Institutions, Transformations, and Insurrections

When you believe that your opposition, is in fact your mortal enemy, is fundamentally evil, and will stop or destroy everything you want and believe to be right... Well, then you can justify absolutely anything to yourself, in obstructing, resisting, opposing, damaging, and trying to remove or destroy that opposition. 

We have been in an escalating cycle of this for decades... Since LBJ at least... Maybe even since FDR... and we are at the point now, where the left believe that literally anything is justifiable, in order to give themselves the power to do what they believe is right... Including literally beating people in the streets. 

This was the goal of the critical school, and Gramsci, and the comintern operations against the capitalist west for the last 100 years... and it has succeeded in creating a completely unhinged left, and the failure and destruction of societal norms and institutions... Most of which the left have been gaining increasing control over for decades, and they have had essentially complete control over many of them since the late 90s. 

This is the point at which the criticalists and Gramscians, believed that they could induce the total collapse of the western capitalist order, and that the people would inevitably flock to socialism... They literally believed it was a scientific and historical inevitability, that socialism was functionally the next stage in the "perfection" of man and society. 

Except that's not happening... leaving aside a relatively small minority of zealots and idiots... Because most peoples lives are actually pretty good, and getting better not worse... Though if you listen to Democrats and the media we live in hell manifest on earth... Unless they're in charge of course.

Instead what is happening, is the majority of people are disconnecting from the institutions around them, and just trying to live their lives, which leaves the institutions to the zealots and the deluded... Until those zealots impinge on the peoples lives in ways they find intolerable, at which point they fight back... witness Virginia... 

This is not a good or stable state to be in... But it's also not the tinderbox of near civil war many believe it to be. It could progress to that, but only if either things actually get to be as bad as the zealots say it is, or those now corrupted and failed institutions attempt to impinge too far on normal peoples lives in ways they will not tolerate, and will violently fight back.... At which point, there should be a big collective gasp for air, and realization that something is seriously wrong and has to change.

... That's the point where we either get a mass reform movement of our institutions, or we get a civil war... which itself is such a mass reform movement, resorting to violence because the people believe it is the only way to effect the necessary change. 

If you look at the policies of the major parties... 

One side wants to completely change everything about this countries culture, institutions, and economy, because they believe the way things are is so bad and wrong that it must be changed completely... and they will precipitate that literally apocalyptic event (look up what the word apocalypse actually means) rather quickly if they can... because their zealots believe they will win (they won't, but zealots never believe they won't win), and then get to rebuild the nation in their chosen image... 

...The other side... not so much...

Title 2 Regulation Isn't Net Neutrality... but it IS Warrantless Wiretapping...

Since it's coming around again...

...STOP SPREADING THE DELIBERATE FRAUD THAT TITLE 2 REGULATION IS NET NEUTRALITY...

It isn't. It has literally NOTHING to do with net neutrality.

Net neutrality is the SELF GOVERNING principle, that all network traffic between service providers and their customers, is the same. Traffic is traffic regardless of the content... except that certain types of latency sensitive traffic can be prioritized, and certain types of low priority non-sensitive traffic can be deprioritized, for network and bandwidth management purposes, and hostile or harmful traffic can be throttled or blocked, to prevent service degradation and the like.

This has, until recently, always been self enforced. Recently, some very large service providers have attempted to double dip, by trying to charge some very large content providers like Netflix, who use up LOT of bandwidth, but are not those ISPs direct customers for their primary data centers etc... That's double dipping, because those ISPs already charge peering interconnect fees, to the ISPs that Netflix already pays for their internet upload capacity.

Again, up until recently, if an ISP tried to treat any other ISP or organizations traffic worse than everyone else, the other ISPs would do the same for that ISPs traffic... thus nobody broke the rules for very long. That is still MOSTLY true MOST of the time... But a couple of the huge mega ISPs are SO big, that you cant do that anymore or you would slow down very large fractions of ALL internet traffic.

Title 2 regulation does ABSOLUTELY NOTHING to prevent that from happening.

Title 2 regulation allows for two main things... The FCC can set the rates large ISPs charge each other for interconnect peering, and it REQUIRES ALL TELECOMMUNICATION SERVICE COMPANIES (including email and VPN providers according to the Obama admin proposed regs) TO COMPLY WITH WARRANTLESS WIRETAPPING AND METADATA COLLECTION, which is the real reason the government wants it.

The FBI cooked up a plan to collude with other federal agencies, and an at the time cooperative and power grabbing democrat controlled FCC, to rebrand warrantless wiretapping, as net neutrality... which actually is, and always has been, something else entirely.

If you believe in phony net neutrality, its probably not your fault... you have been, and continue to be, deliberately defrauded about the issue.

A Simple Question

So... hardcore drug warriors out there... I have a very simple question for you...

Why?

You can't stop people from getting high. It's NOT POSSIBLE.

It literally does not matter how far you go, you cannot stop it.

We can't stop heroin from getting into supermax prisons, where there are no visitors allowed, and everyone is body searched in and out.

I just had a dedicated drug warrior fully sincerely advocate that we completely seal the border, and that every vehicle, container, and person should be fully cavity searched.

When I pointed out that cavity searches didn't stop heroin from getting in to supermax prisons, he said that we need to have full walls on all the borders, and boats to patrol the coastlines to stop smugglers.

