Wednesday, October 8, 2014

This post contains two letters, both urging a NO vote against McClintock for Congress. 
First a Letter to the Editor at Sierra Star, October 7, 2014, 
Next a Letter to the Editor at Mariposa Gazette, October 7. 
Both have links to references for relevant facts. 


I urge a vote against McClintock for Congress. Our economy suffers from extreme inequality. We need a public jobs program, as proposed by the Congressional Progressive Caucus. They  propose to spend $450 billion each year for a three year period on infrastructure projects, energy efficiency retrofitting, home health aides, and teaching aides. Many prominent economists support this proposal as well as 70 House Representatives, members of the CPC. (and see here and here and here where the former Secretary of Treasury advocates such a plan)

This would create 14 million new jobs (see here, page 11). With 102 million full-time and year-round jobs, this would add 14% more FTYR jobs. During the Great Depression FDR’s deficit spending created public jobs, and the unemployment rate dropped from 25% in 1933 to 9.6% in 1937 (see here). During WWII public jobs for the war mobilization increased employment by 40%, a colossal increase in 5 years. The economy expanded by 75% in six years the fastest rate ever, albeit for the unfortunate purpose of waging war. (This information taken from Samuel Rosenberg's book American Economic Development Since 1945, page 20)

Creating 14 million new jobs would press upwards wage rates across the economy and that would benefit 81% of  all workers who are employees (see here, General Questions, #11 and here)-- higher wages means higher income for more families. It’s that simple. A public jobs program is temporary until purchasing power recovers and a self-sustaining expansion recovers the economy. Labor’s share of the national income today is at a historical low. Corporate profits are at a historical high (see here among many sites). 
Today the collective income of the highest-earning 1% of households is greater than the collective income of 60% of households (see here), and their wealth is greater than 92% of all households -- extreme inequality. 

But McClintock would abolish the minimum wage and eliminate mandated over-time pay;  he would squeeze government spending to its minimum, and literally gut the government's social benefit programs (see here for a detailed critique) . McClintock’s policies will worsen conditions for everyone. 

Ben Leet, 

to the Gazette:

Letter to Editor,     

I urge people to vote against McClintock for Congress. We suffer from extreme inequality and his program will only make matters worse. Today the income of the highest-earning 1% of households, collectively, is greater than the collective income of 60% of households, and their wealth is greater than 92% of all households. About half of the nation's households and families cannot afford a modest life style, the bare necessities of life, and this is borne out by research in normal family expenses and income. Recently a Pew Research survey found that 40% of Americans say they are "lower class" citizens, while 44% say they are "middle class" (see here). Almost a majority of the nation feels pinched. Yet the averages of income and wealth  tell us we are very well off. The Bureau of Economic Analysis tells us the "disposable personal income" for every citizen, all 320 million of us, after paying taxes, has reached $40,786 (see, personal income). Therefore each household of four has a post-tax income of over $160,000 per year -- on average. And the Federal Reserve reports that the average savings for all households, all 120 million of them, is $665,000 (see here, page 2). But we know this is not an accurate portrayal of most, the average family's, finances. We could create conditions that raise wages and family incomes, but that would require government to step forward with an employment program.  

Many prominent economists have for years been promoting a public job creation policy to alleviate the poor economy. 
But McClintock's approach is to abolish the minimum wage and to eliminate legally mandated over-time pay, to squeeze government spending to its minimum thereby further exacerbating the reduction in consumer spending, and to literally gut the government's social benefit programs. 

A little reported but important fact is that the nation's private wealth in the past six years has increased by 47%, a stupendous increase in a short time, a $25 trillion increase in the value of financial assets (see here again, page 2). Most of this gain has gone to the already wealthy 5% of household who own 75% of all financial assets. A financial transaction tax would touch only a minority of households, and like a sales tax on ordinary sales, it would go directly into the general fund to finance a $450 billion per year public jobs program that some economists predict would create 10 million public jobs and an additional 4,140,000 private sector jobs, a total of 14 million new job openings. Since 2007 the labor force participation rate has fallen to a low not seen since 1978, and if the workers who dropped out of the labor market since 2007 were included in the unemployment rate, the rate today would be 10.9%, not the official 5.9%. With an additional 14 million jobs the rate would drop to 2.4% (see, from this Table A1 one can make all the calculations). The self-sustaining expansion of the economy that everyone desires would be achieved. The jobs program would disappear as the economy reflated its consumer purchasing demand. (That's economics talk for "things would get a lot better".) 

The agenda of McClintock and the Ryan Budget is opposed to any such plan, and a vote for him will just make matters worse. 

Yours,           Ben Leet 

I write a blog, Economics Without Greed, and I will post this letter and a longer version with references to the facts.