American Economics: 101




Ok..let’s talk about Economics for just a moment.

Let’s talk about AMERICAN Economics.  

The article I linked above is the latest in a long list of examples of Republicans “not getting it” when it comes to the working class.  Still, in the last election, they managed to win over a large portion of the blue collar voters.  This is complex, since the Democrats were always known as the “working man’s party”.  

So, could it be that extreme conservative socio-religious values are superceding the need for self-preservation?  As in, are working-class voters more concerned with gay marriage and abortion than they are in whether or not they have a roof over their heads, a job to get paid from, or a future for their children.  

I know what you’re thinking.  “Ugh!  Another political post”.   

Well.  I mean.  Yes.  But I’m not really attacking anyone.  This is me hoping to offer a perspective on the controversial minimum wage debate.  While debating her opponent, the Georgia GOP candidate made a comment that she is against raising the minimum wage.  “I do not support a livable wage. I support making sure we have an economy that is robust,” she said.  First off, let’s pause and approach this statement with pragmatism.  Regardless of your opinion on raising the minimum wage, look at what she SAID.  

First, to be fair, she later said she was referring to the federal mandate and not the actual wage.  As in, she doesn’t support a federal minimum wage.  I’m not so sure she helps her case, but she and I disagree so let’s leave that there.  

She SAID, “I do not support a livable wage.”  Those words alone should concern you.  Because this wasn’t a slip of the tongue.  This was a response to a straightforward question.  I’m inclined to believe this is something she truly believes.  So, to NOT support a livable wage means that she believes that SOME people (not her, I’m certain) should work for a sub-livable wage.  In other words, some people should work full time or more to still not make ends meet.  Some people don’t deserve a shot at the American Dream.  That is only for certain people.  Elites.  Right?  That attitude should concern you, regardless of how your bank account looks.  If it doesn’t, reading the rest of this won’t make sense to you anyway.  Have a good evening and thank you for your time.

Still here?

Great!  Now, look at the second part of her statement and let’s dig in our heels for some economic theory.  

Saying she isn’t in favour of a minimum wage, livable or not, she goes on to say, “I support making sure we have an economy that is robust”.  In other words, the two are mutually exclusive.  

This is where the divide in this debate is.  

But what if I told you mutual exclusivity does not apply here?

What if I told you that it isn’t that YOU are wrong…it’s that you just haven’t seen this from the proper angle.  That isn’t a knock on your intelligence.  It just means I’m saying something you haven’t heard of before.  It doesn’t mean I’m smarter than you are.  You can think this makes sense and it is going to be OK.  

First, I’m going to tell you WHY this works.  I’m not going to throw the Netherlands or Seattle in anyone’s face.  I’m actually just going to give you my opinion.  I’m not offering references or even hardcore facts, aside from what I know in my head.  I’m doing this deliberately.  Anyone can search “Examples of higher minimum wage success” and find a plethora of articles.  This is simple and doesn’t warrant that much effort on your part to decipher.  If I need to go that far to convince you, I doubt you’re going to be on board anyway.  

Second, I’m going to tell you HOW this works.  I know, I am giving you all of my cards up front.  Here’s the thing.  I don’t get paid to do this.  I’m giving up a game of Madden to write this blog.  I don’t expect the world to change, but this makes SO much sense to me, I want YOUR input too!  I want you to comment and tell me your thoughts.  I am open to being wrong.  I just don’t think I am in this case.

Last, I’m going to tell you the perspective you haven’t considered in how all of this came about to begin with and, again, I’m not going to bore you with references and examples.  We all know about NAFTA and the Telecom act and legislation that loosened regulations to allow some to gain wealth, but cost the working class their futures.  We all know what happened with the unions.  I’m not even talking about that.  I want you to think about our economy from an alternative perspective and then you will see it from a completely different point of view.  

So.  Back to the article.  Her statement speaks to a cognitive dissonance among many in this country, Liberals and Conservatives alike.  Yes, there are those on the Left who don’t believe the minimum wage should raise and even some, I’m sure, that oppose it’s existence altogether.  