You can't stop people from getting high. This is not an issue of sealing the borders.

Even if you actually sealed the borders successfully, then they would just grow it here.

How exactly would you stop that?

It would require constantly patrolling millions of acres of property, searching all greenhouses, and all forests, and all fields of any kind of anything, at least once every 90 days... in the entire country.

Doing so... aside from the massive violations of peoples rights, would require millions of law enforcement officers dedicated to it.

That would cost more than the entire budget of the United State by the way.

Even if you manage to completely eradicate all opium poppies, and all coca plants on the planet, they will just synthesize it in labs... and by labs, I mean, any quiet room with an electrical outlet, or anywhere you can run a generator, or a blow torch.

If you completely ban all substances that people could get high with, you ban thousands of legal products with legitimate and critical uses, including a huge number of critical medications.

You also have to ban all lab equipment, or closely license and track its sale. And all chemicals of all kind... and many kinds of foods. And most kinds of flowers.

And all machine tools, and glass blowing equipment... and blow torches, and pipes and tubes and sand...

And you'll have to dig out and burn out millions and millions of acres of plants.

We have 7,500 miles of border. We have 13,000 miles of coastline.

You can make it a death penalty offense to posses, sell, or use drugs, or get high. Many countries do in fact... and people still get high.

This dedicated drug warrior said that it didn't matter what it took, it didn't matter what it cost... It didn't matter if it wouldn't work at all... That we had to do it anyway.

When I asked why, he said:

"Because to do otherwise would be to surrender"

Then I asked "Surrender what? To who?"

He said "Surrender to the junkies and the dealers"

I asked "Surrender what?"

He refused to answer.

And again I asked "Why"

He refused to answer.

I said "You're advocating a police state, in order to stop people from getting high. Why?"

He refused to answer.

So... I have a very simple question for you...

You cannot possibly stop people who want to get high, from getting high.

You can't make it illegal enough. You can't ban or control enough. It's not possible... you have to know that it isn't possible..

Prohibition PROVED beyond all possibility of doubt that it's impossible.

The last 45 years of the war on drugs have proved beyond all possibility of doubt that it's impossible.

Maximum security prisons prove beyond all possibility of doubt that it's impossible.

But you still think we have to do it... No matter what it takes... No matter the harm it causes... No matter what rights get violated...No matter how much power it gives the state. No matter how much it costs...

Why?

It's a really simple question...

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".

Misunderstanding Law, Government, and Society

Most people... At least most people in modern western democracies... Seem to have a fundamental and unconscious assumption about the nature of law and government, that goes something like this:

Law and government, are or should be, the expression of the will of the majority, for the purpose of making collective decisions, taking collective actions, fixing problems and righting wrongs.

If I gave that definition to most people as what government "should" be, or even what it is, I'd guess they would agree.

 But that's not what law and government are at all. In fact, that notion of the nature of law and government, is not only wrong, it is extremely harmful.

What are law and government?

Government, is the instrument of collective delegation of the legitimate initiation and use of force against others. 

Law, is the body of rules by which that force is administered and applied. 

The only legitimate purpose for which, is to secure and protect the rights of individuals governed by them.

So, what's the other thing, and why is this a problem?

 The other definition, is more properly that of society (as distinct from culture).

Government is NOT Society, and Society, is NOT Government

This conflation of government, and society, is a very serious social and political problem because those who hold it... and I firmly believe it's a large majority... believe that law and government, should be used for "doing what's good, and stopping what's bad".

They naturally wish to see government do what they think is right, or best, and stop that which they think is wrong, harmful, or wasteful... And not just in areas where force should be applied.

They conflate "legal" with "good" and "illegal" with "bad", and try to make laws against things which they think are bad, or mandating things which they think are good.

 They often even conflate "legal" or "attempting to make legal" with "approving and supporting", and "dissapproving and opposing" with "illegal" or "attempting to make illegal".

This is incredibly harmful

We have allowed... even encouraged people... to deeply hold the fundamental notion, that they get to vote on other peoples opinions, choices, and behavior; and if their "side" wins the vote, that it is legitimate to make those things legal or illegal.

 It also means that these people automatically and reflexively try to solve personal, moral, social, or societal problems, with government and law, when it is entirely inappropriate, even harmful, to attempt to do so.

Most of those problems cannot be solved by the use of force;, or at best can only be solved inefficiently, ineffectively, and while violating the rights of others.

 In encouraging this misapprehension, we have in fact made the personal, the political, and the political, the personal.


How do we stop the harm?

We must correct this critical error in peoples fundamental apprehension of law and government. 

People need to understand, at the most fundamental level, that government is force, and that law is how that force is directed and administered. No more, no less.

If we don't correct this misapprehension, then we will continue to simply seesaw back and forth between majoritarian tyrannies, as social changes dictate.

Rights will continue to be violated and abrogated as the opinions of society fluctuate.

The favored, will continue to be privileged over the disfavored at the expense of the disfavored's rights, until the pendulum swings again and the roles are reversed.

Yes, I realize, that is largely how it has always been... But never has law and government had such a depth and breath, had so great a reach into our personal lives, as it does today, and this unfortunately shows no sign of receding.

