EQUALITY, LIBERTY AND FRATERNITY

Inequality is not so much a cause of economic, political, and social processes as a consequence. Some of these processes are good, some are bad, and some are very bad indeed. ~ Angus Deaton    

I have a problem with inequality, and with equality. In this blog I take a tour of the inequality landscape, through its ups (bad) and downs (good).

For the blog’s title I’ve transposed the famous tripartite slogan of the French Revolution – Liberty, Equality and Fraternity – and placed equality first. Equality may have played second fiddle to liberty in late 18th century France, but not now. The current focus of many politicians, commenters and perhaps voters – mostly Democrats –is predominantly on inequality, not as much on liberty and little on fraternity. Except to close them on campuses.

This is hardly surprising. The liberal media is awash with explanations of how widespread and multi-faceted inequality has become; and how it needs to be thwarted before something really nasty happens. Such nastiness might happen, but I haven’t found any quantitative evidence showing that inequality per se actually has caused economic damage. The Nobel-laurate Professor Angus Deaton makes this important point in his quote at the top of this page. It’s a consequence not a cause.

Technical literature examining inequality includes a growing number of qualitative discussions about the harm of inequality, but next to no quantitative findings seem to exist about inequality directly causing economic and socio-cultural loss. No matter, we just know from our gut that rising inequality will eventually cause some sort of revolution.  
The possible consequences of rising inequality have more to do with issues surrounding equity, fairness and lack of opportunity rather than higher unemployment, weaker income increases and lower GDP growth. Whatever its status, the perception of increased inequality in its many forms may lead people to feel threatened and upset. Politicians have capitalized on these feelings, as we know all too well.

When I Googled inequality, 20.3 million results were immediately referenced. Google’s ngram viewer shows that mentions of inequality in the vast array of literature it searches grew by 29% between 1980 and 2000. A recent Pew survey found that 82% of Americans think inequality is either a very or moderately big problem.

Inequality is not a new issue. Paleontologists suggest that after settled agriculture became widespread in the Fertile Crescent and beyond about 10,000 years ago, inequality steadily rose. The owners of land were much richer and wealthier than the people who worked on it; their houses were much larger. It was certainly alive and well during the Middle Ages when Kings, Queens, Dukes and Duchesses ruled the west. If inequality has been present for virtually all of recorded human history, is it really always a problem or more a feature of human society that may even have made a contribution to humanity’s stunning progress? In the minds of capital “P” Progressives, this notion borders on blasphemy.

The general view is inequality, beyond some unstated level (that’s lower than the current one), detrimentally affects our modern society, causing a host of problems. For progressives, we have already arrived at this level. If asked when it started, November 8, 2016 is an often mentioned answer. Inequality has become a crucial, often-stated crisis that must be remedied now. No one in an ivory tower, think tank, public office or sidewalk café knows what degree of inequality will spawn their feared difficulties, but many citizens believe inequality shouldn’t continue to rise, as it has since the 1970s.

How much inequality (or for that matter, equality) should we accept as a society is the ultimate question. What kind of inequality should be our primary focus? And how should it be allayed? Predictably, there are many answers depending on one’s socio-economic, political and cultural perspective.

During the past two years the progressive media and politicians have expanded the scope of inequality beyond its historic confines of just unequal distributions of income and wealth. In researching this blog I counted 11 different, inter-related varieties of inequality that have gained attention and may be candidates for remedy. There are, undoubtedly, more.

Less realized is that eradicating all inequality in its myriad of forms although conceptually beneficial would likely impinge on our freedom as well as our fraternity. Very few folks think about these effects, despite there always being unintended consequences. For some progressives – including many who’ve expressed interest in running against our sardonic, zero-sum, bullet-point president in 890 days– remedying inequality requires imposing significant redistributive taxes on income and wealth. Such taxes can reduce inequality and also pay for new equality- stimulating programs.

Talismanic programs that progressive Democrats believe they must hold close and subscribe to if they want to get support from their base include: universal single-payer healthcare (e.g., Medicare for All), government guaranteed jobs, higher minimum wage (based on a living wage), free college, legalized marijuana and less restrictive immigration rules. These dramatic programs will cost hundreds of billions of dollars to implement and will significantly broaden government’s presence in our everyday activities. More strategically, they will also need to surmount the likely herculean challenge mentioned in numerous surveys, including a Gallup poll, that two-thirds of respondents believe “big government” is the main threat to the nation’s future. One does not diminish inequality with small government.

The seeming sincerity of politicians like Elizabeth Warren, Cory Booker, Kirsten Gillibrand, Kamala Harris, Chris Van Hollen, and Bernie Sanders to drastically reduce inequality is both endearing and concerning. Their urgency reminds me of Kurt Vonnegut’s short story “Harrison Bergeron.”

“Harrison Bergeron” satirically addresses the quest for equality. The story describes the US 120 years into the future. It starts, “The year was 2081, and everyone was finally equal, they weren’t only equal before God and the law. They were equal every which way.” Total equality has been nationally mandated by the passage of the 211th, 212th and 213th Amendments to the US Constitution. Ultimate equality is vigorously enforced by the “unceasing vigilance of the US Handicapper General [H-G],” Diana Moon Glompers. She keeps the nation filled to the brim with equality so it will not edge back “to the dark ages with everybody competing against everybody else.”

Beautiful people are forced to wear masks, or in the case of Mr. Bergeron, a hideous Halloween disguise; strong, athletic people have weights attached to their bodies; smarter than average folks wear headphones that blast screeching, loud, terrible noises every couple of minutes into their heads. By law, every above-average person is handicapped by the H-G back to the mean. Everyone is equal in every way. Vonnegut’s story is a clever illustration of Aristotle’s famed adage, the worst form of inequality is to try to make unequal things equal.

But back to the present…

The standard measure of income and wealth inequality is the Gini index, aka the Gini. The Gini numerically calculates the degree of inequality in in a specified distribution of income or wealth. Corrado Gini, an Italian statistician and sociologist, first described his innovative means of quantitatively measuring inequality in his 1912 paper Variability and Mutability (or as they say in his old country, Variabilità e mutabilità). The Gini index varies from zero, signifying perfect equality in the distribution of income or wealth, to 100%, representing total inequality. The higher the index’s value, the greater is the inequality. The US Gini for income has steadily risen during the past four decades.

I’ll now describe some of the forms of inequality, beginning with income inequality.

Income.  In 2015, the US Gini index for income inequality was 45.41%, according to the Chartbook of Inequality, an impressive assessment of inequality in 25 nations. The top 1% of households received approximately 20% of the pre-tax income in 2013. The CIA World Factbook ranks the US Gini index 41st most unequal for family income distribution out of 156 nations; Finland had the most equal income distribution with a Gini of 21.5%; Lesotho had the most unequal, at 63.2%.

