Right Diagnosis; Wrong Prescription

I know that this blog tends to reiterate certain themes, but we all have our preoccupations. Those who are regular readers will recognize a couple of mine: the importance of “hiring” (electing or appointing) government officials who actually know something about government; and the critical difference between “what should we do?” and “how should we do it?”

The election of Donald Trump and his subsequent choice of cabinet officials has pretty emphatically made the case for my first premise. (There’s a Facebook meme to the effect of “If you think anyone can run  the government, I hope your next colonoscopy is performed by a plumber.”)

My second preoccupation–the difference between “what” and “how”– remains less obvious. I thought of it, however, when I read this column by Catherine Rampell in the Washington Post. As she points out, it’s one thing to correctly diagnose a problem. It’s quite another to devise a remedy that will solve the problem rather than inadvertently making it worse.

By all means, let’s raise the living standards of workers at Amazon, Walmart, McDonald’s and other employers of low-wage Americans.

And, by all means, let’s raise Jeffrey P. Bezos’s taxes, too. The founder of Amazon (and owner of The Post) is the wealthiest man in the world. He didn’t need the tax cut that Republicans just gave people like him.

But the sloppily designed Stop Bad Employers by Zeroing Out Subsidies Act (a.k.a., ahem, the “Stop BEZOS Act”) is a terrible way to do either of these things. It’s virtually guaranteed to hurt the very low-income working families its sponsors want to help.

The bill Rampell is citing addresses an issue that I’ve written about several times: some of the nation’s largest companies (including Amazon) pay their workers so poorly that taxpayers make up the difference with food stamps and other social welfare benefits.. In effect, we are paying a portion of those workers’ wages. Meanwhile, the company’s  “savings” go to shareholders as additional profit.

It’s pretty despicable, and it should stop.

The “Stop Bezos Act” would establish a “corporate welfare tax” on firms with at least 500 employees. Companies would pay a tax equal to 100 percent of the value of safety-net benefits their employees receive, including Medicaid, housing subsidies, food stamps and subsidized school lunches.

That certainly sounds good. As Bernie Sanders, the bill’s sponsor, has said,

The working families and middle class of this country should not have to subsidize the wealthiest people in the United States of America. That’s what a rigged economy is all about.

Agreed. The diagnosis is spot on. The prescription, however, would be a disaster; it would hurt the very people it aims to help, because it would discourage firms from hiring workers suspected of drawing benefits.

These workers come, disproportionately, from some of the most vulnerable populations: families with children, older people and workers with disabilities.

Families with children are much more likely to use food stamps. Older Americans who are poor are much more likely to be on Medicaid. And workers with disabilities would face even more barriers to employment under this bill than they already do.

Under this bill, Medicaid-eligible workers with disabilities or other health issues would become thousands of dollars more expensive. Working-age people over 45, who cost Medicaid about twice as much as their younger counterparts, might face even more discrimination in the job market than they already do.

The bill tries to address these issues by barring employers from asking job candidates about benefits. But firms could easily infer which applicants are more likely to get them, based on their races, genders, Zip codes, etc. Such “statistical discrimination” would be difficult to police.

Moreover, employers get information about dependents and marital status when newly hired workers fill out their HR forms. Guess which workers would be at the top of the list when it’s time to downsize?….

Perhaps worst of all, as the Center on Budget and Policy Priorities points out, the bill would ultimately create a new corporate constituency to push for cuts to social programs and stricter eligibility requirements. Suddenly, reductions to Medicaid or school lunches would be directly equivalent to a corporate tax cut.

This bill would also require new oversight, probably spawn multiple lawsuits alleging discrimination, raise equal protection issues (why treat companies with 500 employees differently than those with 480?) and generate numerous new regulations.

Simply raising the minimum wage would go a long way toward solving the problem without creating perverse incentives or requiring additional bureaucracy.

Stop Bezos is a great soundbite. We should do it. How we should do it, however, matters. A lot.

