In 1995, we encountered a group of economic advisors to Governor John Engler of Michigan, intent on cutting property taxes. We reminded them of California’s 1979 Proposition 13. After Prop. 13 rolled back and froze property taxes, sales taxes reached crushing levels, budget crises became routine, local services collapsed, and public schools fell from the best in the nation to among the worst. But Engler was determined. . . . → Read More: How a Progressive Tax System Made Detroit a Powerhouse (and Could Again)
It was the perfect “natural experiment:” in April 1992, New Jersey’s minimum-wage was scheduled to rise from $4.25 an hour to $5.05, while neighboring Pennsylvania’s minimum wage remained unchanged. Princeton economists David Card and Alan Krueger surveyed over 400 fast food outlets in both states, before and after the increase, in order to test the conventional economic wisdom that minimum wages cause unemployment. What did they find? No apparent effect on employment. None. Zip. Economic hell broke loose… . . . → Read More: The Economics Anti-Textbook: A Critical Thinker’s Guide to Microeconomics, by Rod Hill and Tony Myatt
Conventional economics wittingly or unwittingly provides cover for the One Percent, by professing that “the market” operates benevolently on its own. Alex Marshall gives us an entertaining, thoughtful, and well-written antidote to this dangerous abstraction. . . . → Read More: It Takes Government to Create Markets: Alex Marshall’s The Surprising Design of Market Economies
As most of us know, sales taxes are “regressive.” That is, when sales taxes are “passed on,” they fall harder on poorer customers than on richer ones. That’s why many states exempt food and medicine, as does New York, (except for restaurant food). But sales taxes are also “passed back” onto retailers and service providers. It’s the “passed back” portion of sales taxes that do the most damage, because—unlike profit taxes—they take a bite from gross revenues before expenses. Sales taxes fall hardest on small, labor-intensive retailers, with high volume and low profit margins.
. . . → Read More: Grover Norquist is Right to Oppose Internet Sales Taxes
The Washington Post April 21 headlines an article “Wall Street betting billions on single-family homes in distressed markets.” The article continues, “Drawn by the prospect of double-figure profit margins on rents and the resale of homes whose prices plummeted in the crash, hedge funds, Wall Street investors and other institutions are crowding out individual home buyers.” . . . → Read More: How to Fix the Great Real Estate After-Bubble
On the NewsHour Friday night, in response to the dismal new jobs numbers, Andrew McAfee of the MIT Center for Digital Business blames the loss on “powerful” new labor-saving technology. But if he’s right, is it the technology itself, or the large corporations that install it? . . . → Read More: Is New Technology Destroying Jobs?
When I read David Cay Johnston’s new book, The Fine Print: How Big Companies Use “Plain English” to Rob You Blind, realized that robbery is the least of it. Utility monopolies—a major focus of the book—increasingly cut corners on safety. ne such corner cut is coming to a neighborhood near me: it is a 30-inch high-pressure gas line passing under the Hudson into the West Village and heading north under Tenth Avenue. In December 2010, a 30-inch gas line blew up a block in the San Francisco suburb of San Bruno, excavating a 4-story-deep trench, leveling 35 houses, killing 8 people and injuring 60 more… . . . → Read More: The Monopolists in My Back Yard
Joseph Stiglitz says that “Inequality is Holding Back the Recovery”. He’s right, but he gives the wrong reason, that “our middle class is too weak to support the consumer spending that has historically driven our economic growth.” This “Keynesian” spending model does not effectively address inequality and thus can lead to poor policy prescriptions. The real reason inequality stalls the economy is that natural resources and capital are monopolized at the top, kept away from the middle class that could invest them far more productively. . . . → Read More: Joseph Stiglitz Is Right About Inequality, but for the Wrong Reason
My son is a low-wage worker, a short-order cook. President Obama just called for an increase in the federal minimum wage from $7.25 to $9.00 an hour. Yet he made no effort to save the “temporary stimulus” 2% payroll tax cut, which expired at the end of 2012. That will cost workers like my son about a week’s gross pay over a year—not insignificant when you’re barely scraping by. So what’s better for low-wage workers: an increase in the minimum wage or a decrease in payroll taxes? . . . → Read More: Raise the Minimum Wage or Cut Low-Wage Taxes?
What’s the connection between the battery fires that grounded Boeing’s 787 Dreamliner and the massive failure and recall of Johnson & Johnson’s metal hip implants? Both are consequences of the recent transformation of multinational corporations from manufacturers to monopolistic distributors who contract out production–a transformation first documented by journalist Barry C. Lynn . . . → Read More: The Prophetic Work of Barry Lynn