The absurdity of this reach... and overreach... is finally becoming apparent to many people, on all ideological "sides"; be it the "war on drugs", the "war on terror", privacy and surveillance, or gay marriage and wedding cakes.

So, we have to take action, now 

Use this growing awareness of the overreach, to help people understand.

We have to show people these aren't just outlying excesses. That they result from the way we think of, look at, and attempt to use, government.

We have to get people to understand, that if they can say "there ought to be a law", and then get a law made banning something that they don't like; then their worst enemy, can get a law made banning something they love.

We have to return to the notion that fundamental rights matter, and that the only legitimate purpose of law, and government, is to protect those fundamental rights.

Everything else?

That's up to individuals, and to society as a whole, NOT GOVERNMENT.

Voluntary collective action. If it's really what people want, then they'll work for it, without the threat of force. If it's not really what they want, then we shouldn't be forcing people to do it.

Stop Calling Government Regulation Net Neutrality

Stop using "net neutrality" to refer to government regulation of the internet.

That's not what net neutrality is, and it's certainly not what the government regulations promulgated by the FCC today are, in this case "Common Carrier Rules".

People who don't know any better are celebrating todays faux "net neutrality" FCC action as a victory for freedom and free speech on the internet, when in fact, it's exactly the opposite.

I've written extensively about net neutrality and this is very much NOT it.

All the FCC has done today, is impose common carrier regulation on every ISP (oh and by the way, lots of other organizations as well who "provide internet access". No-one has any idea how the regulations are going to be finalized, what the language will mean, who will be impacted and how... except everyone knows it's going to cost a lot), instead of just the telephone companies it was already imposed on. Verizon for example, who was already one of the worst violators of net neutrality, even with common carrier regulation already in place for them.

Thus it makes competition and breaking of existing monopolies even harder, while not actually doing a damn thing to secure or improve neutrality... oh and it gives the FCC more control over the internet.

Absolutely none of those are good things.

Common carrier regulation is a big part of what made the current near monopolies on Internet access happy in the first place, because small independent companies couldn't compete with the giant Telcom conglomerates under those regulations. So, they all got swallowed up.

I've been working with telecommunications companies, and common carrier regulations, for more than 20 years. I'm an expert in governance and regulatory compliance, and I can tell you right now, NOBODY understands these regulations, because they are not capable of being understood.

These regulations and the rulings and case law associated with them go back to 1930s... and in some particulars all the way back to the 1870s. And of course, rather than replace them with something clear when they wanted to make new regulations, congress and the FCC just amended and added on and countermanded and...

I've flowcharted them before to try to see what applied how and where and when... the only thing I could come up with was "nobody knows for sure, it all depends what a regulator or judge says at the time".

This wasn't a blow for freedom and free speech... This was a giveaway to big corporate donors in the telecommunications industry.

The big telcos have been trying to get their primary competition, non-telco ISPs, burdened with the same regulatory load they labor under, for DECADES. Now, in one stroke, the FCC at the personal direction of the president, has given it to them.

Oh and guess what else common carrier regulation includes... SURVEILLANCE. All common carriers are required to provide the government and law enforcement "reasonable access" for surveillance, as well as to give up records, usage details, and other subscriber and user data, WITHOUT A WARRANT.

What does "reasonable access" mean? Whatever the government says it means... and if you think I'm exaggerating, I'm not. I've dealt with the FBI on this issue, and that's a direct quote.

Yes, this is not only a massive corporate crony handout, it's also a huge gimme to the FBI and the NSA, who have wanted all ISPs stuck under common carrier for years as well.

Stop calling government regulation of the internet "net neutrality". Letting the liars control the language helps them lie to you.

Net neutrality is not government regulation, and these regulations are certainly not net neutrality, nor anything like it. Don't be taken in by fraud, cronyism, and statism, masquerading as freedom.

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:

"Three billion dollars per year, and homelessness continues to soar?"

Except homelessness doesn't "continue to soar".

The quote is from an article on PovertyInsights.org, "Is the US Government Wasting Money on Homelessness".

Their conclusion by the by is "Yes, but we should do more anyway".

.. and I agree with them, we should do more. Not SPEND more... actually DO more. In fact, we should probably spend less... we should just do it more effectively and efficiently.

Homelessness isn't "continuing to soar"

... which, by the by, the linked article actually does admit, though not in direct language. The tag line is meant as an attention grabber.

There IS a problem, and it should be addressed, in the most effective way we can.

That's where things get complicated.

By most measures long term homelessness is stable or declining, and short term homelessness is declining again, as it has been since the early 90s (excepting several year to year spikes and dips from 2006 through 2012).

The first thing, is that homelessness has actually never been near what the "homeless advocates" said, because they were inflating the numbers in a desperate attempt to get people to pay attention, and to get at least somewhere near enough funding for the real problem they actually had.

They multiplied way beyond worst case numbers, by other way beyond worst case numbers, added a fudge factor for "things we can't measure and people we're missing"; then multiplied that number based on the cities with the worst problems, by every city in America, as if they all had similar demographics.

Were they deliberately lying? No... at least they never thought of it as that. They simply assumed that the problem was worse than they could prove, and that they'd better inflate the actual provable numbers just to make sure. It's a common issue with do-gooder-ism.