A livable wage and a robust economy are not mutually exclusive, and here’s why:

Taxes play a HUGE part.  Yes, you have no choice but to play the game of corporate favours.  It’s politics.  Follow the money on industrial parks in small counties and who got what in order to get it located where it is. It’s big business.  It can be corrupt, but it is a game we’re pretty much forced to play.  Think of it like taxpayer funded professional sports stadiums.  Nobody likes the idea of it, but it’s hard to argue that it can bring economic positives along with it.  Making sure an environment exists so that businesses can operate at a considerable profit for those who own them is the backbone of a Capitalist economy.  However, what we’re experiencing now is Capitalism run amok through a funnel of Trickle Down Economics.  

We need to flip that funnel back over to what made America great.  The American Dream.  And that Dream cannot exist in a vacuum.  Right now, all of the air is being sucked out of the room by those at the top while the piece of the pie left for the rest of us is getting smaller and smaller, into crumbs.  I know, I sound like a left-wing wackjob, right?  

My philosophy works.  It makes sense.  And here it is.  

But first, I spent several years in the retail automotive sales business.  I was a car salesman and sales manager.  But what I saw during that time shocked me.  What I learned about our economy changed the way I think about everything!  The biggest thing I learned in car sales is the SECOND biggest game-changer to our economy that would cause it to explode.  I will discuss that in a moment.  

Now, for the single biggest game-changer for our economy:

There is NO more effective injection of life into an economy than placing more consumers into the market.

Please, just follow me for a moment.

Placing more consumers into the market creates a revenue flow that cannot be matched.  All of the corporate tax breaks you give won’t come close to the power of paying a livable wage.  Not unreal- just a wage that keeps up with costs-of-living and inflation.  

In a moment, I’m going to discuss the SECOND single biggest game changer to our economy.  But the first is certainly giving workers a livable minimum wage.  But they’re both game changers and for the exact same reasons.

“Josh, you’re wrong.  The stimulus that was put out several years ago proved that.  Other than an initial jolt, it died out and we fell even harder into recession.”

Ok.  Maybe.  But stop and think about that.  

A stimulus, or a considerable, lump sum of money, was dispersed to a large group of consumers in the country.  A large group of consumers who were already in debt, behind in their bills, laid off from work, desperate and drowning.  Much of that money paid past due bills.  Some came into the economy.  But, it fizzled out and was seen as a failure by many.  

But, if we examined it a little deeper and turned our camera angles just slightly, we would see that by giving consumers an adjusted, livable wage, based on current economic realities, we would then be stimulating the economy every two weeks, with every single paycheck.   
Because of the second thing I will discuss in a moment, these consumers now have a credit score AND a disposable income.  They are buying homes and cars and recreational vehicles like motorcycles and RV’s, boats and 4-Wheelers.  These consumers are upgrading their televisions and wireless devices.  They go out to eat more.  They get much needed repairs done to their home and car that they had put off for so long.  They build a deck, install a pool or go on a vacation!  Again, I don’t need to give you examples.  It is a fact that this type of mentality is working elsewhere, even in this country.  

The key to this is: 

1)  Workers in America deserve a livable wage, enough to ensure that a full-time job doesn’t lead to poverty, and 

2)  We must find a compromise, so that medical debt doesn’t count against credit scores.  This would be the second biggest game-changer for our economy and we do this for several reasons:  First, the medical and insurance industries are a wreck.  A very few are getting incredibly wealthy while the rest of us are going broke.  Let’s not even debate “Healthcare as a right” or not.  Let’s just discuss the pure economics of it.  At very least, the credit bureaus need to look at medical debt differently and not hold that against a buyer.  As in, because a corporate, for-profit hospital is permitted by the government’s collusion to charge limitless fees for services, doesn’t mean it should count the same as real, actual debt.  I know.  You’re going to argue that determining what is a ‘real’ debt and what isn’t is a slippery slope.  “Who then decides that $30,000 is too much to pay for a car, so then repossessions don’t count too?”  Not so fast.

Big business needs to be reeled in.  When a small percentage of CEO’s rake in bonuses in the millions while this industry negatively affects a large population of consumers, I believe that should be considered.  But this isn’t about my opinion, necessarily.  I am simply saying that the ramifications to our economy as whole are so great that it is worth taking a step back and looking at from different angles.  

But back to the minimum wage.  We’re dealing with so many different ideologies.  Some don’t believe the federal government has the right to dictate what the minimum wage is.  They would rather not have a minimum wage at all, or in some cases, place the power in the hands of each state.  That, I feel, is ineffective, but another debate altogether.  

This is about raising the minimum wage that exists to a livable level.  

