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Thread: weekend commentary - American Samoa 2 years after minimum wage increase

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    Default weekend commentary - American Samoa 2 years after minimum wage increase

    (snip)"Congress Sacks Samoan Economy
    by Peter Schiff

    Like many football fans around the country, I recently tuned into a heavily promoted 60 Minutes segment on the uncanny ability of tiny American Samoa to produce a steady stream of NFL players. Although it was certainly interesting to learn how Pacific island warrior culture translated seamlessly into the disciplines of American football, and how the island's players adapted to the hard-scrabble terrain and poorly funded athletic fields, the most interesting aspect of the piece concerned economics rather than sports.

    In passing, the narrator mentioned that American Samoa had recently experienced major setbacks, both natural and man-made. Earthquakes and tsunamis had left scores dead and inflicted major damage on the islands' infrastructure. More ominously, one of the two major tuna canneries, which together accounted for up to half of the islands' private sector jobs,[i] had closed. If the second cannery closes, as 60 Minutes mentioned is a distinct possibility, American Samoa will become completely dependent on Federal support. Whether the reporters considered the subject off-target for their piece or simply could not connect the dots, the pending economic disaster was left largely unexamined. However, the Samoan situation offers a very clear lesson for the rest of America about how government policies can devastate an economy, and how the road to hell is paved with good intentions.

    For generations, American Samoa offered strong advantages for tuna canners. The close proximity to vast Pacific tuna schools, the islands' good port facilities, political association with the United States, and an abundance of relatively inexpensive labor (by American standards) enticed StarKist and Chicken of the Sea to locate their primary canning facilities in American Samoa. Although the workers were paid, in recent years, wages that were below the U.S. minimum, given the low taxes and living costs, these wages were enough to offer the average worker a standard of living that was superior to the denizens of other islands in that area of the Pacific.[ii]

    But then, in 2007, Washington came to the "rescue." As part of its efforts to provide a "living wage" for all Americans, Congress passed a law to step up the minimum wage to $7.25 per hour across all U.S. states and territories by 2009.[iii] Understanding that such a law would devastate American Samoa by raising canning costs past the point where the companies could maintain profitability, the non-voting Samoan member of the U.S. House of Representatives convinced Congress to allow an exemption for the islands. However, Republicans raised allegations that Speaker of the House Nancy Pelosi, in whose district both Chicken of the Sea and StarKist had corporate offices, had caved to pressure from big donors and was allowing the continued "exploitation" of Samoan workers. Facing a sticky political situation, the exemption was removed.

    The Samoan representative desperately sought to fend off what he was sure would be an economic calamity. He asked the Department of Labor to issue a report examining the potential consequences of the law upon the islands' economy. The report explained that "nearly 80 percent of workers covered by the FLSA earned under $7.25 per hour. By comparison, if the U.S. minimum wage were increased to the level of the 75th percentile of hourly-paid U.S. workers, it would be raised to $16.50 per hour." Therefore, the study continued, "there is concern that [the tuna canneries] will be closed prior to the escalation of the minimum wage ... and that production will be shifted to facilities outside the U.S." Ultimately, the Department of Labor concluded that "closure of the tuna canneries will cause a total loss of 8,118 jobs - 45.6 percent of total employment." (emphasis mine)[iv]

    Despite this dire forecast, the law went through. Two years later, the results could not be clearer: Chicken of the Sea closed its cannery and moved its production to a largely automated plant in Georgia,[iv] while StarKist has reduced its workforce and is threatening to leave as well.[v]

    If that were to occur, which seems likely, American Samoa would be left with no functioning industry. Although many of the islanders have the size and athletic ability to be drafted into the NFL, clearly football will never serve as the backbone of their economy. By imposing an artificially high minimum wage on American Samoa, without taking into account actual economic conditions on the islands, Washington essentially decided that it was better to have no one working there than have thousands of people working for wages that the politicians felt were substandard.

    Meanwhile, just as the minimum wage is destroying jobs in American Samoa, it is destroying jobs here on the mainland. Of course the numbers are fewer because the relative minimum is lower, but the principle is the same. Rather than causing wages to rise (which only do so as a function of increased worker productivity), minimum wage laws simply set the minimal level of productivity a worker must contribute to legally be allowed to work. In the case of American Samoa, tuna canners simply could not deliver $7.25 cents per hour of productivity, so their jobs were eliminated. Rather than being employed at $3.26 per hour (the level prior to the minimum wage hike), they are now unemployed at $7.25 per hour. Which do you think is better?

