The New Consumer Math

Joe Doakes from Como Park emails:

In the olden days, waitresses got less than minimum and earned the rest in tips.  It created a moral obligation to tip: if you can’t afford the tip, you can’t afford the meal, you owe her a tip as part of her wages.

Now that waitresses make $9.00 hourly, they don’t need to rely on tips to supplement wages.  They can quit trying so hard and I don’t need to feel guilty about not tipping, right?

Joe Doakes

Oh, why not?  Every other consequence of political manipulation of wages is unintended; why should quality of service be any different?

 

The Shallow, “Message”-Obsessed Left’s War On Women

Joe Doakes from Como Park emails:

New York bar charges women 77 cents on the dollar because . . . pay equity?  Great deal . . . for ugly women.   Pretty girls never pay for drinks.  And most of the wait staff is women, who work for tips, which are based on total tab, which is now 23% smaller.  So women get paid less to protest women getting paid less?  Genius.

Joe Doakes

So will the female servers be giving part of that to the ugly male bartenders, who don’t make nearly as much as they do?

Doakes Sunday: DIY

Joe Doakes from Como Park emails:

Starving workers demand living wage, but only from national chain restaurants and only in the New York City limits.

 

That’s okay, I already bag my own groceries and pump my own gas.  I’m ready for the fast-food touch-screen order menu.  I can enter “No. 5 Extra Value Meal, Small Coffee, 2 Splenda, 2 Cream, To Go” as well as that minimum wage worker can, so go ahead and lay her off.

 

Joe Doakes

And it’ll be boom-time for UX designers in the kiosk business.

Patching The Balloon

Joe Doakes from Como Park emails:

Fannie Mae used to allow 97% loan-to-value meaning you only had to have 3% down to buy.  After the crash, they lowered that to 95% meaning borrowers needed to save up 5% to buy.  It turns out women and minorities are hardest hit by that change.  So Fannie Mae raised it again to 97%.

 

They point out that only 7% of all such 97% loans given between 1999 and 2012 went bad, about the same as all other loans.  What could go wrong?

defaultrate

Yes, and if you started with all loans since Moses, it’d be an even smaller percentage.  Look at the loans given in 2007, when prices were at the max and everyone knew the crash was coming but the feds were still signing up any warm body they could find.  28% of the low-money-down loans failed.  And by 2011, lending restrictions were so tight nobody could qualify for a house so none of those loans went bad, which makes the overall percentage look even better but means millions of people lost homes they should never been able to buy in the first place.

 

I can’t help but wonder if this is the start of another boom-bust cycle in housing.  Are we intentionally repeating the mistakes of the past because it would be politically incorrect not to?  Has fiscal sense gone completely out the window?

 

Joe Doakes

Or does crisis become the current regime?

A Thousand Words

If there’s one thing I cordially detest about social media today, it’s the photo-memeification of all political debate.  On Facebook and Twitter, thousands of people can pass along a graphic, often wrong, frequently giggly/snarky photo in lieu of understanding an issue or being able to state a coherent case.

But sometimes they’re right:

I’ve been harping on the workforce participation numbers since 2011 – and they’ve just gotten worse.

And the fact is, if we’re ever going to reduce that debt figure (which doesn’t, by the way, count all the other unfunded entitlements that are floating about in the ether in numbers that look like they should be expressing Zimbabwean currency), it’s going to take actual productivity – which you’re not going to get when a huge percentage of your most-nominally-productive population are sitting idle, having given up hope that the economy will find a place for them.

(“But Mitch”, someone will no doubt say, “the workforce number reflects the number of baby-boomers that are retiring!”.  Sure, some of it.  But the percentage of Americans over 65 who are at work has actually risen – alone among the age groups – since the recession started.  And people drop off the Bureau of Labor Statistics’ figures after 70, so any retiring boomers will be out of the statistical picture momentarily, here…).