Basically, it's all the worst problems of unrepresentative sampling, combined in one issue.

If the problem ever had been near that bad, it would have meant a dozen homeless men on every corner in every city in America.

But that's what they needed to do, just to see the few dollars at the pointy end that they eventually got; because that's how political funding works in this country.

This is not to say there are no homeless in America, or that both short and long term homelessness are not issues we should address.

There are without doubt massive shortfalls in funding to prevent, and aid in the recovery and return to normalcy of the short term homeless. They have spiked over the last few years since 2006, because of the housing and financial collapses and their aftermath, and the stagnant economy. That has been normalizing since 2010, or at least 2012 even by the worst numbers (though some urban areas are exceptions, and are getting worse for various reasons. Tucson, Las Vegas, some cities in Florida, San Francisco). We still don't have enough money at the pointy end to help those who need help.

The long term homeless population is down from where it was in the 80s and 90s (long term homelessness in the united states is believed to have peaked around 1987 to 1989 - some say as late as 1992 - and began trending significantly downward between 1992 and 1995), though it's still a problem.

Unfortunately, this isn't really because our efforts to improve the situation have been effective. It's more because the large populations of mentally ill that we turned out on the streets from 1978 to 1988 as we "reformed" and defunded our state mental health systems, have largely died; and because the spike of serious drug addiction in this country from 1974 to 1994, peaking from 1986 to 1991 with the "crack epidemic" has largely subsided to its pre 1970 levels (those addicts have also largely died).

The real problem with long term homelessness in this country is a problem with our mental health system, and how we treat substance abuse and addiction. The vast majority of the long term homeless are seriously mentally ill, long term substance abusers, or both.

The other major problem, is that no matter how much funding we allocate at the state or federal level, it gets swallowed up in the bureaucracies, and the inefficiency of the system. Most of the benefit never reaches the street.

That isn't to say the people at the pointy end aren't trying to do their best, they are... it's just that the system prevents it.

The piece linked states that the federal government spends approximately $3 billion to "help the homeless" every year. The states and municipalities combined spend something like 4 times times that (based on the commonly bandied number that about 20% of the dollars for the homeless come from the feds). That's about 15 billion.

There's about 1 million homeless in the country according to the article (best numbers I've seen say 800,000, but that's close enough to 1 million that I'll give it to them).

15 billion, divided by 1 million is $15,000.

If we were EFFICIENTLY and EFFECTIVELY spending $15,000 per homeless person in this country, there wouldn't BE any measurable homeless population.

Everyone who was homeless, would have a roof, a bed, enough food, and basic medical care.

The problem is that, if we're lucky, $0.20 of each of those dollars actually ends up having any direct benefit to the homeless. The rest gets eaten up in the layers and layers of bureaucracy, and "oversight", and planning, and all the other myriad ways that government spending ends up being consumed.

You know who does most of the feeding, clothing, and housing of the homeless in this country?

Two organizations: The Church of Jesus Christ of Latter Day Saints (Mormons), and the Catholic Church.

Oh and of course all the many local churches and charitable organizations (most of them religious in nature) that run homeless shelters, food banks, soup kitchens, free clinics, and outreach programs.

How much do they spend on the problem?

No-one knows for sure and estimates vary widely. The St. Vincent DePaul society, the largest society of the Catholic church providing direct aid to the poor, spends about $700 million annually overall in The U.S. on direct aid. About 1/3 of that is explicitly in aid to the homeless, so something like $200 or $250 million. The LDS church spends something similar, and all other churches in the U.S. combined, also spend about that much (this just on the homeless, not in all aid to the poor. That number is four or five times as much).

Let's round up and call it about a billion total. That's actual money hitting the street directly by the by, not total donations for the homeless, or total funds allocated by the leadership.

So... that's what a billion, used efficiently and effectively, can do, for a million people.

Wonder what they could do with $15 billion more?

Dont you wish YOUR job had raises like this?

This whole government "shutdown" thing has brought out a lot of talk about federal pay.

A liberal of my acquaintance posted something on facebook a couple days ago:

"A Republican I know said, 'If you got furloughed because of the shut down, maybe you should get a real job.' 

Yeah... about that..."

'pon which he linked to a story about the cops, border patrol agents, etc... who were not being paid while protecting congress, and our country.

It's a good point. There are plenty of people doing real, important jobs, who are not being paid... Some of them have gone home, but a LOT of them... actually about 2/3 of the federal non-military workforce, hasn't. They're still doing their jobs.

The problem I have is... there's too many of them... And they are doing too many things, that they don't need to be, or shouldn't be doing.

So, I said something fairly well known in libertarian circles:

"A good friend of mine is a border guard with ICE... yeah, he's got a real job. 

That said, there IS a point when the most liberal liberal in America has to think 'why in the hell do we have 50% more federal government payroll than 1998... we're not getting more than we got then... at least not more good useful stuff....' That's just non-military federal staff payroll by the by, not any other spending..."

His commenters didn't believe me, or just said inflation or homeland security etc...

So I clarified, no, federal non-military payroll; meaning the total compensation (wages, salaries, and benefits) of full time permanent non-military federal workers, has increased, by at least 50%, in constant dollar terms, from 1998 to today.

