Market Pressure to Reduce Welfare Spending

So now we are back to the proposal that has unintended consequences that ultimately harms those you are wanting to help ( see every post between you and I on this thread). This is getting foolishly redundant. If you have something substantively new to add please do. If you are just going to keep repackaging the same argument in slightly different words, please move on and our conversation can be done.

 

Taxcutter says:
Not only do I have a right to be cheap, it is my duty. Better yet, work to prevent government from imposing regulations that favor a narrow political agenda.

 

This regulation has no demonstrable public safety benefit. It only benefits a narrow political agenda - one that few consumers have any support for. So even if the cost passed on to the consumer is just a penny per check-out, it is a "taking" under the Fifth Amendment and must be compensated by the government.

 

I would argue that the majority of consumers do seek to be informed related to their purchasing decisions and certainly the issue of whether I'm going to be taxed to help pay for the employees of "Walmart" is a bit of important information I want to know.

Of course if the people don't care, as stated, then this proposal will not have any effect on the enterprises because it won't change the buying habits of the people that could impose "market pressure" on the enterprise to increase compensation to the employees.

The government isn't taking one penny from the enterprise and has no requirement to compensate the enterprise. Where do people pull this BS from?

 

Only one final comment.

There is no evidence that can be presented that this would create a new form of discrimination, period. The belief it would is nothing but speculative BS that isn't even based upon a logical argument.

There are lots of causes of invidious discrimination in employment but "information" has never been identified as one of them.

 

Nor is there any evidence that this would create upward pressure on wages. It is a proposal, and as such, EVERYTHING is speculative. Somehow you seem to think YOUR speculation is to be treated as the gospel, and my speculation is BS.....lol...how self servingly delusional.

So the concept that if a business owner gets dinged for employees on government assistance, that he will therefore look to hire those that are least likely to be on government assistance, is illogical to you?.... really? To me, that is so irrefutably logical, that it goes into the category of a given. Obviously you disagree. Weve both had our fair say on the issue. Let the reader decide.

 

No denying this fact. it is speculative because we don't know if it would create market pressure but if it doesn't then it doesn't affect private enterprise at all so why oppose it?

One thing we know is that without this information there is really no market pressure at all based upon the information because it's not generally available to the consumer. Market pressure is created by information and knowledge that the consumer has. Prices, which can be compared, for example create market pressure. We're much better off today with the internet in being able to make intelligent purchasing decisions because we can compare prices. Information, information, information, is what allows a consumer to be informed and it's decisions based upon information that creates market pressure.

Capitalism relies on market pressure and information is necessary for market pressure to exist. So my argument is logical, and very "caplitalistic" in nature, based upon what we know.

Will it change anything is purely speculative but it sure as hell won't hurt anything so there is no logical reason to oppose it. If it does change anything then it would only mean a reduction in the necessity for welfare assistance that is paid for with taxation. I support reducing the costs of providing welfare assistance... but apparently some people want to keep the government taxing and spending for welfare assistance.

 

I feel pretty comfortable that I have demonstrated quite aptly why this would be a bad idea.You obviously disagree. We have both had our fair say. I have no desire to rehash the same ground over and over.

 

Taxcutter says:
Great Caesar's Ghost! You've discovered the great cosmic free lunch! People have sought the free lunch for centuries. A regulation for which compliance costs nothing. Zero. Squat. Nada.

I don't believe it.

 

This does not sound libertarian at all. Instead, have the local welfare office publish a count of welfare recipients by employer that they list. It's not Walmart's problem if their employer are also on the dole. It's a government problem.

I see nothing libertarian about forcing companies to take on added costs because of government failure.

It's not the role of employers to provide adequate compensation. Perhaps they'd be forced to bid up labor prices if people couldn't subsidize their income with government benefits.