    Among the unintended consequences of congressional "benevolence" are rapidly rising consumer prices, due to the higher shipping costs now necessary to bring consumer goods to the islands. Before the minimum wage hikes destroyed most of the canning jobs, lots of canned tuna were shipped from American Samoa to the U.S. (over 50% of the canned tuna in American markets came from American Samoa). One benefit of all the shipping traffic was a low cost of imports, as ships were coming to the islands anyway to pick up the tuna. However, with fewer ships coming to Samoa to pick up tuna, goods are now much more expensive to import. That is because the round trip cost of the journey must now be factored into import prices, as ships bringing in those goods now leave tuna-free. As a result, consumer prices rose from a 2006 annualized rate of 3%[v] to roughly 20% by 2008.[vi] So, not only is unemployment wide-spread, but the cost of living has risen sharply as well - a double whammy.

    This just serves to highlight, once again, how inflexible central planning is compared to free markets. From housing to banking to money itself, the politicians would rather mandate prices that they deem acceptable than listen to the innumerable individual decisions that set market prices. Though not always as transparent as with the Samoan case, the result is the same, every time: economic dislocation, higher unemployment, the boom-bust cycle, and a lower standard of living."(snip)

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    I remember reading a book about government bungling. One story stands out the the city updated it's building codes and thus managed to close a homeless shelter run by nuns. These kinds of stories are all over and every year. One of the reasons I am for smaller government.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    ^^^ an arguably very valid point about the 'good intentions' of gov't economic policy actually resulting in negative 'unintended consequences' that actually make the economic situation worse than it originally was. A bit closer to home ...


    (snip)"Can America Come Through with Wealth Creation and Good Jobs?
    by Michael Rozeff [Professor Emeritus SUNY at Buffalo - Department of Financial & Managerial Economics - sic]


    A correspondent not versed in economics admitted to being confused over consumerism vs. saving. He thinks that it is good for the economy that people consume but also good that they save so that businesses can invest. This confusion permeates the press and government, reaching into the highest levels of American policy-making. Unless this confusion is cleared up, America, led by a blind Congress, will continue to stumble into its own lost decade or worse.

    Productive jobs are created in the private sector. People find profit opportunities and exploit them. They do this in all organizational forms: individual proprietorships, partnerships, and corporations. They do this in small, medium, and big businesses. The private sector is the primary source of productive jobs. Finding and exploiting profit opportunities CREATES WEALTH by producing goods and services whose value exceeds their costs.

    As an example of the direction that America has taken, look at this chart of manufacturing employment in California over the past 20 years.





    Manufacturing jobs, which are the good jobs that pay more because the workers are more productive in those jobs, are down from near 2 million to fewer than 1.3 million.

    The government sector largely has unproductive jobs, i.e., jobs that do not produce more than what they cost the taxpayers. For this reason, the more that government taxes and spends, the more this spending impedes the economy. Government largely DESTROYS WEALTH.

    During the same period, government jobs in California have risen substantially:





    The unproductive government sector drains capital from the productive private sector. What is worse, the government sector impedes the creation of productive jobs in the private sector in three other ways: taxation, regulation, and bad laws.

    It is obvious that America cannot be a dynamic wealth-producing economy again until this situation is ended and reversed. Government jobs are good jobs for those who have them. That's because of their high pay relative to the requirements, but everyone else loses. A dynamically growing economy with wealth creation creates good jobs in a general and widespread fashion, not just for a select few who manage to secure jobs that extract taxpayer wealth.

    Funding or financing the private sector, especially to smaller businesses, is currently a problem because American banks are insolvent. They are holding large amounts of real estate loans whose value is far less than their book values. These need to be written off. But if the banks wrote them off, they'd have to go out of business. Despite all the bailouts, Congress has not addressed this problem.

    So far, the Congress, under both Bush and Obama, hasn't come up with a growth program.

    None of their new programs have had the proper features, and they actually have been counter-productive. A temporary tax cut, such as was enacted in the 2008 rebates, does not alter incentives in the private sector. Spending programs have a negligible or perverse multiplier impact. The extension of unemployment benefits does nothing to promote growth. Taking over and funding moribund businesses doesn't create wealth. Stimulating lower mortgage rates doesn't promote production in any sustainable way. Entering war after war in foreign lands absorbs and destroys tremendous amounts of wealth.

