WALMART AND THE ILLUSION OF QUANTITATIVE EASING. IT'S SO OVER FOR AMERICANS.

Allie: 

"Wal-Mart stock is tanking because if household income is $1,600 month and rents is $1,500 a month and if the price of ground beef has nearly doubled, milk and others up 30%, ya got nothing left. There is nothing left."

Me:

Current dollar prices are illusory. True food prices are falling, not rising.

See: PRICES HAVE BEEN FALLING FOR YEARS! INFLATION? MAJOR DEFLATION HAS BEEN UNDERWAY SINCE 2007.

The problem is that true wages have been falling faster than true prices of food and rent.

See: EVERYBODY'S WORKING FOR THE WEEKEND, FOR LESS.

Rent is rising because few built apartment houses during the residential realty boom and now few can afford mortgages on falling incomes. They need places to live. Population continues to grow.

When the prime working age increases faster than the spending rate on capital, wages fall. Wage rates are prices.

When wages fall, all prices fall. What are the source of other prices but wages?

Congress has accepted too many immigrants, legal and illegal. That has killed the return to capital and thus wages.

See: ILLEGAL IMMIGRATION. WHY IT'S BAD FOR YOU AND A BOON FOR ANTI-CAPITALISTS.

Allie:

Anyway - the point is CURRENT prices.

Me: 

Current dollar prices are meaningless. What counts is how much stuff you can buy for an hour's worth of work.

Prices in true dollars are down, way down. Wages in true dollars are down even more.

How can you believe in higher prices on falling true credit. What do you think happens after a great inflation stops?

A giant banking bubble bursts. That is the crisis. What comes next is deflation.

Quantitative easing has papered over massive deflation. There are 69.8% more dollars in circulation today that June 2008. Since all prices are tallied in current dollars, prices in dollars will be higher.

That most don't understand these concepts is why most believe as you.

The facts of reality and everything men have known about commercial banking and economies for 165 years fails to fit your narrative that you want to believe, desperately, and are trying to defend.

It's because of people like you that central bankers can engage in deceits like quantitative easing. If the many understood commercial banking, none of this would be happening because none of it could be happening. They couldn't get away with it.

If everyone believed as you, accepting statistics from the agents of Congress, stats expressed in current dollars for GDP and food prices, then pro-Congress politicians along with their hand-maidens and agents must be right. If so, the rest of us must be wrong.

Yet, if so, all market participants would have complete information. There would be no movement in stock prices or anything else. No one could gain competitive advantage.

We would be stuck in a dreary world of static Dystopian perfection.

Allie: 

You claim, "When wages fall, all prices fall. What are the source of other prices but wages?"

AND WHAT ARE THE SOURCE OF WAGES ? = JOBS

Me: 

Never in the history of mankind have jobs been the sources wages.  Returns to capital are the source of wages.

Wages are income and act like any kind of income. From the worker's perspective, wages are recurring sales in purchase and sales of cash or other bank credit for work done.

From the firm operator's perspective, work done by workers (employees) is capital (property put to production).


If firm operators lack income or credit supported by income, they can't buy capital (work done by employees) to put into a product.

Allie: 

The more JOBS the higher WAGES.

Me:

Wow, what another fallacy you have expressed. First, it's a non-sequitur. Second, you haven't proved it.


Wages are a result of capital. Without  capital and return to it, there are no wages.

Bare subsistence savages have no jobs and no wages precisely because no one has capital (property put to production) from which to gain returns and thus hire them to work at wages.

And for that reason, higher wages come from increasing returns to ever more capital.

Allie:

But ground beef is up!

Me:

Wage rates are prices. Wages have been falling, not rising.

Prices for everything else have been falling owing to efficiency gains and exacerbated, owing to falling wages. From whence prices exist except from wages?

You don't see these falling prices because you think in current dollars. As there are more dollars in circulation today than last month, last quarter, last year, last five years and so on, current dollar prices will seem higher, always. It's illusory.

How can you believe true food prices have been up on massive, increasing unemployment in America and Europe between 2008 and 2014? How does that magic work, exactly?

There have been no significant crop shortages owing to natural disasters and futures markets have provided for much grain storage.

————

Sadly, Allie believes as millions do.

Congress let in too many illegals and too many legal immigrants which swelled the ranks of the working age population. In so doing, returns to capital were impinged.

When collapse happened, extant capital bought on credit at much higher prices were crushed. 

Exacerbating this, idiots at the Federal Reserve engaged in near-ZIRP, which further damaged returns to capital. That led to firm operators doing the only act they could do to restore the return to exact capital bought on higher prices — they laid off workers.

Firm operators decide always on this alone: Is there a dearth or abundance of workers.

If there is a shortage of workers and firm operators want to produce, they must augment workers with capital.

Americans can't have massive immigration in a WTO, free-trade agreement world.

Adding would-be workers kills the return to capital. Without increasing returns to capital, there is no reason to hire anyway.

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OLD LAZY BUSINESS OWNER BLAMES EVERYONE BUT HIMSELF. HE EVEN BLAMES HIS EMPLOYEES.

Today, I awoke to a Disqus comment directed toward me.

I won't argue with you on the facts, but I do question some of your assertions. As a small business person with five employees, my employees have had minimal wage increases over the last ten years. Also the products and services we sell have gone up in price very little in that time period, while experiencing significant increases in cost of almost all things. These same employees are ten years older and definitely not getting any faster or more efficient, actually getting less productive over time. How does MY business circumstances fit into YOUR theories of employers enjoying cheap labor? 

