Poverty – Page 8 – RI Future

October 31, 2014November 1, 2014

The mortgage debt crisis murders the American Dream

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At the DARE Forum on Freddie and Fannie, Ronel Remy of Brockton, Mass. told the emotional story of being preyed upon by unscrupulous lenders and the death of his dreams. Remy hails from Haiti, and early on planned to escape the crushing poverty of his childhood to live in the United States.

Remy came here, found a good job and raised a family. Eventually he was lied to and told that for what he was paying in rent, he could buy a house.

That’s when Remy’s dream became a nightmare.

After being lied to, Remy was swindled and cheated by unscrupulous lenders and others who offered paths out of the trap he was in. Each time he tried to refinance the house, the lenders would raise the valuation, from $266,000 to $340,000. Meanwhile, if they foreclosed, the banks would sell the house for $90,000. Of course, that $90,000 price cannot be offered to Remy. He needs to be punished for his dreams.

The banks that stole from Remy didn’t just take money, they took his very sense of self. Remy found himself asking his daughter to lie for him on the phone, and every knock on the door was met with the fear that this was the day he would be evicted. A good and honorable man, he began to feel like he was failing as a father.

The banks crushed his dreams and aspirations for its own profit. Those who stole from him use his money to buy “houses, boats, yachts… you name it.”

Remy once thought of the United States as a place where he could live the kind of life he dreamed of as a child.

“I wish I had just stayed in Haiti,” says Remy now.

Fannie Mae and Freddie Mac are two government-controlled banks that together own over half the mortgages in the country. “These banks refuse to accept common sense policies like principal reduction, which would stop the foreclosure and eviction of our neighbors and friends, prevent blight and gentrification,” says DARE.

Watch the heartbreaking video here:

October 14, 2014October 14, 2014

Former US Attorneys united: Say ‘no’ to Buddy

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In what one attendee called an “unprecedented” press conference, three former US Attorneys and one expert in governmental ethics held a press conference today to educate the public about the rampant criminality of Buddy Cianci’s two previous turns as Mayor of Providence, with an eye towards preventing a third. Republicans Robert Corrente and Lincoln Almond (who also served as governor of Rhode Island) alongside Democrat and current United States Senator Sheldon Whitehouse, were united in their opinion that a third Cianci administration is, in the words of Corrente, an “alarming prospect.”

Corrente started the press conference by noting that the information being presented was for the undecided voters who will determine the mayoral race in Providence, not for those who have already decided. Cianci, says Corrente, has “minimized and even joked about the crimes he committed in office,” and these crimes include a “violent beating involving a fireplace log and an ashtray.” The head of the Providence City Council during Cianci’s first term told Corrente that, “Cianci is killing the city” through threats, bribery and extortion.

During his second administration, said Corrente, Cianci ran the Providence City Hall as an organized criminal enterprise for nearly a decade before being convicted on RICO charges, yet the former mayor characterized his conviction as “some guy down the hall who took a g-note.” Corrente called Cianci’s statement an “outrageous mischaracterization.”

Lincoln Almond, who joined the press conference by telephone, added, “You don’t get five years for a technical violation.”

Certainly Cianci has served his time for his crimes, but rehabilitation means taking responsibility for and owning up to your misdeeds. Cianci has shown no remorse, said Corrente, and there is every reason to believe that a third term will be exactly like the first two.

Senator Whitehouse concurred, adding that, “one should not believe that this type of criminal activity is harmless to taxpayers.” When the cost of doing business in Providence includes bribery and extortion, business stays away, says Whitehouse, noting that there was a “surge of [business] activity” after Cianci’s tenure as mayor, when business at City Hall could be conducted honestly.

Almond added, “The fiscal problems facing Providence [today] were created during the Cianci administration.”

Phil West, who formerly headed up Common Cause, says that, “the only way [Cianci] can run a city is pay-to-play.” Voters have to ask themselves, “Has Buddy Cianci’s character changed?”

“I find that hard to believe,” said West.

When asked why, despite his criminal record, Cianci is leading in the polls, the three US Attorneys seemed at a loss. Corrente suggested that there may be many who don’t remember the extent of Cianci’s crimes or who moved into the city after the fact. Whitehouse suggested that the public is confusing Cianci’s “entertainment value” for responsible leadership. It was also suggested that many have publicly supported Cianci do so because they are afraid of political retribution should he win.