Solutions for alleviating income inequality converge on imposing new fiscally redistributive taxes that can also fund augmented government programs to assist poorer and less fortunate people. As David Brooks put it, progressives generally prioritize and believe in expanding government to enhance equality. However, every politician knows raising taxes is hardly ever an easy lift, no matter whether she/he is a Democrat, Republican, Libertarian or Green party member or an independent. During the past several decades the rare increases in federal income taxes have been passed to directly fund new programs or mitigate budget deficits, not to remedy inequality per se. Because of the needed increases in tax revenues to equalize income distribution, every state-based effort has failed so far when people have voted on reducing income inequality. Yours truly and others have mentioned that the 2017 Tax Cuts and Jobs Act passed by our Republican-led Congress in December is not going to reduce income and/or wealth inequality; instead, it will clearly increase it. So it goes.

Tax increases that are targeted by progressives to improve equality by redistributing income and wealth from the rich to the rest of us include a financial transactions tax (a tax on every stock, bond and derivative sale), a wealth tax (e.g., the international 80% tax on estates of $500,000 or more than that Thomas Piketty recommended) and greater income taxes for upper income people. Higher sales taxes have also been suggested at the state level. Other programs advocated to improve equality include raising minimum wages especially by using a “living wage,” one that is sufficient to provide the necessities essential to an acceptable standard of living.

According to the San Francisco Living Wage Calculator, the living wage in SF is $19.63/hr for a one-adult household, $44.19/hr for a one-adult, two-child household. In annual terms these living wages are about $41k/yr and $92k/yr respectively. The current SF minimum wage is $14/hr, the highest in the US. Several labor unions, including the American Federation of Teachers, advocate basing minimum wages on a living wage.

Progressives also have promoted universal Basic Income (BI) programs that unconditionally provide monthly stipends to individuals. Finland has run a BI experiment since 2016 that has given 2000 unemployed Finns with 560 Euros ($660) a month, with no strings attached. Participants didn’t have to prove they were looking for work, and if they did find work they were allowed to keep on receiving the money. The Finnish government prematurely ended this experiment in late April, principally due to its large cost. The banner waved by BI promoters is now at half-staff. It’s hard to imagine it ever flying at the US Capitol.

Wealth.  Wealth and income are different. Wealth refers to the stock of assets held by a person or household at a single point in time. Income refers to money received by a person or household over some period of time, say one year. Here’s a synopsis of wealth inequality, which is closely related to but distinct from income inequality. The US wealth Gini is 80.1%, ranked 6th most unequal, behind Switzerland, out of 139 countries. The Gini of global wealth distribution is close to what the US Gini is, 80.4%. Wealth inequality in the US, as elsewhere, is much higher than income inequality. The richest 1% of Americans own (account for) 40% of the country’s wealth (total net worth). In 2014, the richest 30 individuals in the US owned about $792 billion, while the bottom half of Americans owned 1.1% of our country's wealth, also about $792 billion. So 30 people own as much assets as 157,000,000 people. That’s big-time inequality.

The old faithful, granddaddy gauges of income and wealth inequality, have been supplemented since before the last election. I found nine (9) other inter-related, mostly bitter flavors of inequality: 3 types of educational inequality (by achieved level of education, by gender and by fiscal indebtedness); dental; healthcare; criminal justice; sex; generational; and employment.

Education.  Great news, more people are now attending and graduating from post-secondary schools than ever before. In fall 2017, 20.4 million students attended American colleges and universities, constituting a 33% increase since fall 2000. In 2017, 34.6% of young adult females and 33.7% of young adult males have completed at least 4 years of college. Female graduates have outnumbered male graduates since 2015. This is one important area, among others, where females’ performance supersedes males.

Overall, this increase in college graduation has provided alumnae, and the nation, with significant, lasting benefits. Nevertheless, the majority of young adults does not attend or graduate from college despite all the media attention on college attendance. Employers’ demand for high-school graduates has atrophied. Yet federal, state and/or local governments haven’t created broad-based, effective vocational, skills-based training programs for high-school graduates.

Employment opportunities have become increasingly unequal. Unemployment numbers illustrate the disparity. The unemployment rate for people who have a B.A. or higher is currently 2.1%, 1.8% lower than the general unemployment rate. The unemployment rate for high-school graduates is 4.3%, twice as high as for college graduates. For people who don’t have a high-school or GED degree, the unemployment rate is 5.9%.

A final facet of education-based inequality is the debt owed by students who attend colleges and universities. For quite a while, critics have characterized this as the “student debt crisis.” There’s no doubt that students – whether they graduate or not – are carrying more loans and thus more debt as tuition has continued to increase. It’s not clear whether it’s a crisis or not. College students’ median loan debt is $14,400. The average student loan debt for students who have graduated from public universities (where 77% of high school grads go to college) is $25,500. In addition, some people have complained that there is student debt inequality because women carry a higher debt burden than men. This “inequality” exists for one simple reason; more young women are going to college than men. Last fall 11.5 million females attended colleges and universities versus 8.9 million men.

It’s important to put rising student debt into some perspective. Most college graduates receive a financial reward from having a college degree, higher incomes. The average bachelor’s degree holder earns about $32,000 more per year than the average high school graduate. Bachelor’s degree holders make about $1 million in additional earnings over their lifetime according to the Association of Public Land Grant Universities.

Dental.  This attention-getting headline, “How Dental Inequality Hurts Americans,” alerted me to a previously unrecognized facet of inequality. People are suffering because Medicaid doesn’t provide its recipients with dental care. Other inequalities may seem more important and have more widespread impacts; but tell that to someone whose mouth is filled with pain. Can’t we just brace ourselves and strengthen gum control?  

Healthcare.  Unequal access to healthcare has been a key socio-economic issue. One of the major goals of the Affordable Care Act (ACA) was to decrease the number of Americans without any health insurance coverage, an embarrassing, costly reality in our rich nation. The ACA succeeded. American healthcare inequality has steadily declined since 2013; three years after President Obama signed the ACA. In 2013 the share of people without health insurance was 18%. By 2016 it was 10.9%. In 2017, after the Republican Congress and the president stilted coverage and reduced funding, the percent of Americans without coverage increased to 12.2%. This is a senseless misfortune. It also has energized progressives’ push to enact their universal, single-payer Medicare-for-All healthcare plan once they get back in political power. I’ve discussed how this proposed plan may not be the cure-all Sen. Sanders and his compatriots envisage.

