Victimization + Demonization + Emotion = Democrat Votes

Posted by PITHOCRATES - February 6th, 2014

Politics 101

Politicians Lie because they will Lose Elections if they Tell the Truth

Politicians lie.  Why?  Simple.  Politicians lie when telling the truth won’t help them win an election.

When President Obama lied the Lie of the Year he lied for a reason.  People didn’t like the Affordable Care Act (aka Obamacare).  They did not want national health care.  And they believed that Obamacare would put them onto the path to national health care.  To allay their concerns President Obama said, “If you like your health care plan, you can keep it.  Period.”  The statement that became the Lie of the Year.  Because a lot of people lost the health care they had and wanted to keep.  In fact, they wrote the Affordable Care Act to make sure that would happen.  As they need to herd as many of the young and healthy into Obamacare as possible to make the thing work.  People who would pay into the program while not collecting any benefits.  So they could subsidize the old and sick.

Had the president told the people that they would lose the health care plan that they liked and wanted to keep there would have been a lot more opposition to the Affordable Care Act.  With constituents pressuring their representatives to vote against it or they would vote against them in the next election.  This is why politicians lie when they do things against the will of the people.  Because they will lose elections if they tell the truth.

Having Victims is No Good unless you have someone to Blame for their Victimization

Democrats lie a lot.  Because their policies have a long history of failure.  Especially their economic policies.  And that’s because Democrats embrace Keynesian economics with a religious fervor.  Despite Keynesian economics giving us the Great Depression, the stagflation of the Seventies, the dot-com bubble recession and the Great Recession.  No, these Keynesian disasters don’t give Democrats any reason to doubt their faith.   Because at the heart of Keynesian economics is an activist government in the private sector economy.

Democrats like to fault capitalism.  Saying unfettered capitalism is unfair.  Unfeeling.  Cruel.  And just plain mean.  So they involve themselves in the private sector economy to even the playing field.  To unrig the rigged game.  To remove the unfair, unfeeling, cruel and mean elements of unfettered capitalism.  By fettering capitalism.  And the first thing they do is identify victims of capitalism.  A secretary who pays a higher tax rate than her boss.  Warren Buffet.  Minimum wage workers who can’t earn a living wage.  And, of course, people who live in fear of losing everything because they don’t have health insurance.

Of course having victims is no good unless you have someone to blame for their victimization.  Such as the 1% who are extremely wealthy but don’t pay their ‘fair share’ of taxes.  Even though they pay over a third of all federal income taxes while totaling only 1% of the population.  Greedy business owners who’d rather pocket millions while depriving their workers from earning a living wage.  Even though most business owners are not millionaires and probably could earn more by working for someone else.  And evil corporations who force people to work against their will or lose their health insurance and other benefits.  Even though people tend to work where they receive the best pay and benefit package their skill and experience can get.  And will leave one job in a heartbeat for a job with a better pay and benefit package elsewhere.

The Affordable Care Act is an Economic Model that cannot deliver on its Promise

Once they have their victims and their villains all they need to do is pull on the heartstrings.  To generate sympathy for the victims.  While getting these same people angry at the villains.  Which they do by avoiding facts.  Instead, they tune in to people’s emotions.   Victims are sad.  And we should do something to help them from their victimization.  Villains are bad.  And we should do something to punish them.  So they demonize these villains.  Getting the people to believe that punishing them, say, with higher taxes will somehow improve their lives.  Which it won’t.  In fact, they could take all the wealth away from the 1% and imprison them but it won’t make a difference in the lives of the 99%.  For if the 1% are no longer creating wealth they would be unable to pay over a third of all federal income taxes anymore.  Requiring higher taxes on the 99%.  Or a drastic cutting of government benefits.

If people understood sound economic principles (and not the Keynesian nonsense our power-hungry politicians favor) they would not be so emotionally manipulated.  In fact, if people had a solid understanding of history they would never vote for anyone attacking capitalism.  As unfettered capitalism is the only economic system that allows people without privilege to be as successful as anyone else in the country.  Whereas the most anti-capitalistic countries have had the greatest poverty and human rights abuses.  Such as the former Soviet Union, the People’s Republic of China, the former Eastern Bloc countries, North Korea, Cambodia, Cuba, etc.  So for emotional manipulation to work they need a not so educated public. Which is why the Democrats control public education and our universities.  And champion pre-K.  To get control of our kids as soon as possible.  To dumb them down.  And program them into good Democrat voters.

This is the formula the Democrats use to win elections.  Victimization + Demonization + Emotion = Democrat Votes.  For they can’t win by telling the truth.  Or having informed voters.  So they use their control of our educational system to make more emotionally pliable voters.  Ones that are easier to lie to.  And that they can sway with fiery rhetoric.  Which is why we have Obamacare today.  Because the Affordable Care Act is an economic model that cannot deliver on its promise.  To provide a higher quality health care to more people while costing less.  Which is impossible.  Just as it is impossible to draw a square circle.  It’s either a square.  Or a circle.  It cannot be both.  Ditto for the promise of Obamacare.  Which is why to get people to believe that it was possible to give them more for less required telling a lie so big that it was voted the Lie of the Year.

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Minimum Wage, Obamacare and Unintended Consequences

Posted by PITHOCRATES - February 3rd, 2014

Economics 101

The Affordable Care Act greatly increased the Cost of Unskilled and Inexperienced Workers

The Affordable Care Act has changed the employment landscape.  In particular it changed a lot of people from full-time employees to part-time employees.  Especially at entry-level jobs.  Or minimum wage jobs.  Jobs that may be physically demanding but require minimum skill or experience.  Making them ideal for unskilled and inexperienced teenagers entering the workforce.