Please don’t tell me it hurts business.  For that, you’re being shortsighted and terribly cynical on how our economy works and it shows you haven’t done your research into where higher wages DO work.  I have discussed this with businessmen and owners who see a wage hike as a death knell.  But it isn’t.  And I’ve already explained why this works.  

Now I will explain HOW this works and then, offer a perspective to the minimum wage that you probably haven’t considered before.  

These consumers no longer have medical debt keeping their credit scores so low they can’t participate in the market.  Plus, they are making a livable wage.  Imagine the possibilities!  Now, we have more participants into the economy.  I’m no expert, mind you.  But this makes sense if it can be done right.  Let me explain.

In the case of the medical debt, I have already addressed how that would work to the best of my economic expertise.  This compromise is going to have to be hammered out by experts because there is so much at stake.  But the minimum wage?   It’s simple.  We begin with a small raise to $9.25 by June, 2018.  By the next year, the minimum wage raises to $10.50.  By 2020, we have workers working for a minimum wage of $12 nation-wide.  By 2023, 5 years from the initial hike, the federal minimum wage would incrementally be increased to $15 an hour.  Don’t get caught up in the math semantics.  I just threw numbers out there.  The point is that by 2023, the minimum wage would be where it needed to be.  

Stop freaking out.  This is 5 and a half years down the road.  Plus, we’re incrementally giving more money to consumers.  We are also, at a cost to the taxpayers, helping business through this transition for a period.  This money will be returned to the consumer through special tax incentives and possibly a stimulus once the economy recovers.  But before I get too far ahead of myself, let me focus on these tax breaks, since that is a touchy subject for most.

This philosophy works, combined with the right mix of tax incentives to consumers as well as businesses.  The key is understanding that we are already offering businesses welfare.  Corporate Welfare is when the government imposes tax breaks and economic favours to companies for various reasons (keeping jobs in America, for one) that the company then turns around and uses to line the pockets of their CEO’s.  I’m actually arguing in favour off Corporate Welfare.  It’s just that, in this case, the incentives would be given to ensure the employees would be paid a livable wage.  Think of it this way:  Walmart gets the same economic considerations from the government as they do now.  It’s just that they must now use those economic benefits to pay their employees a more livable wage rather than make the Waltons richer than they already are.  This incentive would last until the minimum wage reached our goal and possibly a bit longer, depending on the specifics of our economic growth by that point.  

And no, I’m not against the wealthy, corporations, or big business.  I’m not a Socialist.  I just believe that the economy works when everyone is able to participate in it.  And HOW this works is simple:  CEO’s and Corporations and businesses will still make money!   In fact, they will make more money than they every dreamed of making.  Because, instead of 25 prospects coming through their door in a month, they all of a sudden have ONE HUNDRED AND TWENTY FIVE prospects coming through their door EVERY month!  

I’m not saying 5 times as many people will buy RV’s.  But all-in-all, most of us have a “if I had the money” list of dreams we wish to fulfill.  Don’t you?

The money WILL go back into the economy.  Unlike the previous stimuli that have been released to the public, this would be ongoing, every two weeks with every paycheck.  The consumer drowning in past due bills would be able to use that money to go see a movie or take a road trip instead of catching up where they are behind.  They will be caught up moreso because they are making a livable wage.  At very worst, it is in banks and cycling through the economy that way.  But I guarantee the economy would boom.  How do I know?  

Because I remember when it was booming.  Don’t you?  

You see…the 9/11 Terrorists took down several buildings, killed over 3000 people, and stole our sense of security. The terrorists also did exactly what they set out to do.  They created Terror.  

They also hurt us more than any other enemy we have seen since Adolf Hitler.  They terrorized us AND our economy!

9/11, if you can remember, shut down this nation.  But it wasn’t just America.  Global travel and “business as usual” was ceased for days, weeks.  Some industries didn’t resume for months.  For the travel industry and others, it was years before they bounced back and some others who made it through are still struggling.  People stopped flying altogether.  We stopped buying cars.  We didn’t buy that house.  We rented instead.  We didn’t go out and buy that motorcycle because the plant we work at hasn’t been online since the towers went down.  

Now, I want you to try an experiment.  Remove your belt.  Now, tie it around your neck and pull as tight as you can.  Tighter.  Wait…don’t do this.  Just imagine it.  How long do you think you could stand before falling over?  A day?  A week?  A month?  Years?