I would contend that an aging work force is deflationary in itself and the ONLY increase in productivity is due to technology that ONLY business owners are investing in.I see NO employees pursuing added education or work skills beyond what I am willing to pay for, and once that happens I am expected to pay them more for the trouble.

There are lots of factors driving our economy and without a doubt government intervention is a big one, but I still see INDIVIDUAL efforts to attain, achieve, advance as being a major factor and one that just no longer exists. Society has absorbed the indoctrination of entitlement, and that is not just direct payments from government, but more importantly the expectation that we all DESERVE some quality of life, something for just being alive, much less just showing up. Entitlements, something for nothing, is the disease rotting us to our core, from the bottom feeder on welfare to the coupon clipping "investor" letting their money "work" for them.

Here is my reply.

Old Deadwood: I won't argue with you on the facts, but I do question some of your assertions.

Me: So in so many words, you said, I don't believe you. Next time, man up and say so. Your situation is anecdotal. What has happened to you cannot be applied to the universe of commerce in America. However, let's go through your situation.

Old Deadwood:  ... my employees have had minimal wage increases over the last ten years.

Me:  Likely, you haven't made any significant investment (capital) in your business over that time beyond wear and tear replacement. So your employees have not produced more, substantially. Without new sources of sales, you haven't paid your employees more because there is no source from which you could.

Old Deadwood:  ...the products and services we sell have gone up in price very little in that time period

Me:  You lack pricing power in the marketplace. True prices are falling as I have claimed owing to falling bank credit (deflation) even though owing to cash accretion current dollar prices have risen, albeit slightly for you.

Old Deadwood:  ...while experiencing significant increases in cost of almost all things.

Me:  What are your inputs? Even if current dollar prices of things are up and that is what you should see, that doesn't mean true prices are up.

Since June 2008, dollars in circulation are up 69.8%! If output held constant, prices would be up 69.8% over those six years and three months. Roughly, that comes to is 11% a year or 11 cents additional on the dollar.

Old Deadwood:  These same employees are ... actually getting less productive over time.

Me:  And that is why precisely, their wages are stagnant and so are your earnings relative to the market for what you sell. Even in the face of a shrinking market for your product, your share of that market could be increasing if you were competitive.

Old Deadwood: I would contend that an aging work force is deflationary in itself ...

Me: You would be right if you restricted yourself to the quite limited case of aging men who dig ditches with shovels. The shovel was invented sometime between 10,000 BC ago and 2,500 BC ago — neolithic times.

But how do you explain an actor like Nicholas Cage would has worked in more movies as he has aged, not less? 

Does the aging accountant have more practical, real-world skills and knowledge than the fresh, college grad, 21, or less? 

Old Deadwood: ... and the ONLY increase in productivity is due to technology that ONLY business owners are investing in

Me: Heed my dictum. Labor makes property. Capital makes labor produce property efficiently.

You are only agreeing with me here and supporting everything that I have shared and taught others over these years — the one, true understanding of commerce (the trade of property in pursuit of profit) or what some might call authentic economics rather than the wrong economics taught in universities across America.

Old Deadwood: I see NO employees pursuing added education or work skills beyond what I am willing to pay for, and once that happens I am expected to pay them more for the trouble.

Me: You need only pay anyone enough to keep them leaving you to produce property for your competitor. 

If your workers better their skills to work with the latest machines and your competitor buys those machines (capital) because he is getting increasing returns on each machine he buys, your competitor will snatch away all appropriately skilled workers in the marketplace and from his increasing returns, he will pay them higher wages.

Any wage rate is a price. All prices adhere to the one, true and only law for all of commerce — the Law of Prices. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer sets the price. 

Specifically, wage rates get set in double auctions. Would be workers bid in Dutch auctions (down against each other) and would-be employers bid in English auctions (up against each other).

Old Deadwood: There are lots of factors driving our economy and without a doubt government intervention is a big one...

Me: Intervention by lawgivers never drives an economy. Intervention crashes an economy.

Never be confused by the supposed glorious victories of state capitalism (China). The Chinese communist party is a mafia who are protecting its own and enriching its own by selling mostly to foreigners and not to almost a billion Chinese who aren't protected and who have almost nothing.

Old Deadwood:  Society has absorbed the indoctrination of entitlement...

Me: Rightly, you should have written, Americans. Society isn't a synonym for a people, a nation, Americans, and the like.

Society means friendly association. Some Americans are in society but not all are. A society of strangers can only arise around one thing — the trade of property in pursuit of profit. Property means right of ownership and never what is owned, such as chattel, recorded works of the mind or future obligation under contract.

Old Deadwood: Entitlements, something for nothing, is the disease rotting us to our core, from the bottom feeder on welfare to the coupon clipping "investor" letting their money "work" for them.

Me: Entitlement comes into English from the Anglo-French legal word meaning to bestow rank, to give title to property in something, to give privilege. That is what entitlement means. That is the legal reality. 

All politicians can do is entitle, that is, assign property (rights of ownership) to others through force.

Entitlements are inert, not alive. Entitlements can't act. Entitlements can't swipe one man's property and give it to another man.

The culprits are Congress and the lawgivers of the various states. Only they can steal the property of one and give it to another under the persuasion-in-propaganda rubric of law.

