Rise in minimum wage in 2021

2020 has been terrible for people working in the service sector and other low-wage jobs due to the effects of the pandemic. Thanks to various measures that have been passed in states and cities because of pressure by activists and labor unions, minimum wages are due to rise in some areas of the country providing at least some relief.

2020 was a devastating year for underpaid frontline workers.

But even in the face of public health and economic crises triggered by Covid-19, the Fight for $15 movement persisted, and now 24 states and 50 municipalities throughout the U.S. are set to raise minimum wages in 2021.

On New Year’s Day, 20 states and 32 cities will increase their minimum wage, with the wage floor in 27 of those jurisdictions reaching or exceeding $15 per hour. The January 1 raises will be followed by another round of wage floor hikes later in 2021, when four additional states and 18 localities will increase their minimum wage, 13 of them to at least $15 per hour.

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Can America afford democracy?

In an article The Silenced Majority: Can America still afford democracy? in the December 2020 issue of Harper’s Magazine, Rana Dasgupta argues that democracy is a luxury whose existence depends on inequality between nations that enables the rich in the wealthy societies to accommodate the democratic aspirations of its own citizens.

In the past, power was in the hands of those who had property. With the rise of organized labor as a force in the rich nations, that power was reduced but as long as the people of the poorer nations could be used to subsidize the elevated living standards of those in the richer ones, then democracy could be tolerated. But when that difference between nations begins to disappear, as is happening currently, then so does democracy. He argues that the ultimate death of democracy in the US will come at the hands of the big tech companies.


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Trump emerges from hiding to talk about the stock market

After constantly needling Joe Biden during the campaign about hiding in his basement while he was holding his rallies, the roles have suddenly switched with Trump avoiding public events while Biden has been all over the news holding press conferences to discuss his new administration and policies.

Except for very brief appearances to play golf or to make a short statement to reporters in the White House press room and not take questions, Trump has largely been in hiding. He did come out yesterday to talk about the only thing he cares about other than himself and that is the stock market which broke the 30,000 barrier for the first time. It shows how much he cares about this topic that he was able to recite from memory some statistics when on almost any other topic he has to read them off a teleprompter. (Click on the blue bird at the top right to listen to the comments without having to get the White House app.)

It is also curious that he seems to be taking credit for the market high when during the campaign he warned that if Biden were elected the markets would crash and people’s retirement savings would be wiped out.

The increasing isolation of the US in the world

Under Donald Trump, the US has become increasingly alone on the international stage.

One example is the new Asian trade agreement that excludes the US and includes China. After initially gushing over what a great leader China’s Xi Jinping was and praising their response to the covid-19 epidemic, when the pandemic got bad in the US he seemed to realize that he needed a scapegoat to escape blame and started attacking China. But his conflict with China predated that as part of his dislike of multilateral agreements that led to him declaring war on the trade agreements that his predecessors had agreed on with groups of other nations, and his strong criticisms of the NAFTA, WHO, NATO, and the Paris Climate Accord.

One of the thing he withdrew from was the Trans-Pacific Partnership, a deal that was being negotiated by the Obama administration that was designed to exclude China and increase trade links of Asian nations with the US. Trump pulled out of that deal and now those Asian nations have signed a huge trade pact that includes China and excludes the US.
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The stock market will not crash if Biden wins

The only measure of the health of the country that Donald Trump cares about is the state of the stock market and he warned in the last debate that if Joe Biden wins, the market will crash. But the idea that investors just hang around until after the election results are released to make their decisions is absurd. They usually try to anticipate the future and take steps accordingly. Since Biden has been leading in the polls consistently for some time, if investors really feared a Biden win, the market would have already tanked.
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More evidence that the stock market is irrational

I have frequently mentioned that the rise and fall of the stock market seems to have little to do with what is actually going on in the world and this week provided more evidence of this. On Tuesday, Trump in a tweet suddenly broke off talks with Democratic Party leaders who had been negotiating with treasury secretary Steven Mnuchin about another stimulus package. The stock market sank sharply on the news.

Then the next day, maybe in an effort to prop up the stock market which is after all the only economic indicator that he cares about, Trump tweeted would like to provide support in a piecemeal manner to selected industries like the airlines. In other words, he wanted Democrats to agree to just the things he wanted and abandon the things he disliked. This was a non-starter from the get-go and yet the stock market rallied on his words.

This baffles me. It should be clear by now that nothing Trump says should be taken seriously since he just lets loose with what he thinks at that moment even if it contradicts what he said just a moment ago. So why is the stock market responding mercurially to his tweet eruptions, since any stimulus spending requires detailed negotiations with many parties?

US shows decline in the Social Progress Index

Evidence continues to grow about the decline of the US. The latest comes from the annual report of the Social Progress Index. As Kevin Drum describes it:

The index includes things like health care, access to education, personal safety, sanitation, human rights, and so forth, and combines them all into a single number. This number doesn’t change a lot from year to year, and from 2011 to 2016 it went up by 0.34 in the United States. Since then, however, it’s fallen by an astonishing 1.06 in just four years. We now rank 28th in the world, just behind Greece.

Note that this isn’t an economic index. The US is still one of the richest countries in the world. We just aren’t using those riches to make much social progress.

This is really not a surprise. Social progress does not register in the consciousness of Trump and the Republicans. What drives them is power and greed.

There is always one major problem when you take multiple measures and then weight them to arrive at a single number. That single number enables you to compare different countries but that number also depends on how you weight the individual items to get the composite result and that introduces a lot of subjectivity because if you change the weighting, you can get a different rank order of countries. So the more meaningful use of such data is to take a longitudinal approach and see how, keeping the weighting system unchanged, the number changes over time, rather than take a snapshot approach and compare different countries at one time.

The 1% have sucked up $50 trillion from the rest of us

That the wealthy have been steadily increasing their share of the wealth has been obvious for some time. Reader Tadas sent me a link to an article that has quantified the amount siphoned off by them during the past four decades and it is a staggering $50 trillion since the year 1975.

This is not some back-of-the-napkin approximation. According to a groundbreaking new working paper by Carter C. Price and Kathryn Edwards of the RAND Corporation, had the more equitable income distributions of the three decades following World War II (1945 through 1974) merely held steady, the aggregate annual income of Americans earning below the 90th percentile would have been $2.5 trillion higher in the year 2018 alone. That is an amount equal to nearly 12 percent of GDP—enough to more than double median income—enough to pay every single working American in the bottom nine deciles an additional $1,144 a month. Every month. Every single year. [My emphasis-MS]
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Telling it like it is

Stuart Varney is, along with Sean Hannity and Lou Dobbs, Donald Trump’s most devoted hosts on Fox News and in a recent show he was visibly upset when Paul Romer, a former chief economist of the World Bank, called the people who speak about economics for the Trump administration, such as White House economics advisor Larry Kudlow, ‘liars for hire’ and that they should not be believed. When Varney remonstrated with him, Romer did not back down.

The bizarro world of the stock market

I have long been saying that the US stock market seems to have almost no connection to the general state of the economy but instead seems mainly related to how the very wealthy are doing and this week brought more evidence of that. In March, the market plunged as the country shut down, which made sense. But since then the market has risen again, thanks to the actions of the government and the Federal Reserve to prop it up, even though things are very dire for most people who are suffering from loss of jobs, income, health insurance, and facing evictions.
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