Paradigm Shift

Introducing Social Therapeutics:

A Performatory Approach to Human Development and Learning

Women and Meds is a feature documentary film that explores the options women

face when they want to have children, but take psychotropic medication for mental

illness. The film follows multiple women who have each taken a different approach to

the issue: one woman who has chosen to wean herself off of anxiety medication

before conceiving, a second woman who is deciding between staying on her bi-polar

medication or adopting instead, and a third woman who experienced life-threatening

depression (un-medicated) during her first pregnancy and is now pregnant with her

second child and already exhibiting symptoms of mental illness again.

The film focuses on the personal stories of these women, and the many facets, both

positive and negative, of making such decisions. It addresses the struggle and

emotional turmoil, as well as the hope and perseverance of the featured women, and

advocates for their ability to make the best individual and personal choices for

themselves and their families.
Dina Fiasconaro has an MFA in film production from Columbia University and a BS in TV, Radio & Film from Syracuse University’s S.I. Newhouse School of Public Communications. Previously, she was post-production coordinator at the Hallmark Channel, and has shot everything from super-8 music videos for indie rock bands to high-definition commercial projects for Panasonic. Her short films and screenplays have been the recipient of multiple grants and have screened at a variety of film festivals nationwide. Dina is currently an Assistant Professor in the Department of Film & Video at Stevenson University near Baltimore, MD.

LINKS:

Website: womenandmeds.tumblr.com

But most importantly, we’d like to stress our Kickstarter campaign: http://www.kickstarter.com/projects/158614119/women-and-meds

Sony Pictures Classics

Presents

THE PATIENCE STONE

Opening in Theaters August 14, 2013

Starring Golshifteh Farahani (Body of Lies)

Adapted by Atiq Rahimi (Earth and Ashes) and Jean-Claude Carriére

(The Unbearable Lightness of Being)

*Atiq Rahimi, Golshifteh best essay writing services Farahani, Jean-Claude Carriére, &

Hamidrez Javdan are available for phone interviews*

To Request Interviews & Information, Please Contact:

BetsyRudnick@Falcoink.com & MonicaDelamater@Falcoink.com

THE PATIENCE STONE captures, with great courage, the reality of everyday life for an intelligent woman under the oppressive weight of the Taliban regime.

Directed by Atiq Rahimi, based on his novel of the same name, winter of the 2008 Prix Goncourt, France’s most prestigious literary prize. The film is co-scripted by legendary screenwriter Jean-Claude Carrière, whose many collaborations with Luis Buñuel include BELLE DE JOUR and THE DISCREET CHARM OF THE BOURGEOISIE.

 THE PATIENCE STONE takes place in an unnamed Middle Eastern country. Beautiful actress Golshifteh Farahani (persona non grata in her native Iran for starring in Ridley Scott’s BODY OF LIES and posing nude in a French magazine) gives an electrifying performance in a reversal of the Scheherazade role: Instead of spinning fabulous tales to amuse her man, she sits by her injured, unresponsive husband and confesses to a litany of abuses she has suffered at his hands, among others. Critics have called her performance “mesmerizing,” “spellbinding,” “luminous,” and “a tour de force.”

Rating: R

Run Time: 102 Minutes

The following advanced screenings are available: 

Tuesday, August 6th at 8:00pm / Sony Screening Room

Thursday, August 8th at 6:00pm / Sony Screening Room

550 Madison Avenue at 55th Street, 7th Floor

For Press Materials & More Information, Please Visit:

 http://www.sonyclassics.com/thepatiencestone/

Why Higher Taxes Create Economic Growth

As voters we continue to be promised tax cuts.  Tax cuts will mean keeping more of what we have, and these cuts will induce investment.  This reasoning can only work so far.  Marginal income tax rates rose to their highest under President Clinton.   The very highest was 39.6%.  When a fiscal cliff had been settled earlier this year rates returned to that level for incomes over $400,000.  Under Bill Clinton it was for incomes above $100,000.  This was known as  the Omnibus Budget Reconciliation Act of 1993.  It was H.R. 2264 (House Resolution 2294) passed with the tie-breaking vote of then Vice-President Albert Gore.  The hyperlink to the up or down vote is

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=103&session=1&vote=00247

Economic expansion was muted at first, but he GDP (Gross Domestic Product) did continue growing.  The growth rates had accelerated late in the 1990’s.  During the nearly all of Bill Clinton’s 8 years in the White House it was considered the longest ever peacetime expansion for the United States.  Annual deficits had turned to surpluses come 1997.  Energy prices were low where the gas and oil prices were below $1 per gallon for most of Mr. Clinton’s presidency.