Ghost Of Crisis Future

“Progressives” the world over are pretty much all the same.  Kevin Williamson on the Greek crisis:

When Greece’s sham economy went ass over teakettle, it agreed to a bailout package, finalized in 2010. That deal is now widely blamed by the Left for exacerbating Greece’s economic crisis with excessive “austerity.” The problem with that line of argument is that there was no Greek austerity: Greece lied about its debts before the crisis, and it lied about its reforms after the bailout. It didn’t take the meat axe to its public sector: Greece went out and hired 70,000 new government employees instead. It stopped selling government assets, which it had agreed to do, and government’s share of GDP actually increased rather than declining.

Lying about finances to lull the gullible?  Sounds like the DFL to me.

Greece’s problem – and you’re seeing it here, too – is that “progressive” economists (and the governments who love them) have the wrong measure of economic health:

As one Greek supporter of Tsipras’s wheedling told the New York Times: “We’re all pensioners here.” Indeed, and that’s the problem. A society’s wealth may be measured by its consumption, but its wealth consists of its production. One cannot consume what has not been produced, and consumption can exceed production only as long as your credit lasts, and credit — n.b., congressional clown conclave — is never eternal. Greece has too few people working in productive business enterprises and too many receiving government checks, either as employees or as welfare recipients — a distinction that is increasingly difficult to make in Greece and elsewhere.

Keep that in mind, as America’s employment participation rate drops below its lowest levels in a generation or two, even as our population  – especially the population with a Greek-like love of getting something for nothing – grows.

Options

Joe Doakes from Como Park emails:

Boris Yeltsin*, head of the Federal Reserve, declares the short-term interest rate the Fed charges banks will remain nearly zero.  That will keep loan interest rates down hoping to stimulate the economy.  And with interest rates low, buyers can afford a larger loan so sellers can afford to retire to Fort Meyers.  Unalloyed good, right?

Maybe not.  When I bought my first house in 1987, our loan was 9.5% because the seller paid two points to buy down the rate.  My wife and I were dancing in the street – Free Money!  On a $70,000 house, our PITI was about $1,000 per month.  We could afford that as we were both working full time.

That same house today would cost $150,000.  At 4%, the payment is still around $1,000 per month.  But can Millennials afford to pay that?  They have more student loans than we did.  Their debt to income ratio is worse.  Are they getting married as my generation did, working full time as we did, giving up vacations and iPhones and luxuries as we did?  If not – how can sellers afford to sell and move?

I don’t have a solution, I merely note that zero interest rate is not a silver bullet to cure all economic ills.  And once you’ve fired it – as the Fed has done – there’s nothing left to try.  After that, we’re down to the Iceland Option.

*Oops, I misspoke – Janet Yellen is head of the fed.  Boris Yeltsin was the dictator whose policies led to economic collapse.  I get confused.

Joe Doakes

Something liberals, with their decades of tinkering with the buttons and levers and switches of government, never quite understand; the intrinsic value of things never really changes (allowing for variables like location, quality, or whatever applies).  A house is a house.  An appendectomy is an appendectomy.  A flipped patty is a flipped patty.

Tinkering with the money supply only changes the value of the things we use to represent those concrete values.  Making more money only works if you make more stuff for that money to represent.

We’re not doing nearly enough of that.

As Fuzzy As Rand Paul Is…

…on foreign policy and defense, the more I see of this kind of talk, of a 14.5% flat income tax for individuals and businesses…:

So on Thursday I am announcing an over $2 trillion tax cut that would repeal the entire IRS tax code—more than 70,000 pages—and replace it with a low, broad-based tax of 14.5% on individuals and businesses. I would eliminate nearly every special-interest loophole. The plan also eliminates the payroll tax on workers and several federal taxes outright, including gift and estate taxes, telephone taxes, and all duties and tariffs. I call this “The Fair and Flat Tax.” . . .Even Mr. Obama’s economic advisers tell him that the U.S. corporate tax code, which has the highest rates in the world (35%), is an economic drag. When an iconic American company like Burger King wants to renounce its citizenship for Canada because that country’s tax rates are so much lower, there’s a fundamental problem.

 

…the more I want him to remain a contender.

Debate

SCENE:  Avery LIBRELLE is marching at a minimum wage protest outside a local coffee shop.  Mitch BERG walks out.  LIBRELLE sees him. 

