SUED ITSELF, IN ORDER TO FORCE ITSELF TO KEEP SPENDING MORE MONEY THEY DIDN'T HAVE.

That's not a joke... look it up... and it's not just once either... the absurdity of it would be hilarious, if it weren't tragic.

Now they have the worst debt to revenue ratio in the country... and it's not getting better anytime soon.

Regardless of what Connecticuts government officially says (they concluded they had 0.6% net economic growth in 2014), they are facing what everyone honestly examining the situation knows to be net annual outflow of private sector jobs, income, economic output, and population; with resulting decreasing revenue, and increasing debt load. They're in a coffin corner.

In the next two years, large job losses at GE, Pfizer, General Dynamics, and Sikorsky, are going to stagger the states economy even further

... and rather than stop the bleeding and make it attractive to stay in or come to CT, they have doubled down and continued making it worse.

Rather than cut their regulatory and tax burden, making an overall lower cost to do business for ALL businesses, they are desperately trying to o woo specific large employers to come to the state, with tax and regulatory breaks.

The employers weren't biting, because CT did that before and then screwed those companies 4 to 12 years later.... And besides, there's really no advantage to doing so.

Even if they offer a company 100% corporate income tax free operations, and free land to build their facilities (I did mentione Pfizer earlier didnt I?); CT can't give employers the advantages they get in Texas or Florida:

A government they know actually is pro business, and a generally low cost of doing business; lower total tax burden, lower regulatory burden, lower property costs, lower development cost, lower insurance and benefit costs, lower legal costs and risks; and most significantly, a much easier time (and therefore much lower cost) attracting and retaining quality staff at substantially lower cost per employee (because in addition to lower overheadsm these states have a much lower cost of living, much better weather, and much less constrained lifestyles, providing a considerably higher effective standard of living for a given salary).

Of course,  Connecticuts government somehow never got the lesson, that if you took the same breaks from the ridiculous tax and regulatory burden you were going to give to a company promising to bring 5000 jobs into the state.... and you gave them  to EVERY company in the state already... you wouldn't have to beg big companies to come in, and then have to pander to fhem for decades... Small and medium businesses would flourish again, while costs to everyone for everything in the state would go down, and the economy would not just recover, but soar.

... because they just don't think that way...

It's not command and control, it's not collective, it's not a single big thing they can take credit for, it's not one guy they can cut a deal with, or one guy they can control...

... it doesn't fit the narrative...

But... It actually works...

The even BIGGER Minimum Wage Lie

The narrative that the left is attempting to promote, is that the minimum wage, should be a lower middle class living wage.

They have further determined this "living wage" to be about $15 an hour.

Thats about $30,000 a year based on the standard 2000 hour work year (thats 5 full time work days a week, minus 10 unpaid days for national holidays. Most minimum wage workers do not receive paid holidays or paid vacation).

It's also a $15,500 a year RAISE for those workers, more than doubling their pay (currently $14,500 by the 2,000 hour standard).

...If you think someone picking up  litter in parks, or working a cash register at McDonalds, on their very first day of their very first job, is worth paying $30,000 a year...

There is something wrong with you.

...Or your just don't understand how money, or wages work (which, frankly, is often the case).

Normal wages are not just arbitrarily "set" by some big daddy in the sky, or by evil greedy CEOs looking to "exploit the workers". They are based on the value a worker can provide to an organization, and the cost to the employer of replacing that worker.

Normal wages are not arbitrary, they are not fixed, and they are VOLUNTARY. If you dont want to take what an employer offers, then you can find a different job that you want more and are willing to take less money for, or you can find a job that pays more.

If you can't find a job that pays more, then your skills and experience are not worth more, or you are not selling yourself properly. Otherwise, you WOULD be able to find a job that pays more.

On the other hand, if an employer doesn't pay enough for a job, that people are willing to take what they are offering workers to do that job; that employer won't be able to fill that job. They will have to either make the job more attractive to workers, or increase the pay (or both).

It's basic market economics... Of course, the left don't believe in markets...

Here's the thing...

Really, I think this whole $15 an hour idea stems from the concept many seem to have internalized (whether or not they've put it into words, or consciously thought about it):

Having a "good" middle class life shouldn't be hard.

People shouldn't really have to do things like sell themselves well, or find a better job every year or two, or work harder, or deal with politics, or work overtime, or work more than one job; to make enough money for a "good life".

They see how competitive and harsh the world is, and the job market is, and they think it's bad and scary and stressful, and not everyone can compete. Even if they have the skills and experience some people are bad at interviewing or resume writing, and some people are too stressed by it, and some people are discriminated against, and theres just no demand for the skills and experience many people have, and its all changing all ttthe time...

...and dammit everyone deserves a "good life".

They think everyone who is not disabled, should be able to find a "good" job, that gives them a "good life", regardless of their skills and experience.

In fact, many of them even say you have a RIGHT to a good job, that pays enough to have a "good life".

They don't think you should HAVE to compete, or struggle, or be stressed, to have a "good life".

They just want people to be able to get a default job, for default pay, and have that be "enough", without worrying about negotiating, or getting raises, or competing for better jobs or more money, or losing their job and not being able to find one that pays as much.

Sure, if people want to compete for better jobs, or want to make more they can... but they feel that every job, no matter how unskilled, or how little value it provides to their employer, should pay enough to have a "good life", just for showing up and doing the work assigned, and that people shouldn't have to worry and compete, just to have a good life.

That everyone should be able to make enough money to live where they want, at least with a spouse or a roommate.

That everyone should be able to make enough money to raise kids, or to travel, or to live in new York York or LA, or to go to college...

So we can all be equal and free of "wage slavery", and pursue our real passion in the arts or something, I guess?

Same reason most of these same people think that college should be "free", and school loan debt should be forgiven... or just erased. Same reason most of these same people think health care should be "free" (or paid 100% by employers and the government, which to them, is the same thing).

They want people to be able to have a good life, and not worry about having their life screwed up, by losing their job, or getting sick, or not being able to find a new job.

They want people's lives to not be subject to the whims of the marketplace, or of economics.

How... Utopian.

This in fact, was the original promise of socialism, communism, marxism, maoism... and every other utopian ideology. That somehow, through proper application of government, we can be free of struggle and strife, and free of the need to toil, and free to pursue our dreams without worrying about those things.

Of course, this completely ignores basic economics... There is no such thing as "free", and unfortunately, no matter what laws the government passes, you just cannot ignore basic economics. Because on this planet, we live in a scarcity based economy (no matter what economic system "runs" it), and economics runs EVERYTHING.

In ignoring basic economics, It also completely ignores the fact that jobs don't exist to provide a living for workers.

Though actually, if you ask most leftists, that is actually what they believe jobs are for... or at least what they should be for.

Ask a union organizer why the factory exists, and he'll tell you it's to provide good high paying jobs for his union members first... and whether the employer makes any money or not isn't his problem. They're all greedy exploiters anyway.

But that's not how the world works.

Businesses dont exist to give people jobs. Jobs exist, for the purpose of doing the useful and productive work of an employer, in order to make money for that employer... Hopefully at a profit, or those jobs won't exist for very long.

No, the minimum wage is NOT a living wage, because it is not intended to be, nor should it.

It is meant to be the absolute minimum an unskilled and inexperienced worker will make, while they are learning skills and gaining experience, that will make them more valuable to employers.

... Which is exactly what almost all minimum wage workers do. Excluding tipped employees, over 80% of minimum wage workers earn at least 10% more than minimum wage within 2 years, and at least 30% more within 5 years.

Only 4.5% of the overall work force, and only 1.8% of the full time workforce between the age of 18 and 65, earn minimum wage. It is not, never was, and never should be a living wage.

Also, the common narrative that the minimum wage hasn't kept pace with inflation is a lie.

Not just a misinterpretation or shading the truth, it's a flat out propagandist lie.

http://www.thelibertypapers.org/2015/01/03/minimum-wage-lie/

They lie, by choosing the starting point of their timeline at the highest relative value the minimum wage has ever been, 1968... Which, incidentally, was immediately followed by the highest annual peacetime inflation the U.S. has ever seen, for over 15 years.

The minimum wage has kept exact pace with inflation for the last 30 years (since 1985, to the penny), and has more than kept pace, since it's inception in 1938. It was only from 1969 to 1984, when inflation in the U.S. went as high as double digit numbers annually, that it did not.

In fact, it's not only more than kept pace with inflation since it's inception, and has a much higher relative purchasing power... It has actually almost  DOUBLED relative to inflation, since its inception in1938.