I think Corrente got closer to the truth when he admitted that many, like the firefighter, police, teacher and taxicab unions, are simply voting in their own economic interest by supporting Cianci. I would add that in my talks with likely voters, many feel that the major party candidates, the Republican Harrop and the Democrat Elorza, do not have the interests of working people and the working poor at heart. The concerns of working people are not being addressed by the major party candidates, forcing voters to consider casting their ballots for a criminal who might help them over “honest” politicians who have flatly declared themselves opposed to their interests.

More and more Rhode Islanders are falling into poverty, and our major candidates for office offer little, save for the promise of making Rhode Island more business friendly in the hope of attracting more low paying jobs at poverty wages. In this light a voter’s ballot is not cast for Cianci, but against a system that doesn’t work for them.

As sympathetic as I am to this logic, voting for Cianci is a mistake. Cianci’s life of criminality and abuse of power is a stain on Providence, and I dare anyone to read Emma Sloan’s piece, “Why one rape victim won’t support Cianci” and still publicly support the man. At a certain point, it’s not about the character of the candidate, but the character of the voter.

September 22, 2014

GAO report: Elderly hit hard by student loan debt

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Janet Lee Dupree took out a $ 3,000 student loan to help finance her undergraduate degree when she was in her late twenties. While acknowledging that she did not pay off the student loan when she should have, even paying thousands of dollars on this debt, today the 72-year-old, still owes a whopping $15,000 because of compound interest and penalties.

The Ocala, Florida resident, in poor health, will never pay off this student loan especially because all she can afford to pay is the $50 the federal government takes out of her Social Security check each month. Citing Dupree’s financial problems in her golden years in his opening remarks, Chairman Bill Nelson (D-FL), of the Senate Special Committee on Aging, used his legislative bully pulpit to dispel the myth that student loan debt only happens to young students.

“Well, as it turns out, that’s increasingly not the case,” he said.

Student Loan Debt Impacts Seniors, Too

Last week’s Senate Aging panel hearing also put the spot light on 57-year-old Rosemary Anderson, a witness who traveled from Watsonville, California, to inside Washington’s Beltway, detailing her student loan debt. Anderson remarked how she had accumulated a $126,000 loan debt (initially $64,000) to pay for her bachelor’s and master’s degree. A divorce, health problems combined with an underwater home mortgage kept her from paying anything on her student loan for eight years.

Anderson told Senate Aging panel members that with new terms to paying off her student loan debt, she expects to pay $526 a month for 24 years to settle the defaulted loan, setting her debt at age 81. The aging baby boomer will ultimately pay $87,487 more than her original student loan amount.

Like Anderson, a small but growing percentage of older Americans who are delinquent in paying off their student debts worry about their Social Security benefits garnished, drastically cutting their expected retirement income.

According to a 22 page Government Accountability Office (GAO) report, “Inability to Repay Student Loans May Affect Financial Security of a Small Percentage of Retirees,” released at the Sept. 10 Senate panel hearing, the amount that older Americans owe in outstanding federal student loans has increased six-fold, from $2.8 billion in 2005 to more than $18 billion last year. Student loan debt for all ages totals $ 1 trillion.

The GAO report noted that student loan debt reduces net worth and income, eroding the older person’s retirement security.

Nelson observed, “Large amounts of any kind of debt can put a person’s finances at risk, but I think that Ms. Dupree’s story shows that student debt has real consequences for those in or near retirement. And, the need to juggle debt on a fixed income may increase the likelihood of student loan default.”

Although the newly released GAO report acknowledged that seniors account for a small fraction of student loan debt holders, it noted that the numbers of seniors facing student loan debt between 2004 and 2010 had quadrupled to 706,000 households. Roughly 80 percent of the student loan debt held by retirement-aged Americans was for their own education, while only 20 percent of loans were taken out went to help finance a child or dependent’s education, the report said.

Senator Sheldon Whitehouse (D-RI), who sits on the Senate Special Committee on Aging, says student loan debt is a burden for thousands of Rhode Islanders, including a growing number of retirement-age borrowers who either took out student loans as young adults, or when they changed careers, or helped pay off a child’s education.

“Student debt presents unique challenges to these older borrowers, who risk garnishment of Social Security benefits, accrual of interest, and additional penalties if they are forced to default,” said Whitehouse, stressing that pursuing an education should not result in a lifetime of debt.

