It appears now that raising the minimum wage increases employment. This is directly opposite of the "small bakery" micro-analogy that conservatives appeal to and everyday voters imagine.
I offered students "Raising the minimum wage will/will not raise prices or lower employment." I warned my students in advance that, no matter what they thought, no matter what "common sense" told them, if they did what I required them to do and accessed scholarly reviews, they would find virtually no support for the "will" position. I warned them that academic economists saw the issue as complex, with various effects.
Of about 22 papers that chose the topic, two chose "will not." The rest chose "will," and they either used no scholarly evidence (a consensus) -- opting instead for Hurtage Foundation and Kato Foundation papers that wouldn't fool anyone and newspapers -- or used websites. All of the "will" people, though -- every last one of them -- informed me of the Iron Clad Rule of Capitalism.
If you have someone make you pay your employees more all of a sudden, then you have to make that money up. You either have to increase the prices or fire an employee. Suppose you ran a bakery...
That little canard was inescapable. I read it and read it and read it.
The problem is that this mythical bakery didn't exist in Adam Smith's day, and it sure doesn't exist in 2014. The bakery they imagine is a zero sum, and that's typical of a childhood imagination. Actual bakeries, and we'll drop the bakery as soon as possible, pay for their materials, their labor, their advertising, their insurance, their licensure, their utilities, and then charge extra. The cost of the cupcake is not zero sum. The bakery is costs + profit = price.
Profits, in most small businesses, grow and get shared with the employees, or else they go toward growth. The owner gets richer, sure, but the small business doesn't keep very many workers at minimum wage. As it grows, it rewards its employees.
Who pays minimum wage? 1. Restaurants, 2. "big box" retail. There was a study of a local environment that showed inflation when there was a minimum wage increase, but it was of Chicago, when it mandated waiters and waitresses getting minimum wage. The restaurant business hadn't be set up to handle that, and so it did have a bulge in prices. Otherwise, true minimum wage (non-tipped) tends to show up in fast food.
Mike's Manufacturing doesn't keep a large part of his staff at minimum wage. McDonald's does. Papa John's demands it.
So, aside from some businesses with high turn over and manual labor, who holds the bag? Mal-Wart and McWendy King. The problem with worrying over their labor costs is that the true nature of capitalism is that non-publicly traded companies have the duty, as Henry Ford said, "To make the highest quality possible for the lowest price possible while paying the highest wages possible." Once a corporation is publicly traded, though, its board's duty is to gain profit at all costs, and reducing labor is the easiest way to achieve an illusion of profit. No board can voluntarily increase labor costs (pay) without facing an investor law suit or loss of stock value.
$ = Labor + Materials + Rent on capital + Profit
In low unemployment, employers are forced to increase wages. In a recession or depression, employers have no market force compelling an increase in wage. Furthermore, publicly traded corporations are compelled to increase profits. Since the Great Recession began, corporations, most especially including those that page minimum wage, have increased their profits. McDonald's has turned a huge profit, and Wal-Mart continues to be the most affluent non-oil or drug business one can imagine, but neither may pay employees more without being sued. Neither is compelled to pay more. The balance of the integers in the formula of capitalist price are out of whack. P > L, and it keeps going up.
The companies can't break the cycle.
There is a need for government (the external regulatory authority) to act as a guarantor of the continuing function of capitalism. I.e. it has to negate the impulse of boards of directors in order to make some of the vastly increased profit go to labor.
"If someone says you have to pay your people more, where is that going to come from," students would ask. It would come from PROFITS, of course. If you are one of the main industries paying minimum wage as a large component of your labor, you have been growing in profit and passing none of it down.
I should give some background and dull the blade a bit on my attack, since I appear to be drawing more blood or causing more damage than I had intended.
I cannot but conclude the bulk of your natives to be the most pernicious race of little odious vermin that nature ever suffered to crawl upon the surface of the earth." -- Jonathan Swift, Gulliver's Travels, Book II, King of Brobdingnag.
"Real America" is a term that Sarah Palin uses -- one endorsed and gathered into the flaps of the cloak of Republican discourse -- as code. For her, given her most recent usage of the phrase, it seems to mean only "my supporters," with the dullard's implication that those who do not support her are not only not patriotic, but not American. However, in the nibs and mouths of other Republicans, the ones who urged the phrase into her in the first place, the term refers to a geography that the party believes it can win and a demographic that interlaces a different geography.