The economy seemed to have had permanent momentum.  There were surpluses for the first time in about 30 years.  Investment in our US dollar and confidence in our economy were both at all-time highs.  How could the economy have done so well with higher income taxes?  Higher Taxes always hurt job businesses and workers.  Right?  That is what so many voters are led to believe.  How many times have the Republican leaders in the US House and Senate, House Speaker John Boehner of OH, Majority Leader Eric Cantor of VA, and US Senate Minority Leader Mitch McConnell said that higher taxes hurt job creators?  They kill jobs.  This is all we’re ever told.  What is not discussed about the reason for such tepid job growth are our low wages.

What creates jobs is purchasing power.  Intuition would seem to suggest that purchasing power is hurt by higher income taxes.  The question is whose income taxes are they and how high are they?  The more graduated the income tax scale the more progressive it is, and those earning the lowest incomes pay the lowest rates.  The highest of our tax rates, 39.6%, currently starts at amounts over $400,000.  Less than 1% of salary earners in the US make it to this level.  Many of the wage earners who enjoy these 6-digit pinnacles place much of it in personal savings.  This means it is money not spent, and hence not circulating throughout our economy creating jobs.

For those making below $100,000 per annum and nearly all of the wage earners getting less than $50,000 spend virtually all of their income.  This obviates the need for a graduated tax code.  Those who oppose raising taxes on the wealthy also argue that there should be a flat tax.  This means that the assigned rate is exactly the same for everyone.  It makes no difference whether someone is earning a minimum wage, millions per year, or somewhere in between.  What I discussed thus far refutes the notion that the rate should be flat and unchanged for everyone.  It has been over a decade since Richard Armey of TX was a Congressman and also the US House Majority Leader.  Some of you may remember his fixation of the purported need for flat tax.  Mr. Armey was always so savagely maniacal in his diction “The flat tax is fair and simple for everyone.  All you have to do is file taxes on a post card. It’s that simple.  Anyone working for the IRS needs to go find another job”.  Do these statements sound familiar?  This was because then US House Majority leader would say these above statements constantly.

The ‘Regressives’ Flat Tax Plans

October 29, 2011

http://www.joraypublications.com/wp-content/uploads/2011/10/6a00d8341bf80c53ef014e86f0fcf4970d-500wi.png

Here is why Mr. Armey’s contentions are farcical and also fallible.

Dick Armey: Flat tax would be a win for the American people

By Dick Armey

Updated 10/25/2011 7:59 PM

http://usatoday30.usatoday.com/news/opinion/editorials/story/2011-10-25/Dick-Armey-flat-tax/50917466/1

He dovetailed this with the name “Freedom and Fairness Restoration Act.”  When looking at the chart in the above hyperlink it is clear as to why there is almost no fairness or freedom.   Anyone garnering less than $100,000 will pay more in income taxes, not less, and that is just the beginning.  The referenced chart mentions income taxes only, and says nothing about property and sales taxes.  Since revenue to the states would be lowered and possibly eliminated this means that the difference must be made up in municipal (property) taxes.  As if paying a few thousand more in income taxes is not bad enough the same also becomes true for property taxes owed to the respective township or city.  Often times individual residences can be appraised on very subjective and loosely defined measures to arrive at the assigned real estate market value.  This leads to more property taxes being collected by the municipality because the rate is measured as per $100,000 in the home market value.  This measurement to assign property taxes is called the millage rate.

Millage simply means property tax rates as a percentage that is the same for all home owners or as mentioned above a specified dollar amount divided by every $100,000 in market value.  There would be other added expenses for the middle class to take on still.  While property taxes would go up sales taxes will as well.  Those who are the working poor would feel the effect of higher sales taxes immediately.  Then there are the fees including license renewals.  The cost for flat bed and multi rigged trucks can jump by hundreds of dollars hence hiking transportation cots.  This is especially true if they are hazmat certified where they have clearance to be able to transport hazardous materials.  Fees for garbage disposals and the use of other public parks would also be much higher.  Public sector employment would continue to shrink.  This includes nearly any type of government worker.  This would apply to clerks, management, case workers, and other personnel.  Emergency management contains many professions.  They include police, parole officers, fire fighters, paramedics, ambulance, nurses, police dogs, and other emergency personnel.  There are teachers, teacher’s aides, and librarians who are also slashed.  Al told there have been easily over a million jobs lost in these professions since President Barack Obama took office.  The US postal services and post offices had no doubt cut down on employees.  There is a multitude of reasons why the thinking that income taxes can only do harm and no good is proving very costly and very wrong.

