OK, so I made some general comments concerning the social utility of ensuring wages keep pace, not just with inflation but the prevailing pool of supplied goods. In other words, we need to make sure that there are enough people around who have cash available to purchase what we produce. This would seem to be commonsense - even Henry Ford paid his assembly-line workers enough money to buy his Model T's and Model A's - yet wage and earning discussions too often start from abstract premises completely devoid of questions of social utility (let alone social justice), and include even more abstract and demonstrably untrue notions as the equivalence of power between employer and employee.
What are some things we could do to move towards a more sane relationship between productivity, wages, and credit? First, turn the NLRB in to a body with teeth. Overturn so-called "right-to-work" laws in states that have them - they clearly violate federal mandates concerning unionization. Take Wal-Mart, Target, and other anti-union companies to court and force them to recognize the collective bargaining rights of their employees. Second, to stem the fears that a sudden jump in wages would spike inflation worries, be reminded that our inflation rate is at historic lows, and has been so for over a decade (indeed, a few years ago, the fear was radical deflation, or a collapse in prices and purchasing power) because of stagnant wages. Even a modest increase in purchasing power across the board would have little overall effect because the liquidity influx would be offset by increased consumer spending. With a rising demand for goods, retailers and others would be forced to compete, driving prices down. The increasing demand would also spur production. Since we are not speaking of dumping money into the economy will-nilly, but through a process of giving workers the tools for more financial stability and opportunity, this isn't radical, but pretty sane economic sense.
As for credit, we should take a lesson from history. When the Greek city-state of Athens was about to collapse from economic strangulation, including an excess of public and private credit, Solon, the elected leader, simply declared all debts, public and private, wiped out. Not only were the debts no longer owed, they were erased completely. Creditors were freed from the burden of unpaid debt; debtors were freed from the burden of unpayable debt. Such a debt moratorium would be in the interests of most people, not the least of whom would be banks, holding so much unsecured debt (all those credit cards being used to pay off credit cards), driving up mortgage and housing prices to use as collateral with other banks to support all that unsecured debt they currently hold . . . The whole house of cards could tumble, especially with the housing market recently popping like a big, pus-filled pimple.
We need to remember that there is a social dimension to the question of wages and earnings - and I am not referring to corporate earnings. This is the part of the equation that the New Deal tried to reign in in its first days. One of the lessons we had learned was that businesses are concerned with one thing - earning money. Rules mean little to such as these, which is why regulation is necessary. Such regulation mostly concerned limits on the more egregious misbehaviors of corporate criminals. What needs to be sought now, and I do mean now, before the collapse comes, is a more stringent regulation of the remuneration policies and practices of corporations. A minimum wage is just a first step, and quite frankly an inadequate step. Ensuring that starting wages provide enough for a person to act as a free agent in society is a necessary starting point; as our current minimum is below our current poverty-rate, one would think that pegging the minimum wage to, say, oh, some percentage above poverty - 115%, say, perhaps even 120% - and allowing for it to be adjusted for inflation, would keep the bottom of the wage ladder well above the drowning point.
For those who scream about free markets, etc., all I can say is, free markets destroyed American capitalism once. They can do it again. Too many signs point toward such an outcome in our future, and one would think these market fundamentalists would prefer to save corporate capitalism than watch it sink under the waves of a tragic, and avoidable, economic flood.
Virtual Tin Cup