    The Congress acts as if it is incredibly ignorant of these simple economic facts. It is. It acts as if it has learned nothing from past experiences that illustrate these truths. It hasn't. It acts as if these measures will produce enough of a recovery to get them re-elected. Congress does not seem to realize yet how different matters are this time around. The cumulative impact of past misdeeds and misdirection is now so huge that there is no easy way out.

    Meanwhile, everyone knows that a tax INCREASE will occur by yearend. The tax increase will happen when the tax cuts of the 1990s expire due to a sunset provision. This affects the economy NOW, as history shows.

    It is no wonder that the economy is sputtering.

    Another jobs program á la FDR or the New Deal will not solve these problems. It will just create even more debt. The increases in debt that have already occurred are very large.

    They are creating future tax BURDENS and INCREASES that crimp the economy and hold back productive job creation.

    As long as Congress maintains these benighted policies, the economy will suffer and go downhill. There is no movement on Capitol Hill to reverse the policies of the last 50 years."(snip)


    and the author's key point in regard to both American Samoa and the US economy in general ...


    (snip)"Consumerism means that consumers spend on goods and services. This is NEVER a problem. The consumer has an infinite appetite for goods. That's an iron law of economics. What constrains the consumer is INCOME. The government has NO CAPACITY to increase income by its own spending. The government only gets resources by taxation and borrowing. They merely transfer income from the private sector to government. There is no NET increase by such a transfer.

    The private sector can CREATE WEALTH. More wealth provides more INCOME. Income is the return on wealth. Irving Fisher showed this in 1906 in his famous book The Nature of Capital and Income. Wealth is created whenever anyone finds a profit opportunity that creates a higher value than the costs of engaging in the activity. Wealth creation is the source of the income that allows the consumer to spend.

    That is why I focused on wealth creation and said that Congress needs to do what it takes to encourage wealth creation.

    Congress has focused on spending money that it thinks the consumer is not spending. This gets nowhere. It actually impedes wealth creation by absorbing funds from consumers that they wish to save, where it can be used to finance wealth creation.

    This brings up the other item: saving. There are ALWAYS more wealth creating projects out there than there is funding. But they won't be undertaken if business is uncertain about the future or if the taxes and regulations impede them. The saving is allocated to the projects, rationed among them, by the existence of interest rates and required returns on risky endeavors.

    The interest rate market at the same time determines how people allocate their wealth between immediate consumption and saving. At higher interest rates, they save more and consume less. The wealth created by such higher saving is worth more to them than additional consumption right now. The choice people always face is between consumption now and greater consumption later. There is no need ever to worry about this balance. It is the outcome of billions of individual optimizing choices. This should not even be a public policy decision variable.

    But we do have to worry about the conditions under which people are forced to make these consuming, saving, and investing choices, especially when government influences them for the worse.

    People will not fund risky projects (save and provide credit) if the future cash flows are highly uncertain or if they are going to be absorbed by taxes and compliance costs. Introducing new health care and carbon legislation has introduced large uncertainty. So has the prospect of much larger government deficits going forward and government control over large sectors such as energy, autos, banks, and health care. Wealth creation cannot operate under these conditions.

    In such conditions, people fly to safety. They buy short-term securities issued by the government. Business then fails to get funded. Wealth creation takes a back seat to Congressional manipulations."(snip)

    from

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Melonie View Post

    The government sector largely has unproductive jobs, i.e., jobs that do not produce more than what they cost the taxpayers. For this reason, the more that government taxes and spends, the more this spending impedes the economy. Government largely DESTROYS WEALTH.
    More anti-government, ideological nonsense.

    Melonie,

    If government jobs are unproductive and government DESTROYS WEALTH, why don't you stop using goods and services provided by the government? Why don't you stop using water from government water utilities and stop using the government run sewage systems. That means no more showers or use of toilets. Why don't you stop traveling over government roads and bridges and stop flying from government run airports using government air traffic control system?

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Also, why don't you stop using the internet, which came about from a government program? I guess all of that money the government spent developing the internet was "destroyed wealth" since the internet has never created wealth for anyone, has it?

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Why don't you stop using water from government water utilities and stop using the government run sewage systems. That means no more showers or use of toilets
    Ahem, my house in upstate NY has its own drilled well with pump ( cost me $5,000 ) and its own septic tank with leach field ( cost me another $5,000 ). Yet I still get a fat bill for property taxes.

    . Why don't you stop traveling over government roads and bridges
    I would consider this as soon as NY stops charging me 56 cents per gallon of gasoline plus Thruway tolls to maintain those roads and bridges

    and stop flying from government run airports using government air traffic control system?
    trust me I would have no problem if the unionized TSA airport security employees reverted to private sector contractors the way they started out.