And what is the source of power of Congress and other lawgivers? Voters are the source of that power. Enough voters vote into office Congress and states' lawgivers for the purpose of swiping property and redistributing it.

You ought to learn about Pogo and the enemy. 

All that said, after reading through your commentary and reflecting upon it, what strikes me is the likelihood of you having become complacent over the years, even more so during boom times. And if that is so, you haven't been a good steward to your employees who depend upon you because they are not as smart as you.

————

Until Americans start talking about property — which means right of ownership and not what is owned — and until Americans start talking about duties and rights, as well as the arena were politicians are content to leave alone anyone, which is liberty, people shall continue to be deceived by many rhetoricians.

Until Americans learn how commercial banking works under a fiduciary monetary system with irredeemable paper currency, they will be fooled by by politicians and the handmaidens of politicians.

If the many would stop their minds from rambling and then start to think, prices should fall every year, if ever so slightly, on almost every product made, all things being equal, such as steady preference for those products. 

Improvements are hard to come by, but men achieve improvements, however incremental. It is rare when improvements burst on the scene, e.g., the railroad, the telephone, the car and Macadam road, the Internet, container shipping, the barcoded inventory, and so forth. So even when improvements happen and the winning bids a seller can accept can be lower while still maintaining margins owing to those improvements, current dollar prices will seem to be <i>up</i> because the tally of dollars in circulation are more.

This idea of ever upward growth in the economy is an outright lie published by lawgivers, their agents as well as central bankers and their agents. Economies can grow only under ever better improvements. There must be enough of those relative to the population, especially a growing one as output must be apportioned to the head count.

Economies tend to trade in a range of up and down like every market does. 

Of late, many have claimed that automation / robots kills jobs. Is that so?

"A self service kiosk that enables diners to design their own gourmet beef burgers will create 50 new jobs at a Palmerston North McDonald's restaurant." McDonald's Create Your Taste self service kiosks also create new jobs. 

Capital is the source of wages. Higher capital is  the source of higher wages. Believe it.

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EVERYBODY'S WORKING FOR THE WEEKEND, FOR LESS.

For the wage earning working man, these charts say it all. True wages have been falling for years.

As I show in True State of the Union: Wage-Earners' Income and Taxes, true wager earners' income as a percent of GDP has been falling since George W. Bush.

In You are Going to Wind Up Working in a Gas Station. Capitalism is Dying, Americans, I show you true wages for various occupation groups.

Here is what Total Private Wage Income looks like since LBJ.




No one can deflate anything with CPI. CPI is a measure of current inflated prices from a base of past inflated prices. CPI is not a measure of the change in circulating media.

Measuring the change in circulating media  the only way to get a deflator to measure inflation or deflation in an fiduciary monetary system of legal tender cash and token coins.

In TRUE STATE OF THE UNION: WAGE-EARNERS' INCOME AND TAXES, I give you both the sum of True Private Wages as percent of GDP by presidency as well as the True Average Income by presidency.

Plus my charts look prettier and are much easier on the eyes.

Doug Short might have his head in the right place, but his method of using CPI is flat out wrong. Thus his numbers and beliefs are wrong.

In the 18 years from LBJ to the Reagan private wage income peak, true wage income rose 12.6% rising at the yearly rate of 0.7%. in the 13 years from the Reagan Peak to the Clinton Low, true wages fell -44.8% falling at an annual rate of -4.5%.

In the Clinton Good Times, the six and three-fourths years from the Clinton Low to the Clinton prosperity peak, true wages rose 33.1%, rising at an annual clip of 4.3%. Since the Clinton Peak Good Times to the Obama Hard Times, true wages have fallen -44.1%, falling at a yearly rate of -4.2% during the 13 and half years.

In the fifty and half years since LBJ, true private wage income has fallen -53.7%, falling at annual clip of -1.5%.

As I show over and over, wages and capital are linked. True wages arise from true capital spending. You cannot get true wages unless you get true capital spending and you cannot get a rise in true capital spending and hence a rise in true wages unless the return to capital is increasing.

And now, I give you charts that show the true hourly wage by sector of the economy.





























Here, you can see the declines have been wicked. Yet when the annual decline is ever so slight, most can tolerate the ouch of a sliver of less income each year. 

And once again, here is the smartest chart you shall ever see regarding the economy.



This is the chart that socialists, big government economists and politicians hate. 

The chart says that true wages, or "real" wages if said by economists have been falling for years in lockstep because capital spending per prime age worker, those between 25 and 54, has been falling.

Contrary to what many believe, wages rise when capital rises. Wages are a consequence of producing wealth under efficiency. The more wealth produced and gained by each worker, the higher wages would rise. 

The true question every entrepreneur-adventurer asks himself or herself is is this: Is there a dearth of workers or is there an abundance of workers?

So why has there been a fall in wages since the 1980s? The growth in prime age working adults in America has been tremendous, up 45.3% since 1980. And not-so-coincidentally, true wages have fallen 41% and capital spending has fallen 49.5%!


The only factor that decides if capital spending shall rise is whether there is a dearth of workers or an abundance of workers. From the Reagan Peak to the Obama Low, true wages have declined -58.9%, falling at an annual rate of -2.7%. Since 1980, true cap spending has fallen -49.5% while population of prime age workers (25-54) has risen 45.3%.

In short, immigration, which has been responsible for all net increase in population in the USA since the 1980s, has led to the lowering of true wages for Americans.

