6.27.2014

Taxes, Minimum Wage, and how they relate to the Poor and Middle Class.

The marginal propensity to consume and demand side economics are today’s topics.  I’m going to discuss a little bit about taxation and wages, and how if you look at things from a demand perspective (which Libertarian/Conservative/Republican legislators are loathe to do, because it reduces income inequality) it works out where everyone benefits.  The long definitions I’ll get into in a minute, but right now, let’s consider a few very topical implications.  

A McDonald’s worker, for example, a married parent of three children and in their mid-20s is out of work elsewhere, and doing what they can to provide for their family (roughly half of workers paid the federal minimum wage are over 25 years old).  Imagine that they get a jump from $7.25 an hour to the total of $10.10 an hour.  That’s nearly $3 more, per hour that they spend at work that they can now spend elsewhere.  It’s almost a complete guarantee that those three dollars are going to go back into the economy.  That is the marginal propensity to consume.  For lower income workers, the impoverished, and even the Middle Class, the MPC is much higher than for the wealthy.

Anyway, let’s get some specific definitions out of the way.  The Marginal Propensity to Consume is the proportion of an aggregate raise in pay that a consumer spends on the consumption of goods and services, as opposed to saving it (Source).  In economics, the word marginal means basically “next,” “additional,” or “change.”  So, the MPC is the “next” “likelihood” to “spend money on goods or services.”  In the source I linked, the question arises, if you get a $500 bonus at work, what do you do with the money?  If you spend $250 of it in the economy, and save $250 of it, you have a .5 MPC and a .5 MPS (S means save) equaling a total Marginal Propensity of 1.  

This economic construct belongs in a side of economics that is not discussed much in America because our politicians are extensions of corporate lobbyists rather than independent thinkers (thanks to Citizens United and other like activist SCOTUS rulings, in which corporations are considered people, money is considered free speech, and therefore, people (corporations) can give as much free speech (money) to politicians as they’d like to).  The side of economics I am speaking about is of course Demand Side Economics.  Demand side economics differs from the more commonly discussed Supply side economics in a few very important ways.  The way that I’m most concerned with right now is the idea that Demand side economics incentivized consumption, whereas Supply side incentivizes production.  In Demand side, the poorest citizens receive the greatest marginal incentive, and in Supply side, the wealthiest citizens are incentivized.

So, here we are, having bought into the Corporatist Propaganda Myth that the poor are lazy, dirty, disgusting, and not worth our time.  In fact, according to this propaganda, we should give the wealthiest citizens monetary incentives and they will “hook us up” with the idiomatic “trickle down” (thanks, Reagan).  If we incentivize the corporations, if we give them a larger chunk of revenue, if we decrease their social obligation in the form of taxation, well, then, they’ll just hire more people as they continue to produce more and more.  They will also buy more things, like boats, yachts, more houses, more cars, and they will keep our economy afloat with their large concentration of wealth.  Well, herein lies a large issue that we continue to ignore economically in this country: the wealthy like to save and invest their money, which in fact is detrimental to a struggling and rebounding economy on the scale that it is happening right now.  Their MPC is extremely low, since they already have most of the things they want to consume, any additional money has no purpose being used on consumption marginally, and is therefore saved marginally.  Economies cannot survive periods of time consisting of large-scale marginal saving.

On the other hand, by giving a higher minimum wage and by granting tax breaks to the lower income families (as well as manipulating the interest rates and encouraging government spending in the economy) suddenly, the consumers are incentivized.  In my earlier example, $3 more per hour added to a minimum wage worker will almost assuredly be spent in the economy as opposed to being saved or invested.  The more money we incentivize towards lower income earners is going to be more money that ends up back in the economy.

The thing about incentivizing the consumers is that the consumption is a long term concept.  Incentivizing the producers is short term and temporary, and has to be continually renewed.  Frequently incentivizing production will result in artificial production increases or artificial production decreases.  Eventually, federal subsidies will be granted to the producers to not produce because of the surplus resulting from increased production and stagnant or decreased consumption.  Supply side economics can never work in any system that is not plutocratic in nature, regardless of how much money is given to the wealthy in the form of tax breaks, subsidies, or decreased wages for the poor.  Income inequality is the only result from Supply side economics.

I know I didn’t touch on very much in the post, and I know that this is by no means all encompassing.  Like I’ve said before, it’s just my opinion.  I hope it makes someone at least realize the truth of the economic situation we currently live in, though.

6.1.2014

This blog entry is going to be about privilege.  Not the misrepresented version of the word privilege as it is used in social standing, but the real version of privilege.  This is not a statement that being white or male means that you can run by a cash machine and get your extra money.  It doesn’t mean that you get anything you want.  It means something much more nuanced.  In addition, we’re going to also say a few mean things about the establishmentarian views of certain political affiliations in this country, and maybe someone will learn something, or at least be willing to consider other thought.  Really, privilege denial takes place across political party lines.  It is not a Republican or Democrat issue.  However, the most outspoken about the denial of privilege are usually older white middle class males, the prime constituent in the Republican Party.

First, let’s just go ahead and get the definition of privilege out of the way.  It’s going to be a hot topic, so it just makes sense to start out with it.  It is a special right or advantage available only to a particular person or group of people, or at least predominately available to only a particular group of people.  Privilege means not having to worry about whether or not your specific characteristics define you as a person.  For instance, imagine that you are in a sub sandwich place and someone in the back of the line starts screaming at the top of his lungs, “Come ON!”  “Hurry the fuck up!”  “I got somewhere to be!”  If the man is a white man, he’s probably thought of as an asshole, and that’s that.  If the man is a black man, at least a sizable portion of the other people in that place are going to think something negative about African American, or about him being black.  If the man is not a man at all, and actually a woman, then even more vitriol is thought about in regards to her bitchiness, her hormones, or her menstrual cycle.  And if that man is an overtly effeminate man, then his sexual orientation would be in play.

Privilege is not an individual characteristic.  Having white privilege does not necessarily mean that I have specific advantage.  It does not mean that once I accept that I HAVE white privilege that the world is expecting an apology.  What it means is that whenever I do something, get a job interview, get pulled over by the cops, walk down the road at night, walk into a classy restaurant, or get a driver’s license, whatever it is, my characteristics like “whiteness,”  “maleness,” or “straightness” never come into play.  THAT is the privilege.  I know, with almost 100% certainty, that when I get pulled over, it’s because I broke the law.  I know that if I get a pay cut at work, I’m probably not performing well.  In fact, I know that any discussions regarding my competence at work at all are based exclusively in my level of competence, and not my race or gender.  I know that if someone tells me to shut the fuck up, it’s because I’m actually saying something that warrants that reaction.

It’s hard to explain privilege, really.  It’s a concept that has taken me most of my life to wrap my head around.  If someone doesn’t understand that it exists, then my few paltry examples are probably not going to actually change their minds.  I think that maybe a better way to explain it is to apply empathy.  But really, being in a position where you have the ability to deny that privilege exists, to be able to deny racial, gender, orientation inequality exists, is in itself in fact an explicit benefit of being from a privileged group.