LIBRELLE:  Hey, Merg!

BERG:  Oh, hey, Avery.

LIBRELLE:  People who work deserve to earn a living!

BERG:  Hm.  OK – let’s say that you need your pipes repaired…

LIBRELLE:  I do!  I have eco-friendly biodegradable pipes in my house.

BERG:  Of course you do.  So – I, an English major, come over to fix your pipes.  I have no plumbing skills whatsoever.  But I will no doubt work very hard to try to do the job.  So – do I “deserve” $15 an hour?

LIBRELLE:  Well, if you can find a plumber who can work for $15 an hour, that’s an incredible bargain!

BERG:  Not if he can’t do the job.  And you’re deflecting.  The point is, if I have no skill worth spending any money for, why do I “deserve to make a living”.

LIBRELLE:  [Holds arms up across face]

BERG:  What’s that?

LIBRELLE:  I’m blocking you.

BERG:  Huh?

LIBRELLE:  That’s what I do on my “Minimum Wage Activist” facebook page; I block people who just don’t get it.

BERG:  Huh.  [Holds up arms across own face]

LIBRELLE:  Why do you hate communication?

And SCENE

Quote Of The Day: Minimum Wage Edition

Kevin Williamson on the stupid futility of raising the minimum wage:

Dollars are just a method of keeping count, and mandating higher wages for work that has not changed at all is, in the long run, like measuring yourself in centimeters instead of inches in order to make yourself taller, or tracking your weight in kilograms instead of pounds as a means of losing weight. The gentlemen in Washington seem to genuinely believe that if they measure their penises in picas they’ll all be Jonah Falcon — in reality, their interns won’t notice any difference.

It is kind of a rush to say I’m 5,544 pixels tall – until I get to “pixels”.

Trashed

Bloomington residents are having the same “debate” that Maplewood residents had a while ago, and that Saint Paul residents barely manage to stave off, year over year; socialized trash collection.  In Saint Paul, every few years, a coalition of:

  • Environmentalists who think that having one truck go through your alley every week is better than having more than one truck go through your alley every week
  • NIMBAs (“Not in my back alley”) who for whatever reason are tormented by the number of trucks driving through their alleys at ugodly hours of the Midday
  • Big Government dweebs

…unites to try to jam down municipal garbage collection.

And it’s apparently go-time in Bloomington:

Those in favor most often cited the need to cut down on the number of trucks in the neighborhoods.

“Every Thursday morning my normally serene suburban home life is shattered by a steady caravan of heavy trucks,” wrote John Zimmerman. “Air brakes squeal, backup alarms chirp, and I lose track after the tenth truck has rolled through.”

Apparently John Zimmerman’s realtor told him he was moving to rural Iowa.

Bear in mind, Bloomington already has a semi-government-run system, doling out parts of the city to seven different haulers.  The city wants to go from picking seven winners to picking one:

The city still is negotiating with the seven haulers, but the most recent proposal would cost the average household $18.42 a month for trash and recycling pickup, said Public Works Director Karl Keel.

When the government wants to socialize a municipal service, the first number they give you is like that 3% interest rate on your credit card, or that first joint they give the grade school kids; it’s a teaser.  It will not last.

In  Maplewood, the rates may not have risen – but the “fees” tacked onto the rates certainly have.  The “winning” hauler also made the rate by supplying cheap trash carts that fell apart after a year, cutting corners on customer service, and other “savings” that, in a free market, you don’t have to tolerate.

I pay $20 a month, fees and all, to a ma and pa company that calls me if I forget a  payment, picks up extra stuff without any muss and fuss, and always answers the phone on the second ring.

Think you’ll get that with one big municipal service?

Opportunity Dumps:  If you’re a Bloomington Republican, here’s a classic example of a local issue that your candidates can use to set themselves apart from the incumbents (who, on the Bloomington City Council, favor the proposal 6-1).  Yes, it’s early.  No, it’s it’s not early enough.  If you’re thinking about being a conservative candidate for Bloomington City Council, you should be out there on the barricades today.