    A reality admission here ... there are certain services that gov't SHOULD be responsible for, and actually does a reasonably good job at providing. Im talking about police protection, fire protection, criminal justice etc. Then again there are other services that gov't should NOT be responsible for, and/or does a very bad job at providing. I'm talking about the postal service, mass transportation, education etc.

    You'll note that the services that gov't does a very bad job at providing all involve 'redistribution of costs' i.e. taxpayer funded subsidies so that services can 'appear' to be provided at price levels below their actual cost of operation. This is non-productive, but politically popular to those who enjoy the subsidized prices but don't have to foot the tax cost of those subsidies. This is non-productive but politically popular to those politicians who 'run' such programs and in return receive votes and campaign contributions from unionized gov't workers employed by such programs.


    More anti-government, ideological nonsense.
    Melonie,
    If government jobs are unproductive and government DESTROYS WEALTH
    well, I'll lay the burden on you to cite some examples of gov't workers that actually CREATE wealth. Admittedly there are a handful.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by eagle2 View Post
    Also, why don't you stop using the internet, which came about from a government program? I guess all of that money the government spent developing the internet was "destroyed wealth" since the internet has never created wealth for anyone, has it?
    It might have started out state owned but these days it is getting far more privatized. Do you log into the local college to read stripperweb or a private ISP and their private equipment?

    The wealth started appearing when portions of the internet were privatized.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Melonie View Post
    Ahem, my house in upstate NY has its own drilled well with pump ( cost me $5,000 ) and its own septic tank with leach field ( cost me another $5,000 ). Yet I still get a fat bill for property taxes.
    Have you lived there your whole life? What about when you were traveling around the country as a featured entertainer? Did you use any of the government supplied water or sewage treatment? In most places I know of, property taxes aren't used to pay for water facilities. Homeowners are charged directly for their use of water.

    Quote Originally Posted by Melonie View Post
    I would consider this as soon as NY stops charging me 56 cents per gallon of gasoline plus Thruway tolls to maintain those roads and bridges
    Regardless, if they're worthless, why would you use them? They're either worth something, which is "wealth", or their not worth anything. If you're using them, then they have value.

    Quote Originally Posted by Melonie View Post
    trust me I would have no problem if the unionized TSA airport security employees reverted to private sector contractors the way they started out.
    It's not just the airport security employees that are run by the government. Most of the airports are built and run by the government. So is the air traffic control system.


    Quote Originally Posted by Melonie View Post
    A reality admission here ... there are certain services that gov't SHOULD be responsible for, and actually does a reasonably good job at providing. Im talking about police protection, fire protection, criminal justice etc. Then again there are other services that gov't should NOT be responsible for, and/or does a very bad job at providing. I'm talking about the postal service, mass transportation, education etc.
    How does the postal service do a bad job? For less than 50 cents, you can send a letter to anywhere in the country. If you use a private carrier, the same service cost over $20. If you don't like the postal service, you don't have to use it. There are other alternatives. Without public schools, some people would get no education at all. The quality of schools varies from state to state and district to district. It's true that some leave a lot of room for improvement, but there are others that are very good. The same with mass transportation. Some are better than others. New York City probably could not function without a large mass transportation system.
    Quote Originally Posted by Melonie View Post
    You'll note that the services that gov't does a very bad job at providing all involve 'redistribution of costs' i.e. taxpayer funded subsidies so that services can 'appear' to be provided at price levels below their actual cost of operation. This is non-productive, but politically popular to those who enjoy the subsidized prices but don't have to foot the tax cost of those subsidies. This is non-productive but politically popular to those politicians who 'run' such programs and in return receive votes and campaign contributions from unionized gov't workers employed by such programs.
    That has more to do with the way our political system is run, rather than just the fact that it's government. As long as special interest groups like unions are allowed to finance campaigns, they will have a disproportionate amount of power compared to those who don't contribute a lot of money. You're the one who was extolling the Supreme Court decision that will greatly increase the power of these special interest groups, by allowing them to spend unlimited amounts of money to support or oppose a candidate.


    Quote Originally Posted by Melonie View Post
    well, I'll lay the burden on you to cite some examples of gov't workers that actually CREATE wealth. Admittedly there are a handful.
    All of the goods and services provided by government provides wealth for those individuals who provide those goods and services, whether as employees or government contractors. A road or bridge has the same value whether it is built and financed by the government or a private company. The clothing or electronics you purchase at Walmart or Best Buy has the same value whether they were manufactured in a privately-owned factory or a government owned factory in China or Vietnam. The electricity you use has the same value whether it comes from a private utility or the TVA.