The 1968 number was unusually and artificially high. How high? It was a near doubling from just a few years before, at $1.60 an hour (a 20% increase from 1966, which was itself a 40% increase from 1962, and overall it was a 100% increase over 1956... Even though the U.S. had less than 3% annual inflation in those years. The 1956 minimum wage in 1968 dollars was $1.02. In 2015 dollars, it's $6.96... a bit less than minimum wage today).

But even in 1968, the "$15 living wage" people's baseline year, the minimum wage was STILL not intended to be a living wage. $1.60 an hour in 1968, meant about $3,200 a 2000 hour work year, or about $10.88 and $22,000 a year in 2015 dollars.

That year, the median wage for ALL workers was $6,580 or $3.30 an hour, a bit over DOUBLE the minimum wage. The household income was appx. $7,800. However, the median wage for full time employed males, was actually $7,600 (because women were a small percentage of the full time work force, made far less then men, and rarely worked if their husbands worked a good full time job).

In 2015 dollars, that would be about $45,000 a year for all full time workers, $51,000 for full time employed men,  and the household income would be about $53,000.

Which by the way, is not very different from what they actually are now. $44,000 for all full time workers, $48,000 for full time men, and household income is about $54,000

Remember, these are medians, not averages. Also note, all were above 1968 levels before October of 2008, but the recession has taken about $2k-4k out of personal income and $4-6k out of household income ("official estimates" are as low as $1k personal and $2k household, but no-one actually believes that. Also, they don't account for inflation... official estimate, or actual... Adjusting for inflation using official numbers... which are well known to be very low... Some estimate as much as $6 personal and $9k household accounting for wage freezes, reduced profit sharing and bonuses, and lack of job growth and promotions; as middle income males were hit worst by unemployment and wage cuts, and have recovered least).

So, by that logic, with the artificially high minimum wage of 1968 being approximately half the prevailing median full time wage; to "keep up" with 1968, the 2015 minimum wage should be...

... Wait for it...

$11 an hour.

So, to match what the highest minimum wage in all of American history, the glory day, their chosen baseline, wouldn't be $15, it would be $11.

Of course, as As I have now explained several times, the 1968 wage was a sudden and artificially high raise, double the 1956 wage, and in constant dollar terms, four times the minimum wage at its inception in 1938.

To keep up with 1938, would be? About $4.20

To keep up with 1956, the year before the minimum wage started jumping every couple years much faster than inflation? About $6.95

At $7.25, we're at about the same in constant dollars, as 1962.

..... So the inflation argument is a flat lie, and the $15 argument is not based in economic reality.

But, just to put the nail in that coffin for good... Just in case somehow the $15 minimum wage sounds like anything close to a reasonable or good idea...

Let's do some comparative analysis:

U.S. military E1 (private/airman basic/seaman recruit) makes about $18,500 a year, or about $9.30 an hour base pay (based on the same 2000 work year... This of course is far less than a duty year even in peacetime, which is about 2700 hours, working out to $6.88 an hour).

Once that soldier, marine, airman, or seaman, are trained and ready to perform the basic duties of their basic occupational field ( E2, at 6 months or so), they get a raise to about $20,800, or about $10.40 on 2000 hours, or $7.70 on 2700 hours.

When they reach fully trained and qualified in the basics of their specialty ( E3, usually around 12 to 18 months or so), they get another raise, to about $24,400, or about $12.25 an hour (or $9 an hour).

Once they are fully trained in the details of their specialty, and have a couple years of experience in their field (E4, usually 24  months or so), and are directing the efforts of 2 to 5 other junior enlisted, they get a raise up to about $25,500, or about $12.75 an hour ( or about $9.45 an hour).

After 3 to 5 years, an E5 (sergeant/staff sergeant/petty officer 2nd class) whose job is to be a well trained and expert specialist in an particular area, and/or to supervise and direct the efforts of 5 to 10 other enlisted personnel...

...and here's the kicker...

... makes a base pay of $30,800, or a bit over $15 an hour on the 2000 hour scale, or about $11.47 an hour on a peacetime 2700 hour duty year.

Oh and by the way, its likely that sergeants immediate "supervisor", in HR terms, would be a 2nd lieutenant. A position that requires a bachelor's degree, and only pays $35,000 a year (with MUCH higher expenses than enlisted men, and they don't get a raise for 18-24 months)

So... According to this theory, minimum wage...

...for a 15 year old high school kid working at the mall food court lets say..

...Should be... about the same as base pay for a serious, skilled professional, with five years experience in their field, and at least two years experience supervising as many as 10 subordinates... With the added bonus of being taken away from their families for months at a time and BEING SHOT AT.

If you can't see just how ridiculous that notion is...

But hell... let's take the comparisons further...

The average starting base pay for cops in the U.S. (and most departments require degrees and certifications now) is?

$26,600 a year, or about $13.30 an hour (before overtime and detail of course)

How about teachers?

$36,000 national average (though they vary significantly by state, from $27k to $51k) or $18 an hour based on the 2000 hour year (which is how teachers are paid, even though they work very different hours... Usually about 1600 a year, including after school and work at home time).

Thats with a degree, and a teaching cert (which in some states can take two more years and thousands more dollars over and above the degree). Before they get certified, they average $24,000

Accountants?

$34,000 with a degree, but no experience, masters or CPA, $48,000 with a CPA but minimal experience.

Auto Mechanics?

$27,000 with no certifications, but at least 2 years experience and their own tools. $31,000 with a certification, tools, and experience.

Computer systems and networks operator or technician?

$29,000 with a degree and at least two years of work experience, preferably in tech support. $22-24k with no degree, a few of the right certs, a demonstrated skill and aptitude, and SOME experience.

How about carpenters?

Apprentices start at between $10 and $15 (with tools), journeymen start at $15 to $22 depending on specialty (framing, finish, roofer, cabinet maker etc..), region, seasonal demand, and unions.

Plumbers?

Plumbers helpers and apprentices start at from $11 to $14 an hour. Journeymen $18 to $28.

Electricians

Apprentices start between $9 and $15. Journeymen, from $16 to $24.

...Hmmm... Thats... Umm...

So... yeah... Apparently a grocery stocker, on his first day at work... should make more to start than a cop, a teacher, a mechanic, a computer and network tech, a carpenter, a plumber, and an electrician?

Yeah... NO.

But wait they say... "Now that the minimum wage is $15, then everyone else will have to get paid more proportionally, and everyone will be better off".

Umm... first, thats not how that works. Ever heard of an "inflationary spiral"? Probably not, since if they had, they wouldn't be suggesting the $15 minimum anyway... So look it up.

Second... hey... wait... that means this isn't actually about the minimum wage at all, and its not abput "helping the poor" now is it?

If it were actually about helping the poor, then they'd be pushing for $11 or $12. First, they would be MUCH more likely to get $11 or $12 than $15.

$11 would be roughly half the median full time wage, at $22,000. This is roughly equivalent to the 1968 level (whereas, today's minimum wage is roughly equivalent to 1962).

Critically, $12 an hour would give a single minimum wage income earning family, with two adults and two kids a $24,000 income, enough to lift them out of poverty, while allowing a parent to care for the children. It would bring a dual income family $48k, which is close to the national median household income (which would be $13.50 an hour with two full time wage earners by the way).

... and of course, we don't even need to get into the fact that outside of wealthy urban areas, minimum wage employment would fall to somewhere around zero, if even an $11 national minimum passed...

No... It's not really about helping the poor.

As it happens... A huge number of union contracts, are index linked to the minimum wage, or to the mean or median wages (which would also be increased).  When them minimum wage goes up, so so do their union contract wages.

So are large numbers of government programs, and statistics... Including many poverty and welfare statistics.

And of course, if non-union labor is forced by law to be as expensive as union labor (and by the by, unions are usually exempt from wage regulations), then there's going to be less competition, less price pressure, and more jobs for union members.

So, all if a sudden it's not a "reasonable living wage" for less than 2 million people... It's a big raise for 15 million union workers, and and big budget increase for a whole bunch of government programs (whose administrators and staff are likely union members themselves. 50% of union workers are government workers)... and... what? They think that's actually going to happen?

Really? They think that's actually going to happen?

Or maybe they're hoping that by asking for $15, they can split they're difference, and get $11?

And hey... it's still a huge increase on their contracts right?

And they think that's going to happen?

Where's the money going to come from?

Hell, the money doesn't exist even to give just the less than 2% who actually make minimum wage, a raise to $11 (about 8 billion a year, mostly born by small businesses who already have an 80% failure rate, without increasing their labor costs by 50%). Never mind giving that same raise to 15 million more... Or... any raise to any more.

What are they going to do, mandate it by law, and just print some more money?