(And if you’re a “liberty” supporter?  Helping the people win this battle would convince a lot more people that you’re not just a bunch of white frat boys wallowing in an echo chamber eating chicken wings and listening to each other argue about who’s the biggest Austrian-schooler).

 

Currently, Bloomington’s 26,000 households pay an average of $26.72 a month. Keel estimated that city residents would save about $13 million over a five-year hauling contract.

 

Many residents have pointed out that by negotiating with different haulers, they’ve been able to get extremely low rates. Council Member Tim Busse was skeptical of some claims.

“I’d like to meet the residents who are getting their trash [picked up] for 10 bucks a month,” Busse said. “I want to take you with me the next time I buy a car. That’s some pretty good negotiating.”

In the end, the council voted 6-1 to continue negotiating the single-hauler deal, with only Cynthia Bemis Abrams opposing. A public hearing will be held before a final decision is made.

To Be Fair, You Were Warned

Seattle minimum wage workers discover exactly what everyone has been telling them about huge minimum wage hikes all along; they destroy jobs.  Their jobs.

http://redalertpolitics.com/2015/04/30/pizza-shop-worker-loves-seattles-new-15-minimum-wage-finds-cost-job/

image: http://cdn.redalertpolitics.com/files/2015/04/z-pizza-min-wage.png

Pizza shop worker Devin Jeran was excited about the raise that was coming his way thanks to Seattle’s new $15 an hour minimum wage law. Or at least he was until he found out that it would cost him his job.
Jeran will only see a bigger paycheck until August when his boss has to shut down her Z Pizza location, putting him and his 11 co-workers out of work, Q13 Fox reported.

Oh, Devin. If you’re getting your news from the mainstream media, you will always be a naif lost in the woods. Shake it off, champ.

Does this sound familiar (emphasis added):

He said that while the law was being discussed all he heard about was how the mandatory minimum wage increase would make life better for him, but that doesn’t seem to be the case.
“If that’s the truth, I don’t think that’s very apparent. People like me are finding themselves in a tougher situation than ever,” he told the TV station.
Owner Ritu Shah Burnham said she just can’t afford the city’s mandated wage hikes.
“I’ve let one person go since April 1, I’ve cut hours since April 1, I’ve taken them myself because I don’t pay myself,” she told Q13. “I’ve also raised my prices a little bit, there’s no other way to do it.”

And “Z” is a nationwide franchise that takes some on some of the local franchises’ ad costs (and makes excellent pizza, if you’re ever in Roseville).

Small businesses in Seattle have up to six more years to phase in the new $15 an hour minimum wage, but even though she only has 12 employees, Z pizza counts as part of a “large business franchise.” As a result, she is on a sped up timeline to implement the full raise.

The left’s contempt for business – counting all franchisees’ employees together is pretty contemptible – has to start harming them eventually, doesn’t it?

Shah Burnham said that she is “terrified” for her employees after she closes up shop.
“I have no idea where they’re going to find jobs, because if I’m cutting hours, I imagine everyone is across the board,” she said.
The organization that pushed for the higher minimum wage, 15 Now Seattle, wouldn’t comment directly on the closing to Q13 and didn’t offer any sign of sympathy.

When I read stories like this, I wonder – perhaps some of the people who agitate for minimum wage hikes can help the displaced workers find new jobs?  Maybe that union booth at the State Fair that hands out all the “Living Wage” agitprop can devote some time to the task?

“Restaurants open and close all the time, for various reasons,” Director Jess Spear said.

I guess that’s a “no”.

Surplus Of Stupid

SCENE:  Mitch BERG is ordering a Banh Mi sandwich at iPho on University.  Avery LIBRELLE enters the store.

LIBRELLE:  Hey, Merg!   After four years, Minnesota’s economy is rocking under Mark Dayton, while Wisconsin is sucking pond water!

BERG:  How do you figure?

LIBRELLE:  Minnesota has a $2 Billion surplus

BERG:  Right.  After raising taxes by…$2 Billion.  Now, if the economy is humming along, you’d think that the surplus would be bigger than the tax increase, now, wouldn’t you?

LIBRELLE:  At least Minnesota has a surplus!