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TRUE STATE OF THE UNION: WAGE-EARNERS' INCOME AND TAXES

True Private Wages have fallen -44.4%, falling at an annual rate of -8.64% since hitting a peak at the end of Q4 2007, coinciding with True Peak Credit of the Greenspan-Bernanke Inflation, the greatest credit bubble of mankind, ever.



No one should be surprised that True Wages as a percent of True GDP have been falling precisely because the True Average Income has been falling.



True Average Income has fallen -39.3% since hitting a the Greenspan-Bernanke bubble-fueled peak at the end of 2007. True Average Income has fallen at an annualized rate of almost -8% (-7.98%) a year.

As well, no one should be surprised that True Wages as a percent of True GDP have been falling precisely because Employment Incidence, or the ratio of workers to working-age population has fallen. 

 
Growth in working-age population continues to outpace job growth. This is a direct consequence of excess legal immigration that happened during the Clinton years. 

After hitting a peak at the end of Q1 2001, True Individual Taxes have fallen -47.6% falling at an annual rate of -4.77%. Thus, it fails to surprise to see True Individual Taxes as a percent of GDP shrink.

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SOPHIE'S CHOICE OF CAPITAL OR LABOR. A FREE-MARKETS LIBERTARIAN BECOMES AN ANTI-CAPITALIST AND PERPETUATES AN ECONOMICS MYTH

So today on Forbes, Jeffrey Dorfman, a professor of economics at The University of Georgia, who touts himself as a "free market, libertarian" presents a quite false Sophie's choice description of labor vs capital, which plays well to the misinformed masses. Such labor vs capital silliness is is standard fare for economists. 

Dorfman argues that Americans don't have high-paying jobs anymore because 1) automation is killing the middle class, and 2) lower interest rates causes a substitution of capital for labor and thus the cause for automation over workers.

Dorfman says that Americans are living in a "dumbbell economy, where most of the jobs are at either the lower or upper end of the income spectrum, with few jobs left in the middle class." Dorfman started his argument that capital in the form of automation is killing jobs and a cause of low pay and that more capital makes for fewer "middle class" jobs. In short, Dorfman is a pro-capitalist arguing against capital!

Because Dorfman is an academic economist, he is fooled by economics. As I show in Why is the Economy So Horrible? Because Academia Economics is Fake, Dorfman's false beliefs fail to surprise me.

Before the industrial era, almost all Americans were poor, barely living above bare subsistence poverty. Almost all were farmers who traded little. 

Farmers had little capital. There were hand tools and maybe a few plow horses. 

The few "wealthy" Americans were those involved in shipping. Ships of shipping, of course, are capital.

Under the automation of industrialism, true wages or "real" wages if said by economists rose and rose substantially. As Americans added machinery, which, of course, is capital, workers' buying power as expressed in true pay rose.

In effort to lift his specious "dumbbell" argument, Dorfman points to yard workers, retail shelves stockers, neurosurgeons and movie stars as workers whose work can't be automated while work "rules-based" work as accountants, travel agents, bank tellers, can have their work automated with computers. Yet, the dumbbells Dorfman lifts are quite like the ones President Obama has been seen lifting. Such is for the weak.

Academician economists like Dorfman claim that wages should fall when cap spending rises and wages should rise when cap spending fall. 

To economists, wages vs capital is the Sophie's Choice of economics! In short, economists like Dorfman argue in favor of Luddites (and thus Socialists)!

Academician economists fail to see reality. They think only with their hollow theories, which fail to match real-world reality. 

Wages and capital are interlinked. Wages are a consequence of producing wealth under efficiency. The more wealth produced and gained by each worker, the higher wages can rise.

High capital spending causes high wages. Wages rise when capital spending per worker rises. 

Jobs that fetch low wages are such jobs with little capital needed to amplify the work. Yet, jobs that fetch high wages are those that take much capital to do the work.

The cap spend for yard work is tiny. Lawnmowers and leaf blowers are cheap. Many lawns can be mowed and cleaned in a day by using no-skill workers and super cheap capital.

The cap spend for neurosurgeons is much. Surgical rooms are filled with an abundance of one-of-a-kind equipment and slew of pricey technicians. A surgeon can operate only on one brain a day, maybe two.

The cap spend for movie stars is much. Movies require pricey cameras, pricey sets, pricey editing machines, and slew of pricey technicians. 

The cap spend for accountants, travel agents, bank tellers is low. Computers are cheap. Pushing data through fiber optics is even cheaper. 

Only in proportion as labor becomes pricier that it becomes profitable to use cheaper methods (capital) to amplify labor. Capital spending arises because of likely increasing returns to capital. 

THE CHART SOCIALISTS AND POLITICIANS DON'T WANT YOU TO SEE AND THE CHART THAT SHOWS ECONOMISTS DON'T UNDERSTAND COMMERCIAL LIFE

Here, you can see charts for true wages and true capital spending flowing in lockstep. True wages have been falling for years in lockstep with true capital spending per prime age worker, those between 25 and 54. 

During the Clinton Good Times, wages rose. Wages fell thereafter. Workers enjoyed a small return to growing true wages during the final inflation of the Greenspan-Bernanke Credit Bubble, the largest bubble in American history.