I direct you to the "inflationary spiral" concept I noted above.

The entire concept of $15 is a patently ridiculous and disingenuous scam.

UPDATE for 2021

In July 2021, the last month for which official inflation has been posted, the minimum wage if adjusted for inflation from its original inception in 1938, would be $4.84.

No, the minimum wage was never intended to be the entire household income for a family, or any kind of "living wage". It's intended to be a minimum subsistence wage for someone living within a family unit, such that all working age people are working, or an entry level wage for those entering the workforce for the first time, or for those unable to perform higher compensated work due to disability. 

It's not MEANT to be a primary income fully supporting a household. It was never meant to be. And it has far more than kept pace with inflation.

It has only not kept pace with inflation if you start your basis for comparison in 1968, when the minimum wage was boosted to a historic high rate, immediately before the US experienced 15 years of sustained high inflation. 

The minimum wage was increased that year to $1.60, a 60% increase over what it had been in 1960, and even then that would only be about $12.30 today, nowhere NEAR the $15.00 they're claiming should be the minimum wage. 

This is a deliberate distortion of the facts, through cherry picking. 

If we want to start with a more recent basis, 1985, the first year after the historically high inflation ended, the minimum wage was $3.35, the inflation adjusted minimum wage would be $8.44. 

If adjusted from the first increase after the inflation ended, in 1990 the minimum wage was increased to $3.80, which would be $7.82. That adjustment however only lasted one year and in 1991 it was adjusted again to $4.25, which would be $8.41.

Accordingly, if they wanted to be at least closer to honest, they'd be saying "the minimum wage is about a dollar and a quarter less than it should be to keep up with inflation since 1991", not "the minimum wage is less than half what it should be".

The Minimum Wage Lie

When “progressives” say “the minimum wage hasn’t kept up with inflation”, they're lying.

Not shading, the truth, exaggerating, or interpreting things differently… they are flat out lying.

… And what’s more, the ones who made up the lie in the first place, know they're lying (the rest mostly just parrot what they’ve been told).

What exactly would “keeping up with inflation” mean?

The minimum wage has been $7.25 an hour since 2009.

In 1938, when the federal minimum wage was established, it was $0.25 an hour. In constant dollars (adjusted for inflation) that’s $4.19 as of 2014.

So, not only has the minimum wage kept up with inflation, it’s nearly doubled it.

Ok.. well what about more recently?

Minimum wage 15 years ago in 2000: $5.15, or $7.06 in constant dollars

Minimum wage 20 years ago in 1995: $4.25, or $6.59 in constant dollars.

Minimum wage 25 years ago in 1990: $3.80, or $6.87 in constant dollars.

Minimum wage 30 years ago in 1985: $3.30, or $7.25 in constant dollars.

Funny… that’s exactly what it is today… How shocking.

So, for 30 years, the minimum wage has not only kept up with inflation, for most of that time it’s been ahead of it.

So, how are they lying?

The way “progressives” claim minimum wage hasn’t been “keeping up with inflation”, is by comparing today, with the highest level it has ever been; almost 50 years ago, in 1968, when the minimum wage went to $1.60 an hour ($10.86 in constant dollars).

This was a statistical anomaly.

There’s a long and loathsome tradition of lying with statistical anomalies.

At $1.60 an hour, the minimum wage in 1968 was a huge 20% spike from what it had been just 3 years before in ’65, more than 40% above what it had been in 1960, and nearly double what it had been 12 years before in 1956 when politicians started throwing minimum wage increases faster and bigger (again, all in constant dollar terms. The minimum wage at the beginning of 1956 was about $6.30 in constant dollars)

In constant dollar terms, the minimum wage today, is about the same as it was in 1962 (and as I showed above, 1985).

It just so happens that from 1948 to 1968 we had the single largest wealth expansion over 20 years, seen in the history of the nation (about 5-8% annual growth)… Which then crashed hard starting at the end of ’68.

From 1968 to 1984, the U.S. had 16 years of the worst inflation we ever saw, and the purchasing power of ALL wages fell significantly, as wages failed to come even close to keeping up with inflation (we saw 13.5% inflation in 1980 alone, which is about what we see every 4 years today).

It took until 1988 for real wages to climb back to their 1968 constant dollar level, because we were in a 20 year long inflationary recession, complicated by two oil shocks and a stock market crash (actually a couple, but ’87 was the biggest one since ’29).

However, the minimum wage was boosted significantly in that time period, far more than other wages rose, and stayed above the 1962 water mark until the end of that high inflationary period in 1984, declining slightly until 1992, then spiking and declining again until 1997 etc… etc…

By the by… household income in 1968? appx. $7,700, which is about the same as today in constant dollar terms… About $51,0000 (about 8% more than it was in 1967, at $47k). Which is almost exactly what it was in 1988 as well. Household income peaked in 1999 and 2007 at around $55,000, and troughed in 1975 at around $45,000

Of course, income was on a massive upswing from 1948 to 1968 (and in fact had been on a massive upswing overall since 1896 with the exception of 1929 through 1936). In 1941 household income was about $1500 ($24,000 constant), in 1948 $3,800 ($37,000 constant).

Like I said, it was the single greatest expansion in real income and wealth over a 20 year period, in American history.

1968 was a ridiculous historical anomaly… Not a baseline expectation.

So, From 1964 to 1984, the minimum wage was jacked artificially high (proportionally far above median wage levels), and “progressives” chose to cherry pick the absolute peak in 1968 from that part of the dataset, in order to sell the lie.

A living wage?

As to the minimum wage not being a living wage… No, of course its not. It never was, its not supposed to be, and it never should be.

The minimum wage is intended to be for part time, seasonal workers, entry level workers, and working students.

Only about 4% of all workers earn the minimum wage, and less than 2% of full time workers earn the minimum wage.

Minimum wage is what you pay people whose labor isn’t worth more than that. Otherwise everyone would make minimum wage. But since 98% of full time workers can get more than minimum wage, they do so.

What should the minimum wage be?

Zero.

Wait, won’t everyone become poor suddenly?

No, of course not. Literally 98% of full time workers already get more than minimum wage. If we abolished the minimum wage, most of them wouldn’t suddenly be paid nothing.

Wages should be whatever someone is willing to work for. If you’re willing to work for $1, and someone else isn’t, you get the job. On the other hand, if an employer is offering $10 and no-one is willing to take the job for that, they need to offer $11, or $12, or whatever minimum wage someone is willing to take.

If you don’t want to work for $7.25 an hour, don’t take the job. If nobody offers you more than that, too bad, but that’s all your labor is worth.

If you are willing to work for someone for $7.00, and they’re willing to pay you $7.00, what right does some “progressive” have to tell either of you, that you can’t work for that much?

No-one is “exploiting the workers”, if those workers took the jobs voluntarily, and show up for work voluntarily… If all you can find is a job for less than what you want to work for, you’re not being exploited, THAT’S ALL YOUR LABOR IS WORTH TO THOSE EMPLOYERS.

You may think your labor worth more, but things aren’t worth what you want them to be worth, they’re only worth what someone else is willing to pay for them.

But let’s be generous…

All that said, I don’t think we’ll be able to eliminate the minimum wage any time soon.

So, to those “progressives” who would say “let’s make the minimum wage keep up with inflation”, I agree wholeheartedly… Let’s make it $4.19.

Oh and if you don’t believe me on these numbers, they come from the department of labor, the department of commerce, and the census. If I’m lying to you, it’s with the governments own numbers… the same ones “progressives” are lying to you with. 

Cost is NOT Price, and Neither Cost, nor Price, are Value

Prices Provide a Misleading Measure of Dollar DevaluationForbes Magazine Online - Keith Weiner 

There’s not a human being alive who doesn't know the dollar is falling. Everyone over 25 has stories of what prices were like, way back when (and younger people have heard them). I remember when gasoline was 60 cents a gallon, and my mom remembers when it was 20 cents. 

Federal Reserve Chair Janet Yellen acknowledges the official objective to push the dollar down by 2 percent per year. This intention is behind the Fed’s ill-conceived loose money policy. 

It’s important to measure each drop. This is not just to keep a scorecard on the Fed, but because a change in the dollar skews historical comparisons and distorts business decisions, like giving increases to workers and pensioners....

Read the whole piece, and then come back...

The thesis statement of the piece is correct, in that prices provide a misleading indicator of currency valuation (and that our weak dollar policy is fundamentally wrong and destructive for that matter).

Unfortunately the author suggests that simply using a different price denomination and comparison is a less misleading indicator... In this, he's absolutely incorrect.