Not everyone, though, is a teenager in these minimum wage, entry-level jobs.  Some adults find themselves in them, too.  Older adults.  Single parents.  Widows.  Widowers.  People whose circumstances have changed.  And who don’t have the skills or experience for other employment.  So they find themselves struggling to get by on their entry-level, minimum wage job.

Then the Affordable Care Act (i.e., Obamacare) made their struggle more difficult.  For it required employers to offer health insurance to anyone working 30 hours or more per week.  Greatly increasing the cost of unskilled and inexperienced teenagers.  And their other entry-level, minimum wage workers.  So they did the only logical thing.  They cut their hours below 30 hours per week.  Shrinking the paychecks of both teenager.  And those who are struggling to live on their minimum wage paychecks.

The Unintended Consequences of Obamacare changed Full-Time Workers to Part-Time

We call it unintended consequences.  When a government program to solve one problem creates another problem.  In an attempt to give people with insufficient income to buy health insurance Obamacare forced their employers to provide health insurance for them.  This caused employers to cut hours for these employees.  To keep the cost of their entry-level, minimum wage workers from rising.  Thus reducing their insufficient income even further.

The rollout of Obamacare did not go well.  In the effort to give people affordable health insurance a lot of people actually lost the health insurance they liked and wanted to keep.  Another unintended consequence.  (Unless the Democrats designed the Affordable Care Act to destroy the private health insurance industry as many believe then things are going exactly as planned as people may soon start demanding that the government step in and provide national health care).  Causing a bit of a problem for the political party that gave us Obamacare.  The Democrats.  In the upcoming midterm elections.

It’s one thing causing people with individual insurance policies to lose their health insurance that may or may not have voted for you.  But to further impoverish the impoverished working those entry-level, minimum wage jobs was another.  For thanks to endless class warfare the Democrats put the impoverished into the Democrat camp.  So they needed to do something to replace the income they lost when Obamacare changed them from full-time to part-time employees.  And chose further class warfare.  By forcing those ‘rich’ employers to pay their entry-level, minimum wage workers a ‘living wage’.  By increasing the federal minimum wage.

Obama wants to Raise the Minimum Wage to replace Earnings lost when Obamacare made Full-Time Workers Part-Time

In the State of the Union address President Obama said he wanted to raise the federal minimum wage to $10.10.  But why $10.10?  The current federal minimum wage is $7.25.  And if you earned that working 40 hours each week for 50 weeks (assuming you take 2 weeks off over the year for personal reasons, holidays and vacations) that comes to $14,500 per year.  Raising the minimum wage to $10.10 brings those annual earnings to $20,200.  Or $5,700 more at the higher wage rate.  It’s a lot of money.  But probably not enough for someone to quit a second job.  For if someone is working 20 hours a week at a second job that would come to an additional $7,250 a year.  If they work 30 hours a week in a second job that would come to an additional $10,875 a year.  And some people have to work 70 hours or more a week to approach a ‘living wage’ when they don’t have the skills or experience for a job that pays more than an entry-level, minimum wage job.  So raising the minimum wage to $10.10 an hour probably won’t solve everyone’s financial woes.  But it will do something else.

If people who were working 40 hours a week went to working only 29 hours a week after Obamacare they would lose 11 hours of pay.  At the current minimum wage that comes to $79.75 less in their paycheck each week.  A significant amount for someone struggling to make it on something less than a ‘living wage’.  But look at what happens when we raise the minimum wage to $10.10 for those 29 hours.  If we multiply the additional $2.85 per hour to those 29 hours that comes to an additional $82.65 a week.  Which is a little more than the $79.75 they lost when Obamacare cut their hours.  So it would appear that the new push to raise the minimum wage to $10.10 is to put the money the Obama administration took out of these workers’ paychecks back into their paychecks before the fall midterm elections.  So they still won’t be angry and vote Republican because of what the Democrats and their Affordable Care Act did to their paychecks.

They want to sound compassionate to those with insufficient income by wanting to raise the minimum wage to replace what they took away from them with Obamacare.  To give these people a ‘living wage’.  For the current minimum wage is actually worth about 20% less than it was during the Reagan administration.  When it was $3.35.  Wait a minute, you say.  How can $7.25 be worth less than $3.35?  Because of the Democrats’ embrace of Keynesian economics.  The government wants to print money to spend.  To provide economic activity when the private sector is not.  And when President Nixon decoupled the dollar from gold in 1971 they ramped up those printing presses.  And have been depreciating the dollar ever since.  Because they made the dollar worth less and less over the years the purchasing power of the federal minimum wage fell.  Even when people were earning more dollars.  And raising the minimum wage won’t address this problem.  Only voting the Keynesians out of office will.

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The Minimum Wage isn’t a Living Wage because the Federal Reserve devalued the Dollar

Posted by PITHOCRATES - February 1st, 2014

Week in Review

The Democrats like to talk about income inequality.  Which they say isn’t good.  So they want to raise the minimum wage.  To reduce income inequality.  Even President Obama said during the State of the Union address that he wanted to raise the minimum wage.  To $10.10.  To give them a living wage.  Because they can’t make it on the current minimum wage.  Of course, there’s a reason for this.   And it’s not because of the wage rate.  It’s about the depreciation of the dollar (see Hiking wages with worthless dollars by Seth Lipsky posted 1/29/2014 on the New York Post).