He sees the Bank on Students Emergency Loan Refinancing Act, which would allow approximately 88,000 Rhode Islanders to refinance existing student loans at the low rates that were available in 2013-2014, as a legislative fix to help those who have defaulted on paying off their student loans. “By putting money back in the pockets of Rhode Islanders we can help individual borrowers make important long-term financial decisions that will ultimately benefit the economy as a whole,” he says.
Garnishing Social Security

The GAO reports finds that student loan debt has real consequences for those in or near retirement. The need to juggle debt on a fixed income may increase the likelihood of student loan default. In 2013, the U.S. Department of the Treasury garnished the Social Security retirement and survivor benefits of 33,000 people to recoup federal student loan debt. When the government garnishes a Social Security check, multiple agencies can levy fees in addition to the amount collected for the debt, making it even more challenging for seniors to pay off their loan.

Susan M. Collins (R-ME) warned [because of a 1998 law] seniors with defaulted student loans may even see their Social Security checks slashed to see their Social Security check to $750 a month, a floor set by Congress in 1998. “This floor was not indexed for inflation, and is now far below the poverty line, adds Collins, who says she plans to introduce legislation shortly to adjust this floor for inflation and index it going forward, to make sure garnishment does not force seniors into poverty.

According to an analysis of government data detailed on the CNNMoney website, “More than 150,000 older Americans had their Social Security checks docked last year for delinquent student loans.”

Unlike other types of consumer debt, student loans can’t be discharged in bankruptcy. Besides docking Social Security, the federal government can use a variety of ways to collect delinquent student loans, specifically docking wages or taking tax refund dollars. These strategies also cutting the income of the older person.

Some Final Thoughts…

“It’s very important that we focus on the big picture and the implications in play,” said AARP Rhode Island State Director Kathleen Connell, noting that “Education debt is becoming a significant factor for younger workers in preparing for retirement, delaying the ability of people to retire and threatening a middle-class standard of living, both before and after they retire.

Connell says, “Its serious concern for some older Americans as approximately 6.9 million carry student loan debt – some dating back to their youth. But others took on new debt when they returned to school later in life and many others have co-signed for loans with their children or grandchildren to help them deal with today’s skyrocketing college costs.”

“It’s not just a matter of Federal student loan debt being garnished from Social Security payments if it has not been repaid, “ Connell added. “Outstanding federal debt also will disqualify an older borrower from eligibility for a federally- insured reverse mortgage.

“Families need to know the costs and understand the long-term burden of having to repay large amounts of student loan debt,” Connell concluded. “They also need information regarding the value of education, hiring rates for program graduates and the likely earnings they may expect.”

Finally, Sandy Baum, senior fellow with the Urban Institute, warns people to think before they borrow. “They should borrow federal loans, not private loans, she says, recommending that if their payments are more than they can afford, they should enroll in income-based repayment.

Addressing student loan debt issues identified by the GAO report, Baum suggests that Congress might ease the restrictions on discharging student loans in bankruptcy, and end garnishment of Social Security payment for student debt. Lawmakers could also strengthen income-based repayment, making sure that they don’t give huge benefits to people with graduate student debt and relatively high incomes.

June 2, 2014June 2, 2014

Nick Mattiello cowers to corporate interests

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The article, House speaker outlines state’s economic priorities, in the Providence Journal started badly. Paul Grimaldi wrote,

“The newly elected speaker of the house told a roomful of business people Thursday that fixing the state’s fiscal problems is his priority.”

I didn’t vote for Mattiello for speaker, nor did you. He was “elected” by a bunch of frightened representatives after just a few days of discussion. There was no political campaign, no public discussion. Yet he’s the “elected speaker”?

And he’s talking to a group of “business people” at a Chamber of Commerce breakfast in the Kirkbrae Country Club. He’s reassuring them. Why? Because he’s counting on their contributions to his campaign and any political action groups he might be setting up in the wake of Gordon Fox’s resignation.

In the article, Mattiello says that 38 Studios was one of the biggest debacles in the country’s history.” Really? Did he miss the Real Estate Bubble? The Dot.Com implosion? Stock Market Crash of 1929? Teapot Dome? 38 Studios has been and remains a huge sucking chest wound in Rhode Island’s economy, but it’s not the worst thing that’s ever happened in the US, not even in the state. Remember the Credit Union crisis?

But, having recently returned from a visit to the Bond Rating Folk in New York, Mattiello claims that we have no choice but to repay our “Moral Obligation.”

Let me reframe that little trip as a school yard scene…

Roger the Rocket wants a new video game! He doesn’t have enough money to buy the game, and Wally the Banker won’t lend him the money. But Little Rhody, who wants to be Roger’s friend, and thinks he’ll be able to play the game too, promises to pay Wally the Banker back if Wally will lend Roger the Rocket the money.