What you really want to compare is purchasing power parity (PPP) as measured by equivalent standard of living, expressed as a dollar cost in constant dollars normalized to average labor hour wage or compensation.

i.e. this item costs 5 minutes of average labor, this costs 8 hours, this costs 20 years; the cost to maintain this equivalent normalized standard of living across an aggregate population is 1940 hours of median labor wage etc... etc...

Note, this is NOT an expression of the fallacious labor theory of value, it is an explicit measure of purchasing power parity as actual cost, not currency denomination.

The critical function isn't price, and it isn't wage... it's cost, in this case expressed as a cost to value ratio as a normalized dollar (to make it easy to relate to wages and prices).

Cost is not price; it's a totalized measure of inputs including resources, time, and opportunity.

Windowpanes, Pencils, and Paperclips

Yesterday I wrote something on facebook that bears repeating here:

A comprehensive understanding of the pencil problem, combined with a thorough understanding of the broken window fallacy (and its inputs and corollaries... Hazlitt for example), makes a pretty good inoculant against socioeconomic lies and stupidities. 

Although they are implied by the conditions above, perhaps one should also specifically reference the scale and complexity problems, the perfect information fallacy, the perfect man fallacy, and the law of unintended consequences...

Some of my readers were unfamiliar with the pencil problem.

In comments, the novelist Ryk Spoor provided a decent explanation, which I'm going to paraphrase here, with my own edits and revisions (and the addition of the last bit, about planning and control):

No one man, can make a pencil, or at least a pencil which could be sold economically. 

In general terms, the pencil problem, is that even simplest and most common objects in our civilization generally require an immense number of people and inputs; to not merely build, but manufacture and sell in sufficient numbers, to make it worthwhile to build them cheaply (or at least so that they can be sold economically). 

The applies to everything from cars and computers, to pencils, to paperclips. 

If you wanted ONE paperclip, it would be an epic undertaking, from locating the appropriate ores, refining them, turning them into steel, figuring out how to draw the steel into the appropriate size of wire, and then finally producing the paperclip from that wire. The amount of effort involved in it would be months of your labor, assuming you had the talent and resources to do it at all. 

Instead, you go to a store and buy a 100ct box of them for a dollar; or even at minimum wage, a few minutes of your time for a hundred of the things. 

Multiply that by all the different types of goods and services in a modern civilized society, and it starts to become clear just how many people, in how many different specialties, with how much infrastructure, are needed to keep everything running. 

Given that scale and complexity, it should also be clear how impossible it would be to plan, control, and manage, anything approaching a national economy or infrastructure centrally; or in fact in any way other than as devolved and decentralized as possible.

The original statement of the problem in this way came from an essay by Milton Friedman (which was a restatement of an earlier essay from Leonard Read, which was a restatement of Hazlitt, which was a restatement of Bastiat and back down the chain).

A video of Friedman explaining the problem:

Welfare Towns and Equilibrium Traps

Alright, here's where I start to sound like a liberal to those who don't know any better...

Many people seem to believe, that the majority of "welfare recipients", and the recipients of the majority of "welfare dollars" in this country are minorities; particularly blacks and hispanics, and most particularly urban blacks and hispanics living in slums, ghettos, "the barrio", "the hood" etc...

In fact, nothing could be further from the truth.

It's certainly understandable why this misperception exists, because for the most part, it's the image the media, and politicians, present to us. It's just not true.

This is not to say that there aren't a large number of blacks and hispanics receiving some type of "welfare" in this county, or even that in many areas they do so in disproportionate numbers to their local populations. It just needs to be pointed out, that the common perception of "the welfare people" and "the welfare areas" as urban, and black is not only false, it's actually the complete opposite of the truth.

While this stereotype is generally true in large urban areas outside of the southwestern border states (California, Arizona, New mexico, and Texas, where the majority of urban recipients of state aid are hispanic); overall, even in heavily urbanized states, the very large majority (in most states without a "top 20" city it's generally somewhere between 60% and 80%) of those receiving AFDC, subsidized housing, food stamps, and medicaid (the most significant "welfare" programs); are white non-hispanic, and live in rural or semi-rural, suburban, or small metropolitan semi-urban areas.

It can be hard to generalize of course, because these things vary year to year, and state to state; and of course there are variations in how the states collect and report data; but some demographic factors are very clear, and any error or variability is damped out over time and in the aggregate, so a clear historical baseline and trend can be established.

Blacks and city dewellers simply are not the major "beneficiaries" of "welfare" programs in this coiuntry.

In fact, if you want to know what the "typical welfare town" looks like, it's not urban or black at all. It's very white, and very "middle america".

Likely It's a midwestern or southern, large town or small city; though these towns can be found in just about every state from Connecticut to California, and at most any size population, from a few thousand up to 200,000 or so.

Generally, it will have a very small "metropolitan area" around it, with a significant semi-rural or rural population around that, using the town for shopping and services.

It will generally have either a single major employer or majority single industry employment (often a legacy manufacturing industry, agribusiness, or a military base), along with the businesses that service and support those employed by that employer/industry.

Generally, that single company or industry will have closed down entirely, be subject to severe boom and bust cycles, or have just generally hit bad times and have significantly contracted.

Even if the towns revenue base was healthy and diversified, or their major employers are doing OK, often they are still in trouble because things have changed around them which have just made them economically stagnant or non-viable. In those cases, very often they were a thriving town or city before the interstate highway system expanded, and the rail network contracted; but now they are off the main transport routes, and they cost too much, or are too inconvenient, for infrastructure and logistics dependent employers, to economically operate.

Sometimes, they are farm towns, or often former farm towns. Over the past 80 years, our nations farm productivity has soared, but farm labor has crashed. Before the depression, at least 10% of our population directly farmed or ranched the land to produce foodstuffs or textiles. Now, it's less than 1%. That's great for the cost of food, and in general keeping inflation down... but what are all those people who used to be farmers doing now? Meanwhile, the populations of farming areas have grown at a rate similar to that of the rest of semi-rural america. Only there's no decent employment opportunities to support this growth.

Often, they are a distant satellite of a medium or large sized college town, state capital, military base town, or similar polity; close enough that the larger city pulls away business and talent, but not close enough for workers to economically commute, or for the smaller city to share in the largers suburban prosperity.

... and generally, outside of a few southeastern states, and the border states; these towns have largely majority white populations, with largely white populations of "welfare" recipients.

These are the places that the permanent or semi-permanent, intergenerational, white underclass in America live.

Those stuck in that underclass are most likely high school dropouts (about 50%), or GED recipients (about 25%. Only about 25% actually graduate high school). They have almost always become parents before the age of 24 (about 60%) if not actually while in high school (about 40% of those).

If we're just looking at women it's more like 80% have had children under the age of 24, 60% of those while still in high school, and 80% of them dropped out and did not later obtain a GD (at least not before the age of 24).

Even if they had any postsecondary education, or a trade outside the industry which has left the town non-viable (and Devry, other trade schools and for profit colleges and the like, recruit heavily in these populations), theres little or no nearby employment base for them to gain better employment.

They are likely (more than 50% overall, with more than 60% or males and more than 40% of females) to have multiple minor convictions for possession or intoxication, simple assault, driving with suspended license and insurance; or other relatively minor crimes, that while not felonies, do make getting better than low end employment difficult.

Very few are active habitual hard drug users, though intermittent methamphetamine and marijuana use are common (again, over 50%), and intermittent misuse of prescription drugs is becoming common.

Oh and while they may not generally be regular users, they are however statistically by far the most likely group of people to become serious abusers of methamphetamine.

Minor and intermittent alcohol abuse is common, but true alcoholism is relatively rare.

Most of them DO smoke though... in fact, they're the only group of white people in this country among whom more than 40% still smoke (about 40% of women and 60% of men).

They also tend to have poor diets, which in addition to making them more likely to be obese (more than 60%), when combined with their other risk factors is likely to make them far less healthy overall.This reduces both their testable intelligence scores (such as they are... rant for another time), and their expected lifespan by between 5% and 15%.

That's the white underclass in America today... and the "welfare" recipients alone make up something like 15-20% of the population, never mind the "working poor" who earn enough to be means tested out of "welfare" programs.

All told, white, black, hispanic, and everyone else, this institutionalized underclass is something like 25% to 35% of our population, depending how you count it, and whose numbers you believe. Most of them don't live in the inner cities, or the "hood"...

They live in... Jacksonville Illinois.... or Kearny Arizona... or Waycross Georgia.

... and whether they are recipients of state "aid" or not, they are in what is known as an equilibrium trap.

If things were any worse, people would just leave. Go to another place with better education and employment prospects.

If things were any better, people could get ahead, and the local economy could grow.