The most startling thing about President Obama’s State of the Union message is what he failed to say about the minimum wage. “Today the federal minimum wage is worth about 20 percent less than it was when Ronald Reagan first stood here,” he declared Tuesday night.

But wait, wasn’t the minimum wage $3.35 an hour throughout Reagan’s two terms? Isn’t it now $7.25 an hour? How does that add up to a drop in value by 20 percent? The president glided right past that point. Maybe he thought nobody would notice.

It strikes me that the president owed the country more of an explanation. After all, he spoke exactly on the 100th anniversary of the start of the Federal Reserve System. The central bank is about to begin its second century. Obama made no reference to any of that history.

Yet a century ago Congress refused to agree to a Federal Reserve until there was a promise about the value of the dollar: It insisted on having the Federal Reserve Act state that it would not lead to an end of the convertibility of the dollar into gold.

That legislative promise came to an end in a series of defaults that started in the Great Depression and ended under President Richard Nixon. By the mid-1970s, America had moved to a fiat currency, meaning a dollar that is not redeemable by law in anything of value. Only what one critic calls “irredeemable electronic paper ticket money.”

The minimum-wage crisis is a sign that fiat money is not working. It’s not, after all, that the nominal minimum wage has failed to go up (it’s been raised seven times since Reagan). It’s that the value of the dollar has collapsed. Today it has a value of only a 1,250th of an ounce of gold, a staggering plunge from an 853rd of an ounce on the day Obama took office.

Back in 1907 some people tried to manipulate the stock price of a copper company and long story short the Knickerbocker Trust Company collapsed and caused a panic in the banking system.  Enter the Federal Reserve System (the Fed).  A central bank that can inject liquidity during a banking crisis.  And forever eliminate these banking crises.  Or so went the theory.  But central banks have a nasty habit of devaluing their currency.  Because they can print money.  Fiat currency.  Well, the deal with the Fed was that they would not succumb to the central bank disease.  But, alas, they did.  Which is why minimum wage workers have less purchasing power today than they did during the Reagan administration.  Even though they are paid more dollars.

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Hollywood to hurt Middle Class and export more American Jobs

Posted by PITHOCRATES - December 15th, 2013

Week in Review

James Cameron is going to make 3 Avatar sequels.  Three big block buster movies.  Generating a lot of economic activity.  Something the United States can generate a lot of tax revenue from.  To fund all those programs that liberals love so much.  Especially Hollywood liberals.  For those in the movie industry tend to be far left.  Cameron himself was applying for U.S. citizenship.  But when Republican George W. Bush won reelection in 2004 he chose to remain a Canadian.  You just can’t get much further left than that.  But how can you fault him?  Just look at all the taxable income he will create for the IRS with those three Avatar sequels (see James Cameron says he will shoot 3 ‘Avatar’ sequels in New Zealand by the Associated Press posted 12/15/2013 on CP24).

Director James Cameron says he plans to make three sequels to his 2009 sci-fi blockbuster movie “Avatar” in New Zealand…

Cameron says he plans to complete principal shooting on the three movies at one time, perhaps over a period of about nine months.

New Zealand’s government has agreed to a 25 per cent financial rebate. Cameron didn’t disclose an exact budget although he says he expects economies of scale will help the three movies together cost less than $1 billion.

Guess there will be no taxable income generated from filming these movies.  Forcing the IRS to squeeze more from those who don’t export American jobs.

Filming in New Zealand?  Shooting three movies at one time for economies of scale?  A 25% financial rebate?  Amazing, isn’t it?  The left does everything within their power NOT to use costly union labor or work in locations with costly regulations in the United States.  Yet they champion union labor and costly regulatory policies.  They are all for them.  As long as they can escape their costs by filming in a foreign country.  To satiate their greed.  Putting more money into their pockets instead of paying a living wage to an American.

And it’s the Republicans who have a war on the middle class?  Go figure.

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A ‘Living’ Wage would probably push Quiznos into Bankruptcy Court

Posted by PITHOCRATES - December 7th, 2013

Week in Review

Minimum wage workers just picketed for a ‘living’ wage.  Wanting $15/ hour.  About twice what many are making now.  For they believe that the fast food restaurants they work at are getting rich off of their unskilled labor.  And they want a piece of the profits they’re making.  And they’ll cite the profits of, say, McDonald’s and say they can afford to pay their workers more.  But the thing is, most of those McDonald’s stores are independent franchises.  And the fact that McDonald’s may be making the big bucks it doesn’t mean their franchisees are.

Owning a franchise is a way to own a restaurant without having to spend money on marketing.  And you don’t have to create a menu.  In fact, when you buy a franchise it pretty much comes with an operating manual.  Something most other restaurants don’t come with.  Which is why restaurants are the number one business to fail.  Because running a restaurant is hard.  Even a franchise (see Crisis Quickens at Quiznos by Julie Jargon, The Wall Street Journal, posted 12/6/2013 on Yahoo! Finance).

The once-booming sandwich chain Quiznos is stumbling two years into a major turnaround effort, prompting the company to seek concessions from creditors owed nearly $600 million.

The Denver-based chain, known formally as QIP Holder LLC, has struggled with store closures and tension with franchisees. It recently missed a payment on a loan, and has been negotiating to restructure some or all of its debt load with creditors, who have hired bankers and lawyers, people familiar with the matter said…

Quiznos…shrank to about 3,000 stores world-wide two years ago, and to around 2,100 today, including roughly 1,500 stores in the U.S., people familiar with the matter said. Hundreds of the U.S. stores are underperforming and could close in the next year, some of these people said…

Franchisees long have complained that Quiznos requires them to buy food and other supplies from a Quiznos subsidiary, which they allege charges more than what they would pay to purchase those goods themselves.