The geography implied is the "blank America," the America between the cities, the America of the towns without names, the unincorporated America, the rural America. Facing an election in 2008 where they believed that they had lost the northeast and the west coast, they began to speak of "Real America" as everything between. In fact, the target of such talk was not altogether between the coasts, and it certainly wasn't really the 20% of the population living in the blanks on the map, but it was the South, which perceives itself as rural. The target was a demographic that believes itself to be rural, even as it commutes to work an hour on interstates in an SUV instead of a pickup truck, listening to anger radio the whole way in and back.
The demographic of angry (white) (male) voters isn't my concern, though. My concern is the reality of the "Real America" that Sarah Palin herself actually does represent. She may mean to represent angry white men with fixations, but her actual story as small town mayor and her rise are true representations of the microtown and the rural real.
This blank America is an artifact of the Interstate Highway system. Prior to the Eisenhower Interstate system, many, if not most, of these small towns had a reason to exist. At the very least, it had a deterrent to evacuation. Prior to the interstates, the few national routes slithered through hundreds of small towns, giving hotels and restaurants and novelty architecture and regional raree shows boosts. There was neither a possibility nor an incentive to have a franchised, uniform business conquer the whole of the stretch, nor for one business or business model to homogenize the whole. For small towns like Louisville, North Carolina to be cut off from the nodes and cities of the state, there had to be a line to make the cut, and the interstate provided that line. Prior to the rationalized, massively freighted lines, small towns had their own transportation and industrial routes. River traffic that had once been a logical and profitable localism ceased before the reliability of road transport. Money, then agriculture, then people flowed toward centers nearer and nearer to the line that would connect to the big dots on the map, and the shaded parts of the states grew more blank.
Therefore, the Real America of Sarah Palin's discourse is a post-1960 phenomenon (yes, the interstate system is 50's, but they have to get built, and then they have to have an effect). After that point, regionalism, both in accent and manners and identity, diminished as the cities and suburbs came into their own, and the idea of family roots and localism were less and less adherent for the wealthy and educated. We have seen many, many politicians on the national stage who have come from small towns. Many eminent women and men, many sages and saints come from small towns. Indeed, it seems that being from a small town is a great thing, especially.
Jimmy Carter, for example, came from a small town in Georgia. His was a semi-patrician family (his dialect, though, is purely patrician and not native), but we note that he took his talent and his values and left the small town. He left in order to practice his virtues on a larger stage than his town could offer. He left first to the U.S. Naval Academy, and then he sought to be Governor of his state, picking up from the rather odd traditions of Lester Maddox and the Talmages. Jimmy Carter's small town upbringing shows in many things about him. His religion and his marriage and his attitudes toward forgiveness are all shaded by the values instilled by the post-bellum Southern rural world, but one thing he has never been is a small town politician, a happy small town mayor.
My premise, you will recall, is that the last thing we should want is a politician from "Real America." I should take the ambiguity out and say that we do not want a person who is a politician in "Real America," rather than a person who is a politician and once was in or of "Real America." The latter individual may be superior. The former is an a priori disaster.
The microtown suffers from blight and recycles itself every year. Because building is more beneficial than renovation, large buildings are left empty more often than they are refurbished, but each part of the town experiences a spasm of paint and beams, new banners, crowds, closings, decay, demolition, and then building again. Where I am, steps along the sidewalk lead to empty fields over and over. Once, houses perched there, and the steps led to their stoops. Now, the gardens of 1925 are wildflowers.
In a city, power comes from one's job. In the Real America, power is land. "Real America" is neo-feudal, in that land ownership is common, and it marks out the basis of power and wealth beneath anything so transitory as a particular generation's children's inclinations. That feudal structure had been in place in the South in the Reconstruction era, and it was famously written up by Faulkner. However, that was feudal, not neo-feudal. That came complete with noblesse oblige, education, and its Atticus Finches. After Faulkner's people went to their mixed rewards, the next up dispensed with the bother of families and kept right on with honoring the owners of the land. The owners of the land were, by the 1960's, the working class whites who had bought every time an aristocrat in distress had sold, every time a well trained noble had gone to the city to make a large impression on the world with a small town upbringing (and first class education), every time an antique family died without issue. The land remained the power.