And homeland security is only a fairly small portion of that increase (Only 9% of the federal workforce, though it is the single largest federal agency - excluding the civilian employees of the military and veterans affairs - in terms of manpower).

To which he said, quite reasonably "would you care to source that?".

Gladly sir....

Congressional Reporting Service report on trends in the federal workforce:

http://assets.opencrs.com/rpts/RL34685_20110419.pdf

Congressional Reporting Service report on average wages etc... in the federal workforce:

http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1702&context=key_workplace

Several other primary sources in the footnotes of this article, notably from the Bureau of Economic Analysis:

http://www.downsizinggovernment.org/overpaid-federal-workers

So... let's break it down shall we?

The CRS reports there was a 17%... actually 16.7% increase in the federal workforce between 2000 and 2010.

I don't have the numbers from 1998, 1999, 2011, 2012, or 2013, but other sources indicate that it's probably not much, because there were hiring freezes and reductions that make it pretty much a wash. 17% is probably good for 1998 to 2013.

So, a 17% increase in non-military federal staff from 1.8 million to 2.1 million (excluding the civilian employees of the Army, Navy, Air Force, and Veterans Affairs; currently about 900,000).

Oh and it's important to note that these numbers do not include contractors. Contractors compensation does not count against federal payroll, and they are not counted as federal workers... which is one of the major reasons there are so many of them...

How many?

In 1998 there were approximately 1.8 million federal workers, and only 6.5 million contractors.

Well, as of 2013, there are appx 2.1 or million federal non-military workers... and appx 17 million contractors.

Contractor compensation DWARFS the federal payroll. It's well over 20 times federal payroll in fact... though we really have no exact idea how much, because it's buried in hundreds... or possibly thousands... of different budgets, and literally millions of line items (many of which are gray, or black).

So, let's talk money...

First, let's talk about total compensation.

Total compensation includes both wages and other cash compensation, and non-cash compensation such as benefits.

Bureau of Economic Analysis reported average total compensation for federal employees went from appx. $67k in 2000 to $115k in 2012.

In constant dollar terms that is a 29% raise.

Oh but that's just from 2000-2012 I don't have the exact numbers here from BEA for '98,'99, and 2013...

Purely from a trendline analysis, you see a 2.15% annual average real dollar compensation increase. Extend the trendline from 1998 to 2013, and instead of 29% it's about 38%.

A 17% staff increase and a 38% raise, is a 60% increase in total payroll...

Now... even if you just take cash compensation, BEA reports an increase from $56k to $82k; a constant dollar increase of 16%.

That's much lower than the increase in total compensation, but still quite respectable... And remember, this is in constant dollar terms; so that's over and above inflation and cost of living increases.

Again, thats 2000-2012. Extending the trendline from 1998 to 2013 and you get 21%.

21% raise times a 17% staff increase, is a 41% total increase in real dollar terms; for just cash compensation.

Now... those are BEA numbers, what about CRS numbers?

Hmm...  I don't have the exact numbers on total comp increases from those years... But I do have their percentages... in fact I have every percentage increase, and the inflation percentage, for every year since 1969...

Federal Average salary and wage increases year over year, 1999-2013 (1998 would reflect increases from 1997):

1999: 3.4% over inflation
2000: 2% over inflation
2001: 0.3% under inflation
2002: 0.4% under inflation
2003: 0.2% over inflation
2004: 2.0% over inflation
2005: 0.2% over inflation
2006: 1.4% over inflation
2007: 1.6% over inflation
2008: 1.8% under inflation
2009: 1.6% over inflation
2010: 1.9% over inflation
2011: 1.8% over inflation
2012: 1.8% over inflation
2013: 1.8% over inflation

Official numbers have not been released for 2011, 2012, and 2013; the 1.8% is from news reports and other websites stating that though federal salaries have been in a base rate freeze, the average salary has increased 1.8% over inflation in each of the last 3 years. This is consistent with previous increases. 

So, from purely federal internal sources, we have an average wage/salary only, increase of 24.8%. Times a workforce increase of 16.7% (also from the CRS), we have a 45.6% increase.

So... there's the CRS's own estimate, of average wage and salary alone.

Unfortunately, the CRS doesn't estimate total compensation, but if we assume the BEA numbers are reliable, non-cash compensation has increased from appx 22% of cash compensation in 1998 to approximately 40% of cash compensation in 2012.

This estimate is not out of line with other trends and percentages well known in HR (noncash compensation, particularly benefit costs, have doubled or more in the last 15 years)... so I think it's a good and reasonable approximation. 

Oh... might be useful to summarize. I've got two different sets of numbers, which are different enough to be noticeable, but not enough to completely contradict each other.

Note: The difference between the BEA and CRS may include slight differences in the way they calculate compensation; and they definitely include differences in the way inflation is calculated. The BEA numbers used BLS inflation adjustment. CRS uses CPI based inflation adjustment (CPI is a component of the BLS inflation adjustment, but there are other elements included as well).

Workforce increase 16.7%

BEA: cash compensation increase 21% total comp increase 38%
CRS: cash compensation increase 24.8% total comp increase 42.8%

Total payroll increase cash/comp

BEA: 41%/61%
CRS: 46%/66%

So... no matter which numbers you believe, total comp increase is WELL over 50% in 15 years, and according to the CRS cash comp is up nearly 50%; and the lowest estimate is 41%...