To address franchisees’ concerns, current management decreased costs for food and supplies this summer, a person close to the company said. Quiznos reviews food and supply purchases annually to compare market prices, and shares results with franchisees, this person added.

Current and former franchisees said high costs ate into stores’ profitability, causing many to close. With fewer stores contributing to an advertising fund, the chain had fewer resources to promote new products, hurting sales, which resulted in more store closures, they said.

“It’s a vicious cycle,” said Brian Peticolas, who owns a Quiznos in Alton, Ill. “I almost closed my store five months ago, but I didn’t have any other prospects so I kept the doors open.”

Mr. Peticolas said his store averages $5,000 a week in sales, down from $7,000 a week three years ago. He estimates the restaurant is losing up to $300 a week.

Owning a franchise is a lot easier than trying to open and run your own restaurant.  Because it comes with the menu, the restaurant layout, a list of the equipment you’ll need, an ‘operating manual’ that tells you everything you need to do, etc.  New items are researched and developed.  Then marketed.  And everything you need to sell is shipped to your store.  But this comes at a price.  The franchise fee.  And in the case of Quiznos, owning a costly supply chain.

Pizzerias and sub shops are some of the most competitive businesses.  Most are forced to sell ‘a low price’ because of the great competition.  But when you lower your price you hurt your ability to introduce and market new items.  To get an advantage over your competition.  But if you raise your franchise fee or your food/supply costs to your franchisees you will make it impossible for them to operate at a profit.  Causing store closures.  Which makes it even harder to introduce and market new items.  As the one store owner said, it is a vicious cycle.  That usually ends in bankruptcy court.  Or in an out of court settlement with your creditors.

There is only one thing that can make all of this worse.  Higher wages.  Which will only accelerate franchise closings.  And the trip to bankruptcy court.  Of course the people picketing won’t believe this.  Until the store they work at closes.  Which will most likely happen if they raise the minimum wage to a ‘living’ wage.  Especially at these Quiznos franchises.  Which are struggling to stay out of bankruptcy court.  And will probably lose that struggle.  Even if the minimum wage isn’t raised to a ‘living’ wage.

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Eating Healthy is More Expensive than Eating Fast Food

Posted by PITHOCRATES - December 7th, 2013

Week in Review

Fast food workers recently picketed to raise the minimum wage. To a ‘living’ wage.  Saying they can’t afford to live without a ‘living’ wage.  Even though they have been ‘living’ on the wages they have now.  For however low their wages may be they have been able to put food on the table.  In large part because of fast food.  Because of those low wages.  Making fast food a great value for the money.  Of course if they raised everyone’s wages they would have to raise the price of their food to cover the higher labor cost.  Making fast food less of a value for the money.  Raising the prices such that some families will have no choice but to buy less.  And go hungry more often.

It may not be the healthiest food out there.  But it is the most affordable food out there.  Allowing people to eat until they’re full and then some.  But there are some who want to raise the cost of fast food.  Such as those picketing minimum wage workers.  And Canadians concerned about healthy diets (see Eating healthy adds $2,000 a year to family grocery bill by CBC News posted 12/5/2013 on CBC).

A family on a healthy diet can expect to pay $2,000 more a year for food than one having less nutritious meals, say researchers who recommend that the cost gap be closed…

“Our results indicate that lowering the price of healthier diet patterns — on average about $1.50/day more expensive — should be a goal of public health and policy efforts, and some studies suggest that this intervention can indeed reduce consumption of unhealthy foods,” Dariush Mozaffarian, the study’s senior author and a professor at the Harvard School of Public Health and his co-authors concluded.

Eating a healthier diet rich in fruits, vegetables, fish, and nuts would increase food costs for one person by about $550 a year, the researchers said. Diets rich in processed foods, meats and refined grains were considered unhealthy…

Previously, Mozaffarian’s team suggested taxing less healthy foods together with subsidies for healthier foods would balance price differences.

Does anyone see the failed logic in this taxing scheme?  Poorer people tend to eat fast food and richer people tend to eat the healthier fruits, vegetables, fish, and nuts.  So they are advocating raising the taxes on the poorer to make the food of the richer less costly.  In hopes of getting the poorer to eat the food of the richer.  But if they do just who will pay the tax on the bad food to subsidize the good food?  On the one hand the poorest people will pay more for their food.  On the other hand if the taxing scheme works the source of the subsidies will vanish.  Either way this taxing scheme will force the poorer to pay more for their food.  Or it will simply require higher taxes to replace the lost subsidies.  Which is Canada’s problem in the first place.

Why are people struggling to buy food?  Because of high taxes.  And a weakened economy those higher taxes bring about.  For adding a ‘bad food’ tax on fast food will surely reduce sales.  As is the goal.  But with fewer sales you need fewer people.  So some people will lose their job.

If you want people to eat healthier just let them get a decent job so they can afford to.  Cut taxes and regulations to spur economic activity.  Let the demand for workers increase.  Which will increase wages.  And make it easier for everyone to put healthier fruits, vegetables, fish, and nuts on the table.

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There is Great Income Inequality on the Set of the Big Bang Theory

Posted by PITHOCRATES - September 21st, 2013

Week in Review

It is hard to explain economic fundamentals to the public.  To explain how free market capitalism made this country great.  And how supply and demand set prices.  How unskilled workers are in less demand than highly skilled workers.  So highly skilled people earn more money than unskilled workers.  Which is why doctors earn more money than those working in fast-food.  Because there always seems to be a shortage of doctors.  While there is no shortage of minimum wage jobs.  So doctors are worth more because they are in greater demand.