16 thoughts on “Right Diagnosis; Wrong Prescription

  1. i went to seattle,back in november,after my seasonal stint,i got a job in seattle,running a dump truck(26 a hour),hense,ineeded a place to shack. er,live…anyway onto craigs,zillow,etc, housing is tight,houses near non existant for rentals,and apt,say 1 bdrm,bout 1200-2400 month,plus, a security background check $40 non refundable,everyone,,who will live there.first and last, security,elec,and maybe a membership fee.. total, 5k to move in andwe look at why, theres amazonians living in cars.(fact,many of those apts are being held by banks from the 2008 fallout,under a management a scheme,and short sales).hense,cant get food stamps with no address..at this time,the city council wanted to pass a head tax,on the better to do buisnesses,with a million or more in profits,to support fair housing,,every councilmember signed on, bezos stepped in,and said no way,and threaten to pull outta seattle,the mayor folded,shes a so called progressive. seattl e is in a building boom, its nice,clean,classy,but sucks for the typical worker to survive. now its gentrafication,like san francisco/san jose style. ive spent many days and nights in seattle,over the last 40 years,i was looking to retire there… guess ill just hang elsewhere i dont have to smell bezos exhaust……

  2. Trying to undo 30 yrs of middle class jobs leaving the country is a difficult job at best. 1 bill won’t do it. It is great idea but there must be a reason for companies to wish to stay AND pay a living wage. The same thought applies to universal health care. Follow the money, which leads to big lobbyists influencing politicians. When politicians care more about staying in office than doing the job for which they were hired, nothing gets done.

  3. I am certainly no expert on the subject but I have long thought that a Universal Basic Income would address a good deal of the problem. Such a distribution of money to the poor, the working class, retirees and the disabled would be immediately spent back into the economy. Of course the mere mention of such a thing frightens the bejesus out of righties because–“Isn’t that socialism? Stomp it flat.”

    Raising the minimum wage is necessary even with UBI, of course. All of us have probably read how expensive it is to rent or buy anymore, and that it is simply not possible on minimum wage, unless you are aiming at slum living.

    In the end I can’t offer solutions, only suggestions/directions. Better minds than mine will have to flesh out the details.

  4. Re: nonexistent low-cost housing. I’ve heard that complaint for fifty years about certain cities in which I later lived in. For instance, San Diego, California. My ex and her rich husband lived there. I wanted to move close enough to her that the son she was raising and the son I was raising could easily interact. I left my home in Indiana for which I was paying $500 monthly plus $280 utilities, while advice to me was don’t try it, you won’t be able to find housing for less than $2000. My ex reinforced that opinion. I arrived in San Diego, let the boys spend some time together, then began a search for a home. True enough, newspaper ads offered nothing but high-end apartments. So, I made cold calls on apartment complexes. The third complex was the BINGO moment. It was less than five blocks from my ex and cost me only $280 monthly, including all utilities. The secret is to understand that, yes, some cities will be very expensive habitats…if you have an uncontrollable need to keep up with the Joneses. Which means: your living costs are more determined by your finickiness than by geography. Don’t be so damned finicky.

  5. “The bill Rampell is citing addresses an issue that I’ve written about several times: some of the nation’s largest companies (including Amazon) pay their workers so poorly that taxpayers make up the difference with food stamps and other social welfare benefits.. In effect, we are paying a portion of those workers’ wages. Meanwhile, the company’s “savings” go to shareholders as additional profit.”

    Actually; we are double-billed for the low wages paid by huge corporations. The “social welfare benefits” through our ever increasing taxes and the ever increasing cost of all goods and services provided by those huge corporations. Not only the big-box stores but the corporations who produce, own and operate countless brand-name and store-brand necessities and maintenance and repair service centers we patronize.

    “…the critical difference between “what should we do?” and “how should we do it?”