Criminal justice.  Inequities in the implementation of the US criminal justice system for people of color have been noted since before the 18th century. Most recently, the acquittal of Travon Martin’s killer in Florida and police tactics that killed Michael Brown in Ferguson, Missouri and Eric Garner in New York City have brought these inequities front and center. Significantly more people (usually men) of color are prosecuted and jailed than white people. The figure below shows this on-going criminal justice inequality.

Source: Wikipedia

Sex.  Yes, sex inequality, or rather inequality of opportunity for having sex. Inequality’s scope is thus broadened once again. This is hardly a new issue, but it came out from between the sheets and briefly into the forefront of the media spotlight several weeks ago when an incel man (that’s an involuntarily celebrate person, for the thankfully uninitiated) mowed down a bunch of Toronto pedestrians, killing 10 of them while driving his van on a sidewalk. This horrible incident was portrayed by some as a problem that might be settled by making a “Case for Redistribution” of sex, as New York Times columnist Ross Douthat mentioned.

If we can contemplate redistributing income and wealth (see above), why not sex. This reasoning did not go down well with others. Slate writer Tyler Zimmer’s response to the Toronto incident and Douthat’s column was: if we’re serious about sexual fulfillment, we should worry more about economic inequality, and not sex robots (that Douthat suggested as an antidote, perhaps in jest).

The LGBTQ community has made remarkable progress in increasing the awareness of others about the discriminatory practices and harms brought on their members. Laws and regulations have been changed to rectify these inequalities as a consequence of their efforts.

Generational.  When you think about it there will always be generational inequalities. Because each generation (retiring Baby Boomers, adult Gen Xers, early-career Millennials) is by definition at different stages of their lives, relative to other generations. Nevertheless, Millennials’ status has is occupying a fair amount of attention, as they ascend into demographic and commercial prominence. Several stories appeared close to Mothers’ Day making note that nearly 25% of Millennials between the ages of 24 and 36 lives at home with Mom (and Dad), nearly double the 13.5% rate for that age group in 2005. Geographically, multigenerational households have formed, as expected, in the country’s most expensive rental markets. More than 30% of millennials live with their parents in New York, Los Angeles and Miami. What cities are lowest on the living-with-mom list: Austin, Seattle and Denver that aren’t cheap, but are attractive enough that Millennials are willing to leave the nest for them, despite their cost. These Millennials’ location choices echoes Laurence Peters’ quote; In spite of the cost of living, it's still popular. On the other end of the generational divide, Baby Boomers have been retiring in droves, roughly 10,000 per day. Boomers are facing inequities from employers and service providers who maintain ageist practices.

Employment.  I already mentioned the disparity of employment for people with different levels of education. Other issues, including age, gender and race/ethnicity inequalities, also are present in the nation’s labor market. In the first quarter of 2018 the average unemployment rate for all workers was 4.3%; for White people it was 3.9%; for Black/African Americans the rate was 7.3%; for Hispanic/Latinos it was 5.4%; and for Asians it was 3.0%. Unemployment rates for teenagers are more than three times as large as the overall rate: White teenagers’ unemployment rate was 12.1%; Black/African-Americans was 24.8%, the highest of any published rate; Hispanic/Latino teenagers had a 14.4% unemployment rate; Asian teenagers, 6.6%. Men’s overall unemployment rate was 4.6%, women’s was 3.5%.

Although the Q1 women’s unemployment rate was below the overall rate, they are far less frequently employed in the tippy-top echelons of American corporate enterprise. There are merely 26 women CEOs of S&P500 companies. Their presence as corporate CEOs has grown slowly during the past decade. Women also remain far outnumbered by men in the corporate board rooms of American; only 21% of S&P500 company board seats are held by women.

Unlike typical workers, the compensation that CEOs receive has continued its escalation rapidly to thermospheric heights previously unseen. Here’s the 2017 report of the top 200 best paid CEOs of publicly-traded companies. Interestingly, the salary of Mindy Grossman of Weight Watchers International (WWI), the 22nd highest paid CEO ($33.4M, that unbelievably represents just 32% of the highest paid CEO), has the highest CEO pay ratio. Her compensation is 5,908 times greater than the median salary at WWI. Also fascinating, the CEO with the second highest CEO pay ratio, 4,987, is a woman, Margaret Georgiadis, CEO of Mattel ($31.3M). Louis Hyman, a professor at Cornell, accurately portrayed the real-life inequality of these CEOs’ compensation as, “It’s grotesque how unequal this has become.”

But what about the remaining 3.9% of American workers who still can’t find a job, a low rate that we haven’t seen for more than 17 years? The progressive wing of the Democratic Party has come up with a potential answer: give them guaranteed government jobs at decent wages. Critics have said such a program could be seen as a kind of a very large hammer in search of a nail. Proponents haven’t yet offered a means of paying for such guaranteed jobs, just like Republicans blithely declined to specify how they were going to finance the tax “reform” act they passed into law last year. The US labor market would be fundamentally altered if such guaranteed jobs were actually offered by the federal government in ways it hasn’t been since Franklin D. Roosevelt initiated the Works Progress Administration’s programs in 1939, amid bread lines and 15% unemployment.

After examining these facets of inequality I remain convinced that our current state of inequality is a consequence of many inter-laced socio-economic forces, including laws, regulations and most importantly collective and individual behaviors. Some of these forces can be changed, some must be changed. Some have been changed. Many haven’t been changed.

Because every imaginable future with less inequality is not equally possible, difficult but reasoned priorities must be made. I don’t want some Diana Moon Glompers to be legally enforcing strict equality across the board that I think might be preferred in some very leftish quarters. I also don’t subscribe to blanket adoption of absolute equality as a feasible or even reasonable political goal. The quixotic plans of capital “P” Progressives to dramatically redistribute income and wealth are fraught and, I believe, destined to be politically unsuccessful, as they have been in the past. Some observers who ascribe to a more realistic, measured course of action call such plans infeasible and political suicide. I have recounted these large challenges and risks. Progressives’ push for very expensive, large government programs that might reduce some forms of inequality ultimately rest on a foundation that a few public decision-makers have oracle-like insight to justify spending hundreds of billions of dollars to achieve government-led quests to unspoiled equality. I find that prospect impossible to vote for.

Although there’s no magical threshold of equality that will consequently effect more opportunities to more people, I do believe it’s important and wise to provide more public resources to people who need them but don’t have them. These beneficiaries will ultimately improve not just their lives, but all of ours. America has eventually done this for the vast majority of our history. The current administration’s efforts to decrease wholesale economic and cultural equality should be stopped. So by all means make sure to vote this November 6th, and in the on-going primaries to throw these Republican con artists out.

I also think Plato’s characterization of democracy is an apt one: Democracy is a charming sort of government, full of variety and disorder and dispensing a sort of equality to equals and unequals alike. If Democrats prudently chose to not dive into the deep left end of the political pool, and can gain some measure of actual political power in Washington and elsewhere after November, cutting back the administration’s ill-founded hydra of increased inequality will be a superb, initial start to increasing equality, liberty and fraternity.