The notion that a business can require you to pay taxes is ridiculous on it's face. It's the government that makes you pay taxes, and it is the government that pays out benefits. If you want to punish private businesses for what the government does how about putting market pressure on companies by refusing to go to those who accept SNAP? Oh wait, then you wouldn't be able to shop anywhere.

 

Poverty of the worker reflects a failure of caplitalism where the enterprise is operating at a profit while the workers is operating at a loss. Poverty is not a problem created by government but instead is created based upon the application of the Law of Supply and Demand to labor which is not a component of the capitalist economic philosophy. Applying the Law of Supply and demand to labor can result in coercion where a person is forced to accept employment where the compensation is not enough to meet their basic necessited and this violates the Law of Contract, a component of capitalism, as coercion invalidates a contract.

The "additional costs" to the enterprise related to surveying the employees and posting the results of the survey is insignificant. As noted it would cost less than the employees use in toilet paper every year. Stating that a cost of a couple of dollars per year per employee is in anyway significant borders on stupidity.

The government does not create poverty. The free enterprise system creates the poverty because it allows coercion to enter into the "employment contract" and coercion violates the principles of a free market. Government merely mitigates the effects of poverty created by coercion in the free market.

Or perhaps the government should just bill the enterprise for the costs of assistance required by their employees. A thought worth considering.

It should be noted once again that even the "slave owner" was required to provide for the basic necessities of the slave. Should private enterprise be held to a lower standard than slave owners?

We are required to pay taxes to fund the welfare assistance necessary to mitigate the effects of poverty created by the enterprise that fails to adequately compensate their employees. We don't pay any taxes to fund welfare assistance for employees where the enterprise provides adequate compensation. Learn how to connect the dots.

 

Coercion?

You can always walk away. People do it every day.

 

A good sign of a failed argument is moving the goal posts.

My statement "The government isn't taking one penny from the enterprise and has no requirement to compensate the enterprise. Where do people pull this BS from?" was in response to an issue addressed by the Fifth Amendment where it states:

Does my proposal result in even one penny of "private property" being "taken for public use" from the enterprise? Of course not.

We can also address the issue of "regulations" costing an enterprise money. Let me take one big huge issue today.

Let is wipe the slate clean of all "electrical power producers" in the United States and impose a regulation that states, "Electrical power production cannot pollute the atmosphere." That is not an "unreasonable" regulation to impose because no person or entity has a "Right to Pollute" to begin with.

That regulation does not impose any cost on enterprise although it would limit the ways by which electrical power is produced. Hydro-elelctric, geothermal, wind, solar electrical, and even nuclear power generation (so long as safeguards were adequate for the nuclear power plant) would all be able to meet this regulatory requirement without any additional expenditures.

Pragmatically, of course, we wouldn't have enough electricity so we do allow some electrical power generation using fuels that do pollute but the amount of pollution we allow is up to us. A coal fired power plant doesn't have a Right to Pollute and any cost that we impose upon the coal fired powerplant to reduce the pollution is an acceptable cost because they don't have to pollute to begin with. They could simply not exist at all and there is no cost. If they choose to pollute then they have to accept the costs of limiting pollution as a necessary cost of operating their enterprise. Of course they are also entitled to transfer those costs to their customers so they don't actually "lose" any money in the process and, if their profit is based upon a percentage above costs, they actually increase their profits because of the additional expense.

People have this really strange idea when it comes to regulatory costs for the enterprise. They believe that protecting the lives and health of employees, or that protecting the environment, imposes an unnecessary expenditure on the enterprise and that is pure poppycock. No enterprise has a Right to Endanger the Employee or a Right to Destroy the Environment and regulations that protect the Person and the Environment represent a necessary expenditure of the of the enterprise and not an unnecessary imposition of cost by government.

 

You really do believe in a free lunch.