Those on the left want a living wage for everyone.  Regardless of their skill level.  Unions are trying to unionize fast-food workers and Wal-Mart employees.  So they can force these businesses to pay them more than the market price for their labor.  As determined by the laws of supply and demand.  Like they do everywhere else.  Computer programmers were in high demand during the dot-com bubble.  Raising the salary of computer programmers.  And people went to college to learn how to be computer programmers to get those high salaries.

But try to explain this to the layperson when the left demonizes Republicans.  Calls them greedy.  Saying they want to take food away from children and the poor.  And throw Grandma off the cliff.  That they’re in the pockets of the big, evil corporations.  And that unfettered capitalism is corrupt, unfair and just plain mean.  What makes it especially difficult to explain these economic fundamentals is that the left controls the public schools and our universities and colleges.  And the entertainment industry.  So they’re teaching our children to hate free market capitalism.  And Republicans.  While the entertainment industry mocks and ridicules anyone who tries to advance sound economic policies instead of expanding the welfare state.  Instead they preach egalitarianism.  Where everyone should get a living wage regardless of their skill level.  And where we treat people fairly and with dignity.  Transferring and distributing wealth fairly.  From those according to ability to those according to need.

It sounds nice.  Caring.  And kind.  Despite every country that has ever tried that became a horrible place to live.  For that’s what they did in the former Soviet Union.  The People’s Republic of China.  The former East Germany.  North Korea.  Cuba.  Nations that had to use a brutally oppressive police state to prevent their people from escaping the kind of egalitarianism the left is constantly trying to bring to the United States.

Perhaps the most frustrating thing in trying to teach economic fundamentals to lay people is that their heroes in the entertainment industry are always campaigning for the left.  They attend fundraisers for the left.  Help them win elections.  And they constantly mock and ridicule those on the right.  Despite indulging in some of the most unfettered free market capitalism themselves (see ‘Big Bang Theory’ Stars Seeking Hefty Pay Raises by Lesley Goldberg, The Hollywood Reporter, posted 9/17/2013 on Yahoo! TV).

Sources tell THR that Emmy winner Parsons (Sheldon), Galecki (Leonard) and Cuoco (Penny) will negotiate together — as they did in 2010 — and are looking for a considerable bump in pay from their current deal. According to a TV Guide Magazine report, the trio currently earns $325,000 per episode and may seek up to $1 million an episode…

The new deals for Bialik and Rauch, who joined the series midway through its run and were promoted from recurring to regulars, will see their salary jump from $20,000-$30,000/episode to the $60,000 ballpark, with increases each year taking them to $100,000 per episode by the end of their new contracts.

One million an episode versus $100,000 an episode?  Wow.  Talk about your income disparity.  There is no egalitarianism on the set of the Big Bang Theory.  There’s no fairness.  And just think how much food this could have bought for the children.  And the poor.  If these people were corporate officers they would be hated and despised for their greed.  Especially when the median household income (the income that supports an entire family) has been languishing around $53,000.  And here are actors making more than that each episode they film.  Is that fair?  When others have so little?

Yes, it is unfair.  But is it wrong?  No.  This is free market capitalism.  This is the top-rated comedy on television.  It has great writing.  And great characters.  Which the writers created.  But if you watch an early episode and then a later one you will see how these actors have evolved these characters.  In the first episodes Penny was the pretty neighbor Leonard was smitten with.  But watch her now.  And all the things she doesn’t say.  Her body language and facial expressions.  The little nuances that have transformed Penny into a real life person we look forward to seeing every week.  Kaley Cuoco has made Penny into what she is today.  As Jim Parsons has made Sheldon into what he is.  And Johnny Galecki has made Leonard into what he is.  The rest of the cast is probably the best ever fielded on a sitcom.  But it is the interactions they have with these three that make this show the number one comedy on television.

So, no, we don’t begrudge them from getting these unfair contracts.  More power to them to get as much as they can get.  Sure, it’s unfair to the actors that came before them.  When things were very egalitarian.  Where the actors made far less than they do today.  Even if that show went on forever in syndication.  Like Gilligan’s Island.  Making a lot of money for the owners of that show.  But not the actors.  No, they didn’t get a dime from that syndication.  Worse, none of them made close to a million dollars an episode.  They didn’t get paid a lot.  But everyone made closer to what everyone else made.  Because back then actors were more equal.  Unlike today.  Where there is great income inequality between actors.

So there is nothing wrong with Parsons, Galecki and Cuoco making these huge sums of money.  Or anyone else in the entertainment community.  It would be nice, though, if this community wasn’t publically against the very thing that they benefit so handsomely from.  Free market capitalism.  Which has been very good to them.  As it is very good to everyone.  But yet the entertainment community generally endorses the left.  And attacks the right.  Which helps the left raise taxes and burden business with more costly regulations.  Things that hurt the economy.  And keeps the median household income from rising.  Harming the middle class.  But making no impact on these superrich.  This is the problem we have with the entertainment community.  They’re hogging all the free market capitalism for themselves.  While forcing us to live in the miserable social democracy they helped to create with their endorsement of the left.

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FT186: “Liberals are so bad at economics because they had no one in their lives to undo the bad education they got.” —Old Pithy

Posted by PITHOCRATES - September 6th, 2013

Fundamental Truth

Minimum-Wage Workers in Fast-Food and at Wal-Mart want a Living Wage for their Minimum-Wage Jobs

Wal-Mart workers are now demanding a living wage.  (Or people hired to protest the company the left loves to attack.)  Awhile back it was the fast-food workers demanding a doubling of the minimum wage.  So they could have a living wage.  Because they can’t raise their families with a minimum wage job.  So they want a pay rate beyond the pay rate of a minimum wage job.