PUTTING THE GINI BACK IN ITS BOTTLE

A tax loophole is something that benefits the other guy. If it benefits you, it's tax reform. ~ Sen. Russell Long

Liberals have been understandably concerned about the distribution of income and wealth in the US. Over the past four decades an ever-higher share of the nation’s total income and wealth has been garnered by a small number of rich, wealthy Americans. This blog discusses the vicissitudes of income and wealth inequality over the past seven decades and how this inequality is related to the Republicans’ current legislative focus, their Tax Cuts and Jobs Act.

This unequal distribution is seen as the few very rich people gaining control of a growing amount of our nation’s income and wealth. Such concentrated control likely has serious implications and consequences.

Economists commonly account for the nature of a nation’s income and wealth distribution using the Gini index. The Gini index is a measure of inequality of a nation’s distribution of income (or wealth). It was pioneered by the Italian statistician and demographer Corrado Gini in his 1912 paper, “Variabilità e mutabilità” (Variability and mutability). The Gini index has a maximum value of 1 (signifying total inequality) and minimum of 0 (signifying complete equality). A perfectly equal distribution of income would be when each income decile of a nation’s households accounts for 10% of its total earned income, including the highest- and lowest-deciles of households. The lower the value of the Gini index, the more equal is the underlying income (or wealth) distribution. The higher the index is, the more unequal the distribution of income becomes.

The table below shows the share of US income and wealth held by the Top 1% rising since the since the 1940; the income-based Gini index is also presented from 1955 to 2015. Both the 1%’s share of income and wealth and the Gini index have steadily risen since 1975, signifying growing inequality.

Economic Inequality in the US, 1940-2015

Year	Share of Top 1% for Gross Income	Share of Top 1% for Total Net Wealth	Gini Index (Household Income)
1940	15.7%	39.7%	NA
1955	9.2%	27.5%	0.377
1975	8.0%	22.8%	0.371
1995	13.5%	27.9%	0.433
2005	17.7%	32.1%	0.450
2015	18.4%	37.2%	0.454*

Source: Chartbook of Economic Inequality. *2014 value, last year available.

In 2016, the Top 1%ers had household income of $430,600 and net worth of $10,374,030. The inequality of wealth distribution has long been far more pronounced than of income, as shown in the table. You can readily see that control exercised by the 1% over the nation’s wealth is roughly twice that of the nation’s income.

The 75-year period shown in this table spans significant economic growth and change as well as economic booms and busts. The Gini index grew more than 20%, the income and wealth shares increased much less. Between 1940 and 2015, the US real GDP grew by 13 times.
To state the obvious, the Republican tax “reform” legislation now has no economic or social justification. Following the widely-accepted view, expansionary fiscal policy (broadly lowering tax rates and increasing government spending) should be enacted when the nation is suffering from a recession. Like what was happening in 2009 when unemployment was 9.9% and GDP shrank by 2.7%. Since 2010, the US has enjoyed steady if minimal economic growth, in no small part due to the Obama stimulus legislation. The Republicans vehemently opposed Obama’s 2009 $787 billion fiscal stimulus because it would increase federal deficit and debt.

Hypocrisy now abounds. The US is already at full employment, the unemployment rate is 4.1%, 0.63% below the natural (full-employment) rate of unemployment. The Republican inequality-enhancing tax “reform” bill would increase the national deficits at least $1.5 trillion, probably much more, over the next decade. This time, nary a word of opposition has been heard from the two-faced Republicans with regard to this significant deficit escalation. This fiscal policy “reform” that overwhelmingly supports the 1% is not needed for any economic reason except to compensate the Republicans’ most important donors.

If your legislative preferences conflict with the narrow fiscal priorities now espoused by those who exercise political power in Washington DC, you’re likely to be grasping at short straws for some time to come regarding somehow remedying inequality.

Higher inequality and slower growth have created market warriors and market worriers. An example warrior in the news now is the Federal Communications Commission (FCC) Chairman, Ajit Pai, who is strongly pushing to slay “net neutrality” and give ISPs more power. Two other market warriors are Representative Paul Ryan and Senator Mitch McConnell who have led the Congress in nearly passing the Republican Tax Cuts and Jobs Act that will increase inequality by providing the already-wealthy with significant tax reductions and thus even more income and wealth, despite what these two warriors deceptively claim.

Example worriers include Senator Elizabeth Warren and economists Paul Krugman and Thomas Piketty, who envisage economic and social havoc arising from ever-escalating inequality. Sen. Warren and Dr. Krugman are irate about the Republicans’ tax “reform” success and its expected deleterious effects on many middle-class families.

Although the Republican tax bill hasn’t yet been finalized, it’s easy to see that the many changes likely to be approved by the House/Senate Conference committee will ultimately increase income and wealth of the already rich. These gains appear to be the principal goal of the Act, notwithstanding Republican pronouncements. Inequality will rise.

The Tax Cuts and Jobs Act will reduce taxes for upper-income people, and especially for corporations (which after a series of Supreme Court decisions, including Citizens United, are “people” too). About 67% of the Act’s total tax cuts will benefit corporations.

The list of this Act’s likely stipulations that will accelerate inequality is unfortunately long. They include: reducing the marginal tax rate for high-income individuals that among other effects will increase their disposable income – relative to lower-income people – and provide disincentives for those people to provide tax-deductible charitable donations that provide significant financial assistance to the less fortunate. Drastically lowering corporate tax rates will principally benefit the already-rich and will likely decrease the well of money going into the Low Income Housing Tax Credit that funds affordable housing. Less affordable housing will be built.

Among other wrongs, the House bill removes the deduction for student loan interest. Unlike other tax deductions, the student loan interest deduction is usable even if you don’t itemize your deductions, so it won’t lose its value as the standard deduction rises. For the majority of college students who borrow money to get college educated, their costs will rise, their disposable income will fall and fewer will be able to afford going to college. For the very first time, graduate students will have to pay tax on the value of their tuition waivers in the House bill; both the House and Senate bills will require private universities to pay tax on their endowments’ capital gains.

But how to rein in the growth of inequality – putting the Gini back into a smaller bottle – is far from agreed, and deviously difficult to implement within an existing political system. Many revolutions have been fought through history to enhance equality; peasants and indentured farmers-servants finally rose up to improve their lives. An example is the 1789 French Revolution whose rallying cry was Liberty, Equality, Fraternity. 