    These questions no longer have that old simple answer, “If you know what the problem is, you know the solution.”…if that was ever a solution. We are facing at the least – IF the November 6th election overturns the Republican control – 6 more weeks before they are inaugurated and can attempt to begin to know “what to do” regarding salvaging what might remain of our partially “deconstructed” United States government. Much damage can be done by decamping enemy forces in 6 weeks. What will be the cost of “how to do it” will be hampered by the question what remains of our tax base to begin paying for possible solutions. There will also be the inevitable transition period post inauguration of those possible new members of Congress. With all of the “leaks”; outspoken members of both parties, hearings prior to appointments, known results of known changes and loss within the current administration and the many published books; no one outside of this White House KNOWS what all has been done, is going on and what preparations are ready to be put into action by this Rube Goldberg government body. This brings me to our current option as step one:

    VOTE BLUE!

  6. I am a Bernie Bot, but this Bezo’s tax is the wrong plan. A countrywide $15 an hour minimum wage would be a huge help. A $15 an hour minimum could be phased in over three years and then tie in future increases to the rate of inflation. The issue is increasing taxes on the rich should also be in the mix and eliminating the loopholes that allow stashing of cash offshore.

    President Agent Orange and his Trumpets on FAUX News, etc., hail the new heights reached by the Dow Jones Industrial Average and Standard and Poor’s Index. It’s the rising tide, low unemployment and a booming stock market. Oh let’s break out into Song – Happy Days are here Again.

    Since 1980, the bottom 80% according to the Census Bureau has steadily lost their share of Household Aggregate income. The top 20% and the top 5% has gobbled up the losses the 80% suffered, this has been unimpeded no matter who has been President.

    So where do all these paper gains in the Stock Market go?? The Richest 10% of Americans Now Own 84% of All Stocks. The top 10% of American households, as defined by total wealth, now own 84% of all stocks in 2016, according to a recent paper by NYU economist Edward N. Wolff.

    “Despite the fact that almost half of all households owned stock shares either directly or indirectly through mutual funds, trusts, or various pension accounts, the richest 10% of households controlled 84% of the total value of these stocks in 2016,” Wolff writes.

    Furthermore, while virtually all (94%) of the very rich reported having significant stock holdings—as defined as $10,000 or more in shares—only 27% of the middle class did. (The study framed that middle class as the group between the poorest 20% and the richest 20% of Americans.) http://time.com/money/5054009/stock-ownership-10-percent-richest/

    So consider one other factor, when comes to campaign donations (bribes) the top 20% would have the disposable income to fund the politicians who deliver for them, not for the Proles.

    None of the Corporate Media that cheer leads the Stock rise to varying degrees, seems to ever look at the equation concerning rising wages for the Proles.

    When President Agent Orange, trumpets the stock market rising, the Democrats could use the line from a credit card company and ask the Proles – What’s in your Wallet? In other words have all of tax cuts, and a rising stock market resulted in your wages increasing??

  7. Corporate welfare is taxing all of us unfairly. Then, that’s what happens when the government is a sea of bribery, graft and greed. Why, for example, do oil companies enjoy “depletion allowance” subsidies from us taxpayers while their profits continue to soar. In all fairness, these companies are leveraged to the hilt in order to keep destroying the environment while finding newer sources of energy. That said, isn’t it part of the Republican mantra for businesses to sink or swim on their own? Republicans are still working assiduously at eliminating basic “subsidies” from working peoples’ lives so their corporate donors can keep improving the stockholder payouts. Maybe some of that oil company revenue is an “investment” into the politicians who take their bribes.

    I guess the point is that what laws do we pass – and that will be enforced – that makes these bribes illegal and the corporate welfare passe’? Maybe if oil drilling’s costs became so high in their own right, these companies might have more incentive to develop alternate energy programs like better electron storage for electric vehicles. Isn’t that the way it’s supposed to work?

    Silly me. It’s just easier to abuse the taxpayer, because they don’t vote all that much or all that intelligently anyway. The corporate mindset won’t change until non-corrupt politicians are put in office to make laws that are fair to everyone including businesses that still refuse to pay a living wage. Maybe some of that lobbying money could be spent on salaries for their employees.

    WOW! What a concept! VOTE BLUE!