So how much is earning $15/hour?  Well, if you work full-time and get the usual (2 weeks of vacation and holiday pay) that comes to 2080 (40 hours/week X 52 weeks/year) payroll hours a year.  At $15/hour that comes to $31,200 annually.  Which is the ‘living wage’ the fast-food workers want.  And no wonder.  According to the Bureau of Labor Statistics (see May 2012 National Occupational Employment and Wage Estimates) here are some other jobs that pay around $31,200 annually with what they do as noted by the Bureau of Labor Statistics:

Medical Assistants (Perform administrative and certain clinical duties under the direction of a physician. Administrative duties may include scheduling appointments, maintaining medical records, billing, and coding information for insurance purposes. Clinical duties may include taking and recording vital signs and medical histories, preparing patients for examination, drawing blood, and administering medications as directed by physician).  Medical Equipment Preparers (Prepare, sterilize, install, or clean laboratory or healthcare equipment. May perform routine laboratory tasks and operate or inspect equipment).  Ophthalmic Laboratory Technicians (Cut, grind, and polish eyeglasses, contact lenses, or other precision optical elements. Assemble and mount lenses into frames or process other optical elements. Includes precision lens polishers or grinders, centerer-edgers, and lens mounters).  Pesticide Handlers, Sprayers, and Applicators, Vegetation (Mix or apply pesticides, herbicides, fungicides, or insecticides through sprays, dusts, vapors, soil incorporation, or chemical application on trees, shrubs, lawns, or botanical crops. Usually requires specific training and State or Federal certification).  Pharmacy Technicians (Prepare medications under the direction of a pharmacist. May measure, mix, count out, label, and record amounts and dosages of medications according to prescription orders).  Phlebotomists (Draw blood for tests, transfusions, donations, or research. May explain the procedure to patients and assist in the recovery of patients with adverse reactions).  And Substitute Teachers (Teach students in a public or private school when the regular teacher is unavailable).

Some have worked Two or More Fast-Food/Retail Jobs so they could get the Education and Skills for a Higher-Paying Job

These are not entry-level jobs.  You just can’t walk in when you’re still a high school student, fill out an application and expect to get hired in any of these jobs.  They all take training/education beyond high school.  And require a license or certification.  Which requires an investment of time and money to get.  Usually including night school at the least.  And more often at least 2 years of college.  None of which is required for a minimum wage job.

So it’s no wonder people with minimum wage jobs want a pay rate that is beyond their skill-set.  Who wouldn’t?  Wouldn’t you want to get that higher pay without putting in that schooling?  That investment of time and money?  Things you probably can’t even do if you’re raising a family on a minimum wage job.  Or two.  But does that mean we should just pay these people more?  Would that be fair to the Medical Assistants, Medical Equipment Preparers, Ophthalmic Laboratory Technicians, Pesticide Handlers, Sprayers, and Applicators, Vegetation, Pharmacy Technicians, Phlebotomists and Substitute Teachers?

No.  It wouldn’t be fair to them.  For they would have made great sacrifices in their life to get those better paying jobs.  Because that is how you get a better-paying job.  In fact, some may have worked two or more fast-food/retail (such as Wal-Mart) jobs so they could get the education and skills these jobs required.  A lot of people working in fast-food/retail today may be doing the same thing.  For fast-food and retail offer two great things that allow these people to acquire these skills.  They will hire people without any skills (i.e., entry-level workers).  And fast-food and retail have many working schedules available.  Allowing single-parents to work when they have other arrangements for their children (school, daycare, parents, etc.).

The Hippies of the Sixties became Professors and then Moved on to Write the Curriculum

Instead of protesting fast-food and Wal-Mart we should be happy that at least someone in this horrible economy is actually hiring people when so few others are.  As President Obama’s economic policies have made such an anti-business environment.  The economy is so bad that just this past month another 516,000 have left the labor force (see Table A-1. Employment status of the civilian population by sex and age).  Which is the only reason why the unemployment rate fell.  Because of discouraged workers who couldn’t find a job just quit looking for a job.  But the government puts a positive spin on this by lauding the 169,000 new jobs the economy created.  Saying it’s further proof that President Obama’s economic policies are working.  Despite 516,000 who quit looking for jobs that are just not there.

If people are unhappy with their low-paying jobs in fast-food and retail they should be more upset about this economic destruction being waged by the Obama administration.  Which is the reason why fast-food and retail are the only businesses hiring today.  But there is no outrage.  Why?  Because most don’t understand economics.  And there is a reason why most people don’t.  It’s because of our education system.  Which the left has taken over.  Who write a curriculum that teaches students that capitalism and profits are unfair and bad while government and income redistribution so the rich pay their fair share is good.  And just.

A professor at Michigan State is the latest professor to illustrate the indoctrination of our young going on at our public schools and colleges.  Parents had to deal with their kids coming home from high school to hear how they were killing the polar bears because they drive cars.  But when these kids go to college this is the kind of stuff they encounter on a daily basis.  And he’s not the worst offender.  The worst offenders are those who don’t say outrageous things.  But who do it more subtly.  A smile, a smirk, a condescending remark—things that tell a young impressionable mind out from under their parents’ control for the first time that their parents were wrong.  Unless their parents were liberal.  They will believe almost anything these professors say.  Because they are very smart and must know far more than their parents.  And they treat these kids like adults.  And there is nothing that high school/college kids want more.  To be grown up.  It’s why they smoke cigarettes.  And have sex.  Because that’s what grownups do.

