As my son was returning to North Carolina several weeks ago, he called me from DIA before boarding his flight to inform me that he was sitting in a fast food dealership advertising $ 18 of l time to get help. Just two years ago, when Colorado unions launched their campaign for a statewide minimum wage of $ 15 an hour, business groups, including the Metro Denver Chamber, predicted economic disaster: jobs would be lost, small businesses would close and a collapse would be triggered by the “fight for fifteen”. Then COVID-19 came along, and jobs were lost, businesses closed and all of a sudden we were talking about essential workers and the need to pay them more for the risks they were taking.
There are probably as many sarcastic jokes about economists as there are lawyers. For every economic theory, there seems to be an equally reasonable and competing assumption. Economists bicker over cause and effect, despite their claims to mathematical proofs of the hard sciences. Difficult to know who to believe: the suppliers or the applicants? Today, old minimum wage jobs pay $ 15 an hour or more for a chance at attracting candidates. However, no economic catastrophe followed. Beginner employers have gotten into the habit of blaming indolent workers who would rather stay home while collecting unemployment checks rather than bother applying for a job. Truth be told, it looks like most of the Coloradans who lost their jobs last year are now back to work.
Suppressed demand and funded savings can contribute to low inflation. The Bloomberg news went so far as to claim that rising prices have already eaten away at recent higher wages. The Choir of Fate predicts a return to double-digit interest rates of the 1970s. Optimists say there is no comparison – that the stagflation of the 1970s and early 1980s resulted from a capital shortage as our current turmoil reflects an excess of capital looking for a place to land. I do not pretend to know who is right about this feud, but I hope it is the idea that the inflation that we are experiencing is going to go away soon. I remember all too well the bad habits that prolonged inflation encouraged. Accumulating credit card debt doesn’t seem very risky when you can expect to pay it off with 75 cents just a year or two later. Sooner or later a guy like Paul Volcker shows up who is stabilizing the money supply and forcing you to get out of debt with a toy shovel.
Former President Trump warned voters that the election of Joe Biden would precipitate a fiscal collapse that would turn the Great Depression into a picnic. On the contrary, stock prices continue to rise, all of our 401Ks continue to grow, and the economy is showing signs of strength that defy both COVID-19 and common sense. For decades, Republicans have warned voters that federal budget deficits pave the way for perdition (except when the Rs are in the majority). Yet somehow we have been able to provide free vaccines, economic support to restaurants, airlines, local governments, public transportation and more for billions of dollars – which indicates that there were / were a lot of dollars in the vaults. to the Federal Reserve than anyone knew. Now Congress envisions an additional $ 4 trillion in bricks and mortar, as well as social infrastructure spending, over the next decade.
Apparently, this last portion of the stimulus will be funded by a restructuring of tax policy – starting with a cut of the $ 2 trillion in tax breaks given to businesses and the richest 1% by Republicans in Congress in 2019. targets start to rise and will soon turn out to be deafening. Big PHRMA has no interest in negotiating drug prices with Medicare and Medicaid and warns of the danger to public health if they can no longer rake in excessive profits. U.S. job creators who failed to invest their 2019 tax breaks in job creation promise to turn down new investments if their taxes rise, as do the nearly 20% of Fortune 500 companies who have avoided pay a dime in income tax.
They are probably empty alarms. The Clinton administration also raised income taxes to nearly 40%, launching the strongest economy in the past half century (yes, even stronger than the “best ever” Trump economy). Colorado’s economy has generally thrived through the budget ups and downs of the past 50 years despite clamors from economic nihilists. That could change, of course, and it’s probably wise to keep a cache of money under the bed or, better yet, in an FDIC insured account. If labor shortages make it more difficult to trap our essential workers in the wage peonage, so much the better. Some inflation translates into fairness.
Miller Hudson is a public affairs consultant and former Colorado lawmaker.