Reducing inequality through specific legislation or economic policy has rarely been attempted. Most direct legislative remedies are not politically popular or feasible because they involve raising taxes on well-connected, powerful, upper-income people. As shown in the table above, the last time inequality dropped in the US was during the decade or two after the end of WWII, which was a startlingly exceptional time for our nation. This post-WWII drop in inequality was an historic exception. The norm for the past 70 years and before, is that inequality has been present and gradually risen.

The only way anyone can even partly rationalize the Republicans’ tax “reform” effort is to concede it as an article of faith for true believers in the Covenant of the Latter-Day Wealthy, to which Mr. Ryan, Mr. McConnell and the president are its triumvirate of leaders. The Republicans’ unified support behind this deeply-flawed, mean legislation shows them shedding their ephemeral disguise as sponsors of working-class interests. In the Senate bill the much-flaunted increases in the “reform’s” personal deductions and child tax credit are scheduled to disappear entirely in 2025. This triumvirate probably believes (with reason) that most of the voting public doesn’t care much about seven years from now. They only care about this year and next year, when Trumpian voters will likely see their taxes drop some.

The issue of rising inequality has been at a slow to medium boil on liberals’ political stoves for a while, but it’s not a new issue. Nope, significant income and wealth inequality have been present for millennia, in far greater degrees than now.

Thomas Piketty’s best-selling Capital in the 21st Century showed sizeable inequality was present in the 18th Century. More recent analytical excursions into the past using paleo-data on house-size as a wealth proxy illustrate the virtually-eternal challenges of reversing wealth and income inequality going back 10,000 years. This study’s authors who suggest that inequality was present in later Neolithic societies blame the advance of formal agriculture. Inequality rose steadily after the shift into settled agriculture.

Solutions to inequality such as an international tax on capital that Mr. Piketty recommended are impractical. While worthy of momentary consideration, having the UN improbably establish the legal ability to enact and then enforce a global wealth tax on every very rich person on Earth has absolutely no practical value as a realistic solution. No nation has ever established inequality-reducing taxes on the already-wealthy of the sort Mr. Piketty suggests; an annual levy starting at 0.1% and increases to a maximum of perhaps 10% on the greatest fortunes. He also suggests a retributive 80% tax rate on incomes above $500,000 or so. Good luck with that Thomas.

We now live in a period when our government is proposing to eliminate entirely the very narrowly-defined estate tax. No nation – capitalist, socialist or communist – has punitively taxed wealth, but several have simply absconded with privately-held land, capital and/or assets. In the longer-term, few such seizures have worked out that well for anyone. For example, China’s Cultural Revolution or most recently Venezuela’s chaotic confiscation of property and businesses owned by the elite.
So how about taking a one-way ride in Doc Brown’s DeLorean back to allegedly more-equal early Neolithic society? I didn’t think so.

Here’s a heretical thought. Potentially inequality may effect economic and other harms. But if inequality has been present for most recorded human history (think Queens, Kings, Dukes, Princes, Genghis Kahn and Pharaohs), is it really a serious problem or more a “feature” of human society that may even have contributed something to humanity’s stunning progress over many centuries? What I’m suggesting is that income-wealth inequality may not necessarily be nasty per se, but is problematic beyond some as-of-yet undefined level. Although the literature includes a fair amount of qualitative discussion about such potential harm, little quantitative evidence seems to exist about inequality itself actually causing economic and socio-cultural damage. Is the post-hoc fallacy at work here? Perhaps.

But turning the clock forward to the present, there’s little doubt the Republicans’ tax “reform” will cause rising inequality in the US over the next decade. They’re gleeful; the rest of us, including many middle-class Trumpians, may not be as the clock keeps ticking.

Basic Income: A Cure-All or Misstep?

Buddy, can you spare 120,000 dimes? 

Basic Income (BI) is a type of publicly-funded economic security system. Other terms for BI include universal basic income, universal demogrant and citizen’s income. BI is considered by some as a mechanism that can lead to a more equitable, just and utopian society. Ideally, BI provides all citizens with a regular, unconditional sum of money from the government, in addition to any income received from elsewhere.

As I mentioned in a previous blog, literary utopias began with Plato's Republic, where he described a communal society that eliminates poverty and enjoys an equitable distribution of income and resources for its citizens, with no lawyers. What’s not to love about this Republic? In 1516 Sir Thomas More’s Utopia first coined the term and was the “modern” primogenitor of all utopian considerations. Unfortunately, whenever any group – and there have been many – has attempted to actually create and live in such a setting, it’s ultimately been a fraught, generally futile process that appeals to few people (e.g., Twin Oaks in Virginia, Icaria in Illinois and New Harmony, Indiana).

Nevertheless, more contemporary believers in idyllic possibilities have considered BI as a way of getting to a larger-scale Eden. There have been several implementations of BI-like policies that have enjoyed some success including one in Alaska (of all places) and another in Brazil.

The Permanent Fund of Alaska [PFA], established in 1976, is seen more as a re-distribution program funded by North Slope petroleum tax revenues, rather than a basic income program. Nevertheless, several aspects of the PFA illustrate its close ties to BI. In 2015, the PFA provided Alaskan residents with $2,072, the highest yearly payment ever. These payments to Alaska’s more than 710,000 citizens represented 2.9% of its Gross State Product in 2015. Such large payments are not likely to be forthcoming this year or for as long as the price of oil remains relatively low. [The price of West Texas Intermediate– the US benchmark oil price – was $48.03/bbl on June 28; 1 year ago it was $61.70; 2 years ago it was $91.81.]

For the first time in decades, Alaska had a fiscal deficit last year due to dramatic drops in world oil prices. Because of the deficit, Alaska politicians are now considering using PFA funds to help balance their state budget rather than only directly paying residents – something that Alaska voters aren’t at all pleased about.

Brazil’s much-praised Bolsa Familia program, started in 2003, is not unconditional or universal but is fairly broadly offered. Payments are provided to over 13 million Brazilian poor families (about 26% of Brazil’s population), based on income criteria. To receive payments families must have their kids vaccinated and must send them to school. Average monthly payments are 70 reals ($21); average per capita GDP in Brazil is $993/mo. The Bolsa Familia program costs about $19 billion annually, roughly 0.6% of Brazil’s GDP.

The proponents of BI, who include left-leaning folks, argue that it’s the right solution to the ever-increasing problems of income inequality and poverty. Income inequality has become a prominent issue in American political discussions. [So pervasive has the “inequality” issue become in the media that last week The Atlantic posted a story under the headline, “Why lightning disproportionately kills the poor.” What’s one to do but contact Thor and Xolotl (respectively, the Norse god of thunder and lightning and the Aztec god of lightning) and beseech them to change their ways, reduce lightning inequality and abide by a lower Gini Index.]

But enough about unequal lightning and back to BI.

