Wednesday, January 1, 2014

How to Reduce Income Inequality; It's Not About the Minimum Wage

From my blogs Government Causes Income Inequality and The Real Reasons for Income Inequality, I maintain that government policies cause income inequality.  It has nothing to do with the minimum wage.

We need more and higher quality jobs in this country---and that won't happen by playing "games" with minimum wage laws.  That is equivalent to re-arranging the chairs on the deck of the Titanic.  The US has already hit the iceberg and we're taking water!  Wake up!

If you want to reduce income inequality, the answer is not to raise the minimum wage as our small-minded leaders seem to think.  The answer is to radically reform the Federal Reserve and change various Federal gov't policies, rules, laws and tax codes that end up creating unfair advantages for the wealthy and hurt the poor. We also need a sustained policy to bring back the lost manufacturing jobs which will help this country more than anything else.
  • Eliminate the mortgage interest deduction for mortgages for well-off taxpayers (at least). This helped cause the last bubble and that bust continues to hurt this country. It might yet cause another bubble/bust.
  • Eliminate the preferred capital gains treatment of housing capital gains.  There is no need to encourage speculation in housing and the "flipping"of housing.  This preferred tax treatment has helped cause the last bubble and bust that continues to hurt this country. It might yet cause another bubble/bust.
  • End the never-ending money printing program at the Federal Reserve putting Trillions of dollars in the hands of the top 0.1%. This is inflating all of the assets preferred by the uber-wealthy and probably creating the next bubble/bust. 
  • End the ZIRP policy (Zero interest rates) now: normalize short-term interest rates to match or exceed current inflation rate (ie.,establish a normal fed funds rate).  This helps mom and pop savers and retirees who are trying to scrap by collecting money on CDs and deposits.
  • Stop the insane policies of the Fed to further increase inflation when it's already near 2%.  This hurts most people and actually helps the top 10% (who can afford inflation hedges).  Their target of 2% will causes prices to double every 36 years.
  • End the dual mandate and reform the Federal Reserve.  Their sole functions should be maintain zero inflation and be lender of last resort.  The Fed should be mandated to maintain zero inflation (or less) by using rule-based methods to control the growth of debt and monetary aggregates to something like 2 or 3% per annum (consistent with the real growth rate of the economy) which will stabilize prices.  Their 2nd mandate should be "lender of last resort" in a financial crisis consistent with it's original purpose.  First thing: the Federal Reserve should NOT be the cause of more financial crises!!!
  • End the insane addiction to the failed Keynesian economics.  Paper money is NOT wealth. Increasing paper money does not increase wealth.  Endless Federal deficits hurt the economy, causes interminable trade deficits and eventually hurts the bottom 90%.  It causes inflation, debases the dollar, and hurts the least well-off while helping the wealthy who have 'hedges.'  Imagine people being able to afford housing, medical care and get an education! This dream is being ruined by your government.
  • Balance the Federal Government Budget and keep it balanced.  Excessive government spending inflates medical and education costs.  Austerity on THE GOVERNMENT itself will be healthy for the real economy and eventually help ordinary people. 
  • End ObamaCare and TRULY reform the healthcare marketplaceACA will end badly as it doubles down on a broken system.  Fix the system instead and focus on reducing medical costs.  ObamaCare is already causing huge distortions in health insurance pricing and is too coercive: doctors are fleeing, hospitals are fleeing and most ordinary people would like to flee if they had a choice.   Replace ObamaCare, Reform Health Insurance and Curb Medical Costs
  • Reform Corporate Tax Codes and Bring Back Manufacturing Jobs from Asia!  High corporate tax rates in the US, the highest in the world, creates an incentive for companies to locate and/or stay overseas.  We have the highest corporate tax rates in the world.  The rest of the world has been lowering their rates and attract our companies!  It's worked (to our disadvantage)!  Change it!  See Businesses Export Jobs Because of High US Corporate Taxes.
Vote the progressive idiots out of office.  This country needs sound money, sane monetary authorities, and sound federal budgeting including balanced budgets.  Assuming that we can ever get intelligent leader, then truly reform health insurance and government spending per my blog "Replace ObamaCare, Reform Health Insurance and Curb Medical Costs."

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