 

First off, supply and demand applied to labor, in no manner shape or form constitutes a force or a threat, and as such is not coercion. Nor does supply and demand in the labor market violate the Law of Contract. Coercion violates the Law of Contract, but since supply and demand does NOT constitute coercion, it in no way violates the Law of Contract. Its kind of clever how you tried to erroneously slip in the misnomer that supply and demand constitutes coercion, thus violating the Law of Contract, but the notion is flat out wrong. Who told you that?

 

WTF does "you don't have a right to be cheap" mean? OF COURSE people have a right to be cheap! WTF??

 

Can you provide us this definition of "Law of Contract" where it says that any person should receive their basic needs from someone else? Where is this law written, and what makes it valid?

Not all coercion implies violence. The employer does not threaten the employee with violence. To call the breaking of an association between two parties "violent" is to deny that either party has natural rights to choose their association, which is exactly what you are doing.

Since not all coercion is based on violence or the threat of violence, not all coercion invalidates a contract. There is no violence implied in the termination of an association between parties exchanging labor for property.

A person may *feel* forced to accept compensation than is lower than what they want, but there is no violent coercion involved. If you believe there is, then provide us the language you would use in a court of law to prove that an employer is threatening violence against an employee by threatening to terminate his association with that employee.

Do you believe that coercion is wrong? Governemnt cannot obtain the means to mitigate poverty (or anything else) without extracting wealth from the productive through coercion. If coercion is wrong, then your argument is that two wrongs can make a right. If coercion is not wrong in some cases, and wrong in others, please give us an objective explanation of where a moral and just person can draw the line between rightful coercion and wrongful coercion.

Since there is no contract between government and enterprise, other than what is coerced by law, collecting money would be coercion backed up by the threat of violence. It would be no more right for government to do that than for you or I to give out money to people we think need it and then charge their employers for it.

First, that's an assertion on your part and I don't know that it's true. Second, holding an enterprise to a standard is your choice as an individual. Using coercion to enforce a standard you believe is right is a moral wrong and once you hold that your standard ought to be applied, then you cannot claim that it's wrong to enforce any standard should others have much much higher standards than yours.

We are required to pay those things through coercion. Either coercion is wrong, or it is right. Why is it wrong for the employer to coerce, as you claim, but right for government?

 

Taxcutter asks:
Is a consumer's money not his private property?

Your proposal does not take a penny from "the enterprise" because any business enterprise passes such costs on the the consumer. It sorta looks like a tax, but legally cannot be a tax because it was not imposed by a legislative body of officials who have to face voters periodically. So it is an uncompensated taking. Property (money) is taken from the consumer for no perceived value in return.

In fact the SCOTUS has ruled (the Topsail Beach decision) that regulations that inhibit the normal use of property without change of title is a taking under the Takings Clause of the Fifth amendment. This is the core of battles over Section 404 of the Clean Water Act. People are penalized for developing their property. Hence the property is useless and has no value. Cases are moving through the appellate court system. In one case a guy was inhibited from developing his land so he appealed his property tax assessment. He says the land is worth zero because it is allowed only to be a breeding ground for mosquitoes. Needless to say the local governmental unit doesn't care for that. So far, the appellate courts have found for the owner.

Back to the case at hand. If I walk into a Wal-Mart and find that the stuff I want to buy is more expensive because Wal-Mart has passed the cost of compliance on to me (they have to) the government has taken my property (my money) without normal legislative processes associated with taxation. It is a taking, pure and simple.

Many of the Big Government tribe fear the Takings Clause because it has the potential to make mad-dog regulation too expensive for government to do. the Takings Clause has the potential to bring down the entire regulatory structure. If the government wants Wal-Mart to post this information, the government should pay Wal-Mart to do so. That would be normal government spending (the taxpayers may have something to say about it) if the government pays for something that is the government's idea. But forcing Wal-Mart to spend the money to comply with a politically-motivated regulation and force the consumer to pay for it is a taking.


But we all know Hussein Obama's opinion of the Constitution.