Income taxes are deduced from many wage earners pay check, and there are many reasons why graduated tax codes with higher rates on higher incomes are necessary.  While income taxes are subtracted from most paychecks, they are about a lot more than just that.  They also have to do with the funding structures of towns, cities, counties, and even entire states.  More graduated tax codes help fund these communities and localities through financing.  When income taxes are higher investment in municipal bonds is also higher.  These bonds are what provide the funding for a wide gamete of structures.  Public facilities include libraries, public schools, post offices, court houses, fire houses, and some hospitals, VA (Veterans Administration) hospitals especially.  Lower tax rate deplete investment in municipal bonds and hence funding for these government entities.

Municipal bonds used to be a more lucrative funding stream with higher income taxes than they are now.  This is because municipal bonds have often been tax free alternative to corporate bonds.  The more progressive the tax code the more solvent this financing structure is.  It is because as rates go up the tax free yields on municipal bonds provide higher net returns than corporate bonds do and with a lot less risk.  Some of you have been hearing about the critically acclaimed Banking Analyst Meredith Whitney.  Mrs. Whitney has been talking about both local municipalities and entire states going completely broke as in the recent bankruptcy filing in Detroit MI.  Meredith Whitney has been getting relentlessly admonished.  “This can never happen.”  “She has no idea what she is talking about”.  Her worst fears are proving very much to be accurate.

While Detroit maybe the largest (as of late) municipal filing for Bankruptcy protection, it falls far short of being our only nationally known funding crisis.  Many states have had to slash government services while also raising property taxes.  The loss of real estate value and a struggling housing market has been a strain on many city budgets including Las Vegas NV and Phoenix AZ among many smaller to medium size populated cities.  CA has the largest statewide population and also the largest budget in dollars.  It is widely known how thousands of government workers have lost their jobs and in turn property taxes have been raised.  CA might the largest example on an entire statewide basis but certainly not the only one.  The loss of liquidity and credit tightening has not just hurt stocks but also bonds.

Treasury and municipal bonds have been suffering now too.  Because yields have remained depressed and income tax rates have stayed low there has been less investment in these financial instruments.  The talk that more and more investors have been hearing about a fixed income bubble is reflected in this article

https://www.thrivent.com/wallstreettoyourstreet/blog/marketcommentary/2013/Bubble-Talk-Reassessing-Risk-in-the-Fixed-Income-Markets.html

The above article does not point to a full collapse of the bond market but certainly a drastic reassessment about the viability and appeal of bonds.  Large budget deficits as referenced in this article definitely are a factor.  Low interest rates are also mentioned.  What we are seeing with the Federal Reserve right now is known as quantitative easing.  This term refers to near 0 borrowing rates and purchase o bonds by the Fed (Federal Reserve).  However liquidity is still tight because many prospective or would-be borrowers are not satisfying the lending requirements.  This is obvious with the now millions of residential foreclosures.  This is also true for small business loans.  The same is becoming increasingly true for student loans.

This is very much now true for students because with the surging tuition costs these loans have too become harder to qualify for.  What this is telling us is that businesses are suffering because they are without the support of these public facilities or these facilities are shut down altogether; the causality of this downward cycle is very clear.  These public entities are gravely weakened or boarded up in many cases because they are now without the financing of creditors (bond holders).  There are now far fewer bond holders because even the lowest of yields carry substantial risk of default where this was not the case in the past.  In economic terms the interpretation of the cycle is that if interest rates and taxes are higher they “crowd out” investment because of inflation and now the economic growth is slowing, possibly contracting.

Borrowing rates for businesses are near 0.  Mortgage rates have also been very low.  Why have businesses barely expanded and why are there fewer home purchases?  Interest rates have remained so low for an extended period that they have caused lending and credit to tighten, not loosen.  Of course there is a limit to how high interest rates can be.  During the late 1970’s and early 1980’s these borrowing rates were at all time highs, and our employment rate was similarly at double-digit percentage.  The term stagflation had been hurled around repeatedly.  Inflation was severe and unsustainable, and it was driving unemployment.  Still there was one bright spot.  Wages did rise at nearly the same pace as inflation.

Income taxes were higher, and public facilities were receiving their financing.  Interest rates are a nominal rate to determine the cost of capital.  What is failing to garner the discussion here is that the cost of capital is not all about interest rates only.  It is also about the confidence in conducting the business.  Interest rates are “rock bottom’, but so is confidence on the part of businesses.  What these same companies don’t like to acknowledge is that they need to see these government structures to be financed and functioning whether they be public schools, the post office, court house, fire houses, libraries, and Department of Labor One-Stop Training Centers.  Could this be a lot of why the banks, brokerage house, and similar companies cried afoul when they needed government money?  Many of these public services have all but been eliminated in many communities and even closed entirely.