In the "middle," the pace was accelerated, as there hadn't been the bother with ancient rites. Ranchers, farmers, any "original settlers" or "pioneers" (i.e. the people who came in and displaced American Indians or flooded into the vaccuum, legal or military, after they "had been" displaced) that had been town founders had been town powers and had been town owners. Being from a small town before 1960 meant being from a well established family that guaranteed a strong drive for education, as well as values of service to the less fortunate and, especially in the midwest and west, constructing a town. In other words, town founders worried about what makes a town work and had to have a touch of the altruistic in them. Again, though, as the microtown develops, the people "from small towns" who have these skills and values leave, and the power stays with the land. In a movie Western, good or bad, one hears about some character or other, usually corrupt, and then that "he's a major land owner in this county" and so, "You can't buck him, Sheriff." Of course that is all a shadow cast by the Lincoln County War, as Hollywood (and I am, too) is on the side of the sheep against the beef. But, at the same time, that line resonates, if it does not telegraph out to the real land owners who watch movies, with small town America.
I am the scion of both the fallen and risen groups. I am mainly, though, the son of two people who are "from a small town." Both grew up, one in a family that had been very important before the Civil War and become impoverished during Reconstruction, and the other that had been part of the southern professional class during the whole time and therefore had remained prosperous, before the interstate system, and both had memories of their towns as important places with set social orders and strong value systems. My observation is starkly different, because I return after their professional lives, after the interstates made their towns otiose. I had seen before, though, what I have seen here, more than once.
In the blank American town, the person with land owns, and retains ownership. That person has the capacity to generate wealth when necessary, and usually to gain more wealth. More to the point, such a person gains the ability to rent. In the actual terms of Adam Smith, such a person becomes a naive capitalist. Because the microtown is cut off, because the Interstate is forty miles that way or that way, because "those people in [Big City]" do things differently, the landed individual inherits the social position of the founder without inheriting the values of the founder.
The pioneer who crosses the plains to set up a community and decides to put his life, wife, and future at stake to live with the rest of his wagon train in a particular valley is dedicated, vitally, to the concept of cooperation. Contrary to NRA pamphlets, such persons were not dedicated to shooting things and people and "freedom." Even if the people who settled were weirdos there to get gold, the ones who stayed were pretty passionate about the idea of a town that functioned by law and fairness. Those "founders," like the aristocratic families of the south, took care to inculcate in their children a code of compassion and fairness (at the end of a lash, if necessary). The person who acquires simply to overcome the unfairness of the capitalist system, on the other hand, may inculcate a different set of values, may have a different lesson to teach. In microtowns now, that is the person, through abdication and abnegation, who is the town leader.
[I've detained you enough for one essay. I will continue with part three, but it will come sooner than this one did. Rising gorge wants out.]
Alaska "governor" Sarah Palin has resigned. William "Wrong Way" Kristol had praised her last year as a vice presidential pick for John McCain precisely because she represented both "energy" and "Real America." This latter theme is something that Mrs. Palin was eager to promote. She was consistent in telling all who followed her that she was "real" in a way that other candidates for office were not.
Now, there are all sorts of questions that arise from this.
One is George Chapman's statement from 1612, "Ignorance is the mother of admiration." The more we know about anyone, the less we admire that person, and Sarah Palin was completely unknown -- a set of cheekbones onto which we could paint the cosmetics of our own political desires. All of us who had been snubbed by the junior high school Pom-Pom, either for a date or friendship, could project our nastiness, and all of us who wished still to cuddle up to that same bundle of confetti on a string could do so again. Was that all that Palin was? Was she just Dan Quayle in drag?
I think, instead, of something Swift said in one of his sermons: "The power of fortune is confessed only by the miserable; for the happy impute all their success to prudence or merit." Sarah Palin was a happy woman, a "pitbull in lipstick" and a "hockey mom" and a "small town mayor," and, most of all, a success story from real America.