So is it any wonder that people have a poor understanding of economics?  Ever since the hippies of the Sixties couldn’t change the country from the outside they became professors to change it from the inside.  And then moved on to write the curriculum.  These people who hated capitalism.  And admired communism.  Which is why so many of them lived in communes in the Sixties.  These are the people writing the curriculum for our children.  Making sure our education system creates like-minded people.  To keep them voting Democrat until wisdom and experience opens their eyes.  And undoes the bad education they got.  This is why people think that it’s fair to pay minimum wage workers the same as Medical Assistants, Medical Equipment Preparers, Ophthalmic Laboratory Technicians, Pesticide Handlers, Sprayers, and Applicators, Vegetation, Pharmacy Technicians, Phlebotomists and Substitute Teachers.  Just to see how pervasive this indoctrination of our children is—and why people keep voting for those who keep trying the failed economic policies of the past—we should put a webcam in every classroom and lecture hall.  So parents—and the rest of America—can see the liberal dogma being fed to the young.  Making them think, and vote, the way they do.  Then we’ll know whether these are isolated incidences.  Or that it is in fact pervasive.  Explaining why so many people today have no understanding of economics.  That minimum-wage jobs are entry-level jobs.  And that if you want to raise a family you probably shouldn’t be voting Democrat.  Whose policies are making the only available jobs in this horrible economy those entry-level jobs.

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Ashton Kutcher didn’t ask for a ‘Living Wage’ when he was Working Entry-Level Jobs

Posted by PITHOCRATES - August 18th, 2013

Week in Review

Ashton Kutcher made a speech the other day everyone is talking about.  Conservatives.  And liberals.  It’s become very political.  Especially for this part (see Ashton Kutcher Channels Steve Jobs In The Best ‘Teen Choice Awards’ Acceptance Speech Ever by Kyle Russell posted 8/12/2013 on Business Insider).

“I believe that opportunity looks a lot like work,” he began. He goes on to describe his first jobs: helping his dad carry shingles to the roof, washing dishes at a restaurant, working in a grocery store deli, and sweeping in a factory.

I never had a job in my life that I was better than. I was always just lucky to have a job. Every job I had was a stepping stone to my next job and I never quit my job before I had my next job.”

Could the repeating of the word ‘job’ have anything to do with his new movie “Jobs?”  Perhaps.  It’s something Greg Gutfeld pointed out on one of his umpteen television shows.  I think this comment was from The Five.  Funny guy.  And poignant.  In a warm, festering canker-sore of a way.  (Yes, you respect him.  Then you insult him).  One of my favorite libertarians.  But I digress.

Some on the left who reported this left out those earlier jobs he had.  Suggesting to the unaware reader he was talking about his acting jobs only.  And not those minimum wage jobs he was “lucky to have.”  That were merely a stepping stone to his next job.  These entry-level jobs gave him important work skills for his next job.  That’s what these jobs do.  They are not supposed to provide for a family of four.

The fast-food workers are striking to double their pay.  So they can remain in these entry-level jobs forever.  Which is not the point of these jobs.  These jobs are for kids entering the workforce.  Like Ashton Kutcher when he was a kid.  If they are unhappy they aren’t earning a ‘living wage’ in an entry level job then they should complain about the economic policies of the Obama administration that has left them behind in an entry-level job.

Anti-business policies like Obamacare have frozen new hiring.  And pushed people from full-time to part-time.  Or out of a job completely.  Leaving only entry-level jobs for many.  Who work one or two to replace the better and higher paying job the anti-business policies of the Obama administration destroyed.  This is what these people should be fighting for.  Repealing Obamacare.  And undoing all of President Obama’s anti-business policies that have left so many people working in entry-level jobs because they’re the only jobs available in the Obama economy.

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McDonald’s 2012 Annual Report

Posted by PITHOCRATES - August 6th, 2013

History 101

The Benefit of a McDonald’s Franchise is getting the Benefit of their Years of Building their Brand

Recently a late-night comedy show attacked McDonald’s for being greedy.  Because they don’t pay their minimum wage workers a living wage.  Because what were once entry level jobs are now the primary support for some families.  And why have entry level jobs come to support families?  Because the anti-business policies of the current administration have destroyed better-paying jobs.  But they don’t attack that on late-night television.  They attack a company actually providing jobs in a jobless economy.

Today McDonald’s is huge.  You can find them pretty much anywhere in the world.  Which can be a welcome site for a weary traveler.  For they know they can walk into a McDonald’s wherever they are and have the comfort of a meal exactly like that at home.  Which is pretty amazing if you think about it.  And why McDonald’s is so successful.  The sight of those Golden Arches can attract a foreigner in a strange land or a construction worker on a new project in a distant city.  They know exactly what they can get at that McDonald’s.  What it will taste like.  And what it will cost.  Even if they’ve never been in that McDonald’s before.

This is because McDonald’s has very successfully built their brand.  Which is one of those intangible things.  It has great value.  But you can’t physically touch it.  Those who own a McDonald’s franchise can enjoy a thriving business.  From day one.  Without doing any marketing to get people to walk into their restaurant.  They don’t have to.  Because McDonald’s has already done it.  And continues to do it.  This is the benefit of the franchise.  You get the benefit of all those years of hard work McDonald’s did to build their brand by simply paying a franchise fee (see Restaurants and Franchises posted 8/5/2013 on Pithocrates).  It’s not cheap.   But it’s such a fair deal for both franchiser and franchisee that McDonald’s had 27,882 franchised stores in 2012 (see McDonald’s 2012 Annual Report, page 11).