In general, true prices have been falling for decades. And as a wage is a price, so too have true wages been falling. In Prices have been Falling for Years! Inflation? Major Deflation has been Underway Since 2007. So Why Does Life Seem Harder? I show you charts of prices for all kinds of goods falling and for years 

The Dorfman claim that entrepreneur-adventurers ask themselves "Should they hire people or should they automate?" never has reflected commercial reality. The true question is this: Is there a dearth of workers or is there an abundance of workers?

The growth in prime age working adults in America has been tremendous, up 45.3% since 1980. And not-so-coincidentally, true wages have fallen 41% and capital spending has fallen 49.5%!



True cap spending has been falling for years in America for heavy industry. Yet, cap spending for R&D and software has been rising. 



Check out the True State of the Union, Private Sector Capital to see more charts.

In You Are Going to Wind Up Working in a Gas Station. Capitalism is Dying, Americans, I show you a table of true wages for various occupations since 2000. You can see that wages rose during inflation of the massive Greenspan-Bernanke credit bubble and then fell substantially during deflation of that bubble precisely because more credit led to more capital spend and less credit to less capital spend.

All trade is about trading the right of ownership (property) in stuff, completed work or future payments in purchases and sales for profit. All of the names mankind uses for property (right of ownership) — capital, wealth, asset, collateral, stock — are names of property in various states — production, trade, estimation, deals of credit, potential sales.

Heed my dictum. Labor makes property. Capital makes property efficiently. 

All trade gets governed by one true, infrangible law and one axiom — the Law of Prices and the Axiom of Profit. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer set the price. The Axiom of Profit holds the sum of sales must at least equal the cost of production or the producer goes to ruin.

As I explain in Poverty and Envy, there is profit and loss for everything. We calculate profit or loss by subtracting outlays from income. No one works at a loss, whether wages less living expenses for workers or income less outlays for firms. In the absence of intervention, some things would not get sold for long as the sum of sales could not yield a profit.

Entrepreneur-adventurers are smart laborers. Entrepreneur-adventurers arise because of capital. 

Without capital, there is little reason to organize workers. Without capital, everyone lives at bare subsistence. 

All producers get constrained by the great Axiom of Profit. Capital becomes a factor in production only if in using capital, workers can produce property in stock or in work cheaper than by producing property in those things without capital. 

The capitalist buys a share of the profits from the entrepreneur-adventurer by selling cash and credit in a purchase and sale. Such a trade can arise only if the entrepreneur-adventurer can enlarge profits to cover his cost of capital and enlarge income to cover his cost of labor. In short, the permanent use of capital arises only under increasing returns whereby application of capital yields a proportional increase in output.

Little variation exists in the muscularity among individuals. Thus, little variation arises in the output owing to hand labor alone. However, with capital, variation is manifold according to various application of technology leading to degrees of efficiency.

With small production — hand labor — consumption is small precisely because low wages can only afford low payouts. In proportion as a market enlarges — more product on offer to many with low wages — wages can rise for those who make more product on offer. More product on offer only can come from efficiency achieved with capital amplifying labor.

Significant production of property to become wealth requires capital. As proportion of wealth produced by labor falls, the actual amount the laborer gets rises. More wealth produced leads to a higher living standard for those producing it. In short, capital leads to better living. 
Never are workers robbed by capital. Workers gain by capital. This is so not because capitalists are generous, but because entrepreneur-adventurers only can use capital under increasing returns.

Because of capital, workers can consume more than they could ever produce absent capital. It is owing to capital that all material progress arises. Revivalist Preachers of Born-Again Socialism like Thomas Piketty simply don't understand capitalism and thus reality.

For more on this, check out  Capitalism. Because without it, You Would be Living as a Bare Subsistence Savage and Elites Seek to Punish Workers with a Consumption Tax, or a Tax on Workers' Wealth.

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MINIMUM WAGE IS AT AN ALL-TIME MINIMUM. IT SHOULD BE $20.12 AN HOUR, IF ...

Americans have reached a bad state when it comes to wages.

In PRICES HAVE BEEN FALLING FOR YEARS! INFLATION? MAJOR DEFLATION HAS BEEN UNDERWAY SINCE 2007. SO WHY DOES LIFE SEEM HARDER? THE ANSWERS ARE COMING NEO, I show the chart socialists and politicians don't want you to see.

Here it is, again:




Likely, this is the most important chart ever you shall see published regarding economy.

The chart says that true wages, or "real" wages if said by economists have been falling for years in lockstep because capital spending per prime age worker, those between 25 and 54, has been falling.

Contrary to what many believe, wages rise when capital rises. Wages are a consequence of producing wealth under efficiency. The more wealth produced and gained by each worker, the higher wages would rise. 

Socialists and other pro-labor agitators don't want you to know this because it  slays their dragon of trickery.

Capital spending increases when labor becomes pricier. Yet, when labor becomes abundant, capital spending falls. Since 1980, wages have fallen 41% and capital spending has fallen 49.5%. Not so coincidentally, the head count of prime age workers has risen 45.27%, a massive increase driven by immigration and descendants of recent immigrants.

In ELECTRICITY PRICES. SHOCKING, ISN'T IT? THANKS, NIXON, I tell of then president Nixon closing the gold window and thus decreeing the dollar no longer could be redeemed for gold. Before Nixon did so, 35 dollars bought one ounce of gold, by law. Today, the Federal Reserve note dollar buys the same as 9 cents of one gold-backed dollar did before Nixon slammed shut the gold window.

Let's have a look at the true minimum wage priced in True Dollars™.