There are now debates in France, the Netherlands and Finland about how to begin Basic Income pilot programs. The Swiss held a BI referendum this month that was strongly defeated. The Swiss Basic Income Initiative received 76.9% “no” votes. The unstated but expected BI monthly payment was to be about 2,500 Swiss francs ($2,560) per adult, with a smaller subsidy for children, without regard to employment, education, disability, age or wealth. Small-scale BI projects have been instituted in Namibia, India and Iran.

Several Americans have proposed BI pilots in the US, including Sam Altman a wealthy, Bay Area tech entrepreneur. In May he proposed that his startup incubator, Y-Combinator, will run a “short-term” BI study in Oakland, CA with the purpose of learning “how to pay people, how to collect data, how to randomly choose a sample, etc.” that could lead to a long-term study. Predictably, his announcement received much publicity. But conspicuously absent from this proclamation were any actual details about the proposed study, such as when it would begin, its size, how long it would last and perhaps most critical, how much the payments would be. As such, it was an impressive but empty statement; it lacked any substantive details or actual commitment.

It’s beyond rare that a potential pilot BI program mentions the income payments that would be offered. This is probably by design since once a payment level is stated costs could be calculated and there would be protests about its inappropriateness – both too high and too low.

Nevertheless, here is my payment suggestion as a thought experiment for US BI income levels designed to reduce inequality and eliminate “official” poverty; $1,000/mo for 1 person ($12,000/yr), $1,700/mo ($20,400/yr) for a family of 3. BI-like programs, such as Bolsa Familia, do not have this substantial objective; instead they provide smaller, supplemental payments to ease poverty.

My suggestion is based on the official federal government-determined poverty-level incomes that are established each year, based on household size. The 2016 federal poverty “guidelines” are $11,880/yr for 1 person and $20,160 for a family of 3 people. The guidelines’ income levels for family sizes range from 1 person to over 8 people.

For some perspective, the current legal minimum wage in California is $10/hr or $20,800/yr with full-time work. In San Francisco the minimum wage will be $13/hr in July (about $27,000/yr).

I was interested to see how my suggested poverty-purging BI’s compared with proposed and much-discussed (but not implemented) living wage levels. [A living wage is an income level that approximates the costs of a person’s/family’s basic living expenses such as food, clothing, housing and medical care.] Using MIT’s handy living wage calculator for US states and localities, the 2015 living wage for Alameda County, CA is $13.35/hr for a single adult or $27,800/yr with full-time work. If the household has 1 adult and 2 children, the living wage is $32.09/hr or $66,700/yr. Thus, even my substantial BI’s represent only 30% of a living-wage based income for a family of 3.

Interestingly, the median household income in Alameda County is $67,169, which is almost the same income level that the MIT living-wage based income level is for a family of 3. As you recall, median income represents the income level that divides the distribution of income (here, for Alameda County) into two equivalent parts. This illustrates the practical fantasy of considering changing minimum wage levels to family-sized living wage levels. The living-wage minimum is almost equal to the median income level, meaning virtually 50% of the population’s income would need to be increased, which would be a political impossibility because it would be a very expensive effort.

Predictably, the strongest criticism of BI programs centers on their substantial costs.

Even if my suggested BI program is limited to providing $12,000 per year only to citizens 21 years and older, it could cost $2.78 trillion (T) per year or about 15% of our GDP and require the vast majority of federal tax revenues. This BI program would be much more expensive – greater than 3 times more – than merely offering tuition-free public university education.

The total FY2015 federal budget is $3.8T and total federal tax revenues last year were $2.96T. Because my BI program thus represents 94% of all tax revenues, the federal government couldn’t spend anything for much else except the BI program. With virtually any BI program, taxes would need to increase substantially, and not only for the rich and wealthy.

If my BI payments are cut to $2,000, which wouldn’t come close to clearing the poverty line (but would be as much as the Alaska Permanent Fund provided last year), the program would  cost $463 billion per year, representing 80% of what CY2015 defense expenditures are and over 15% of total federal tax revenues.

A BI program not only is wildly expensive, but many critics also state that such government-provided income can diminish folks’ incentives for seeking paid employment as well as lowering the motivation of workers displaced by robots (or far, far more likely, by other workers) from participating in skill-enhancement and -training programs. Potential alternatives to ameliorating poverty and labor displacement more cost-effectively include increasing the well-regarded, existing federal Earned Income Tax Credit, broadening government-funded job retraining programs or even creating a low-wage employment subsidization system.

As professor Laurence Summers stated, “A universal basic income is one of those ideas that the longer you look at it, the less enthusiastic you become.” Nationally implementing even a modest BI program would be an expensive misstep. Basic Income is a misplaced idea whose time hasn’t come. It’s time for Biexit.

MY HOLIDAY WISH LIST

The excellence of a gift lies in its appropriateness, not its value. ~ Charles Dudley Warner

Merry Christmas, Hanukkah, Kwanzaa, Saturnalia and Brumalia. And, in that spirit, here's my wish list to Santa for this holiday season.

1)  A large box of judicial equity. During the past several weeks I've been affected, like many, by the horrible killings of Michael Brown and Eric Garner at the hands of local police. The lives of these 2 men are the latest in an all too long line of black men slain by men in blue under highly-questionable circumstances. Two grand juries now have independently decided not to indict the policemen who directly caused these men's deaths. Indignation about these jurisprudential decisions, let alone the killings themselves, has been widespread. Always willing to jump on the opportunity to showcase turmoil-the-making, the media has publicized demonstrations, thankfully after Ferguson, mostly peaceably mobilizing in cities across America. Outrageously, the Wall Street Journal ran an AP story which implied that a cause in Mr Garner's death was New York's high taxes on cigarettes. [Mr Garner was allegedly selling non-taxed cigarettes before being confronted and slain by cops.] OMG.

Politicians have echoed their anodyne, incomplete statements that these men's deaths are tragic and that law-enforcement tactics need to be modified via "retraining" police officers. At best, such "retraining" is a necessary but hardly sufficient remedy for these crimes. It's hard, very hard, to "retrain" culture with an immediate effect, which is what's needed. De-militarizing police departments and tactics is an unstated, but needed initial step.

Why hasn't any public authority demanded that the process and rules governing our grand jury system needs to change? Like all grand juries, these juries' deliberations and proceedings were held behind tightly-closed doors. Among other fundamental issues surrounding this system, so-called experts have cited the inherent conflict of interest that envelops local prosecutors and police interactions with police violence cases. Of the 2,700 cases heard by grand juries between 2004 and 2011 where police officers' actions resulted in the death of a civilian, only 41 (1.5%) resulted in charges of manslaughter or murder being brought against the cop. Talk about bias. Grand juries are mandated by the 5th Amendment to our Constitution. The Magna Carta – soon to celebrate its 800th anniversary – formally created and authorized grand juries at the strong behest of King John's nobility. Eight-hundred years is enough. In 2015, we need crucial changes made so real justice can be ultimately served in such appalling cases as Mr Brown's and Mr Garner's.