 

An employer hires employees at the market rates which are primarily determined by supply and demand. The cost of this labor must align with the business model no matter if it's a non-profit or for-profit company.

You talk about Walmart so let's use them as an example. They have 1.5 million employees and we can assume that nearly all of them earn $35K or less annually. So nearly 1.5 million workers are earning between $7.25/hour and $17/hour. Do you know for a fact that everyone earning $17/hour or less are also opting for government assistance? Using your assumption what if 750,000 of them are collecting government assistance...do you know for a fact how much each of these workers earns...maybe all of them are between $12 and $17/hour?

My point is you're just playing politics with assumptions trying to force wage increases for the wrong reasons. And you're suggesting this be done with strong-arm tactics by posting confidential information.

I can guess every worker earning less than $35K is receiving some form of government assistance...from tax credits to Obamacare subsidies to free school lunches, etc. You cannot arbitrarily increase the wages on 750 million American workers! Yes...750 million American workers earn less than $35K which happens to be the median income.

Lastly, if your goal is to reduce government assistance, then greatly reduce government assistance. Do you actually believe we need to spend $80 billion per year on food stamps? Do you actually believe the 25 million Americans who are collecting disability payments are incapable of working?

Can you even begin to imagine what happens when you 'force' 750 million American workers to be given $3-6/hour wage increases? Start with inflation which means purchasing power is not greatly enhanced. How about less competitiveness in the global markets because you just added $3 billion labor cost increase per HOUR or about $6.24 TRILLION in extra labor costs per year...

 

Coercion does not imply violence although violence or the threat of violence could certainly be an act of coercion. It can also be psychological according to the legal defintion. Under contract law it is tyically used to refer to entering into the contract under "duress" where pressure is exerted upon a person "to coerce that person to perform an act that he or she ordinarily would not perform."

http://legal-dictionary.thefreedictionary.com/Coercion

Capitalism depends upon the "law of contract" as all exchanges between persons are issues of contract.

Let me clarify though that I'm not claiming that the enterprise is guilty of coercion that invalidates the contract. I'm claiming that the law of supply and demand when applied to a labor contract can result in "duress" for the person where they are "forced" to accept an "employment contract" where they must accept wages below what they would ordinarily accept (i.e. where compensation is less than what it costs for them to survive).

The "law of supply and demand" works when addressing contracts related to the exchange of commerial goods and services and even in most cases of employment but not in all cases of employment. It is a failure of the "capitalistic model" when a person is forced to "operate at a loss" where they are not receiving fair compensation that would, at a minimum, ensure that they can afford the basic costs of living. In a very real sense "market pressure" forces a person to work for less than what it costs them to live and they would not work at a loss voluntarily. They are forced under duress to accept employment where the compensation isn't enough to meet their basic necessary expenditures.

Government welfare assistance attempts to mitigate the effects of this failure of the capitalistic model that can be documented in tens of millions of cases.

My solution it to also use "market pressure" created by informed consumers to counteract the "market pressure" that places a person in duress where they must accept employment where the compensation is less than required for the person to live on.

Of course a lot of people really don't understand the capitalist economic model and they will argue against providing "information to the consumer" that could result in market pressure on the enterprise. I can't really help the fact that some people don't really understand capitalism but what we see is that in arguing against the proposal they really don't present any valid arguments.

Requiring the enterprise to provide information to the consumer really doesn't impose a significant cost so they can't argue against the proposal based upon cost.

Market pressure in capitalism is a good thing and not a bad thing so they can't argue against the principle of market pressure.

The proposal avoids a mandated "minimum wage" that is inaccurate because it doesn't take into account the "income of the household" which is what really determines whether the "household" can fund the necessary costs of the members of the household (welfare assistance is based upon the household and not individual income so it is a better metric).

http://legal-dictionary.thefreedictionary.com/Duress
http://legal-dictionary.thefreedictionary.com/Coercion

 

Yes, the underpayment of compensation where a person cannot afford to live on the compensation (i.e. wages/benefits) is due to market pressure based upon the application of the Law of Supply and Demand to employment. The law of supply and demand places "market pressure" on enterprises but enterpises are never forced to "operate at a loss" because they can just close the doors and go out of business. A person can't simply "go out of business" unless they commit suicide.