    In addition, there are entire industries that have resulted from government programs. The development of jet airplanes in this country was fully funded by the US government. So was the space industry and the use of satellites. If you use GPS when you're driving, you're using a product developed by the government, and as I said before, the internet came about as the result of a government program.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Deogol View Post
    It might have started out state owned but these days it is getting far more privatized. Do you log into the local college to read stripperweb or a private ISP and their private equipment?

    The wealth started appearing when portions of the internet were privatized.
    But there never would have been an internet to begin with, without the government.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by eagle2 View Post
    But there never would have been an internet to begin with, without the government.
    Agreed.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    How does the postal service do a bad job? For less than 50 cents, you can send a letter to anywhere in the country. If you use a private carrier, the same service cost over $20.
    At the risk of yet more off topic discourse, I'm not surprised to 'hear' that you are one of those Americans who enjoys consuming a gov't service at 'subsidized' prices i.e. the 50 cent letter ... while failing to recognize that the cost of the subsidy ( i.e. the actual price of delivering that letter is well above 50 cents - hence the USPS billion dollar budget deficit) is actually being borne by higher income taxes collected from those ~50% of Americans who actually PAY income taxes.


    But there never would have been an internet to begin with, without the government
    it is true that the DARPA funded communications cables between universities and gov't facilities formed the hardware basis for the internet. It is similarly true that the packet switching algorithms developed for the military to provide communications reliability in the event of massive war scenario infrastructure damage was the software basis for internet communications.


    In addition, there are entire industries that have resulted from government programs. The development of jet airplanes in this country was fully funded by the US government.
    It is true that GE received massive amounts of gov't money to develop Frank Whittle's jet engine for military use. However Whittle's jet engine itself was created on a shoestring budget with very little gov't assistance from the Brits.

    It is also true that Boeing received massive amounts of gov't money to develop the B29 pressurized airframe which was the fore-runner of all large jet airframes. But DeHavilland essentially bankrupted themselves developing the first commercial airliner the Comet without gov't funding ... followed by Boeing investing their own money in developing the first 'successful' commercial airliner the 707.

    I did post earlier that there were indeed some gov't jobs that do produce more 'value' than they consume. But they are few and far between. And that does not address a second question as to whether or not the billions of dollars of tax money being spent on gov't projects that do create additional value are actually 'profitable'.

    And that certainly side-steps the point that 90% of gov't employees in no way shape or manner create additional value - with value defined as an end result that is 'worth more' than the costs sunk by taxpayers to achieve that end result.

    Swinging back on topic, like the high minimum wage driving value creating private business and jobs out of American Samoa, the high minimum cost of 'prevailing wage' gov't contractors is a big reason that the roads and bridges in many states are falling apart ... despite the fact that targeted taxes on gasoline / vehicle registrations / tires are (supposedly) being collected to specifically fund road and bridge repairs. From a common sense standpoint, anybody who has ever observed a gov't contractor road paving crew's progress versus a private driveway / parking lot contractor's progress can attest to the relative 'value' being provided.

    ~
    Last edited by Melonie; 01-25-2010 at 04:41 AM.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Melonie View Post
    At the risk of yet more off topic discourse, I'm not surprised to 'hear' that you are one of those Americans who enjoys consuming a gov't service at 'subsidized' prices i.e. the 50 cent letter ... while failing to recognize that the cost of the subsidy ( i.e. the actual price of delivering that letter is well above 50 cents - hence the USPS billion dollar budget deficit) is actually being borne by higher income taxes collected from those ~50% of Americans who actually PAY income taxes.

    ~
    The 50 cent letter isn't a 'subsidized' price. The USPS is prohibited by law from taking tax dollars. Any budget deficits are covered by borrowing from the Treasury.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Government has proven to be better at destroying PRIVATE sector employment than it is at creating it. Note I said, PRIVATE sector employment.

    As for the Post Office, it is a fair question whether the private sector could do better. Maybe, BUT mail delivery would have to be done on a franchise basis. In other words, if a private contractor wanted to do private mail delivery they would have to be required to deliver to EVERYBODY. There are some sections of the country where it just would not pay for a private mail carrier to handle the mail: too rural; not enough people; too remote etc. With a franchise they'd be required to serve everybody just like cable T.V. franchises.