Long before I moved (back) to "real America," I knew what it was. Long before I moved to a very small micro-town, I knew what it meant. I knew what it was to survive and thrive in one. It is not quite the same thing as surviving and thriving in high school, although my suburban high school in a major city had more students in it than my current "city" does citizens, but it means that rules and conditions that apply nationally are simply in abeyance, and, in their place, a different set of expectations and demands function. These are not, Republican rhetoric designed to pander to its only voters notwithstanding, better or more "real" than other expectations and demands, and they are certainly not more sincere. They have only one claim to greater "reality," and that is a greater realpolitik to them, a thinner margin between personal greed and political gain.
The "real America" or "real American town" is always in economic crisis. Whether there is a recession or not, but more when there is, it has trouble with unemployment. Its "underclass" is not abstract, not dislocated, not in a vague "other" place. The unemployed and underclass are visible every day, wandering through town, and the Section Eight housing is a major feature of city architecture. The town usually worries about "the plant." It may be "the textile mill" or "the bag plant" or "the control" maker, but there is a single monocultural employer that will dominate and overshadow the town's economy. Similarly, a single merchant will overshadow the retail opportunities for the town (usually Wal*Mart).
Towspeople will not congregate at "the mall," and "mall culture" and such talk as that is as foreign to them as talk of sushi bars. Instead, whether it's Bill's Dollar Store or K-Mart or Rite Aid or Wal*Mart, there is a single general store that will expand to take in most of the retail activity of the town, and it will have virtual monopoly power. Grocery stores will be scarce. Usually, there will be two. One will be general, and the other will be low cost, with a featured section for immigrant cuisine (brands known south of the U.S. border, with packaging written in Spanish). There will almost inevitably be a crisis of empty store fronts. If the empty store fronts are not the vacated downtown, they will be the evacuated Wal*Mart, and they will prove impossible to rent, long term. Agriculture will take place around the town, and so the city's population will never reflect the actual economic residents. Fast food restaurants will proliferate, with perhaps two or three older restaurants barely surviving on slim margins. The population will flange out, with old and young, but little in between. Children and elderly will outnumber mid-life adults, and so there will be a constant tax crisis for schools and social services and therefore a constant need for state and federal assistance in these places where state and federal agencies can least find the population. There will be community colleges and technical schools, but universities and four-year institutions will constitute "going away" and going into debt, and therefore they can only exist as online degrees or for the children of the upper class. As a result, the independent businesses that really boom are loan and medical supply businesses.
The disparity between upper and lower classes is personal, not abstract. It is encoded in families, in names, in street and place marks, and in attitudes. "Fallen" families do not get respected the way that Emily Grierson did, at least not since the 1960's. Rising families do not have to endow public works and make the Snopes municipal building, or the Tweed City Hall. Instead, the signifiers are more dynamic, as the fortunes are, and more affected.
Open the door to the homes of the real America, and you will find satellite televisions and Internet connections, and these are, in my estimation, the only actual changes and erosions in what had been a petrified forest of certitude and cultural ideolect. Inside, you will see the women decorating in Martha Stewart's imagineered New England style, or Paula Deen's reclaimed South, or a neo-native Southwestern, or a clumsily distilled and purified northern immigrant cute, but it will be as expensive as anything could be, and it will be practiced as a debutante's bow or a best man's toast.
Go out the back door, and you will find the disturbed soil of acres of all-terrain vehicle tracks or vainglorious gardening. The men will have thrown themselves outward in a jovial, lite-beer, back strain and hoed or roto-tilled or chain sawed or fenced or shot, and land will be desired or damned for its recalcitrance or promise.
This is the town, the village, the dimple.
When you who live in cities look at a map of your state, or when you who live in other nations look at the United States, you will focus on the centers and then see shaded areas inside the lines, as if cartographers had too much color and too little data. Within that big box of "state," you will know of things -- Chicago, Raleigh, Kansas City, Mobile -- and then you will, if you are bothered enough, notice all of these freckles on the surface of the plain. They have unimaginative or improbably hallucinatory names, and they do not appear at regular intervals. No one lives there. For all the evidence you have, sitting in an apartment or flat, these are mere accidents of penmanship at the map companies. When the elections occur, you hear about them, and you hear that all of these divots on the surface of the nation have only one opinion, one mood, one thought, and that is resentment toward the people who ignore them.
Well, I'm here, here in "Real America," as Sarah Palin puts it. I will take two more posts to talk about it, to be your spy, to report on it as a fact and artifact, and I'd like to tell you why, of all the things the world may or may not need, a politician from Real America is the one thing we need least.