A free market does require the application of the Law of Supply and Demand to "goods and services" but doesn't require it related to "employment" which many seem to not understand. While the Law of Supply and Demand does work for "employment" most cases it also fails in tens of millions of cases. A person that can't "go out of business" is placed in a situation of "duress" where they must accept an employment contract that will result in them "operating at a loss" and that is unacdeptable.

No, my proposal does not advocate the posting of "confidential information" which would be information on individual employees and, in fact, the enterprise wouldn't typically know the information related to any individual employee because the survey would be annonymous and an employee couls also opt out of even providing the information. The enterprise would be posting "statistical information" and that is not confidential information.

We don't know how many "Walmart" employees are dependent upon financial assistance so we can't make any assumptions related to it. An employee earning $7.25/hr may not be receiving any assistance while a person earning $12/hr might. We don't even know if "Walmart" posting statistical information about the number and percentage of employees collecting assistance would result in market pressure for "Walmart" to increase compensation. What we do know is that without this information the "consumer" cannot make an informed decision related to patronizing "Walmart" because they are reliant upon assumptions and not facts.

We also know that "Walmart" can operate at a profit regardless of whether their average wage is $9/hr or $15/hr because "labor" is a relatively small component of "Walmarts" operating expenditures. The purchase of the goods "Walmart" sells and the overhead costs are the primary expenditures of the enterprise. The "business plan" accomodates the wages and, except in cases of very high wages, the cost of labor isn't really a determining factor in whether an enterprise can earn a profit or not. We can provide far too many examples where enterprises that provide greater compensation to their employees are far more successful than their competitors because their business plan is superior for the enterprises that provides less compensation. Unfortunately few people understand a "business plan" which is the primary reason so many start-up enterprises fail.

 

$15/hour minus $9/hour is $6/hour extra cost to Walmart, multiplied by 1.5 million employees equals $9 million per hour additional cost multiplied by 15 hours per day equals $135 million additional cost per day multiplied by 365 days equals $49.3 billion additional cost per year multiplied by 1.30 to cover overhead equals $64 BILLION per year in additional cost to the business! You actually believe Walmart or any company can (*)(*)(*)(*) away $64 billion per year and it won't effect their business model? And in an imaginary world if Walmart ever did this, it would ripple through all other businesses who compete with Walmart for labor, which now adds trillion$ to the cost of doing business and you don't think this would have a negative effect on the economy? Inflation, over paid labor, loss of US competition, on and on and on...

 

What a great way to make sure people on welfare never get employed. Brilliant!

 

While I appreciate the time and effort spent "running the numbers" there are numerous flaws with the analysis.

The most important fact is that my proposal doesn't dictate what "Walmart" would have to pay to it's employees. It doesn't require Walmart to raise the wages of anyone even one dime.

Next is the fact that Walmart has about $450 billion in annual sales with an SG&A (wages and compensation) expenditure of about $85 billion (2012). An increase from $9/hr to $15/hr would increase the SG&A to about $141 billion but this is an over-estimate because many at Walmart already earn more than $15/hr and even with this over-estimate it only represents a little more than 10% of gross sales.

Walmart would recoup much of this increase in the labor costs because it would dramatically reduce the turn-over rate of Walmart employees which imposes a huge cost on enterprise. This would actually lead to a reduced workforce at Walmart because the employees would be more experienced and more competent in performing the tasks they are required to perform but because of the higher compensation they receive they would increase the overall number of jobs in the economy as other enterprises would benefit from the higher compensation to the Walmart employees which, in turn, would also increase sales at Walmart. Henry Ford proved that increasing the wages of his employees, that he double, affected the prevailing rate in all of manufacturing and that, in turn, resulted in Ford selling more Model T's and the same thing would occur if Walmart raised it's compensation to it's employees.