Over and above inflation...

Yeah... don't you wish your job had raises like that?

Oh and one more thing...

From the late 1960s, through the 80s and into the early 90s, federal workers as a whole were actually paid quite poorly, as compared to comparable private sector jobs. Their wage scales were originally set at bottom of market to begin with (generally though of as a tradeoff for their better job security and benefits), and the unusually high inflation from 1968 to 1984 had private sector wages rapidly increasing, while federal cost of living adjustments were significantly under the rate of inflation.

This left a population of workers who were dramatically underpaid in comparison to the private sector, all the way through the early 1990s.

Many still are. Those in the bottom 2/3 of the federal pay scale are generally still significantly UNDERPAID, not overpaid as compared to private sector; sometimes dramatically so (permanent non-contractor federal IT staff make less than half industry comparable salary for example).

Those in the top 1/3 though make quite a lot more than comparable private sector jobs.

...Well, that is, until you get to the "senior executive" level, where, once again, they make 1/2 or less what they would in the private sector ($190k a year is the top out. Private sector workers at those levels of education, experience, responsibility etc... typically make anywhere from $200k to over a million, with $400k+ not uncommon).

It is only from the mid 90s that the federal payroll, and specifically average pay (skewed by the top 1/3), began to dramatically outpace private sector pay.

The bottom 2/3 of the federal workforce didn't get very much of that increase.

The top 1/3 of the federal workforce got much larger increases.

Also, there are far more workers in the top 1/3 of the pay scale than there were in 1998. Far more making more than $100k a year, and far more making more than $150k a year.

The middle 1/3 shrank significantly.

So there's more low end, more high end, and less middle...

Not exactly shocking...

The OTHER 17 times the government shut down without the world ending...

Did you know that this is actually the 18th time the fedgov has "shut down" since 1976?

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/25/here-is-every-previous-government-shutdown-why-they-happened-and-how-they-ended/

or:

http://en.wikipedia.org/wiki/US_government_shutdown

These included 1 shutdown for 10 days under Ford; 5 shutdowns in 18 months, for a total of 57 days under Carter (with dem controlled house and senate no less); 8 shutdowns for a total of 14 days under the 8 years of Reagan (none longer than 3 days); 1 for 3 days under Bush; and 2 for 26 days under Clinton.

Mostly these things happen because of the Antideficiency act, which, if an executive branch administrator has been found in violation, can cause them to lose their jobs, and possibly face civil and criminal penalties:

http://www.nbcnews.com/business/143-year-old-law-has-lawmakers-treading-gingerly-during-shutdown-8C11319714

My favorite shutdown?

4 of the 5 Carter shutdowns were because of debate between northern and southern Democrats about whether medicare could fund abortions only in the case of danger to the life of the mother; or whether there should be an exception for rape and incest. The rape and incest northern Democrats eventually won.

Note... there was no "Republican obstructionism" involved... it was southern Democrats vs. northern Democrats on this one...

The scope and scale of the fraud... and the misconception that allows it to continue, and worsen

So, once again, telling people the truth about Social Security produces indignation, and the expression of common misconceptions... to wit:

"Hey wait a second. I paid into Social Security for 47 years. I'm just getting out that I paid in, and the return on my investment. It's not my fault congress didn't do what it was supposed to, and raided the trust fund".

Actually, no, you're not. Not even close.

The first thing is, as noted in the pieces "The Greatest Fraud in the History of the Human Race", and "It isn't, wasn't, aint ever gonna be..."; there is no investment, no insurance, no pension, no annuity, and no "trust fund".

The payments to current retirees are entirely and exclusively paid out of the taxes of current productive workers. Nothing else.

Further, retirees actually get far more out than they put in.

As of 2010, the average retired worker received $1180 per month, or $14,160 per year. This is, in theory properly inflation adjusted etc... So can be dealt with in constant dollar terms.

In constant dollars, the average individual salary has almost doubled over the working life of the current retiree, from somewhere around $13,000 (constant dollars remember) in 1963 to around $25,000 in 2010.

The FICA tax rate is currently 12.4%, currently split equally between the worker, and the employer. Meaning that the average annual FICA contribution is currently about $3100, $1550 by the employer, $1550 by the employee

That's about 1/5th the amount paid out to the average retiree...

If we assume a 47 year working life (actually, the average is 39 years for women who work, and 44 years for men who work, with a national average of 37 years - including non-workers -  but we'll be generous), that would, presuming constant wages in constant dollars, mean a total contribution of about $146,000.

Against an 11 year average retirement, that would be about $13,200 a year... Only the average is actually $14,160, a difference of about $1000, or about 7%.

However, because constant dollar wages have actually almost doubled over the life of the average retiree (meaning that their FICA taxes were much lower for much of their working life; particularly prior to 1984) and because the average working life is approximately 44 years, not 47 years (for men who work... we'll exclude women, as they didn't make up a major percentage of the full time workforce until the 1980s), the actual numbers are much worse...

In constant dollar terms, given inflation (particularly the inflation that occurred from 1968-1984), and the current average lifespan after taking retirement of 11 years; the average social security recipient actually receives 2.7 times in benefits as they paid in (this is the SSA's estimate).

