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Minimum Wage: Bloomberg Editors Say "Let's Make a Deal..."
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TAC-WhiteAmerica With our chattering classes now totally focused on the overriding question of whether the political contributions of Romney’s Wall Street cronies or those of Obama will first reach the billion dollar mark, only a few scattered voices have focused on matters which impact the remaining 99.9% of our citizenry.

In particular, recent weeks have seen Counterpunch’s Alexander Cockburn devote a whole series of his columns in web and in print to what he has reasonably entitled “The Most Vital Issue in American Politics Today,” namely a large hike in the national minimum wage.

With huge numbers of ordinary Americans falling into near destitution and worrisome recent signs that the so-called “recovery” may once again be running out of steam, the notion of giving tens of millions of American workers an extra six or seven thousand dollars per year in hard-earned spending money seems more appealing than for the taxpayers to just give another six or seven hundred billion to the banks, who’d surely just gamble it away as they did their previous funds. Although Sen. Tom Harkin has introduced a bill to gradually raise the minimum wage to $9.80 per hour by 2014, Cockburn’s Nation column highlighted the position of prominent liberal-leaning economist James K. Galbraith, the academic leader of a “smart coalition,” which advocates a boost all the way to $12.00 per hour. Under such a drastic measure, our minimum wage would actually become somewhat higher in real terms than it had been under the 1968 full-employment economy of Republican Richard Nixon.

Just a week after Cockburn’s Nation column ran, Galbraith reiterated his $12.00 per hour proposal made in January, this time using the much broader platform of a special CNN column. He focused on the practical real-world impact of such an economic measure, in constrast to the mere symbolism of some of Obama’s favored proposals, such as the ‘Buffett Rule,’ aimed at raising taxes on the ultra-wealthy. As Galbraith pointed out, the latter measure would create no jobs, put no extra cash in the pockets of ordinary workers, and would merely raise a few extra billion dollars of revenue, narrowing our horrific deficits by just a fraction of one percent. Symbolism obviously has its place, but it doesn’t pay delinquent mortgages or stimulate the economy.

In any event, symbolism quickly failed, and the Buffett Rule went down to defeat this Monday in the U.S. Senate, Obama’s enthusiastic support notwithstanding.But at this point, something fascinating happened. Almost exactly at the moment the plutocrat-controlled Senate was dealing ordinary working Americans a sharp symbolic defeat, Bloomberg Financial News—owned by one of the wealthiest Wall Street plutocrats of them all—adopted a very different stance. In a strongly-worded editorial, Bloomberg endorsed…a sharp rise in the national minimum wage!

What explains this astonishing development? Have Bloomberg and its Wall Street cronies converted to Marxism, or taken a hankering to Che berets? Has a reborn Symbionese Liberation Army kidnapped the children of these Wall Street titans and demanded a national wage hike for their release?

Actually, the answer is quite simple and obvious. A rise in the minimum wage has absolutely no impact whatsoever on the financial position of these billionaires or mega-millionaires, who probably don’t even know whether the current hourly figure is $7.25 or $17.25 or $27.25. As an example, an amusing NYT article of a few months ago mentioned that the ultra-high-end nannies favored by the Bloomberg social set are typically paid $200,000 per year, rather comfortably above minimum wage considerations. Indeed, I would suspect that the typical salary of their nannies’ nannies might run around around $45,000 or so, meaning that only their nannies’ nannies’ nannies might be impacted by Harkin’s hike. Our Financial Masters care not one whit about a minimum wage one way or the other.

Meanwhile, the Buffett Rule would directly impact these same Oligarchs, perhaps raising their taxes by many millions or even tens of millions of dollars per year, which is exactly why their hirelings in Washington ensured that the measure went down to certain defeat. Admittedly, nearly all the Democrats voted for the bill, but if it had had any chance of passage, enough Democrats would have immediately switched sides to prevent such a calamity.

Hence, I suspect a more accurate title for the Bloomberg Editorial would have been “Let’s Make a Deal,” wherein the assembled Oligarchs of Wall Street offer to raise the minimum wage to whatever figure seems desirable in the minds of workers and leftwing economists in exchange for dropping all attempts to force billionaires to pay tax rates as high as their secretaries or their janitors. The Left sacrifices its symbolic commitment to tax fairness in exchange for putting hundreds of billions of extra dollars into the pockets of ordinary workers, which seems like a pretty reasonable bargain to me.

But what’s the catch—who loses? If the stimulative impact of a large minimum wage rise is sufficiently great—as suggested by Galbraith’s analysis—the result is a positive-sum situation, in which the entire economy benefits on balance, with the winners far outnumbering the losers. But to the extent that losers do exist, many would tend to be concentrated in the lowest ranks of the affluent, perhaps sweatshop owners, off-the-books restauranteers, and other marginal economic players who could not survive a higher-wage shakeout. However, none of these groups employ powerful K Street lobbying interests or contribute vast sums to elected officials, so no one in America much cares about what happens to them, least of all the Oligarchs who run our country. To a Bloomberg, there is no economic difference whatsoever between a sweatshop owner and a sweatshop laborer, and if favoring the latter will head off major tax reform, then that’s the thing to do.

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The only influential political element opposing a much higher minimum wage would be the ideological free-marketeers of the numerous thinktanks and economics departments, who fear national disaster unless the minimum wage is steadily reduced to zero and America’s working class to total poverty. But nearly all these individuals are merely Oligarchic employees, and if their paymasters tell them to reverse positions, they’ll do so as promptly as the world’s Communists switched sides after the signing of the Hitler-Stalin Pact. And this is logically consistent, since making a Virtue of Selfishness obviously requires people to worship their paychecks and grants, and do whatever is required to keep them.

A couple of years ago, Ralph Nader published a book with the amusing title “Only the Super-Rich Can Save Us.” In today’s unfortunate political reality, I would argue that only the super-rich can save our economy by raising the national minimum wage. But I think there’s actually a pretty good chance that’s exactly what they might decide to do.

 
• Category: Economics • Tags: Immigration, Minimum Wage 
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