Wally loans Roger the money. Roger loses it on his way to the store. Roger can’t pay, but Wally says that Little Rhody has to pay.

Little Rhody doesn’t know what to do. Rhody didn’t have the money either! So Rhody goes to Wally the Banker’s friend, Bondy, who gives out grades of A, B and Junk, and ask them for advice.

What do you think Bondy told Little Rhody to do?

Juvenile? Yes. Simplistic. Yes. Realistic? Startlingly so.

But the bad news is that the article keeps getting worse. Mattiello is telling these business people everything they want to hear. He’s going to lower corporate taxes. He’s going to raise the estate tax threshold.

One proposed bill, whose “nuances” he refused to discuss, would shift the way corporations taxes are assessed, from property, payroll and sales to just sales. In theory, this would increase revenue (presumably because they’d increase the taxes on corporate sales?), but in reality it looks like another big tax break for CVS. Think about it. What’s the biggest corporation in this state with the most employees and the most property?

Poor Little Rhody doesn’t know what to do. The rich kids all have so much money. Rhody wants to play in their playground. Maybe if Rhody will do whatever the rich kids say, then Rhody will be popular and have money too!

What do you think Rhody will do?

March 5, 2014March 6, 2014

Nominate Your Unsung Hero Today!

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In honor of Richard Walton... And all others like him that work to improve the human condition. — In honor of Richard Walton… And all others like him that work to improve the human condition.

Ever since I got involved in community organizing in 1980, I’ve seen numerous people and organizations struggle to survive while they worked relentlessly on issues of social justice for the common good.

As I can personally attest, and as can anybody who has ever toiled and bled for a cause or issue that they believe in, you’re crazy to think that anybody would do this for the money. Low pay, long hours, unknowingly donated cars, neglected health and damaged relationships are just some of the normal “benefits” one can expect when they take on a fight against what’s wrong in order to fix what should be. And maybe most ignominious of all, almost nobody knows your sacrifice except you and those you live and work with.

You gotta be crazy to do what we do.

And yet, all around Rhode Island, indeed throughout the country and around the world, people consciously choose to do this. I’ve always been amazed, and profoundly appreciative, at how many do so. Organizations and individuals come and go, the burn out rate is high, but more join in as the need arises, all willing to sacrifice, all willing to do what it takes. We owe a lot of people, collectively, a debt of gratitude for all the good they have done for us. But for the most part, that recognition and that appreciation rarely comes. Until now. The Red Bandana Fund was created to change that. By recognizing those among us who do so much for so little.

And we’re asking you to help us decide who deserves that recognition. We are seeking nominations from the community to recognize both unsung organizations, and individuals, that embody the spirit and work of Richard Walton and for the commitment they have shown to making the world a better place. Nominations are now being accepted for anyone you feel worthy of recognition. To nominate someone, simply email RedBandanaAward@gmail.com to receive the nomination form. In addition to providing contact info for the nominee, we are asking that you provide a 1 page description of why they deserve the award. Keep in mind that the committee members may have never heard of the person you nominate so the description you give will be go a long way in determining whether they win the award or not. The Nominee who wins this year’s award, will receive a cash gift and will be honored at the 2nd annual Red Bandana Celebration at Slater Mill on June 8th. The deadline is April 15th.

So what’s behind all this you ask? It’s all about an old friend who was the epitome of activism in Rhode Island for decades. The Red Bandana Fund was created to honor the memory of long-time, activist Richard Walton who passed away on December 27, 2012, after a long illness, leaving a huge hole in the hearts of the Rhode Island Progressive community. There is a remembrance post about Richard, published in two parts by RIFuture, here and here. On June 2, 2012, the First Annual Red Bandana Fund Concert was held to raise money for the fund and to give the First Award by the Fund to Amos House, an organization Richard was deeply involved in.

And now is your chance to nominate that unsung hero you have watched give so much to the rest of us. First, email RedBandanaAward@gmail.com and submit your nomination. And then secondly, help us honor the legacy of Richard Walton by coming to the 2nd annual Red Bandana Celebration at Slater Mill on June 8th and lending your support.

Of course, this is just a small token in payment to those we owe it to. But we hope to do this every year and to grow the fund to spread awareness, recognition and appreciation for the people and issues we hold so dear. And we hope you will be become a big part of it. Help us grow the Fund by donating and by joining us at our annual celebration to recognize those who deserve our thanks so much. We’re all in this together. Let’s prove we can make it work.

Contact: RedBandanaAward@gmail.com for nominations

RedBandanafund@gmail.com for information

Please Like us on FaceBook here.