This is primarily the result of inflation, and dramatically increased lifespan. Unfortunately, as no actual return earning investments have been made, it takes the increasing contributions from new and more productive workers, to keep paying down the current payments.

This tells the tale:

Total benefits paid, by year
Year – Beneficiaries – Dollars

1937 – 53,236 – $1,278,000
1938 – 213,670 – $10,478,000
1939 – 174,839 – $13,896,000
1940 – 222,488 – $35,000,000
1950 – 3,477,243 – $961,000,000
1960 – 14,844,589 – $11,245,000,000
1970 – 26,228,629 – $31,863,000,000
1980 – 35,584,955 – $120,511,000,000
1990 – 39,832,125 – $247,796,000,000
1995 – 43,387,259 – $332,553,000,000
1996 – 43,736,836 – $347,088,000,000
1997 – 43,971,086 – $361,970,000,000
1998 – 44,245,731 – $374,990,000,000
1999 – 44,595,624 – $385,768,000,000
2000 – 45,414,794 – $407,644,000,000
2001 – 45,877,506 – $431,949,000,000
2002 – 46,444,317 – $453,746,000,000
2003 – 47,038,486 – $470,778,000,000
2004 – 47,687,693 – $493,263,000,000
2005 – 48,434,436 – $520,748,000,000
2006 – 49,122,624 – $546,238,000,000
2007 – 49,864,838 – $584,939,000,000
2008 – 50,898,244 – $615,344,000,000

You can see that:

from 1950 to 1960, beneficiaries increased by a factor of 4.5, payments increased by a factor of 12
from 1960 to 1970, beneficiaries doubled, payments tripled
from 1970 to 1980, beneficiaries only increased by 30%, while payments increased by 400%
from 1980 to 1990, beneficiaries only increased by 11% while payments more than doubled.
from 1990 to 2000, beneficiaries increased by about 11%, payments increased by about 50%
from 2000 to 2010, beneficiaries increased by about 11%, payments increased by about 50%

These are reflective of the huge jump in expected lifespan between 1950 and 1990, and the massive inflation from 1968 to 1984.

We are about to hit another inflection point however. Or rather, we already have, it's just not reflected in the numbers yet. In the 2000s, beneficiary growth slowed down, because the 1940s were a relatively low birth rate period for the U.S.

In 2007, the baby boomers started hitting minimum retirement age of 62. In 2010, they started hitting 65. The peak of the baby boom was from 1946 to 1959, where we maintained, on average, more than double our previous normal population growth year over year. This is combined with an expected increase in lifespan over previous generational co-horts of 3-7 years; and an increase in real income of almost 30% to 50% over previous cohorts.

So, the REAL fun, is the 10 years from 2010 to 2020... when instead of the typical 1 million or so additional beneficiaries, and 30 billion additional dollars in payments per year, we are expecting 2.5 million additional beneficiaries, and over 100 billion additional dollars in payments per year.

Then from 2020 to 2025, the increased slow down, to just 1.75 million additional beneficiaries... but still over 100 billion additional payouts.

Basically, we're looking at increasing the beneficiary population by about 50%, and about tripling the annual payments, in the next 12 years.

This is happening, just as the earners in peak earning years fall off precipitously. From 1964 to 1975 the birth rate dropped by 30%, and has pretty stayed there ever since.

By 2025, we're looking something like 75 million beneficiaries, and 2 trillion a year in payouts; against probably 125 million productive workers (this is accounting for population growth, as well as retirement growth).

That's $16,000 per year, per productive worker.

Presuming todays average salary per productive worker of appx $25k with a real dollar increase of 3% annualized (the average over the past 100 years) over 12 years, you get appx $37k.

It would require a 45% payroll tax rate to cover that... Which is about 4 times what it currently is.

That's JUST for social security, never mind all other taxes... and that's a fairly optimistic growth rate for both worker population, and worker wages.

... and its obviously completely impossible.

We literally cannot tax our way out of this... We'd have to increase taxes to 100% of income... and then expect to actually get it (which we won't. We've never been able to extract more than 22% of gdp for more than a few years even in WW2, and never more than 19% average over any rolling 10 year period); and it isn't going to fixed by "modest reform".

We are going to have to cut social security dramatically AND raise taxes dramatically... there is literally no other possibility.

Oh... and it gets worse for the following 11 years... well, that's based on todays average survival after retirement... it's estimated that average goes up by 4 years over the same time period... before it starts to get any better... and it's not for 15 years after that, that retirements actually slow below the rate of worker increase...

... and then another 15... or given increasing lifespans probably 20 years at that point... before wages actually increase at a rate higher than retirement payouts.

Oh and the "trust fund"? Yeah, even if it actually existed, it would only be about 2.7 trillion... which is only about 4 years payments at current levels, and 2 years payments at expected future levels. So, even if the "trust fund' hadn't ever been raided, we'd STILL be in this situation.

So... it's 2013... We're already below zero, and if we don't do anything to fix it, we're basically hosed until about 2070.

And it isn't because "you're getting your fair share of what you put in"... You're actually getting 2-3 times what you put in.

Well... for now anyway...

We've already run out of money... The question now is, what happens when we run out of debt, and excuses.