BERG:  Right – apparetly, entirely due to the tax hikes.  In the meantime, Wisconsin is headed toward a surplus without the need for tax hikes – or, as we call it, a sustainable surplus.

LIBRELLE:  Yeah, but our economy is still better!

BERG:   Most of Minnesota’s growth is in metro-area medical, medical device, insurance and financial services companies – the ones that benefitted from Obamacare and “Too Big to Fail” stimuli.  Things aren’t nearly as rosy in Greater Minnesota.  In the meantime, Wisconsin’s growth is being held back by the slow manufacturing sector – which is a much bigger share of Wisconsin’s economy than Minnesota’s, and isn’t doing all that well here, either.

LIBRELLE:  If Minnesota had elected Tom Emmer governor in 2010, we’d be in the same boat!

BERG:  Right.  We’d have two economies being dragged down by Democrat policies.

LIBRELLE:  What?

BERG:  The parts of Wisconsin that are dragging the state’s economy are the ones that have been run by Democrats for generations.  The decay of Milwaukee’s manufacturing base is the state’s biggest economic problem.

LIBRELLE:  Hah!  But in Minnesota, it’s the Democrat-run cities that are winning…

BERG:  …as a result of national Democrat probrams to transfer wealth from consumers to banks and health insurance companies.

LIBRELLE:  You should issue a rape trigger warning.

BERG:  Clearly.

[And SCENE]

Who Could Have Predicted?

The economy under wan, feeble socialist Obama has grown at an anemic rate compared to the rates under the healthy, happy free-marketeer Reagan.

Ronald Reagan’s economic plan saw GDP surge at a 3.5% clip – 4.9% after the recession. That’s a 32% bump.

During the Obama years, thanks to his big government policies, the US economy has stalled. Today the quarterly GDP was announced. The GDP for the first quarter of 2015 braked more sharply than expected at only a .2% pace. The US economy has grown an anemic 9.6% during the Obama years (excluding today’s dismal number).

Who woulda thunk it?

Everyone who didnt’ skip Econ 101 to go to a Noam Chomsky speech, that’s who.

Tipping Point

Joe Doakes from Como Park emails:

In the olden days, waitresses got paid less than minimum wage and made it up in tips. If you didn’t tip, you were stiffing her wages. The rule of thumb was 15-20% to cover her wages and the quality of her service.

Now they’ve changed the law so waitresses get minimum wage. So, why am I tipping 15-20%? Not to make up wages, you already got that. For quality service? Okay, what’s the percentage for quality service?

If Mark Dayton and the DFL already covered her wages for me, then my “quality of service” tip should be 5-10% instead of 15-20%, right? I haven’t noticed restaurants re-programming the helpful chart on their receipts. Am I missing something?

Joe Doakes

No, Joe. You’re not.

Smarter Than Our Leaders

Back during the 2008 presidential campaign, John McCain was right about one thing, anyway; despite all of governments foul-ups the fundamentals of the American economy are basically strong.

We have ideas, and entrepreneurial energy, I don’t labor force that (2008 and 2012 elections not withstanding) we’re pretty smart and capable, and one of the worlds larger, wealthier consumer markets. Those, among other things, give the American economy’s a degree of resilience that is going to be hard to extinguish, even after 14 years of flagrant overspending and six years of crypto-socialism.

That’s the economy. Not the governments massive piling up of debt. That’s a whole ‘nother thing.

Why does it matter? Because the fact that the American private market is bigger, stronger, and smarter than its government – for now – may be the only thing that saved it from complete collapse six years ago.

Rosy

As the media relentlessly chants about “economic recovery”, at least one article (from the AP) notes that those “new jobs” aren’t really doing much for the lower-middle-class – people who may be doing OK on the surface, but are only a missed paycheck or two away from depending on someone else.

And it’s worth noting that every previous sharp recession – like 1982 – had a correspondingly sharp rebound; within two years of the bottom of that recession, the economy was adding 500,000 jobs a month.

The 2007 recession was, along with the Great Depression, part of a tiny, exclusive club; sharp corrections that didn’t bounce back fast – as in, almost like an inverted bell curve.  And what did they have in common?

Govenment efforts to “help”.