Contribute to The Red Bandana Fund here (click the donate button).

February 10, 2014February 10, 2014

No safety when people are disposable commodities

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One of the events organized at URI last week was a panel discussion on Alternative Strategies for Maintaining a Safe Campus. Here is an updated informal version of the notes I prepared for the occasion.

Outline

Identify the problem: how does one create a safe campus in a society that idolizes violence on all scales?
What can we do about it?

Violence

Societies breed the sociopaths they deserve. The following two are manifestations of the systemic violence:
- the lone-nut on a shooting rampage
- police departments militarized with perpetual-war surplus
The physical abuse we teach in military training and employ abroad in expanding our empire sets the standard for oppression we use at home. This is what happened to non-violent protesters of Disarm Now Plowshares when they resisted our nuclear weapons of mass destruction:
- They —nuns, priests, and a nurse— were arrested, cuffed and hooded with sand bags.
- At the trial the marine in charge testified:
  
  When we secure prisoners anywhere in Iraq or Afghanistan we hood them … so we did it to them.

The US has the highest incarceration rate in the world
- home of 5% of the world population and 25% of the world’s incarcerated.
- 5% of black men; 2% of Hispanic men; less than 1% of white men are incarcerated.
- Read Michelle Alexander’s The New Jim Crow or watch this this video. Here is a panel discussion called End Mass Incarceration; it provides the missing links required to find alternative strategies.
With guns as god on our side we have 30,000 gun shot fatalities per year and 70,000 non-fatal shootings. These statistics dwarf the spectacular events that feed and are caused by the corporate media complex.
Pro Publica had an article about the effects of violence: The PTSD Crisis that’s being ignored:
- vicious cycle: neighborhood violence → PTSD → compromised public safety → neighborhood violence
These are the effects on children when they grow up in poverty and violence:
- learning disabilities
- lifelong negative health effects
- intra-uterine growth retardation
Pediatricians refer to this violence to which children are subjected as toxic stress. The solution of the corporate media complex assisted by the United Global Union Busters? Blame teachers for their under-performing students and call in the privatization troops!
Death preventable by effective health care: If we had the French health care system in US, there would be 140,000 fewer such fatalities per year.
The real numbers are a state secret, but a good estimate is that US national “defense” costs $4,000 per person per year. This amounts to a lifetime expenditure of more than $250,000 per person.
Martin Luther King in his Beyond Vietnam speech at Riverside Church onApril 4, 1967, a year before his assassination said:

A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.

The system we have created is what spiritual death looks like: we are all zombies now! Two atomic bombs worth of fatalities each year, but nobody notices and nobody cares because it produces no gripping pictures on the home page.
This is an abbreviated list with lots of victims of systemic violence, but it’s all peanuts compared to the violence of global inequality, which kills about 25,000,000 people per year. Global climate change, which barely registers in the corporate media, may cause a number of fatalities bigger by one or two orders of magnitude. How can we begin to solve that problem, if we collectively ignore statistics like these?

What can we do?

There is the eternal question: “How do we deal with the danger of increasing crime?”
A famous Dutch criminologist, referring to a newspaper notorious for its sensationalism had a simple answer: “Read a different morning newspaper.”
My reply 30 years later:

Tune out of the stupefying pap served up by the corporate media complex.
Get used to the idea that the brain acts as if it has two parts: (fast forward to the seven minute time mark in the video)
- System one responds to pictures and anecdotes; it can barely count or reason and is easily mislead, but it’s fast and can save us from immediate danger.
- System two can think systematically and critically; it can understand statistics, but it’s lazy, slow and painful to engage.
- The corporate media talk to system one. Tune out and there will be fewer hysteria driven events such as the lock-down at URI last year.
- Engage system one and you’ll realize that there is a war on the poor and people of color in America. The lone-nut shooter in a nice white, affluent neighborhood near you is responsible for only a minute fraction of the total number of victims.
How can an individual help solve problems of global scale? Follow Gandhi when he said: “Be the change you want to see in the world!” Maybe I’ll get to that, for now I’ll follow Martin Luther King with his:

In the end, we will remember not the words of our enemies, but the silence of our friends.
Once again, for the academic year 2013-2014 URI is in the bottom twenty of LGBT unfriendly schools.
According to government statistics, the most prevalent hate crimes by far on university campuses result from bias involving race and sexual orientation. Drawing attention to their manifestations on campus is encouraged as long as it results in nice photo ops for administrators. As soon as the message become a threat to the corporate brand image, the messenger is disappeared.
It happens all the time and it is what happened to my dear friend Andrew Winters at URI. First people get MLK peacemaker awards, but then something goes wrong and silence at URI sets in. Andrew’s disappearance was covered in
- CCRI’s Unfiltered Lens
- The Brown Daily Herald
- The Providence Journal
- Options, RI’s LGBT community newsmagazine
URI’s Good Five Cent Cigar, the Student Senate, and the Faculty Senate have all deliberately participated in the URI code of silence. Blessed by the Board of Education and the Governor’s office, the tactic of choice remains loyalty to the corporate Think Big brand. As always, the tactic of choice is saying one thing in public, and doing the opposite behind the scenes.