The economy benefits and does not decline from the increase in compensation because increased compensation results in increased consumption (spending) and consumption drives employment which, in turn, drives more consumption. Of course there is a caveat because this only applies when the increased compensation is spent on consumption but low income workers spend all of their disposable income on consumption. The economy doesn't expand and no jobs are created if the compensation increase is related to the high income households that don't use the money to buy goods and services.

Inflation is an increase in costs due to an increase in the money supply and has nothing to do with the costs of doing business. Just because an enterprise is charging more for goods and services doesn't imply that the increase was due to an increase in the money supply although it often is tied to it. What we actually know is that the increase in wages driven by the increase in the money supply trails several years behind the increase. In short the worker loses "real income" due to inflation and is always behind the curve trying to catch up but never does. In short if the cost of goods and services increase due to inflation don't blame it on the compensation for the employees. Blame it on the US government and the Federal Reserve Bank(s) because they are responsible for the inflation. Don't blame the victim (the worker), blame those responsible (US government and Federal Reserve).

Once again let me summarize. The "Law of Supply and Demand" when applied to labor creates "Market Pressure" that drives down wages. All I proposes is allowing the counteracting force of "Informed Consumers" to provide "Market Pressure" to counter-act the "Market Pressure" that drives down wages. It establishes a possible balance between two forms of market pressure on enterprise where today the only market pressure is to drive down wages.

I seek to balance the market pressure between forces that do drive down compensation with market pressure that can drive up compensation. It is my proposition that under capitalism it's not "all about the enterprise" but instead its about the "enterprise and the individual" where each benefits from the actions of the other. Today we see that the enterprise can "win" while the employee "loses" and a "win-lose" situation is not healthy for Capitalism or the economy.

 

Low income households spend all of their disposable income on goods and services so if they have more income they generate a demand for more goods and services. That demand drives job creation because people have to provide those goods and services.

There is a caveat to this though. If the household is receiving government welfare then they are already spending the "money" on goods and services so the jobs already exist. So up to the point of the "welfare" benefit amount all the increased compensation from employment does is cut-out the government as the "middle-man" and the taxpayers as the "source of income" for the household. As soon as that benefit amount is exceedd then it begins to create jobs. For example the average SNAP benefit, as I recall, is $200/mo/household. If the wages go up by $200/mo to eliminate the SNAP benefit there is no net gain in employment but there is an increase in employment if the increase exceeds that $200/mo amount as it introduces "new moeny" into the economy.

Something that many seem to not understand is that an economy is based upon an economic pyramid where the foundation is the lowest income workers and the point of the pyramid is the very top income earners. Every level of the pyramid depends upon the level below it to generate their higher incomes and the more income those below them have the more income they earn. If we increase the income to the bottom 10% then that expands the income for everyone above them resulting in an expanding economy. The pyramid cannot expand without increasing the size of the foundation.

It is ironic that "conservatives" like to point out that if all of the wealth of the top 1% of income earners was distributed that it wouldn't reduce poverty and they're correct. Then they turn around and propose that increasing the wealth of the top 1% will reduce poverty (the foundation of "trickle-down" economics) but obviously that isn't true. We need to increase the income of the lowest income households and not the highest income households if we want to reduce poverty and build a bigger and stronger economic pyramid.

I don't propose mandates (increased minimum wages) to increase the income of the poor but instead propose a market approach where the "informed consumer" could or would put "market pressure" on the employers to increase the compensation to the "bottom of the pyramid" to increase compensation and that, in turn, would build up the foundation for the economic pyramid. It is a "Free Market" solution based upon the informed buying decisions of the consumers and nothing more and it would expand the economy as opposed to contracting it.