It isn't, wasn't, aint ever gonna be...

I mentioned Social Security as an entitlement payment in my post on the government shutdown, and it raised a fairly common objection in several who read it. They don't think of Social Security as an entitlement, or a welfare payment; they view it as their right, by virtue of having contributed to the system for their entire working life.

So, time to correct a very major, and unfortunately common, misconception.

Social Security, is NOT a pension, nor is it insurance.

Now, I realize that the majority of the American public believe this is so, but they only do so because they have been deliberately defrauded by our government...

First read this to understand the scope and scale of the fraud, and the problem it (now only vestigially) masks:

The Greatest Fraud in the History of the Human Race

Ok... so, by now, most people understand that Social Security, as it is, is essentially a legal Ponzi scheme (whether they accept that, or admit it... if they can do basic match, they at least understand it).

What I really didn't fully appreciate until recently, is that often, even people who understand this is true, don't understand why or how it got that way.

There is a very common misconception, even among otherwise economically, historically, and legally well informed and educated people, that the current state of Social Security is somehow a twisting of what it was intended to be, or taking advantage of loopholes etc...

Many people believe that Social Security was set up to be an annuity based insurance and pension plan. That paying FICA contributions was supposed to buy you into a long term annuity, or investment plan, and that your Social Security payments were intended to be the product of that investment.

They think that the "trust fund" exists, and was set up to collect and invest the contributions of the workers who paid into it, so that the investments would fund the workers retirements.

They believe that the problem with Social Security is that congress has been raiding the trust fund since 1958 (most don't know it was since '58, but they are sure that's why Social Security is broke).

Unfortunately, every bit of this idea is entirely incorrect... and people who hold that idea generally do so, because they were deliberately misled.

I's simply not true... though many... perhaps most... people believe it is; but in fact, Social Security was always nothing more than a pyramid scheme, and an entitlement.

They misunderstand entirely... Because they have been deliberately deceived; as has been the majority of the population.

Social Security was NEVER, EVER, an annuity, pension, or insurance. 

Actual insurance, annuities, pensions etc... were not part of the legislation that created it, or anything thereafter. 

Also, there never was an actual "trust fund" as such... simply an accounting of surplus contributions which were, in theory, to be placed into low yield "no risk" treasury bonds. 

Note, I said "surplus contributions"... this means contributions in excess of payouts to existing recipients. Because benefit payments are not made from the proceeds of investment, they are made using the payroll taxes of those currently paying in today (this is why we call Social Security a ponzi scheme... When Bernie Madoff does it, it's fraud and he goes to jail. When the government does it, it's... well it's still fraud, even worse fraud... but no-one goes to jail sadly). 

The sham of it, particularly the sham of the accounting trick they called the "trust fund" was publicly proclaimed as early as 1936 (by Alf Landon in his presidential campaign). 

Social Security is, and always has been, a tax and entitlement distribution scheme. 

The government lied, and called it insurance, but in fact it has never been anything other than a payments and distributions pool, funded by taxes. 

You can look it up, in 42usc (the section of U.S. code defining the various programs known as Social Security).

The programs collectively known as Social Security are referred to as insurance several times, but in fact they very clearly are not. The legal definitions and descriptions make this very clear. Social Security is a tax and entitlement disbursement scheme, by act of congress. 

There is no individual ownership, no accrued value, no capital gain, it cannot be transferred, and it can be changed (or removed), at will, by congress; without being construed as a taking without due process.

It is NOT INSURANCE.

Perhaps I am not explaining this properly...

It's not that congress went against the intent, or written provisions of the law, and changed Social Security from what it was supposed to be, to what it is...

It's that in fact, the law was NEVER what they told the American people it was. 

In fact, if the law HAD been what they sold it as, then that law would have been declared unconstitutional by the supreme court (as had the earlier railroad pensions act, which actually DID created a property based pension scheme). It was specifically because it WAS a tax and distribution, that congress had the power to do it; and was argued thus before the court in 1937. 

Helvering v. Davis clearly defines Social Security "Contributions" as a tax, and social security "benefits" as welfare payments. This is the basis for it's constitutionality. 

Fleming v. Nestor in 1960, reaffirmed that FICA is a tax, and that the "contributions" are government property, to be done with as the government sees fit; and that "contribution" through FICA did not cause one to accrue a property right to any asset, pension, or insurance scheme, nor did it create a contract consideration, right, or obligation on the part of the government. Further, it affirmed that "benefits" were NOT insurance or pension disbursements, but entitlements by act of congress, and that congress could change them at any time in any way they chose, without being construed as a taking under the 5th amendment (though they did say that they must have cause and due process to do so... but any legitimate cause within their purview would do). 

Justices Black and Reich, specifically dissented from the majority opinion, explicitly and expressly addressing the issue of property rights. They believed that such contributions, to such a program, SHOULD as a matter of moral and public good, be considered property, and have property rights attached. They acknowledged however that the law as written did not, and that by strict interpretation the majority was correct... They just thought it was better to make it property anyway. 

Unfortunately, it's not... It is neither a pension or insurance, and never has been, from the very beginning. 

However, almost every explanation ever given the public, and in most documentation, it is referred to as insurance, or even a pension.

All as part of the greatest fraud in the history of the human race.