  8. I firmly disagree with the premise the bill would make it more difficult for those needing employment to be hired. I have heard of instances of the newly hired Walmart employees being advised during orientation to file for food stamps and other government based subsidies. This is exactly the type of situation addressed in this proposed legislation. We are living in a society where the wealthy corporations are running amuck and MUST be brought under control. The election of tRump further emboldened the “I’ve got it the hell with the rest of you” mentality. Corporate welfare must be addressed and this bill is the best avenue for this correction.

  9. That’s like saying a 325 aspirin is the right diagnostic opinion of what is causing the Riley Hospital neo-natal patient’s cries. Wrong Final Exams about now would be the same as at the end of the Semester when prefabricated with the ANSWER sheets for the A & B & C & D copies for the DRIVE tests to the footprint of that ONE HUMAN with a 4 name for a ZIP …PER.

  10. Make more money regardless of the impact on others does not work for we the people but is the mantra of those with extra wealth (investors and executives).

    The US will continue our ride over the cliff until we the people hire and fire the right representation to our government. So simple.

    Part of we the people got organized to do that but it turns out that the force that organized them was entertainment media paid for by oligarchs. Whoops.

    Now the rest of we the people untainted by entertainers have to find our own hiring and firing organization that’s in our best not least interests.

    It has to be the Democrat Party. There’s nobody else capable and standing. We will not like every Democrat but are left with no other organizing choice.

    Our recovery starts in a few weeks. Vote blue. It’s not perfect but the only road to recovery.

  11. Nobody finds it odd that a writer from the Bezos owned WaPo raises a red flag over the Stop Bezos Plan, and Democrats jump in line?

    How well conditioned you are…maybe if Maddow throws it under the bus the plan will do a quick death for the corporate-owned DNC.

    I don’t see any conflicts of interest here. (eye roll)

    The writer in WaPo takes a mighty leap about how easily the corporation would be able to discover if the employee is receiving state assistance. Scanning zip codes for suspected welfare recipients isn’t a quality scientific premise. In other words, she presented zero evidence to support her opinion that taxing her boss was a bad idea.

    What this bill does is allow Americans to have a discussing about how we can balance the current unfair system. Nobody working 40 hours a week should require government assistance to sustain their life. The mere fact this exists in this country should cause our entire Congress to stand up and offer remedies.

    The obviousness there is NO discussion or LIMITED discussion should cause Americans to question our economic system. It isn’t functioning properly.

    Also, more than food stamps and healthcare, there are lots of studies showing that lower wages for workers supporting families prices them out of rents or owning homes. They are forced to rent and require government subsidies. This evidence is provided throughout the USA.

    If we were truly a representative republic, correcting the unfairness of the system would be a topic front and center for all elected officials. It’s not been addressed.

    Neither has a minimum wage been adjusted for inflation. Before NAFTA was signed, or any other trade deal signed, they should have addressed wages for those Americans losing middle class paying jobs. Supposedly, union members were part of the trade team. They must have been paid to do nothing because that’s exactly what they did.

    Going back to yesterday’s post, this is why those receiving government subsidies aren’t excited about voting for any candidates. None of them represent their interests. Neither democrat nor republican.

    Where are the Champions for the People? What about our moral obligation to the people?

    This is why the Pope speaks about wealth and income inequality as the “moral crisis of our time.”

    I’d concur with the Pope but also add the exploitation of our environment as well. This is another externality we must address which subsidizes our meat and energy providers. Hundreds of billions if not trillions of dollars are being soaked up by our environment for which the polluters don’t a dime to correct. We need to tax the CAFOs who pollute our water so that the price of producing cheap meat is more accurately reflected in their price to fast food operators and grocery store chains.

    Sorry, but those $1.00 Value Meals are MUCH more expensive than a dollar. Once again, we privatize profits while socializing the costs. We could go on down the line with every single industry.

    Stopping Bezos Act is like deciding where to place one band-aid on a patient suffering from multiple stab wounds.