As it is, conditions are just in that "dead spot" on the curve, where they are both "good enough" or even "tolerable enough", that most people willing to live under them long term, AND where there there is little opportunity for anyone to significantly improve their life, without both a major expenditure of effort and resources, and significant risk of failure (actually, the near certainty of failure several times, before success is achieved).

The risk outweighs the potential reward for most, and most of the rest get beaten down by the multiple failures it generally takes before one can succeed.

Equilibrium traps are considered one of the worst steadystate socioeconomic problems for good reason.

That one particular issue: the fact that failure (even repeated failure) is a part of the process of success; is often the hardest obstacle to overcome.

 Even those who are motivated to improve their lot, and willing to put in the effort, and take the risk; generally have neither the resources to keep trying in the face of failure; nor the education, motivation, acculturation, and support network to help them do so... even if only to help them understand that failure is part of the process, and that it is possible to succeed.

So, you get an institutionalized underclass of the barely employed or unemployed, under-educated, disincentivized, and demoralized people, maybe just maybe just getting by, maybe just surviving...

Maybe not really living... maybe just... existing.

Of course, even when our government is not actually directly creating this equilibrium trap (and very often, they are), they encourage, support, and reinforce it. The government gives just enough "aid" to make things tolerable, but not enough to really make it better; not enough resources, or options, or freedom to let someone help themselves effectively; and they take EVERYTHING AWAY if you try to make it better for yourself.

It would be a case of perverse incentive, if it weren't for the fact that the system is clearly functioning as designerd. It's purpose is not to lift people up, or help them lift themselves... but to keep them under control.

YES... THIS... WE WANT THIS... LOTS AND LOTS OF THIS...

Bring Reading Rainbow Back for Every Child, Everywhere.

First thing... THIS is how you do a kickstarter.

This is the kind of thing that kickstarter can be great at, and do great things with; being done by people who understand their medium and their audience, and who design their campaign properly around it.

If this doesn't become one of the most overfunded kickstarters in history, I would be amazed.

I've been watching it for about 2 hours, and it's gone from $100k to over $500k in that time.

... And this is something I'm backing... even as little as I can afford right now. It's a good idea, and it's something I'd like to see done. I can't do much, but I pledged... It's the price of a cup of coffee or a little more than a gallon of gas. You should too if you can.

Anything we can do to increase the net level of education, intelligence, and reading in this country... on this planet... we should be doing. If it's a smart, well designed, well implemented way of doing so, even better.

Long term, I'd like to see what their fee schedule and sustainability model is, are they organizing long term as for profit, not for profit etc... but let's get this off the ground at the very least.

Now... for my more skeptical, and more conservative friends and readers... yes, liberals, education blah blah blah.

THIS IS A GOOD THING - IGNORE THE POLITICS

This is an essentially libertarian thing, using the power of private enterprise and initiative, and the power of market preference, to fund education.

WE WANT MORE OF THIS. LOTS MORE OF THIS.

There is one specific issue that I personally have a problem with... but I can get over it, because I understand the issue, and why it's presented as it is.

So for my fellow skeptics, and numbers geeks...

Ignore the claim that 25% of children don't learn to read in this country...

That is not an outright lie... it's also not the absolute truth. It's a matter of how we define literacy, and to what degree we count someone literate based on that definition.

That's a concept that takes more than 30 seconds, and more than one paragraph to explain... so it gets simplified here as "1 in 4 children don't learn to read".

It a political number, not a real number. A classic example of using definitions to make things scarier, to emphasize the problem.

Don't let that stop you from the core message here, or from supporting what looks to be an excellent idea.

Oh and, be sure to watch the video to the very end... priceless...

A bad analogy can be dangerous, a purity test, deadly

I've written at rather great length about the debt ceiling, and the political idiocy surrounding it, several times, most recently during the LAST "debt ceiling showdown and government shutdown traveling vaudeville show" here:

"Defunding, Debt Limits, Shutdowns, Oh My!"

"A not so brief explanation and history of U.S. federal government debt"

As noted when the "fix" was passed last time, it wasn't actually a "fix", it just pushed the next "crisis" a few months down the road.

Welcome to a few months down the road... 

The debt ceiling increase was voted up last week (this time for 12 months instead of 3), as everyone knew it would be, as it absolutely had to be (see the posts above for more on why that is true).

The Republican leadership used a procedural trick to make it seem like they were actually opposing it... entirely for PR purposes, and entirely because of these geniuses who either don't understand; or rather  those who do, but take advantage of the ignorance and misunderstand of those who don't.

This time, the Republicans... or at least most of them... were slightly less stupid than the last couple times. MOST republicans seem to have finally come to understand that playing chicken with the debt ceiling is NOT a winning strategy.

...Well, it isn't a winning strategy for Republicans, but when they do, it IS a GREAT strategy for Democrats.

Of course, that hasn't stopped much of the self identified "conservative" public from going absolutely insane, again... sadly, quite predictably.

It seems they believe, with absolutely unshakable conviction, that somehow, attacking a supermajority of the house and senate for not doing the impossible, will make things better. That somehow, doing what absolutely must be done to avoid disaster, is "betrayal".

Really, all they are doing is highlighting their complete lack of understanding of both politics, and the mechanics of how our government functions; oh and that they completely failed to learn anything from the last few times they pulled this crap.

In fact, many of them are PROUDLY ignorant of reality. They will loudly proclaim that "it's a matter of principle dammit", and that anyone who actually understand what reality is, and understands the necessity to work within the bounds of reality is just "caught up in the system".

... and of course, there are always politicians in a position to use this sentiment. They have been doing so quite aggressively this past week.

This REALLY does not help

The only Republicans (or conservatives, or even libertarians) this sort of idiocy helps, are the ones who have no chance of losing to a Democrat (it helps them raise money), and the ones mounting a challenge to a safe Republican seat from the right.

Republicans being attacked from the right may make some "conservatives" feel better, but it doesn't actually make anything better, because rhetoric isn't legislation. It certainly doesn't do anything good for the Republican legislative agenda.

In the long run, this stupidity (and yes, it is emotionally indulgent stupidity, and attention seeking) weakens congressional Republicans, and doesn't actually HELP achieve the desires of the "conservatives" who like the IDEA of "fighting at all costs", "never compromising" etc... etc... (most of whom aren't actually conservative even if they think they are. Mostly, they're populists, or reactionaries, or both)

Simply put, you can't legislate if you don't win elections. The elections that are going to be won by senators and house members who are "real conservatives", as defined by these geniuses, are already in Republican hands. Maybe 1 or 2 seats can be won from the right, but that's it.

The geniuses forget two major things:

1. You don't win majorities from the edges: The far right and the far left are only about 20% of the electorate on either side. 40% total. 60% of the electorate are somewhere "in the middle", and they will VOTE somewhere "in the middle".
2. All politics is local: Senators, and particularly house members, are elected on LOCAL issues, or at least on LOCAL attitudes, ideas, preferences etc... "Real conservative" ideas may be vote winners where YOU live, but not for where the majority of voters live. Yes, they're "better" and "right" and all that, but it doesn't matter because most people don't agree with them.

To gain vetoproof legislative majorities in both houses, which is the only way they can legislate now, Republicans need to take seats away from "centrist" democrats.

Let's leave aside the entire issue of "centrists" (whether they actually exist, what the definition is etc...) and just accept there is an electoral reality here.

Republicans who are "real conservatives" are not going to win seats in the urban northeast. A republican who believes in small government, personal and economic liberty, low taxes etc, but who is also socially moderate or liberal (pro choice, pro gay marriage for example), just might (in fact, they have).

If you say that someone who believes those things isn't really conservative, or isn't a Republican, or is a RINO... YOU are part of the problem.

Shutting down the government may FEEL like a great "moral victory" to those on the right, but it will NEVER win elections in centrist districts. In fact, it will COST the Republicans seats they've already won in those districts.

These are seats that will NOT be made up by the phantom hoards of "real conservative" voters that will magically appear when "real conservative" candidates show up. Those seats are the ones that Republican already control.

There are a few senate seats in the south and west that the "real conservatives" might be able to win with their rhetoric... but honestly, if they were going to do so, why didn't they over the last three elections?

The people who don't understand this, have since 2012 been doing their best to turn the Republicans, into the democratic party circa 1968. They are the Republican equivalent of McGovern democrats.

Note: At the moment, there is a very strange dichotomy going on with presidential politics, largely as a function of the differences between local and national media and their influence in elections. 

Mitt Romney likely would have beaten Obama in 2012 if a large number of conservatives hadn't stayed home, because he wasn't conservative enough. He also likely would have won, if the media hadn't been so effective at portraying Romney as an ultra-right wing super-conservative. 