Many of these neighborhoods have been replaced by crime and violence with frequent calls to the police, 911, and the ambulance.  Lack of public services creates uncertainty and unrest for business.  This local unrest more than makes up for the difference in higher interest rates.  This is costing companies more money than the otherwise higher lending rates.  President Barack Obama got relentless criticism by suggesting that businesses don’t exist and grow by themselves.  The truth is that Mr. Obama is right.  These corporate leaders need safe roads and bridges to get to work.  They also need buildings that meet fire codes and that are not contaminated with asbestos and other particulates.  They also rely on these municipal and government services to be able to do their own jobs as well employ other workers.

How a high rate of return can be bad for business

The rate of return can refer to several things.  Equity investors pay attention to stocks.  The fixed income market is bonds.  In capital budgeting and business investment the rate of return most closely corresponds with the internal rate of return or IRR.  This is known as the return on a capital project such the construction of new shopping mall, warehouse, seaport, etc.  Another term for the rate of return is yield.  This is because the yield answers what percentage of return truly occurred on the investment.  Many questions about the planning invariably have to be raised.

How large is the local and regional population?  What are the demographics?  What segments of the population are most likely to benefit from and use this facility?  How will this affect traffic flow patterns?  Will increased traffic erase any known profits from this capital investment and also create economic strain for the surrounding businesses?  How will the sewage and drainage be altered changing the direction of any runoff whether it is rain, freezing rain, sleet, ice, snow, etc?  How prone is this facility to fires, explosions, and combustion?  These are some of the questions that must be answered when deciding what kind of facility it should be.

The entire square footage, number of stories (floors), and the height of each floor require extensive floor plans with drafted blueprint, excavation, and other applicable steps in the construction process.  Whether the approval is for a seaport, large-scale retail mall, business center, and corporate headquarters a lot of variables must be weighed.  The decision has been made to construct this facility or place of business.  Now it comes time for the burning question.  How much money can we make from this project once it is open for business?

The central figure that tells us just how much money the project did get is known as the rate of return, and another term used in the finance field or profession is also referred to as Return on Investment (ROI).  This comes from discounting future cash outlays as converted in today’s dollars.  The rate of return measures the percentage of return realized after these out flows.  This is the percentage earned on cash flows, but does not consider the cost of capital.  The cost of capital is not reflected in the internal rate of return; the rate of return just pertains to the outflow of the cash stream in each fiscal (budget) year.  The Internal Rate of Return is often overestimated in terms of its yield because it is presumed that the yield is the same on the dollar amount of outlay during each budget year regarding the funding of the project.  Alternatively the more conservative yield that does consider the cost of capital is better known as the modified rate of return.

A modified rate of return will take into consideration fluctuations in the actual rate of return from one year to another hence it reflects changes in the yield on the investment.

Still the Modified Internal Rate of Return (MIRR) can be unrealistically high as well.  While higher yields appear attractive to the investor, they may also mask mismanagement and complications related to the project whether it is financing, planning, and management decision making.  Internal disagreements on the part of management are common, and knowledge about the level of risk may not be immediately clear.  Liquidity and transferability (are they fungible) say a lot about the risks and viability of the funding.  One cost structure that can add up very quickly is known as floatation costs.

Floatation costs are separate and extrinsic to the interest rate charged on the capital funding and borrowing.  This is because they are administrative expenses, and they often get compounded with delays and changes in the business plans including initial blueprint excavations and subsequent construction.  Some circumstances can be unforeseen due to extreme weather, but other aspects have to do with mistakes and unanswered questions.  More paperwork is costly because more business meetings are required resulting in more delays.  While these costs are not a function of the interest (lending) rate they have to be reflected in the overall cost of the financing.  The overall cost of the financing is known as The Weighted Average Cost of Capital (WACC).

Depending on the frequency of these delays plus some of the other cost factors discussed The WACC can be upgraded by a few percentage points unmasking more of the true costs associated with the underwriting and budgeting of the project.  This heightens the need to be more vigilant to the concern that there may be a default or at least garner a net negative on their investment (this is where outflows of funds exceed the inflows).  This is more common than some may think.  A construction lot is left abandoned and undeveloped.