In 1971, a minimum wage job paid $1.60 an hour. Today's true minimum wage is a measly 63 cents.

So today's minimum wage is 39.5% of the 1971 minimum wage. Today's minimum wage has fallen 60.5% from the 1971 minimum wage and 64.2% from the peak true minimum wage of 1980.

Back in 1971, my much older brother could afford car payments on a new Ford Pinto on his McDonald's fast-food job while working through his senior year of high school.

If we take the average of the true minimum wage in every year the minimum wage raised by law, that average would be $1.33. Today's minimum wage has fallen 52.3% from that average of $1.33.

To equal the average minimum as calculated above, in today's gold-less dollar, the minimum wage would need to be $15.19. To equal peak minimum wage set in 1980, today's minimum wage would need to be $20.12!

In BUT IT IS FOR INEQUALITY! AT WHAT POINT DO PEOPLE STOP EXPONENTIALLY DOUBLING DOWN ON STUPIDITY?, I called for an end to minimum wage as well as an end to specific welfare. The combination of minimum wage and welfare amounts to a subsidy to employers whose capital structure gets predicated on using minimum wage workers on the whole.

As no one would work at a loss (wages - living expenses), would-be workers would reject all wage offers at less than break even. 

So the right move is the end minimum wage laws and all political interference in trade. Another right move would be to restrict immigration for the next 10 years and perhaps longer. 

If the Congress would evict the 20 million or so illegal aliens residing in the USA, a significant chunk of the pool of low wage bidders would be erased. That would go far to pressure wages upward for no-skill workers.

You can't end poverty merely by giving people welfare. It doesn't work. Think about it. Poverty exists even though there is TANF, SNAP, Section 8, Pell, Medicaid, Medicare and so on.

There are no means by which living standards can better that do not involve the increase in wealth per capita of prime age workers. To discover how to make increasing returns to capital is to solve the problems of poverty and lowering living standard. 

For those who doubt the connection between capital spending and wages even when shown to their eyes as above, Miha Zupan tells the story of rapid rise of Koreans.

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BUT IT IS FOR INEQUALITY! AT WHAT POINT DO PEOPLE STOP EXPONENTIALLY DOUBLING DOWN ON STUPIDITY?

CLUELESS KENNY

Instead of taxing the rich to help the poor put there by the rich, we should do something different. Raise minimum wages to match inflation, ban tax rebates while employees are on welfare, the list goes on. We must have equal power to negotiate or we will lose every time.

Here is an argument for raising minimum wage that does not involve bleeding heart rhetoric.

People on minimum wage spend everything they earn to survive. They cannot thrive because the opportunities to improve their lot take capital they don't possess and never will at their wage level.

We want the economy to improve. Raising wages will accomplish this goal on a macro economic level. After all, if the majority of your employees don't earn enough to buy your own products you have limited your consumer base. If this wage level is industry standard, then most other companies pay their employees insufficiently to buy your products as well. Pay them enough and they will have the choice to buy your products, go to school for an education, earn even more and buy yet more products. Do it for the economy.

ME

A tad more than 5% of all hourly-paid workers get paid an hourly wage at or below the minimum wage. That is a scant 1% of the total U.S. population!

You would have us believe that raising the wages of 1% of all Americans who have the lowest incomes is going to do anything?

Do you not see the absurdity of your beliefs, how silly-minded your beliefs are?

The Federal Minimum Wage is $7.25. One percent of the U.S. population is 3.139 million (2012).  Full-time work amounts to 2,080 hours a year. The 2012 U.S. GDP was $15,680 billion ($15.68 trillion). So if all 1% of Americans who minimum wage earners worked full-time, they would have earned a scant 0.30% of GDP, that is ZERO POINT THREE PERCENT. Said another way, that is three-tenths of one percent.

If Congress doubled the minimum wage to $14.50 an hour and all minimum wage earners worked full-time for a whole year, they would only have earned six-tenths of one percent of GDP! If Congress tripled the minimum wage to a whopping $21.75 an hour, the do-you-want-fries-with-that workers would only have earned about 1% of GDP (0.996%)!

So rather than calling for minimum wages to rise, people who barely buy anything, why don't you call for the pay of CEOs to be increased one-hundred fold? After all, rich people buy the most stuff.

Why are you calling for wages to rise for people who have limited wants rather than calling for wages to rise for those with insatiable wants, those accustomed to spending much and often?

By your thinking, giving people more to spend causes more trade and thus creates growth in what most call the economy. So why anoint those least capable of knowing how to spend to do the task?

Either way, merely injecting more cash and consumer credit does little more but to raise prices. Scholarly men have known this since the late 1690s at least (John Locke, Sir Dudley North). Why don't you know this?

Giving people more cash does not increase production. With a few extra dollars each week, the poor suddenly are not going to call for new Cadillacs and Lincolns to get manufactured.

The poor won't eat more pasta nor more bread nor will the poor drink more milk merely because they have a few extra dollars each week to spend. Giving the poor a few more dollars will do nothing but raise prices. More cash chasing the same output results in RAISING PRICES ONLY.

All prices conform to the one, true , infrangible law of trade — the Law of Prices, which holds the winning bids of purchase and sale in the face of what is on offer sets the price.

If minimum wage were the answer, why hasn't it ever been the answer? In the United States, statutory minimum wages were first introduced nationally in 1938.