    Education ? It's been proven over and over that private schools and Charter Schools outperform large centralized school systems. In fact, Arne Duncan and Obama are pushing states and cities to open MORE charter schools. In New York, the UFT got their toadies in the Legislature to torpedo an increase in charter mandates and N.Y.C. lost the chance to get $700 million in Federal funds.

    Mass Transportation ? Not every transit system is as poorly run as Amtrak or the N.Y.C. subways. Some transit systems do rather well. Private companies do well with freight. With passengers ... not so much.

    Health Care ? I don't think government should have anything to do with providing it. Note I say PROVIDING health care except maybe to military personnel and Veterans. I've repeatedly posted that for those who can't afford it, government should pay for health insurance and let the PRIVATE sector provide it.

    I don't think government should be providing for my retirement or anyone else's. However I'd like them to regulate food, drugs and products for safety to maximize my chances of reaching retirement age. And try to keep me safe from terrorists and criminals.
    Last edited by Eric Stoner; 01-25-2010 at 12:52 PM.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    The USPS is prohibited by law from taking tax dollars. Any budget deficits are covered by borrowing from the Treasury.
    Again, spoken like a true non income tax payer !!! However it's structured, when any private sector 'business' pays operating expenses with (growing) debt the costs of repaying principal and interest on that debt must be included in future years' budgets. However, where the USPS is concerned, the costs of repaying principal and interest on money borrowed from the Treasury to fund operating expenses winds up being repaid by whom ? ... yes that's right ... those 50% of Americans who actually pay income taxes ! This is simply a 'stealth subsidy' which allows the USPS to 'underprice' their service ... in exactly the same way that public transportation, Fannie / Freddie, and a long list of other gov't operated service 'businesses' similarly 'underprice' their services while nailing actual income tax payers to make up the difference.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Melonie View Post
    Again, spoken like a true non income tax payer !!! However it's structured, when any private sector 'business' pays operating expenses with (growing) debt the costs of repaying principal and interest on that debt must be included in future years' budgets. However, where the USPS is concerned, the costs of repaying principal and interest on money borrowed from the Treasury to fund operating expenses winds up being repaid by whom ? ... yes that's right ... those 50% of Americans who actually pay income taxes ! This is simply a 'stealth subsidy' which allows the USPS to 'underprice' their service ... in exactly the same way that public transportation, Fannie / Freddie, and a long list of other gov't operated service 'businesses' similarly 'underprice' their services while nailing actual income tax payers to make up the difference.
    Melonie. Come on now. There's no need to join Eagle in personalizing. Afaik he does pay taxes. Afaic it's neither here nor there.His or any other poster's personal situation is irrelevant. It neither adds to or detracts from what he or anyone else posts.

    As usual, you are correct. There is no such thing as a "free lunch". Somebody, somewhere, is ALWAYS picking up the tab one way or another.

    The taxpayer subsidizes the operating deficits of the U.S.P.S. Until they can raise their rates and recoup what they borrowed. And as a GSE they do NOT pay taxes the way Federal Express or UPS does. Even Fannie and Freddie paid taxes after they were spun out and privatized.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Melonie View Post
    Again, spoken like a true non income tax payer !!! However it's structured, when any private sector 'business' pays operating expenses with (growing) debt the costs of repaying principal and interest on that debt must be included in future years' budgets. However, where the USPS is concerned, the costs of repaying principal and interest on money borrowed from the Treasury to fund operating expenses winds up being repaid by whom ? ... yes that's right ... those 50% of Americans who actually pay income taxes !
    Wrong. Did you even read what I said? It is against the law for the government to provide tax dollars to the USPS. If the USPS runs a deficit and borrows money, it must pay back the debt by raising rates or decreasing expenses.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Melonie View Post

    It is true that GE received massive amounts of gov't money to develop Frank Whittle's jet engine for military use. However Whittle's jet engine itself was created on a shoestring budget with very little gov't assistance from the Brits.
    and once Frank Whittle developed the jet, it was the government that financed taking the jet and using it to power aircraft.

    Quote Originally Posted by Melonie View Post
    It is also true that Boeing received massive amounts of gov't money to develop the B29 pressurized airframe which was the fore-runner of all large jet airframes. But DeHavilland essentially bankrupted themselves developing the first commercial airliner the Comet without gov't funding ... followed by Boeing investing their own money in developing the first 'successful' commercial airliner the 707.
    Boeing also received a significant amount of government funding to develop the military version of the 707, the KC-135.