A perfect example took place when URI was featured in an article in The Chronicle of Higher Education. The university’s CEO wrote in his blog of March 9, 2011 under the heading Another Special Moment for URI:

Many of your [sic] have heard me say that one cannot solve problems while trying to hide them, or by pretending they don’t exist.

Sounds good until you find out that the photojournalist working on this article for The Chronicle was ordered off the URI campus.

Violence makes most of its victims one by one; the vast majority remain nameless. The corporate media complex reports only on the spectacular outliers that produce juicy pictures. Is it surprising that this feeds mass hysteria?

Meanwhile, capitalism keeps alive a health care system run by death panels consisting of criminally overpaid CEOs. The system perpetuates violence and oppression in the workplace, in the streets, in the prisons and a global scale. The alternative strategy that we are looking for has been formulated by Camus:

In such a world of conflict, a world of victims and executioners, it is the job of thinking people not to be on the side of the executioners.

January 29, 2014

Not needed: crank economic opinions on the Minimum Wage

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Arguments against raising the minimum wage are tedious, immoral and wrong.

Writing about the need for a substantive raise in the minimum wage to alleviate the crushing poverty of the working poor opens the floodgates to conservative and libertarian cranks who argue, against all reason and compassion, that minimum wage laws should be abolished. Tearing quotes from their dog eared copies of Rothbard and Mises, two economists who never met a real-world constraint on their precious theories that they can’t talk themselves around in an assault of dense, senseless prose, Libertarian and free-market conservatives (as if there is a real difference) barrage the Internet with drivel.

Entering into discussions with people who advance economic models over economic reality is like jumping into choppy waters to rescue a drowning victim: If you are not extremely careful you will be dragged below the waves and drowned yourself.

After I wrote a piece on this blog taking Republican gubernatorial candidates Alan Fung and Ken Block to task for opposing an increase in minimum wage, I was hit with this objection from frequent commenter “jgardner”:

The minimum wage has never been, nor will ever be, a job creator, but will always be a job destroyer.

First, I never said raising the minimum wage would directly create jobs, but I did cautiously assert that providing the working poor with more money would have the effect of stimulating the economy, because poor people spend their money. More importantly, however, is the the second contention, stated without any proof as though delivered from God to Moses: The minimum wage is a job destroyer. From this I am to then conclude that abolishing the minimum wage would create more jobs. Perhaps. But these jobs would only be paying slave wages that keep the working poor working and poor.

As explained way back in 2009 by economics professor Bill Mitchell:

The winds of change strengthened in the recent OECD Employment Outlook entitled Boosting Jobs and Incomes, which is based on a comprehensive econometric analysis of employment outcomes across 20 OECD countries between 1983 and 2003. The sample includes those who have adopted the Jobs Study as a policy template and those who have resisted labour market deregulation. The report provides an assessment of the Jobs Study strategy to date and reveals significant shifts in the OECD position. OECD (2006) finds that:

-There is no significant correlation between unemployment and employment protection legislation;

-The level of the minimum wage has no significant direct impact on unemployment; and

-Highly centralized wage bargaining significantly reduces unemployment.

Having to finally concede that there is no real world evidence for his contention and instead a wealth of evidence against his position (though in truth no concession was made, the issue was simply sidestepped), “jgardner” pulled out his trump card:

If the minimum wage could lift people out of poverty with no adverse effects for anyone, why not raise the minimum wage to $25/hr?

One might as well ask why, if one beer relaxes you, why not drink twenty-five beers. The answer is because doing that will kill you. When answering such objections, no matter how nicely you try to put things, you feel like you are talking to a petulant child: “A little of something can be good for you, but a lot of something can hurt you. That’s why you can’t eat all your Halloween candy in one night.”

Here’s a nice way to say it, from the Social Democracy blog:

There is another objection that has been going the rounds (mostly on libertarian blogs): if we make the minimum wage $9, then why not $900? That objection is, quite frankly, brainless.