In a whopping 76-year trial run, minimum wage never has alleviated poverty. SEVENTY SIX YEARS OF MINIMUM WAGE LAWS have done nothing.

Aid to Dependent Children (ADC), later renamed AFDC and later still TANF has been around since 1935! In a 79-year trial run, welfare never has alleviated poverty.

So, why should 77 and 80 years suddenly be the turning point years for those failed programs, the expression of failed thoughts and false beliefs?

CLUELESS KENNY

But, but, but ... What about the children?!

ME

If you want to see a righteous rise in wages, you should call for an end to minimum wage as well as an end to specific welfare. The combination of minimum wage and welfare amounts to a subsidy to employers whose capital structure gets predicated on using minimum wage workers on the whole.

No one would work at a loss (wages - living expenses). It is only because of subsidy of welfare that many choose to be workers at minimum wage.

The right move is the end minimum wage laws and all political interference in trade. That idea frightens more businessmen to a greater degree than it does the people as too many businessmen fear authentic, manly competition.

Another right move would be to restrict immigration for the next 10 years and perhaps longer as all net population increase in the USA since 1980 or so has come from immigrants and their descendants. In conjunction, if the Congress could evict the 20 million or so illegal aliens residing in the USA, a significant chuck  of the pool of low wage bidders would be erased. That would go far to pressure wages upward for no-skill workers.

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WILE E. COYOTE, CAMPGROUND BUSINESSMAN SUPER GENIUS

In GREEDY CAPITALIST COMPLAINS ABOUT UNEMPLOYMENT INSURANCE EXPENSE AND QUITS HIS BUSINESS, I reveal that a former Ventura County businessman who failed to make a go of business in Ventura County using seasonal labor had his labor expense subsidized by taxpayers for as long as he operated in Ventura County. 

His lackeys didn't like learning about reality as such didn't fit into their hyper-indoctrination mindset, so they endeavored to beg for my attention.

Entrepreneurs must face reality if they want the gains of profit. The Coyote suffers from incompetency. The Coyote faces the same price for labor as all other businessmen in Ventura County who compete for workers of such skills. His competitors aren't merely camp ground operators, though in this county, that would be the State (McGrath State Beach), the operator of Lake Casitas and a few slumlord homeless RV parks. His competitors are all those also bidding for that kind of unskilled labor.

So the Coyote faces the same labor constraint as all other employers in Ventura County who can not run their operations without that same kind of labor. Thus, it is other factors for which the Coyote hasn't demonstrated competency that has led him to exit the field.

If the Coyote is pure entrepreneur, so what? He had nothing at risk. Only the capitalist who lends is the one who faces loss and thus is the only one who puts at-risk anything.

If the Coyote is an entrepreneur-capitalist, then he has been experiencing an unforeseen loss by change or what Mangolt described as a technical loss while more prudent businessmen know such as a loss of non-occurrence. The tide of travel turns from California seashores to Colorado mountains. So the Coyote, if as capitalist, should exit the field and put his remaining capital, if any, to a better and higher use.

Clearly, there are too many campgrounds in Ventura County and not enough winning bidders of demand for camping slots willing to bid prices high enough for the Coyote to break even.

The facts remain about UI and the Coyote. For every year he operated and laid off workers while also turning a gain of profit, the Coyote earned that gain on the backs of taxpayers who never collected UI but paid taxes for it and other businessmen who never laid off workers but paid taxes for UI. 

The Coyote has a legit gripe about Agent Smiths shaking him down for permits and the like. However, he lacks any grounds for complaint about UI as likely without it, he would have been out of business long ago.

As well, all should question the skills of the Coyote as a businessman. The excessive lawsuits from factions of employees reveals the Coyote's incompetence regarding communication, persuasion and group dynamics.

The Coyote can't gain profit because the sum of his sales on prices set by winning bidders for campground slots fail to exceed his cost of production.

The worst bit is that taxpayers have been subsidizing the Coyote's cost of production for all the years he operated his business in Ventura County as taxpayers forced to pay taxes or face imprisonment subsidized the Coyote's seasonal payroll, which let him pay a price of wages below the actual market rate absent intervention.

What they need is a lesson in business and commercial economics. 

1) Direct labor costs never are included as overhead in cost accounting. It is debatable that UI is overhead, as it is a variable cost dependent solely on actual fluctuating payroll. No one considers labor costs as overhead. The rate for UI is fixed by states' legislators, but the outlay is variable to the outlay for direct labor employed in any payroll period.

Typical overhead would be fixed cost outlays for a lease and insurance, which would be any costs inescapable regardless of chosen production methods and materials.

2) A wage is a price and conforms to the one, true, infrangible and only law of trade, the Law of Prices. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer sets the price.

Employers are sellers of money (these days credit) who buy skills through time, which we call labor, or the "poor man's capital".

Workers are buyers of money / credit, which we call wages and are sellers of expressed skills through time.

In most job markets, inter-employer competition has employers engage in English auctions for workers, while inter-worker competition has workers engage in Dutch auctions for jobs.

Where the winning bidders of employers and winning bidders of work seekers intersect, that is the clearing price, which, when it involves work, we call it a wage.

Both workers and employers get constrained by the Axiom of Profit — the sum of sales must at least equal the cost of production, otherwise the producer goes to ruin.

In short, employers can bid up for workers only where what gets sold as the product from the workers exactly equals the cost to produce it. Likewise, workers can bid down for work only where what they get paid equals what it costs them to live.