  12. Bezos must be allowed to abuse his lowly workers. He supports the DNC. His workers are probably deplorable since they are low wage earners. Low wage earners are losers and deserve their hardship.

    VOTE BLUE!!! KEEP THINGS THE SAME!!!

  13. Bernie has the right idea but Sheila is right on with her askance at implementation. As my fellow commentators know, I constantly rant about wage inequality, and if we had had wage equality in tandem with the Dow (which we had beginning with FDR and until Reagan) the median wage now would be just short of $24 per hour, so I have an idea. Compromise where the wage should be and settle for a $20 per hour minimum wage (to play catch up from where we have been and still are since 2009 at a minimum poverty-enhancing wage of $7.25 an hour) AND tie increases in such minimum to increases of the Dow, computed and effective monthly.

    Can’t be done? Will drive businesses into bankruptcy? Some will fail, of course, but these are likely the ones on taxpayer welfare whose business plans depend upon such largesse, as in, why should you and I pay for food stamps for WalMart employees while Sam’s devisees have more wealth than the lower 40 percent of Americans? Corporations don’t create jobs; aggregate demand does, and when you think WalMart’s trademarked statement of “always low prices” has any validity, consider that the retail price you pay for their Chinese goods is only a down payment. You are paying hidden costs in varying amounts that go straight to the stock options of corporate executives and dividends and capital gains opportunities to their shareholders, who are laughing at us dummies all the way to the banks which are, in turn, “too big to fail.” This is not capitalism; it’s theft. Let’s legislate for people and let the corporations either come up with business plans that work in this new wage environment or flee to Chapter 11, merger or go under, just as hundreds of thousands of their employees go to Chapter 7s each year, 41 percent because of medical bills they cannot pay.

    Currently we have a “system” where taxpayers support corporate success; let’s reverse that process, starting with an end to wage inequality and then going from there on to statutory requirements of workers on corporate boards etc., all of which would greatly stimulate aggregate demand, the sole arbiter of economic growth. Such forward looking aids to economic growth will not be accomplished by the Republican Party, which has long since been bought out by the rich and corporate class and, more specifically, libertarian interests such as the Kochs, Mercers and others. Let’s bring this charade to a screeching halt this November.

  14. “The Liberal” is not obviously.

    More and more Republicans are showing up wanting to support the status quo by debasing all possible changes to it but because no problem has been solved since 2016 have nothing positive to even mention.

  15. I’m not so sure Bezos or Amazon is the problem company. Amazon pays well
    it is the Walmart’s, Finish Line and a lot of the 3PL’s (distribution centers) who are part of the problem. Many of the distribution companies and 3PL’s pay VERY poorly. Also a lot of these manufacturering companies don’t pay crap either for assembler and their warehouse staffs.

  16. I will accept that the Stop BEZOS Act isn’t the best solution.
    However, let me make two points here.

    First, yesterday we complained about people who only wanted the perfect and wouldn’t vote otherwise. Today, only the perfect solution counts. A curious reversal.

    In the recent past, there have either been no solutions proposed because we were worried about unintended consequences or something, or we had the Obama procedure, namely, ignore all ideas that are left of center and begin with a “conservative” (now called centrist) idea and compromise it away. If real solutions had been proposed, Bernie’s ideas wouldn’t have carried as much weight, nor seemed so “far out left”. Remember, Democratic Socialism is just New Deal 2.0.

    Why not start with this act and negotiate it into something that doesn’t look like it came from the American Enterprise Institute, protector of the rich? ALL ideas should be on the table if we want to find the best answer, and if we know any compromise will move the solution to the right, I, for one, would prefer to start the negotiations a little more to the left. We might reach a better compromise bill that way. Why should liberals/progressives always be told to shut up and let the “adults” pick the solutions.

    My second thought – even though Ms. Rampell suggested that an increase in the minimum wage (pretty much fait accompli in ever increasing parts of the country), her arguments of doom and gloom if the Stop BEZOS Act passes really do echo the arguments that have usually been mounted against an increase in the minimum wage. Sorry, she is not that convincing.

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