Both happened. Romney lost. 

Do you see the problem here? 

Anyone not left wing (or otherwise a media darling... which tends to last just until that person threatens a "progressive" with defeat) can reliably count on the media to portray them as insanely far right. Witness McCain in 2008. He went from being the anti-Bush media darling, to, you guessed it, "right wing lunatic who want to control womens bodies" etc... etc... 

The only way to combat that, is to DIRECTLY (with irrefutable evidence) show "centrists" that you are a "centrist", or at least someone they can vote for. 

2012 was a matter of purity tests screwing conservatives and Republicans. If the "McGovern Democrats" have their way, so will 2016.

So... why don't they understand?

Part of the problem here, is that most people (including most of the "conservatives" above) don't really understand the debt ceiling. They don't actually understand what it is, how it works, and why we can't just decide not to raise the limit once we've reached... or more often actually exceeded... it.

No, really, we can't do that. If we did, very bad things would happen.

They feel that refusing to raise the debt ceiling would mean the federal government would have to spend less.

That is an intuitive idea. It makes sense... 

... It's also dangerously wrong.

The problem, is that people intuitively think of the debt ceiling as analogous to the credit limit on a credit card. In fact, that is the rhetoric most politicians and much of the media use when they talk about the subject; and the rhetoric of much of the "conservative" commentariat.

With a credit card, when you hit your credit limit, you have to stop spending. Then, you have to pay down your debt before you can spend again.

Many people, probably most people, seem to think that government spending and debt work like this; or at least is should, and would if we didn't keep raising the debt ceiling.

It's an easy and relatable analogy. It feels correct, and it suggests a simple solution to a very difficult problem.

Unfortunately, feelings are not reality.

There are rarely simple solutions to complicated and difficult problems.

A friend wrote this:

"I think the problem with the debt ceiling comes mainly from the fact that people think it's a credit limit, when it's more like a kind of a line you set yourself when drawing up a budget for the year"

That analogy is better than what most people seem to have in their mind, but it's still not quite right. It's simple, and quick, but it's still misleading as an analogy.

There is really no one sentence explanation for how this works, unless you have a background in business or finance.

Trying to relate it to something that a lot of people are familiar with, though not as many as a credit card... hmmm...

Ok, this is one of those "I have to explain this thing, so I can explain this other thing" situations.

Here goes...

Say you run a company that only gets paid every three months, at the end of each quarter (this is more common than you might think).

In order to run the company, you need to pay all your suppliers and contractors. So, you get terms from them. Your suppliers and contractors will provide you goods and services, and you will pay them within 90 days of invoicing.

At the end of the 90 days, you HAVE to pay these bills.

Remember, you've already used the goods and services. If you don't pay the bills, your vendors sue you, put a lien on your business and property etc... If you want to try to keep running, you can't get anyone else to give you terms. Everything goes to prepay or COD.

You REALLY want to avoid that if at all possible.

Now... it's possible that your receivables won't come in until after your payables are due. It's possible that there will be delays in processing and funds clearance. It's possible your business might have a bad quarter, and your receivables won't be enough to pay your outstanding payables. Maybe most of your billables are paid quarterly, but there a couple big ones that are only paid yearly.

Oh and of course, you need to pay the day to day costs and expenses (which are two different things, and the difference is important, but would make this explanation even longer) of running your business. Weekly salaries, payables without credit terms, fees etc...

So, in order to operate, you get a line of credit from a commercial lender (hopefully at a favorable interest rate). That lets you pay your day to day costs and expenses, and pay your bills as they come due, without worrying about your receivables current account.

Then, as your revenues come in, you pay down your credit line. The amount of your credit line you use, is, reasonably, called your utilization.

The lender doesn't make you pay ALL of your utilization off every month, or every year, or for that matter EVER.

So long as you don't use ALL of your credit (creditors consider that a bad sign), and you keep making your mandated payments (on time), your lenders will probably keep extending you credit (since they make money on it).

Pretty much every medium and large business (and a lot of small businesses) operate on this basis. Whether you know it or not, if they've got more than 20 employees, or they own or lease a building, it's almost certainly how your employer operates. It's how most of the businesses you interact with operate.

It's also how the federal government operates.

The government has day to day costs, and they consume goods and services (and transfer funds to other entities), as directed by legislation and regulation. They pay these costs from their current accounts, which are debt financed, and they pay on the debt out of their revenues.

So... that's the background and baseline.

Now, a business with a lot of revenue, can still have a year, even several years (in some cases even MANY years) where their expenditures exceed their revenues.

Maybe they had an off year, maybe a major customer went bankrupt and didn't pay them, maybe they expanded a lot, maybe they made a lot of investment; maybe their revenues were increasing, but their expenses increased faster...

There are plenty of reasons why a viable business might have their expenditures exceed their revenues. Many companies go on that way for many years in fact. Some businesses have more years with losses than profits.

This is where most peoples level of understanding becomes problematic. Most people know that a company can lose money and still continue operating, but they don't really understand the details of how or why.

So long as a company has substantial ongoing revenue, and a solid history of making their payments on time; even if the company isn't profitable, they will likely be able to obtain operating credit.

Major companies maintain lines of credit in the billions, so that they can manage manage their liquidity. When they need it, and presuming creditors have confidence in their ability to repay, they will get additional credit.

If a company would like to raise a fixed amount of capital, that they would like to repay over a longer (or at least a fixed) period of time, typically at a lower interest rate than cash/credit financing, they may elect to issue debt in the form of bonds.

The proceeds of the sale of bonds accrue directly to the issuer. The purchasers are then free to sell these bonds to others as they see fit.

So long as investors believe in the viability of the bond issuer, they will buy new bond issues.

Again, this is how the federal government operates.

The FedGov's 2013 accounts receivable (2.8 trillion) were lower than their 2013 expenditures (3.5 trillion). This 700 billion deficit was covered by issuing bonds, which were purchased by investors (primarily large institutional investors, foreign governments, and foreign banks).

However, this debt isn't issued in real time, to pay the governments bills. The government floats a balance at all times, paying it down with revenues and the proceeds of debt issuance.

The government can't just shut down in between tax payments and bond auctions. It has bills to pay and payments to make every day.

Depending on the time of year, and the particular year, the government spends about 90 days ahead of its revenues.

The debt ceiling isn't actually a credit limit, it's the terms of the debt we've already incurred.

An important difference between the government and private businesses of course, is that they don't have a choice about most of their spending, as their board of directors (congress) has incurred these obligations, and written them into law.

The federal government can't just stop spending, even if they don't have any money. They are not allowed to stop spending until congress tells them to.

Congress tells them to spend, and it tells them not to spend.

The problem isn't the debt ceiling... and the debt ceiling isn't actually a restraint on government spending.

The problem is congress.

You can't stop government spending by refusing to increase the debt limit. That just shuts the government down, and really, that isn't good for anyone...

...but in actuality it doesn't shut the government down, because the law doesn't allow it to.

It just shuts down the stuff that isn't explicitly required by law.

Even if the government is "shut down", they are still required to make payments on debt.

If they don't, the U.S. defaults on our sovereign debt.

If the U.S. Federal Government were to default on our sovereign debt, the entire world would be plunged into a massive depression. Pretty much every economy in the world would collapse.

That's really bad. We really don't want that.

But guess what, even that wouldn't stop the government from spending.

The many laws requiring government spending don't allow it to stop just because the bank accounts are empty. They do not contemplate the notion of an empty bank account.

When governments don't have enough money to pay their bills, they just print more.

So, what happens then, is hyperinflation. The government keeps spending dollars, by printing money... or rather electronically creating it out of nothing. This devalues the currency.

When the currency enters a devaluation cycle, people decide to stop taking it.

This of course makes the global depression a thousand times worse.

Repeat after me:

NOTHING CAN STOP THE GOVERNMENT FROM SPENDING BUT ACTS OF CONGRESS

Ok, so then, how do we make them stop spending?

Win elections.

So long as the democrats have control of the presidency and one house of congress, they can keep spending nearly as much as they want.

AFTER you win elections, you have to pass legislation cutting spending. To do that, you need veto-proof majorities, and/or a Republican president.

Now... if the Republicans prove to be no better than democrats on spending (or worse, as Bush was), THEN you attack them from the right.

CVS Drops Tobacco Products, Walgreens Considering it

Washington Post: "Why CVS thinks it can win big by ending cigarette sales"

Don't mistake this for altruism... this is forward thinking, and getting ahead of the trend, in order to milk some good PR out of it.