There are too many no-skilled Americans Dutch-bidding themselves and not enough employers who need workers bad enough to train those workers or provide them capital precisely because there is too much regulation like minimum wage laws, workers' comp, social security; and too much welfare giving unearned buying power, both which interfere in the fair, just working of markets.

2) All producers get constrained by the great Axiom of Profit. The Axiom of Profit holds the sum of sales must at least equal the cost of production or the producer goes to ruin.

Even if the winning bids for labor take up the budget of a firm, if that firm can not earn sales exceeding costs, whatever that cost profile is, that firm goes to ruin.

3) The Coyote has been gaining unearned profits for all the years he operated his business, beggaring other businessmen as well as workers. In the absence of UI, the Coyote would have faced lower a profit margin on much higher expenses as his cost of doing business no longer would be subsidized by firms that pay UI but don't layoff workers and by workers who pay UI but don't collect UI, as well as subsidized by all taxpayers who pay for welfare subsidies to his income-qualifying workers likely who collect food stamps (SNAP) and Section 8 (subsidized housing).

It's too much to ask of many who succumb to peer pressure and the effects of hyper-indoctrination to see the emperor isn't wearing any clothes. People hate truth, even more so when it gets in the way of the fantasies of their minds. Cognitive dissonance is such an amusing thing to watch in others.

Any pro free-market, pro-capitalism, pro society of property, pro individualist would point out the hypocrisy of those like the Coyote who fail to make it on their own merits and cry when the rules change, rules that once favored their inefficient ways.

Some of us want to see an end to UI, which is the only fair move for workers and efficiency-driven, competitive employers so that weaklings like the Coyote never take the field of competition.

Big governmentalists are the same, it doesn't matter whether a Democrat leftist or Republican rightist. 

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GREEDY CAPITALIST COMPLAINS ABOUT UNEMPLOYMENT INSURANCE EXPENSE AND QUITS HIS BUSINESS

So someone brought to me a story about a guy shuttering his business in Ventura County, California (see: A Milestone to Celebrate: I Have Closed All My Businesses in Ventura County, California)

What caught my eye is this complaint of his:

In most states we pay a percent or two of wages for unemployment insurance.  In California we pay almost 7%.  Our summer seasonal employees often take the winter off, working only in the summer, but claim unemployment insurance anyway.  They are supposed to be looking for work, but they seldom are and California refuses to police the matter.  Several couples spend the whole winter in Mexico, collecting unemployment all the while.  So I have to pay a fortune to support these folks' winter vacations.

While anyone can be sympathetic to this guy's sob story about suffering at the hands of Agent Smiths of the government matrix, some of which is true, the man himself fails to see reality.

The Coyote has been gaining unearned profits for all the years he operated his business, beggaring other businessmen as well as workers. In the absence of UI, the Coyote would have faced a lower profit margin on much higher expenses.

It is an unassailable fact of trade, that absent UI, wages would rise. No one would work at a loss (wages - living expenses). Market forces would force employers to pay more.

A wage is a price and conforms to the one, true, infrangible and only law of trade, the Law of Prices. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer set the price.

All producers get constrained by the great Axiom of Profit. The Axiom of Profit holds the sum of sales must at least equal the cost of production or the producer goes to ruin.

All laborers also are capitalists as labor is the poor man's capital. Labor is the sale of work through time.

As the Coyote, his laborers must get a price (wage) so the sum of the sales (work) must at least equal their living expenses (cost of production) otherwise, there is no incentive to work.

The unemployment insurance program in California as in any state, lets any business operator engage in beggar-thy-neighbor action both upon all employees who have taxes levied against them for this program but never who collect benefits at least equal to taxes they have paid as well as all other business operators who have paid more in UI taxes than have accrued net terminated employees.

Absent unemployment insurance, even if hands would remain idle, employers would need to pay for idle hands in the form of higher wages to induce workers to at least break-even (wages equaling cost of living). It would matter not that higher paychecks would come during the work season with none coming off-season or if paychecks would be spread out over a 12-month period.

With the presence of UI, business operators pay less than full, free-market wages into a fund, as UI is a percentage levied against active payroll. UI compensation lets a seasonal, laid-off worker break-even because UI as welfare subsidizes the laborer revenue (wages) against living expenses to achieve break even.

Absent UI, it would have been the decision of the Coyote to deploy his efforts and capital elsewhere if not wanting to earn less.

So, too, then without the subsidy to the Coyote and his workers, perhaps his product never would have come to market, which is what should happen in a system where people's profits (excess earnings) let them hold referendums on what everyone else should make and thus inhibition of anything not brought to market owing to efficiency under the constraint of the Axiom of Profit in the face of the Law of Prices.

The true meaning of greed is wanting to get something without honest exchange. So wanting to gain property (right of ownership) in something (excess profits) without paying for it (higher wages absent external subsidy) is the picture perfect definition of greed.

The right move is the end UI and all political interference in commerce. That idea frightens more businessmen to a greater degree than it does the people as too many businessmen fear authentic, manly competition.

This is why Americans suffer from crony politics, crony governance and crony regulatory capture. UI is expression of that cronyism.

Beggaring-thy-neighbors is the same whether done by politicians on behalf of government bureaucrats as the means to maintain power or by self-deceived capitalist-entrepreneurs shafting everyone else for their inefficiency and greedy quest for unearned profits.

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