2)  A big package of economic growth. The US economy needs to grow faster. It has been limping through our "recovery" since June 2009 from the Great Recession at a paltry annual growth of 2.3%. Thus, the usual elixir of higher macroeconomic growth has been missing, much to the detriment of the vast majority of people. Our economy needs to marinate in expansionary fiscal and monetary policy for quite a while. As I've mentioned in previous blogs, this resuscitative package can take many forms but ultimately first needs to be put under the trees of middle- and working-class Americans.

3)  A present of broader economic equity. The inequitable distribution of income and wealth in the US needs to change in favor of the lower 80% of income- and wealth-holders. Such a present will not only promote more economic equity, but more growth and a greater sense of fairness for all. This gift of equity will provide priceless benefits.

4)  A wet present followed by wisdom. In these vanishing days of 2014, I offer thanks to Chaac, Tloloc and Zeus for the recent rains we've received here in California. I hope this wetness continues often enough so our drought finally subsides. But us water users (meaning everyone) and politicians (all of them) must become wise and brave enough to enact new water-use policies that recognize fresh water is always a limited, vital resource. These policies must raise the price of and mandate the recycling of this necessity. Building more dams and aqueducts isn't the answer. Water policy must require efficient and appropriate usage at all times. 

5)  Large lumps of coal to Congressional Republicans. Finally, virtually all Congressional Republicans have been naughty this past year. These stalwarts of mis-placed austerity and disdain for regular folks' continuing plight have thwarted all efforts to enact any real expansionary fiscal policy to improve growth and equity. For this, Santa should place a large lump of Kentucky coal under the trees of each Republican Congressperson, and at least 2 big lumps for Rep. John Boehner, Rep. Kevin McCarthy, Sen. Mitch McConnell and Sen. John Cornyn. Hopefully, they'll get the message from Santa and change their ways to qualify for actual presents next year. We all hope so.  

Happy New Year!

FUTURE BURGER-FLIPPERS – A SMILING FACE OF FLESH OR PLASTIC?

"Raising the minimum wage tends to be more popular with the general public than economists." – Christina Romer

It's rarely a good time to be a low-skilled worker. Right now, here in the land of the evaporating American Dream, it's a downright terrible time.

Low-wage, low-skill workers are at the bottom of the proverbial 99% heap of us. Who are low-wage workers? The roughly 21 million workers who earn between the minimum wage and $10 an hour are largely young, lesser educated and without children. Low-wage workers represent 13.5% of the US laborforce.

In September, the Census Bureau reported that real (inflation-adjusted) median household income in 2012 was $51,017. Unlike previous years, this income level didn't fall from 2011 (a small help), but it's no higher than it was 30 years ago and 9% lower that it was in 1999 (a larger problem). The bleakest part of this Census report was that since the economy began recovering from the Great Recession in 2009, 95% of the economic gains have gone to the richest 1% of people. The bottom 75% of income-earners (roughly, families who earn less than $89,000/yr) are making considerably less than they had been, due to higher unemployment and stagnated wages.

In other words, economic inequality is still very much alive and growing in the US and making low-wage workers' lives that much more challenging. The US Gini Index[1] in 2010 was 46.9%. In 1990, it was 42.8%. Most recently, the US Gini Index was ranked 89 nations below (meaning more unequal than) Sweden's which was 23.0% and the world's lowest.  

What can be done about this? Economists are of several minds with regard to possible solutions^[2].

President Obama proposed in February that the Federal minimum wage be increased to $9/hr (by the end of 2015) and tying it to the cost-of-living. For liberal economists the minimum wage should have been raised some time ago, but better late than never. The current Federal minimum wage is $7.25/hr and has been unchanged since 2009. Consumer prices have increased 8.4% since 2009.

A higher minimum wage level would increase the income of low-skilled, entry-level workers who hold minimum-wage jobs. The current Federal minimum wage's annualized income is $15,080. The 2013 federal poverty level for a single person is $11,490/yr for a family of 2 people, it is $15,510.

The chart below characterizes these workers by age, education and employment. As you can see, 57% of low-wage workers have a high-school degree or less; just 3 types of employers account for two-thirds of all low-wage workers in the US.

In July and August, the Service Employees International Union (SEIU) organized a series of one-day "strikes" in numerous cities at hundreds of fast-food restaurants (there are no unionized fast-food restaurants) to call attention to the plight of low-wage workers, especially burger-flippers and service staff at fast-food emporiums. Many fast-food employees work part-time. An example includes Terrance, a man who earns $9.30/hr after working for eight years at a Burger King, plus $7.40/hr at his second part-time job at Pizza Hut. The SEIU action sought a new minimum wage for fast-food workers of $15/hr, which would be a 107% increase above the Federal minimum wage. The SEIU estimates there are 200,000 fast-food restaurants in the US. The current median pay for fast-food workers is $8.94/hr, according to the National Employment Law Project.

OK, with this discussion about burgers and fast-food, it's time for a one-question quiz: which city in our great nation has the highest concentration of fast-food restaurants? See this footnote for the answer.[3]

Would raising the minimum wage be an effective remedy for the real dilemma facing low-skill workers, including burger-flippers? It's possible, but unlikely to have much effect for 3 reasons.

First, the federal minimum wage isn't going to change. Unsurprisingly, the Congress hasn't considered or acted on the President's proposal. It has much bigger burgers to fry. Republicans, perhaps following their affiliated economists, traditionally have serious problems with any increase in minimum wage. Conservative, "market-driven" economists state that a higher minimum wage will result in workers either losing their jobs or, as businesses adjust, hiring fewer, higher-cost, low-skill workers.

Unless you're Rip Van Winkle, you're all too aware the Republicans control the House of Representatives, so any House bill to raise the minimum wage is dead before arrival. And from their decidedly other-worldly perspective, the extreme Republicans (ExReps) who now seem to rule the House despite their small numbers (talk about minority rule), are more focused on drastically cutting funding for food stamps, defunding the entire Federal government (by not passing a "clean" authorization bill by October 1^st) and not raising the public debt limit.

Because the ExReps will do nothing to change the Federal minimum wage, state and local authorities are acting. Eighteen states and the District of Columbia have higher minimum wages than $7.25/hr. California Governor Jerry Brown just signed a bill to raise the CA minimum wage to $10/hr by 2016; that would be the highest State minimum wage in the nation. In June, the City of Berkeley began considering the establishment of a city "living wage" modeled on San Francisco's living wage that is now $10.55/hr, the highest in the US. Being Berkeley, it's not if the City Council passes such a rule, but when.