They're losing 2.4% of their gross revenue and 3% of their profit, in exchange for lots of good press, and avoiding a lot of hassle.

Walgreens is apparently "considering dropping tobacco products" as well.

Mark my words, the next target of the tobacco lawsuit industry will be retailers (just like the gun lawsuit industry has gone after gun stores). Never mind what will happen to tobacco producers and sellers if Obamacare proceeds.

Dropping tobacco means, lower insurance and legal bills, fewer hassles from state regulators, and less risk in general.

The smoking population in america is now below 20% (2013 estimate is 19% of adults). Unless a store is a "first choice" retailer for tobacco products, or can sell them at a large markup (gas stations are both for example) it no longer makes sense to sell tobacco products.

A not so brief explanation and history of U.S. federal government debt

So, a "debt deal" has been reached... which most on the right are characterizing as "the republicans caving to the democrats"... which is frankly bull.

You can't fairly characterize doing what they always intended to do, and everyone who knew anything about the situation other than slogans knew they were going to do in the first place, "caving".

This whole "shutdown" exercise was nothing more than a PR and fundraising exercise for the 70% or so of each party who have completely safe seats; and an attempt to "challenge from the right", the 15% or so Republican seats that are completely safe for the party, but for whom the voters may be persuaded to choose a different Republican.

This is not to say that U.S. federal debt isn't a serious problem, of COURSE it is... just that no-one in Washington was ever going to try to actually do anything about it.

To do so would require cutting spending; and regardless of what voters claim to be for, very few of them would stomach actual cuts to actual programs they like or approve of "only those unnecessary things the other guy likes".

Congress is not there to govern, they are there to acquire and spend money, in order to get votes. If you don't understand this by now... you probably shouldn't bother reading the rest of this.

They are SUPPOSED to be there to govern yes, but they pretty much gave up on that, some time between February 3rd, and May 31st, 1913 (look it up).

So, to be clear, the alternatives here were not "raising the debt ceiling" or "cutting spending"... because no-one was ever even approaching the idea of making meaningful cuts in spending.

The alternatives were "raising the debt ceiling", and "continuing to manipulate the currency and using accounting tricks to pretend that we aren't raising the debt ceiling".

Oh yeah... the fourth option there, "government default" wasn't ever going to happen either. The likely consequence of the federal government defaulting on debt right now, would be a global financial panic followed by a global depression.

Ok... so, given that what's the basic situation right now?

As of today, the U.S. federal debt stands at $16.75 trillion USD, and increasing about 2.7 billion every day. We've actually technically been over the debt ceiling of $16.7 trillion for about 4 months, but we've been using accounting tricks to avoid "officially" breaking it.

Right now, we're taking in about $14 billion per day, and spending about $17 billion per day.

That's in direct spending of course, and doesn't cover unfunded liabilities (those are MUCH larger).

Given today's "budget" (we haven't had an actual budget in 4 years, just long series of continuing resolutions and special appropriations... but that's another post) they're going to have to increase the debt ceiling 1.6 trillion to get us through another year.

So, this time next year expect the debt to be $18.3 trillion.

How exactly did we get here?

The short version?

Spending more than we took in... in some years only a little more, in a couple years slightly less, but in many years FAR more than we took in.

The long version is very long... but I think very illustrative and useful to know.

The LOOONG version

Ok guys this is a really long post full of mostly numbers. If you want the upshot, it's at the end. But if you would like to know just how much we've been screwed, and just exactly who did the screwing... Well, the devil is in the details.

First, the earth cooled, then Woodrow Wilson came

The U.S. Federal Debt ceiling was originally established in 1917 as a check against war spending for WW1.

WW1 was a war most of us didn't want to be in in the first place. Woodrow Wilson basically defrauded the country to force us into it, because he wanted to have the whip hand in post war negotiations to fulfill his grand design of a "league of nations".

With the debt ceiling legislation, congress were in theory, trying to keep the war spending under control, and to keep it from becoming a much larger war (and specifically to keep us from bailing out the British, French, and Belgians financially, or taking on the majority of the warfighting and war materials procurement).

In practice, they didn't actually do much to control the costs (though we did stay the "minority partner" in the war, as the U.S. electorate, and congress, intended; much to Wilsons disappointment).

In 1917, the debt ceiling was set at $13.5 billion dollars ($247 billion in 2013 dollars). It was quickly raised through the course of the war to $43.5 billion in 1919 ($590 billion).

That's more than doubling the debt in 2 years.

From 1919 through 1941, it grew to 50 billion ($800 billion).  That even including the government spending of the "New Deal" years, which far exceeded our depression diminished revenues every year.

Between the wars debt grew considerably, but not at a ridiculous rate... about 30% in real terms, in 22 years. That's not all that bad considering the government growth after the 16th and 17th amendments, and particularly the post WW1 expansion of the executive branch (thanks again Wilson), and then the mother of all government wealth transfer programs, "the new deal".

Then World War II happened

From 1941 to 1945, US federal debt rapidly increased, from $50 billion ($800 billion), to $300 billion (4 trillion).

So, in 28 years, and two world wars, U.S. federal debt multiplied by a factor of 16; and in 4 of those years, it multiplied by a factor of 5.

That's a lot of debt... but hey, wars are expensive right?

The 50's...

Well, for the next 18 years, the debt stayed almost completely flat... actually it was reduced several times. It stayed around the 300 billion mark from 1945 all the way to 1963.

1963 was both the last time it was reduced, and the last time it was at 300 billion. However, because of inflation, that wasn't actually flat debt; it was in fact a significant reduction from 1945s $4 trillion 2013 dollars, down over 40% to $2.3 trillion 2013 dollars.

That's still 4 times the debt at the end of World War 1 of course.

Oh and by the by... throughout this explanation I'm going to use the debt limit, and the actual federal debt, as if they were the same thing... because for all but 8 years during this time period, they WERE the same thing. We have generally run either just under, or actually in most years jsut OVER the debt limit, but used accounting tricks to seem like we were under it. 

Anyway...

The '60s

Wars are expensive yes, but through the Viet Nam years, federal debt grew far slower as a percentage than it had during WW1 or WW2.

It took 'til 1967 to get to $350bb ($2.45tt), and 1970 to get to 400bb (2.41tt); really a very small increase from 1963... and again, still a significant reduction from the end of WW2.

Overall, there was a less than 5% constant dollar growth in the debt through the entire 1960s; and that is coming off of a large drop in the debt from the end of WW2.

The '70s

Now, inflation started rising rapidly from 1968, particularly from 1970-1984, so you can't really compare the raw year to year numbers  from here. You need to compare the inflation adjusted numbers from here on out.

We hit $450bb in '72 ($2.51tt), $500bb in '74 ($2.371tt), $600bb in '75 ($2.608tt)... You can see again, slow growth or even shrinkage in constant dollar terms.

We hit $700bb in '76 ($2.9tt), $800bb in '78($2.9tt), 900bb in '79 ($2.9tt), and 935bb in '80 ($2.7tt), a big jump from '75 to '76, but then flat to a even a small reduction for 2 years.

Note, that was during the Carter administration, with a Dem controlled house and senate.

During the entire 1970s, we increased the debt by about 25% in constant dollar terms.

Then we hit

...the Reagan years... 

Except the Reagan years really weren't the Reagan years; they were really the Tip O'neil years (speaker of the house from 1977 to 1987).

Everyone remembers Reagan as a big spender on the military... because he was, but also because that was the media portrayal of him, but they forget that for every dollar Reagan got added to the military, O'neill and the democrats got $2-3 added to other government spending; and Howard Baker and Bob Dole (the Republican Senate majority leaders from 1981 through 1986) were happy to go along with it.

In 1981, the U.S. federal debt hit $1 trillion for the first time, ending the year at $1.1 trillion ($2.83 trillion)... but in constant dollar terms, that was actually less than 1979, and only slightly more than 1980.

Really it's not all that much more than 1963... only about 22%, in a period where population had doubled, military spending had quintupled, social security had jumped from insignificant to 15% of the budget.

It took 'til 1983 to get to $1.5tt ($3.5tt), and then to '85 for $2tt ($4.35tt), just two years to double the debt in absolute terms. Though that was "only a 22%" increase in constant dollars; that's almost exactly the same amount the debt increased from 1963 to 1983 in constant dollars.

20 years debt in 2 years.  Way to go guys.

Post 1984 inflation slowed dramatically, so the constant dollar differentials year to year are considerably less.

Oh and for you history buffs, 1985 was the year we equalled, then exceeded, our national debt levels at the end of World War 2 (in constant dollars).