The minimum wage is a floor concept: the floor is roughly the poverty line (or slightly above it). That is where you set it, and not well above it.

Not even Post Keynesians deny that excessive wage increases can feed into cost push inflation – wages being a big factor in input costs. But a rise from, say, $7.25 to $9 is quite small. In the real world, whole swathes of the market have corporations and businesses that actively set prices and control them by price administration. They leave prices unchanged for significant periods of time, even when mild to moderate demand changes happen, or even when mild price increases affect their factor input costs.

I’ve been hard on “jgardner” because he was brave enough to put his opinions out there, and I would like to believe he’s a decent person. But like so many otherwise decent people who believe terrible things because of their religion, “jgardner” seems similarly trapped by his economic beliefs. Ultimately, shouldn’t all this back and forth economic theorizing should be secondary to other, more pertinent concerns? People right now are working full time at two or more jobs and being forced to subsist below the poverty line. This situation is plainly immoral and monstrous.

Moral arguments for raising the minimum wage include lifting people and families out of poverty, paying people an honest salary for an honest days work, moving away from the economic paradigm that suggests unemployment is voluntary and that workers are “shirkers” and reducing in some small way the vast economic inequality that threatens to destabilize our democracy.

A decent society, made up of decent people, does not let unemployed people starve, it does not plunge families into homelessness and it does not encourage businesses to pay slave wages for hard work.

Economic theories that do not fit in with observations made in the real world need to be modified or discarded. Science is not a process of inventing a set of ideal rules that support pre-existing prejudices. It is a process of suggesting possible rules, and then testing them against reality through experimentation and observation. In this way Libertarian economists such as Mises and Rothbard catastrophically fail as scientists. I should add here that as bad as Libertarian economic theory is, even mainstream economics needs a scientific wake-up call. (See: “Economics needs a scientific revolution” by physicist Jean-Philippe Brouchard.)

Inviting Libertarian economic views into serious economic and political policy discussions is as useless and counterproductive as inviting the views of Trofim Lysenko into a modern genetics conference or inviting Erich von Däniken to give a talk at an ancient history seminar.

The damage done to human wellbeing by corrupt economic theory far surpasses the damage down to our society by the teaching of creationism in schools, anti-vaccination conspiracy claptrap, the anti-birth control advocacy of the Catholic Church and Islamic terrorism combined. It is time to grow up, abandon the religion of economic idealism, and start living in the real world of testable economic hypotheses and scientific economic rigor with the intention to abolish poverty once and for all.

January 24, 2014January 24, 2014

Republicans are wrong about minimum wage and economists know it

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In response to Democratic gubernatorial candidate Angel Taveras supporting a minimum wage increase in Rhode Island from its current $8 to a kingly $10.10, both Republican candidates, according to the ProJo, have opposed the idea. Ken Block is quoted as saying, “We have seen repeatedly… that Democrat-driven mandates, like increasing the minimum wage, raise the cost of doing business and ultimately lead to fewer jobs,” while Cranston Mayor Allan Fung declared, “Raising the minimum wage isn’t a solution. It’s a symptom of a larger problem.”

Are Block and Fung right when they say raising the minimum wage will have an adverse effect on Rhode Island’s already struggling economy? The short answer is no, and the truth is that economists have known this since at least 1994 when David Card and Alan Krueger published Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania.

Card and Krueger did an analysis in 1992 when New Jersey raised its minimum wage from $4.25 to $5.05. Contrary to what Ken Block seems to believe, the study found “no indication that the rise in the minimum wage reduced employment.”

As to Fung’s position that raising the minimum wage isn’t a solution, one needs to ask, “A solution to what?” If we are looking for a solution to the problem of how to keep workers poor and minimum wage employers rich, then Fung is right. However, if we are looking for a way to potentially lift hundreds of thousands of low paid workers out of poverty, then raising the minimum wage is a solution worth pursuing. A report from ROCUnited shows how this is possible.

Both Block and Fung, it seems, are content with the status quo, in which large corporations and other other businesses underpay their employees. This puts the burden of public assistance for these underpaid workers squarely on the taxpayers. Raising the minimum wage, however, does not put any additional burdens on the taxpayer, and in fact, by getting people off public assistance, tax burdens will be lowered.

To those who think that raising the minimum wage will just benefit a bunch of teenage kids working for date money or people too lazy to find real jobs, this chart, from the AFL-CIO and put together with info from the Bureau of Labor Statistics, should dispel that idea.