Owning a McDonald’s Franchise allows you to own a Restaurant that has been Successfully in Business for 72 Years

In addition to the intangible value of the brand the franchise fee also includes rent.  For McDonald’s “owns the land and building or secures long-term leases” for the franchisee’s store (see McDonald’s 2012 Annual Report, page 11).  While the franchise needs to foot the bill for the “equipment, signs, seating and décor.”  This makes sure all stores are modern and up to date and uniform.  Helping to maintain that comfortable familiarity for the customers.  While splitting the capital costs between the franchisee and franchiser.  So both parties have a major investment in the business.  And each shares in the profits of the business.  Perhaps the best of the deal for the franchisee is getting a mentor.  And a detailed operating manual telling them everything they need to know and do.

Owning a McDonald’s franchise is costly.  But you get to step into a restaurant that has been successfully in business for 72 years.  Give or take.  Considering that half of all restaurants fail within the first five years of business this is a HUGE benefit for the franchisee.  And something well worth the franchise fee.  As evidenced by 27,882 franchised stores in 2012.  So what is that franchise fee?  And how much money does the franchisee get to keep after paying the franchise fee?

Well, if you do a little number crunching with the financials included in the 2012 annual report you can get an approximate number.  McDonald’s also has stores they own and operate.  In 2012 they had 6,598 company-owned stores.  The average per store revenue was $1,358,594 (calculated by dividing the total revenue from the company-owned stores by the number of company-owned stores).  A similar calculation gives an approximate $667,205 franchise fee per franchised store.  Subtracting the typical franchisee fee from the typical store revenue (assuming all stores have the same average revenue as the company-owned stores) gives the franchisee an annual income of $691,389.  From this income the franchisee has to pay for food, labor and overhead.  And whatever is left over is profit.

High School Kids and College Students work at McDonald’s because they need no prior Restaurant Experience

The rule of thumb in restaurants is that costs are broken down into thirds.  One third is food cost.  One third is labor cost.  And one third is overhead and profit.  So if we divide that $691,389 by 3 we get an annual food cost per franchised store of $230,463.  Ditto for labor.  And overhead (gas, electric, water, insurances, taxes, licenses, fees, waste disposal, light bulbs, toilet paper, soap, garbage bags, etc.) and profit.  Let’s look at the labor cost more closely.  To see if McDonald’s is greedy when it comes to paying their employees.

The benefit of owning a franchise is that it comes with very explicit instructions.  A McDonald’s distributor delivers prepared food ready for the grill and fryer.  As delicious as it is, though, it doesn’t take a highly skilled chef to prepare it.  As the franchisee operating manual has it down to a science.  Which is why high school kids and college students work at McDonald’s.  They need no prior restaurant experience as it is an entry level job.  Typically their first job.  Where they learn what it’s like entering the workforce.  The importance of being on time.  Following instructions.  Being responsible.  Skills that they will use in later jobs.  Which most do.  As there is a high turnover of employees at McDonald’s as there is for all fast food.  Because these are entry level jobs for unskilled workers.  Who learn the skills they need on the job.  So let’s assume a restaurant that is open 24 hours a day, 7 days a week.  Assuming an hourly rate of $8.50 and an overhead of 40% for direct labor costs (workers’ compensation insurance, unemployment taxes, health insurance, uniforms, training, etc.) the average hourly labor cost comes to $11.90.  Dividing the labor cost of $230,463 by this hourly cost gives us 15,758 annual labor hours.  Or about 53.06 hours per day.  Or 17.69 hours per 8-hour shift.  Giving us an average of 2.21 workers per 8-hour shift.

During the breakfast and lunch rush a typical McDonald’s may have between 5-8 people working.  With fewer working in the evening.  And a skeleton crew over night working the drive-thru.  So the labor fluctuates during the day to correspond to the amount of business.  Which is why there are a lot of part-time workers at McDonald’s.  Ideal for high school and college kids.  In addition the owner typically works during those busy periods to help with the rush.  And works on paperwork during the slower times.  Putting in about 12 hours a day.  If you assume an overhead rate of 18% and multiply that to the franchisee annual income of $691,389 we get an overhead expense of $124,450.  Subtracting that from the $230,463 (overhead & profit) leaves an annual owner income of $106,013.  Or, based on a work week of 84 hours (12 hours a day X 7 days a week), the owner earns about $24.27 an hour.  A rate a lot of people can earn working for someone else without the headaches of owning a business.

That late-night comedy show attacked McDonald’s for being greedy.  Saying they should increase their pay rate to a living rate.  Like picketers were asking for.  $15/hour.  A labor cost increase of 82.6%.  Or an additional $190,382 each year.  Which would bring the franchisee’s annual income from $106,013 to an annual loss of $84,369.  So are these McDonald’s franchisees greedy because they refuse to pay a living wage?  No.  They simply can’t afford to pay more than the minimum wage for these minimum wage jobs.  Unless they can get people to spend $6-$7 for a Big Mac.  They are delicious.  But are they $6-$7 delicious?  And can a low-income family afford to take the family to McDonald’s when they are charging $6-$7 per burger?  Probably not.  No.  McDonald’s is just fine.  What we need to do is to un-do the anti-business policies of this administration that is killing those higher-paying jobs.  And forcing the primary earner in some families to work a minimum wage job.  Because that’s all that is available in this jobless economy.

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