Clear Fog Blog

Political musings from Warren E. Peterson

Archive for January, 2014

Let Someone Else Pay

Posted by Warren Peterson on January 28, 2014

In the Sunday, January 26, 2014 edition of the Seattle Times, we are treated to Pro and Con opinion pieces on a $15 minimum wage for Seattle. The Pro side saw the higher minimum as a means of closing the gap between low and high income earners; not an unexpected argument. (For one of the most cogent articles on income inequality see: David Brooks Column in the NY Times) It was on the Con side where a surprise occurred. The writer has a small business and makes the case that jumping Seattle’s minimum wage by over $5 an hour would add significantly to existing stresses on small business. One more increase on top of rising rents, utilities, employee benefits and completion from online merchants not to mention regulations (remember the City of Seattle imposed parking changes and mandated sick leave). The Con article noted that small businesses with less than 50 employees would be exempted, “But, if Fred Meyer, Home Depot and Starbucks are all paying $15 an hour, other businesses would be forced to follow suit if they want to compete for competent, capable employees.” Additionally, raising the minimum to $15 would force up wages for other workers. If all these costs cannot be offset by reducing labor or moving to a cheaper location, they would have to be passed on to customers. It would not be too long before these increased costs would flow into the general economy ($5 lattes anyone?) and the $15 minimum would be called too low. Off we’d go chasing our socialist tails once again.

Unfortunately, the Con plea veered hard left by proposing alternate ways of improving the lives of minimum wage earners by shifting taxes on small business to big corporations and wealthy people and implementing rent control. Every day there is another call for taxing the rich. As Margaret Thatcher said, “The problem with Socialism is eventually you run out of other people’s money.” As for rent control, do not some landlords qualify as owners of a small business? Also rent control has unintended consequences such as deferred maintenance, damping of new construction and landlords being forced to subsidize long time renters through below market rates.

Before we tinker with our economic system by mandating wage and rent levels not supported by the market, we should concentrate on policies that encourage investment, job creation and education that produces graduates with skills commensurate with higher pay. These are harder to do than voting for a $15 minimum wage and limiting rent but they do offer a greater possibility of a permanent solution.

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A Proposal for Councilmember Sawant

Posted by Warren Peterson on January 24, 2014

Socialist Seattle City Councilmember Kshama Sawant is the new chair of the council’s Energy Committee. In a Seattle Times article on a proposed rate increase for Seattle City Light, Sawant outlined her agenda for the committee saying, “The committee in the coming months would examine issues including the situation of workers at City Light, executive salaries, and the relation between global financial markets and the rates people in Seattle pay.” While she’s at it, I’d like to propose another idea for consideration.It was offered to the council members in 2008 but none ever replied; all afraid to touch a Seattle sacred cow. However with socialist Sawant overseeing City Light maybe they should reconsider. In summary, I proposed selling Seattle City Light to a private company and using the proceeds to endow the Seattle Parks and Recreation Department. A privately owned utility would still be regulated and rate controlled but not by Sawant and the rest of the council subject to reelection grandstanding. Regulation and rates would be set by the Washington State Utilities Commission staffed by energy professionals. Endowing the Parks Department would remove a large part of the taxpayer funded city budget freeing up funds for other uses; maybe even a tax cut.

In today’s fragile economy, there should be no sacred cows. Every idea deserves consideration.

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