January 15, 2014

Speaker Fox: equitable education funding formula will be a priority this session

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If addressing poverty in Rhode Island is your thing, the House is probably going to be the chamber in which you have the heavy lifting to do this legislative session.

I caught up with House Speaker Gordon Fox last night, and I didn’t hear the same kind of commitment that Senate President Teresa Paiva Weed made last week when she said, “The Senate’s focus this session on the economy will be inextricably intertwined with the causes of poverty. We can’t move the economy forward without addressing the very issues that underline poverty.” When I asked Fox if he shared Paiva Weed’s commitment to addressing poverty he said, “She and I share a lot of priorities and we’ve already discussed them so let’s see how it plays out.”

But if an equitable public education for every student in Rhode Island, there’s reason to have high hopes in the House this session. When I asked Fox what his poverty priorities are this session, Fox said “making sure equity is built into [the education funding formula] because we know that some of the highest needs – I was one of the those kids – it’s really about addressing it through public education.”

You can watch our entire three minute conversation here (thanks for the extra minute, Speaker!)

January 9, 2014

Interfaith vigil at R.I. State House helping to raise state poverty awareness

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Providence– The sound of the Shofar echoed throughout the State House as well as the names of each and every legislator slated to begin work on Wednesday January 8, 2014. The Rhode Interfaith Coalition and its supporters turned out in strength, with hundreds in attendance, to issue a prayer for the legislators, a prayer that asked for the legislators to govern with wisdom and compassion and to remember those most vulnerable Rhode Islanders as they make decisions in the new year.

Supporters wave their banner with pride as they march toward the state house.

Maxine Richman, Board Member of the Jewish Council of Public Affairs and Co-chair of the Interfaith Coalition called on the state legislators to, “Create a budget and programs that assure that all Rhode Islanders are afforded pathways out of poverty and a road to economic security.”

Richman concluded, “Hope is the motto or our state. Let us together bring hope to those struggling Rhode Islanders.”

The goal of the vigil was a simple one, to ensure that Rhode Island legislators address issues of poverty as they govern. The Interfaith Coalition wants to make sure that every Rhode Islander is given the same basic rights regardless of their race, religion, or economic status. This annual vigil, held at the beginning of the legislative season, is meant to raise awareness among legislators that every Rhode Islander shall have:

A decent, safe and affordable home
Adequate food and nutrition
Equal access to affordable and quality health care
Equal and quality education for all children
Decent work with adequate income

(From left to right:) Rhode Island governor, Lincoln Chafee, and Reverend Dr. Jeffery Williams (King's Cathedral) — (From left to right:) Rhode Island governor, Lincoln Chafee, and Reverend Dr. Jeffery Williams (King’s Cathedral)

The Interfaith Coalition works in collaboration with other organizations and coalitions who share the same values, goals, and support, their efforts to impact public policy to achieve economic well security for all Rhode Islanders.

At the Vigil, the Interfaith Coalition released its Advocacy Platform for the coming legislative session, which includes working with their partners on the following principles and policy initiatives:

All Rhode Islanders deserve a warm place to live, food on the table and adequate health care:

Expand affordable housing and prevent unnecessary foreclosures
Increase funding to the Food Bank to ensure an adequate supply of nutritious food for low-income individuals and families.
Help low-income seniors and people with disabilities pay for health insurance

If you work you should not be poor:

Increase the minimum wage and the state Earned Income Tax Credit
Reform Pay Day lending
Allow working parents to keep their child care assistance as income rises

Education is the way out of poverty:

Provide child care assistance for low-income parents who want to go to job training
Lift the 6-month limit on the specialized work-readiness program for RI Works parents with limited literacy and/or English language skills so they can gain the skills they need to enter the workforce
Restore Head Start seats to 2012 levels by increasing state funding for Head Start and continue the expansion of Pre-K and access to full-day kindergarten so all children can be successful learners

January 9, 2014January 9, 2014

Paiva Weed: Senate will focus on poverty this year

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Senate President Teresa Paiva Weed said her chamber will focus on addressing poverty as a bottom-up strategy to fixing what ails Rhode Island’s economy this year.

“The Senate’s focus this session on the economy will be inextricably intertwined with the causes of poverty,” she said at a State House vigil yesterday to call attention to poverty in Rhode Island. “We can’t move the economy forward without addressing the very issues that underline poverty.”

She said the vigil and a screening later in the day of Inequality For All “will set a tone for the year and the message will be carried with us as we work to meet the significant challenges ahead.”

Steve Ahlquist has the video:

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