States have revised their minimum wage laws, but it's a piecemeal action that can only help low-wage workers living in those jurisdictions. Localities, like Berkeley, can do the same thing on a more micro scale. A potential consequence is that if the minimum wage increase is large enough (California's change represents a 25% increase over several years), firms in those areas may decide to lay off now-higher cost workers or not hire as many in the future. Or firms can hire workers in other locations not subject to the new wage. Some businesses have long complained that doing business in California is more expensive than other states. A new, higher CA minimum wage will exacerbate this. Employers like hotels, restaurants and retail sales – who employ a disproportionate number of low-wage workers – may be more incented to hire in areas that aren't subject to the higher wage requirements.

Second, unemployment still remains a significant concern for workers, especially young, low-skilled workers. Teenage unemployment is now 22.7%, more than 3 times as high as current overall unemployment of 7.3%. Youth unemployment (16-24 year olds) is 16.3%; unemployment for 25-35 year olds is 25.8%. These unemployment rates have been lowered marginally over the past year, not because more young people have found jobs, but rather because people have dropped out of the labor market and are no longer actively looking for work. This withdrawal from the labor market is reflected in the labor force participation rate (LPR). For youth, the LPR is now a depressing 60.5%; the LPR for all workers over 16 is a grim 63.2%, the lowest rate since 1978.

From a market perspective, this combination of historically above-normal unemployment rates and historically below-normal labor force participation rates means there are many low-skill workers who are potentially available now for employment who aren't working at all (or as much as they want). Unlike more competitive labor markets for skilled- and highly-skilled-employees, low-skilled labor is not in short supply. The world's supply of low-skilled workers is rapidly growing, even in the US.

 Although burger-flippers need to know how to operate several restaurant appliances, and service employees need to know how to operate a cash register and interact properly with customers, these skills are not rocket science. Restaurants' training efforts easily cover these job requirements. Low-skill labor's wages are dwindling in large part because low-skill labor is widely available and quite substitutable with other, unemployed workers. It's a buyer's market.

Beyond burger-flippers and in this age of globalization, low-skill wages for manufacturing ultimately aren't set in Oakland any more than in Milwaukee or Little Rock, they're influenced by international forces. [See my "Maddie and the Machine" blog.] There are a lot of Bangladeshis who are willing to work for a lot less than $7.25/hr. [The current minimum wage in Bangladesh is $38 a month, which is $0.24/hr.]

Thus, there isn't any strong market force pushing US low-skill wages upward. These current labor market conditions make it unlikely that the SEIU's goal of having burger-flippers receive $15/hr will be met. But what if burger-flippers were to earn$10 or even $15/hr; what might happen?

This question leads to the last reason for questioning how much effect a higher minimum wage might now have for low-wage workers. This reason is more strategic and involves technological substitution of capital (in the form of new machines) for labor. It is a centuries-old, continuing process that made an indelible, irreversible mark during the Industrial Revolution.[4]

For much of our history, the US was labor-poor. That is, although the nation enjoyed impressive natural resources, labor was relatively scarce. One can easily argue that seminal technological inventions like the cotton gin (1793) and mechanical reaper (1834) were introduced to improve labor productivity, given that workers were relatively scarce. New technologies like these and many others eventually reduced the need for many low-skilled laborers in many industries. Over time manufacturing, agriculture and other business activities became less labor-intensive and more capital-intensive. Fortunately, technological change, combined with robust economic growth, also created other opportunities for displaced workers. That's not today's situation; GDP grew less than 2% this year.

During the past 20 years, textile and apparel manufacturers in the US have suffered enormously as markets were lost to lower-cost foreign producers – due in part to far cheaper foreign labor costs, those Bangladeshis, for example. Since 1990, US apparel manufacturers have lost 81% of their capacity and 85% of their jobs. However, a few US textile-apparel manufacturers now have made a come-back – by employing far more technology (e.g., capital and machines) and far fewer workers. Like other industries, modern manufacturing has become much more capital-intensive, thereby requiring higher-skilled workers.

If the recent labor actions at fast-food establishments were to surprisingly succeed in significantly raising wages, I wonder that after a few years, well-capitalized employers (in 2012, MacDonald's Corp had $27.5 billion revenues; Burger King had $1.97 billion in revenues) would start using robots instead of higher-cost human beings in their restaurants. Big Macs and Whoppers could be made and served by ever-smiling McDrobots that don't need to get paid.

Do fast-food consumers want low prices or are they willing to pay more to keep receiving their orders from real humans whose wages may be increased by government fiat? In the realm of 99 cent meals, price probably dominates. It wouldn't surprise me if fast-food firms have explored automated possibilities. Such capital-based automation would echo similar strategies that have already been implemented by many firms like automobile, mobile phone, computer and steel manufacturers to name just a few.

So what are low-skilled workers to do? These workers' living needs are increasingly unattainable with their minimum-wage earnings. Raising the minimum wage by statute at a time of elevated unemployment seems warranted but may not be effective. Should federal and state governments improve and broaden their worker training programs to better prepare these low-skill people for productive, remunerative jobs? Yes. Training/re-training programs could help, but don't always have strong performance records. Should more money be spent on vocationally-oriented education? Yes. However, more federally-funded programs for training and education is going to happen no sooner than when the federal minimum wage is raised. That is to say, not until the House gets a Democratic majority. Don't hold your breath.

I believe the most fruitful way to help low-skill workers is to get the US economy growing again emphasizing labor-intensive infrastructure investment and more equitably sharing the benefits of such increased investment. The ExReps are unlikely to buy into the equitable sharing part of this. But if they somehow step out of their twilight-zone reverie for a moment – admittedly a very long shot – perhaps when Ted's not Cruzing on Green Eggs and Ham, they might belatedly see the wisdom of enacting much-needed fiscal stimulus aimed at middle-class, low-skill workers that would benefit their constituents and the rest of us. Otherwise, we may be buying our future burgers from a smiley-faced McDrobot automaton.

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[1] The Gini Index measures income distribution inequality, where a higher percentage represents more inequality. A completely unequal income distribution would be represented as a Gini Index of 100% (all income would be earned by 1 individual). Thus, a lower Gini Index is considered generally better because it indicates less income inequality.

[2] Being of "several minds" isn't an uncommon condition for economists and prompted George Bernard Shaw to note, “If all economists were laid end to end, they would not reach a conclusion."

[3] And the envelope please: it's Las Vegas. Five points if you guessed correctly.

[4] There was no definitive start date for the Industrial Revolution; many historians suggest it began in the late-18^th Century. A Farewell to Alms by Gregory Clark offers a fascinating, insightful assessment of this revolution's economic and social causes and effects.