So... we come to 1986 and at $2.3tt, we manage to double the 1966 debt, at $4.9 trillion in 2013 dollars (though only a 12% year over year increase from '85).

In '87 we went to 2.8tt (5.8tt) a 20% increase from '86, but managed to not increase the debt ceiling in '88... Unfortunately we made up for it in '89 moving up to $3.1tt ($6tt).

So, across the Reagan years, we went from $1 trillion ($2.83tt) to $3.2 trillion ($6.1tt)... More than tripling the debt in absolute dollars, and more than doubling it in constant dollars (117% to be exact)

Hmm... 40% debt shrinkage in the '50s, 5% debt growth in the 60s, 25% in the '70s... 120% in the '80s.

.. well, at least we slowed inflation down...

The '90s

And hey, we're getting into the '90s right? I mean yeah there was the '89 to '91 recession... and the first gulf war... but then there was the peace dividend and the .dot com boom, and the "surplus"... the '90s were prosperous years... we had surpluses... we shouldn't have increased the debt too much in the '0s right?

Sadly, wrong.

In 1990 alone, we increased our federal debt from $3.1tt ($6tt) to $4.2tt ($7.5tt) a 30% absolute increase, and a 25% constant dollar increase.

In constant dollars, that's also more than triple the 1960 debt

...and more than triple the 1970 debt...

...and more than triple the 1980 debt...

Once again... way to go guys...

But, by some miracle, during an incredibly expensive but incredibly short war, we managed not to increase our debt for 3 years... The entire rest of the first Bush presidency in fact.

On that one, seriously, way to go GHW Bush.

Clinton

But we started spending again the second Clinton was elected, and by the end of 1993 had increased the debt to $4.9 trillion dollars ($7.9 trillion in 2013 dollars).

Then we had our "surplus years"... all two of them (actually we never really had a surplus, but they made it look like we did by ignoring a bunch of stuff and some accounting tricks... it WAS however the closest we had actually come to a balanced budget since 1958, when we started using the social security taxes as part of the general revenues). We didn't increase the debt ceiling during 1994 and '95..

... but again we made up for it in 1996 by increasing it to $5.5tt ($8.2tt) and '97 to $6tt ($8.8tt).

Then the Republicans got serious... for a second... and we managed not to raise the debt ceiling again until 2002.. when the NEXT war started.

So, we went from a 120% debt increase in the '80s, down to a... 50% increase in the 1990s...

Those were the "surplus" years? The "peace dividend"? Really?

Yeah... not so good...

Bush the younger

Now, all you Bush haters... all you folks claiming Bushes spending is what ruined us etc... etc...

In the first 18 months of George W. Bush's presidency we increased the U.S. federal debt exactly...

ZERO

Yup, nada.

We didn't increase the debt ceiling at all from '97 'til late 2002

Then, as I said, the NEXT middle eastern war happened. And, as we know from earlier, wars are expensive.

Now, if you like, you can blame Bush for the wars... Though really, no matter who was president, we were probably going to have a war in Afghanistan, and a war in Iraq during the 2000s was a near inevitability as well. They certainly could have been run better and been over quicker however. 

In 2002 we increased the debt to $6.7tt ($8.71tt), a $700 billion, or 12% absolute increase from 1997...

Only in constant dollar terms, guess what...

It was actually a $100 billion dollar decrease.

In 2003 we went up to $7.4 trillion (9.4tt), another $700 billion increase... both in absolute and constant dollars since inflation was pretty much flat.

In 2004 it was an $800 billion increase to $8.2tt ($10.1tt) and again inflation was pretty flat.

These numbers by the way, are also the approximate annual costs of the war.

We didn't increase the debt during 2005... which was actually our highest spend year of the war in absolute dollars by the way; and in 2006 increase it another $800 billion to $9 trillion ($10.4tt), but inflation had increased so it was only a $300 billion constant dollar increase.

... though I should point out, the INCREASE in debt from 2004 to 2006, was 20% more than the ENTIRE debt in 1917 (in constant dollars)

... and the increase in previous years was more than the entire debt in 1941, at the outbreak of World War 2.

In 2007 we went up another... hey it's our friend $800 billion ($900bb) again... to $9.8 trillion ($11.1tt), another $700bb in constant dollars.

And in 2008... yup, another $800 billion to $10.6 trillion ($11.9tt), which was also an $800bb constant dollar increase.

Again, these numbers correspond roughly to the annual cost of the wars in Afghanistan and Iraq.

So for Bush BEFORE the 2008 financial crash we went from $8.8 trillion to $11.9 trillion increase, while fighting two wars, about 35%.

Not spectacular... but a hell of a lot better than it could have been

Except that in the last few months of the Bush presidency, we increased the debt another $700 billion, for the "bailout", bringing us to $11.3 trillion or  $12.3trillion in constant dollars.

$8.8 trillion to $12.3 trillion... about 40%.

And finally we reach...

Barack Obama

Yaknow... I'm not even going to bother going year by year for this guy.

Barack Obama was sworn into office on January 20th 2009.

It's October 18th 2013.

That's 4 years, and 10 months. Let's round up to be generous call it 5 years.

In less than 5 years, under this president and this congress, we have increased our debt from $11.9 trillion to $16.8 trillion. Actually a bit more without the accounting tricks.

So... 5 trillion more or less.

Bush pushed the debt up 3.9 trillion in 8 years, or just about $500 billion a year.

Obama pushed the debt up 5 trillion in 5 years... about $1 TRILLION a year.

In constant dollar terms, that's more debt INCREASE every year than we had TOTAL before  December 7th 1941.

In constant dollars it's 60% MORE THAN THE ENTIRETY OF WORLD WAR 2

Minute by minute...

As I am writing this, Obama has been president for 4 years, 271 days, 17 hours, 48 minutes, and 10 seconds.

That's 1733 days, 17 hours, 48 minutes, and 10 seconds.

That's 41,609 hours, 48 minutes, and 10 seconds.

That's 2,496,588 minutes, and 10 seconds.

That's 149,795,290 seconds.

That's a $33,378.89 increase in the U.S. federal debt EVERY SINGLE SECOND HE HAS BEEN PRESIDENT.

That's $2,002,733.40 every minute.

That's $120,164,004.00 every hour.

This guy has 3 years, 93 days, 7 hours, 11 minutes, and 50 seconds left to be president.

At this rate, that's another $3.5 trillion dollars.

Oh and in the decade of the 2000s, we went from $8.8 trillion to $13.5 trillion constant dollars; about 55% growth.

From 2010 to today, 3.8 years, we've increased the debt from from $13.5 trillion to 16.8 trillion or $3.3 trillion. Basically $900 billion a year more or less. So, we're on track to finish the 2010s at $22.2 trillion in constant dollars.

... To put it another way, in 2017, 100 years after the debt ceiling was first written into law; we will have increased our debt to approximately 100 times what it was in 1917.

The 2010a are on track to go from $13.5 trillion to $22.2 trillion is an $8.7 trillion increase, or about 65%

The final breakdown, decade by decade

40% debt shrinkage in the '50s
5% debt growth in the 60s
25% debt growth in the '70s
120% debt growth in the '80s
50% debt growth in the 90s
55% debt growth in the 2000s
65% debt growth in the 2010s (projected)

Ok... so what does that mean personally?

Well... to simplify, and to keep things more comparable, let's keep it post WW2. As it happens, debt stayed relatively constant in absolute dollars from 1945 to 1963 (though dropped in constant dollars), and 1963 was the last time the debt ceiling actually decreased... plus it's 50 years, a good round number... Let's take it from 1963.

Total debt growth in the last 50 years, in constant dollar terms?

Debt went from $2.3 trillion, to 16.8 trillion, a multiple of 7.3.

In 1963, the debt to GDP ratio was about 40%.

In 2013, the debt to GDP ratio is 101%

In 1963 the U.S. population estimate was 189,241,798
In 1963 the per capita U.S. federal debt was $12,153.76
In 1963, the mean salary for a full time worker was appx. $44,000
In 1963 the federal debt to personal income ratio about 28%
--all constant dollars. Note these are means not medians.

In 2013 the U.S. population estimate is 316,882,000
In 2013 the per capita U.S. Federal debt is  $53,016.58
In 2013 the mean salary for a full time worker is appx. $47,000
In 2013 the federal debt to personal income ratio is about 115%

Note: If you take it by median individual income it's about twice as bad (the mean full time is only full time workers between 18 and 65. The median individual income includes the unemployed, retired, part time workers, under 18 and over 65 etc...). 

So, our debt has increased by a factor of more than seven; and our per capita debt has more than quadrupled, as has our debt to income ratio.

... and yet... some people say "we aren't doing enough, spending enough..."