    Quote Originally Posted by Melonie View Post
    I did post earlier that there were indeed some gov't jobs that do produce more 'value' than they consume. But they are few and far between. And that does not address a second question as to whether or not the billions of dollars of tax money being spent on gov't projects that do create additional value are actually 'profitable'.


    And that certainly side-steps the point that 90% of gov't employees in no way shape or manner create additional value - with value defined as an end result that is 'worth more' than the costs sunk by taxpayers to achieve that end result.

    ~
    The value of labor is whatever someone is willing to pay for it. The value of a government employee's labor is whatever the government is willing to pay that person, just like the value of your work as an adult entertainer is whatever someone is willing to pay you for your work.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Eric Stoner View Post
    Government has proven to be better at destroying PRIVATE sector employment than it is at creating it. Note I said, PRIVATE sector employment.

    As for the Post Office, it is a fair question whether the private sector could do better. Maybe, BUT mail delivery would have to be done on a franchise basis. In other words, if a private contractor wanted to do private mail delivery they would have to be required to deliver to EVERYBODY. There are some sections of the country where it just would not pay for a private mail carrier to handle the mail: too rural; not enough people; too remote etc. With a franchise they'd be required to serve everybody just like cable T.V. franchises.

    Education ? It's been proven over and over that private schools and Charter Schools outperform large centralized school systems. In fact, Arne Duncan and Obama are pushing states and cities to open MORE charter schools. In New York, the UFT got their toadies in the Legislature to torpedo an increase in charter mandates and N.Y.C. lost the chance to get $700 million in Federal funds.
    Charter schools are still government schools. Personally, I have nothing against using tax dollars to pay for students to go to private schools, as long as the schools meet certain standards. The only thing that matters to me is that all children have access to a quality education.

    Quote Originally Posted by Eric Stoner View Post
    Mass Transportation ? Not every transit system is as poorly run as Amtrak or the N.Y.C. subways. Some transit systems do rather well. Private companies do well with freight. With passengers ... not so much.
    I've taken NYC subway a few times and have no complaints. They're very basic, but they got me where I needed to go. Amtrak has to share its rails with freight, which gives them a big disadvantage. European and Japanese rail lines run much better because they have their own rails.

    Quote Originally Posted by Eric Stoner View Post
    Health Care ? I don't think government should have anything to do with providing it. Note I say PROVIDING health care except maybe to military personnel and Veterans. I've repeatedly posted that for those who can't afford it, government should pay for health insurance and let the PRIVATE sector provide it.
    It doesn't make any difference to me whether my health care is provided by the government or private sector. The only thing that matters to me is the quality of the care and affordability. If the private sector can provide quality health care at a reasonable cost, I have nothing against it. The same is true if it was the government providing health care. The problem we have right now is health care is becoming unaffordable for many, and something needs to be done.


    Quote Originally Posted by Eric Stoner View Post
    I don't think government should be providing for my retirement or anyone else's. However I'd like them to regulate food, drugs and products for safety to maximize my chances of reaching retirement age. And try to keep me safe from terrorists and criminals.
    You might think differently when you are retired.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    The value of labor is whatever someone is willing to pay for it
    which is precisely why 1/2 of Samoans and an increasing number of Americans are unemployed ... because the minimum amount of money the gov't requires be paid for their labor cannot be absorbed and still allow the turning of a profit for private sector employer


    The value of a government employee's labor is whatever the government is willing to pay that person
    with no relationship between the rate of pay and the 'market value' of the labor being required ( in the short term at least ). This is a major reason that both the US federal gov't and most state gov'ts are hugely in the red ... because they have been funding the bloated paychecks of gov't employees by going ever deeper in debt. But eventually the debt well begins to run dry, leaving states no choice but to fire gov't employees the state is no longer able to borrow enough money to pay !!!

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by eagle2 View Post
    Charter schools are still government schools. Personally, I have nothing against using tax dollars to pay for students to go to private schools, as long as the schools meet certain standards. The only thing that matters to me is that all children have access to a quality education.


    I've taken NYC subway a few times and have no complaints. They're very basic, but they got me where I needed to go. Amtrak has to share its rails with freight, which gives them a big disadvantage. European and Japanese rail lines run much better because they have their own rails.


    It doesn't make any difference to me whether my health care is provided by the government or private sector. The only thing that matters to me is the quality of the care and affordability. If the private sector can provide quality health care at a reasonable cost, I have nothing against it. The same is true if it was the government providing health care. The problem we have right now is health care is becoming unaffordable for many, and something needs to be done.