Minutes, you say?  You think maybe 60 seconds of that and you’re down for the count?

If you look at the economy, the world’s economy, the American economy, or even the economy of your household, one thing is clear:    

The Economy is a LIVING, BREATHING ORGANISM.

Except, the blood flow is money.

Just like you can’t cut off the blood flow to your brain for more than a few minutes without significant damage being done, the economy cannot withstand that kind of attack.  

And in September of 2011, that’s exactly what happened.  We had a belt tied around our neck and the blood flow ceased.  We lost blood flow for days, weeks, months and even years!  There are businesses that existed, entire industries in some cases, before the attacks that no longer exist.  How many airlines shut down due to the economy?  Restaurants?  Clothing stores?  Malls?  Yes.  The Digital Age and Amazon are taking their tolls.  However, without 9/11, we wouldn’t be where we are and those businesses and industries might have had a little more life in them.  

It’s hard to argue stores like Sears, JC Penney and K-Mart still being relevant in this economic and consumer atmosphere.  Still, I would argue that their demise wouldn’t be so imminent had the economy not had its blood flow halted.  Possibly, if some of these businesses or industries weren’t so focused on keeping their lights on they could have shifted focus to innovation to remain relevant.  

You see, the economy, like so many things, is cyclical.  And while on the surface it may seem absurd to think that in 2017, we’re still reeling from the aftershocks of an event that took place nearly 16 years ago, it isn’t that absurd at all.  As a matter of fact, I need only say two words for you to start shaking your head in agreement.  “Butterfly Effect”.  One event 16 years ago is STILL having its effect on us today.  If I didn’t have to sell my house at a loss in 2010, would I be in a better position today?  If my father’s construction business hadn’t suffered after the housing market bombed out in the mid 2000’s, would he have left me something more?  

The terrorists attacked the World Trade Center.  It was a symbolic hit for them, but practical in that it took down our economy.  

Now, I could very well say “raise the minimum wage or the terrorists win”, but that’s passe and not entirely accurate.  However, as corny as that may be, it offers food for thought.  How do we TRULY make America great again?  By ensuring that WE are a superpower in this world.  By making sure we are leaders in human rights, economics, innovation and education.  We do this by raising the minimum wage, folks.  

Higher, more livable wages, means more people go to school and get educated, at the very least.  

Simply by raising the minimum wage, incrementally over the course of several years, and adjusting how medical debt is interpreted on a credit report, we will see the single biggest boon to the economy this nation has ever known.  

The saddest part is that many still believe that the best route is deprivation of the masses for the overindulgence of the few.  This is terribly closed-minded and a dangerous way of thinking as eventually it leads to demise.  It is a failing business model.  We have seen that.  We ARE seeing that.  It’s time to look at this differently.  

Understanding that even 16 years later we can still be feeling the after effects of a horrific event is important.  Also, understanding the legislation enacted before and after that event which enabled an environment where banks or automotive manufacturers needed a bailout in the first place is unAmerican.  It goes against the very foundation of this nation and that is preserving and promoting The American Dream.  

And the worst of this is that, even with today’s economy the way it is, $15 an hour is just livable. 

Now, I know you’re going to suggest that why should a fast food worker get $15 when you only average $21 with a degree.  That’s not fair, right?

The minimum wage is the standard-bearer.  The minimum wage is just that.  It is the MINIMUM wage a company can legally pay you to perform a task.  Think about that.  The minimum wage is just how cheap they can get away with paying you.  In other words, if they COULD pay you less, they WOULD.  They just aren’t allowed to because law.  

So, if the MINIMUM wage was set at $15, doesn’t it make sense that, eventually and incrementally, your wages would ALSO increase?  

Yes.  It would be forced to.  Because, why fight through the stress and headaches of management for $20/hr ($41,600/yr) when you can make a living at $15/hr ($31,200/yr) doing “a minimum wage job”.  

Wages have no choice but to match, over time, eventually and incrementally.  

But I’m playing the long game.  I’m not looking at 2023, when this would be implemented.  I’m looking at 2053, thirty years and an entire generation down the road.  

I believe this theory holds.  I believe this is the key to understanding our economy and how it actually works.  I believe that over time this creates a stronger middle class, stronger workforce, more educated society and a flourishing, “robust” economy we can ALL participate in.  

What do you think?

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