    You might think differently when you are retired.
    Charter Schools are "chartered" by the government BUT they are free from excessive regulation, union contracts, union work rules and are often funded, at least in part, from PRIVATE sources. KIP and Geoffrey Canada's charter schools have done wonders for minority , inner city students in NYC. They have proven that private schools are not necessary to provide quality education.

    The NYC subways themselves aren't bad. Compared to their condition in the 70's and early 80's they're fantastic. The NYCTA and the MTA are both leaking fiscal sieves still overloaded with excessive management, inefficiency and waste. The Europeans and Japanese have invested the money to have dedicated rail lines just for high speed trains. We have permitted passenger rail service to suffer in favor of subsidizing auto and air travel.

    Name one thing the government has provided well at lowered cost ? If anyone is going to provide better health care at lower cost, history shows it can only be the private sector. Cats don't bark.

    Think differently about what ? Why is it a government responsibility to provide for MY retirement ? Why not let me save and invest MY money to provide for same ? I've certainly outperformed the return on T-Bonds with my investment decisions.
    Last edited by Eric Stoner; 01-26-2010 at 09:52 AM.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Melonie View Post
    which is precisely why 1/2 of Samoans and an increasing number of Americans are unemployed ... because the minimum amount of money the gov't requires be paid for their labor cannot be absorbed and still allow the turning of a profit for private sector employer




    with no relationship between the rate of pay and the 'market value' of the labor being required ( in the short term at least ). This is a major reason that both the US federal gov't and most state gov'ts are hugely in the red ... because they have been funding the bloated paychecks of gov't employees by going ever deeper in debt. But eventually the debt well begins to run dry, leaving states no choice but to fire gov't employees the state is no longer able to borrow enough money to pay !!!
    Spot On ! The average Federal worker now receives well over $70,000 per year NOT including benefits. The average private sector employee gets about $42,000 not including benefits. In many states like California the contrast is equally ridiculous.

    It wasn't that long ago that government workers essentially got LOWER salaries than the private sector in return for job security and good benefits. Under Obama, the gap between private and public sector salaries has gotten even larger. Under Obama, public sector employees have INCREASED in number.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Melonie View Post
    which is precisely why 1/2 of Samoans and an increasing number of Americans are unemployed ... because the minimum amount of money the gov't requires be paid for their labor cannot be absorbed and still allow the turning of a profit for private sector employer
    No, There was never a problem in Somoa when they had a minimum wage based on the cost of living on their island. It was only when it was raised to a level based on mainland US cost of living that they lost jobs, thanks to the Republicans putting out misinformation claiming Somoa was exempt from the US minimum wage as a result of campaign contributions to Nancy Pelosi.

    If you think the minimum wage is so bad, why don't you take a job doing manual labor for $2 an hour? Why don't you try living like the average person in your adopted country, instead of like the expatriates who have benefited from living in countries with high wages?


    Quote Originally Posted by Melonie View Post
    with no relationship between the rate of pay and the 'market value' of the labor being required ( in the short term at least ). This is a major reason that both the US federal gov't and most state gov'ts are hugely in the red ... because they have been funding the bloated paychecks of gov't employees by going ever deeper in debt. But eventually the debt well begins to run dry, leaving states no choice but to fire gov't employees the state is no longer able to borrow enough money to pay !!!
    Government employees are paid at the market rate. The government hires a higher percentage of highly-skilled and professional employees than the private sector, which is why government salaries are much higher. Just comparing overall average salaries is not an accurate way to compare wages for government employees and private sector employees. The only accurate way to do it would be to compare salaries of employees in the same field. Do you really think the average government lawyer makes anywhere near as much money as lawyers do in the private sector?

    From:

    http://www.usatoday.com/printedition...terstitialskip

    Jessica Klement, government affairs director for the Federal Managers Association, says the federal workforce is highly paid because the government employs skilled people such as scientists, physicians and lawyers. She says federal employees make 26% less than private workers for comparable jobs.

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    Default Re: weekend commentary - American Samoa 2 years after minimum wage increase

    Quote Originally Posted by Eric Stoner View Post

    Name one thing the government has provided well at lowered cost ? If anyone is going to provide better health care at lower cost, history shows it can only be the private sector. Cats don't bark.
    Studies have shown government VA Hospitals outperform private sector hospitals in a number of areas.

    http://www.businessweek.com/magazine...9/b3993061.htm

    This wasn't always true, but as a result of reforms enacted in the 1990's, VA hospitals have improved dramatically.

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