Why is the lot not developed, and what are the future plans?  This vacant land can exist for months, sometimes years.  Changes in the national real estate market are considered macroeconomic because they are measured in aggregate terms.  Individual cities have their unique culmination of microeconomic business circumstances.  Because of the recent bankruptcy filing in Detroit, this is a very common problem that has only mushroomed especially in recent years.  One block has many boarded up businesses while another section of the same neighborhood has many unused lots that are vacant, in some cases due to prior demolitions of the structures.

Detroit is certainly not alone.  Other such cities include Cleveland, Baltimore, St. Louis, and Buffalo, NY.  There is a precipitous and accelerating exodus of the local population with Detroit losing well over 10% of its population each decade.  Commerce has changed altering the job market.  Many of these larger cities have not fully asked why this is happening and what needs to be done about it?   Where I live in Jersey City this is plenty prevalent and also throughout Hudson County.  There are the boarded up buildings and unused lots adjacent to them.  Nearby Newark has added businesses, but this largely remains the case throughout many of the neighborhoods in that city.  In all of the communities I have mentioned crime and drug use are high with chronic unemployment for many residents and families living within the respective neighborhood.  Calls to the police, the ambulance, fire department, and 911 are recurring and routine even during the middle of the day.  Developers and businesses know about this.

They are hesitant about developing their commerce in these locations.  They would opine that the high rate of crime and unemployment stops them from advancing their projects.  There have been and continue to be urban enterprise zones available to have some incentivizing of future business development.  A lot of what of what does cause these delays is lack of open mindedness and municipal planning.  Not enough research was done about the construction of the structure, plumbing and the impact on sewage, fire codes and safety evacuation plans, and lastly but of course not least the changes in traffic flow patterns.  In this phase and portion of the planning it is the zoning laws that require the greatest examination and hence the question becomes are they appropriate and applicable to the proposed project?  Poorly coordinated planning in these aspects of a capital project along with lack of transparency, and not enough prior research conducted about the costs and feasibility studies no doubt drive up the costs.

Depending on the repetitiveness, frequency, and longevity of these delays the lending rates may too be augmented.  No differently than with an individual mortgage holder a business considered to be high risk will have fewer financing options where the interest rates will be higher.  Floatation costs will obviously go up as well.  Outside investors who invariably end up as the respective creditors are going to naturally demand a higher yield.  Since the risk of default is evidently real and even imminent in some circumstances these investors will want to be compensated accordingly since they are the parties responsible for making the capital budgeting and construction possible.  There can be any number of reasons for the delays.

As with almost any assignment turnover is a likely factor.  An individual creditor may have personal corruption issues and difficulty with the law.  Training might be inadequate.  The technology could be poor leading to inaccurate record keeping. The list of possibilities can be endless.  Whatever the case is or might be the added costs could plausibly be exorbitant and ongoing.  I talked about this in my piece on pension plans how they can be referred to as legacy costs.  They are ongoing, recurring, and permanent.  Therefore they become compounded, and they accumulate.  The reason these expenditures become so costly is that they cannot be reversed and certainly not eliminated.  They become a permanent part of the budget.

Loan agreements, property taxes, long-term rental contacts, and leasing terms are among the most common budget items where these expenses are perpetual.  It is important for a spectating investor to ask what the cost structure is and how it defines the rate of return.  There are many necessary questions to ask when considering the fiscal consequences.  What are the rates of return on similar or nearby projects?  What is their Weighted Average Cost of Capital culminating the lending rates with the added administrative (floatation) costs?  What are the reputations of the creditors?  Are they reliable?  How will the surrounding community be affected in terms of traffic flow, plumbing, and without question individual residential market (real estate) value?  Depending on these comparative measures the high rate of return maybe nothing other than a subversion regarding the lack of certainty and also lack of confidence about whether the respective project should be undertaken.

Why Defined Contribution Translates to Defined Loss.

Nearly all workers of today know the term 401k.  401k is a retirement plan.  It is structured under what some know as defined contribution.  What defined contribution means is that the employee and enrollee in this plan contributes an agreed upon dollar amount or percentage, normally a set percentage of the income or paid salary.  The allocation of this contribution can be distributed in many different ways.  Depending on the investor preference it can go to treasuries and relatively secured bonds with low yields.  The bond market is better known as fixed income in the financial markets.

Fixed can denote a set percentage of income, or there can be an assigned dollar amount regardless of the size of the investment.  For equities the return is much more variable (and volatile).  This means that returns change much more quickly and frequently.  The more typically speculative and volatile investment comes from equities more commonly referred to as stocks.  Stocks are open to any range of gain or loss; some stocks may outperform the overall stock market or underperform where they grow less than the rate of return on the stock market. Conversely some stocks may lose less nominal value simply known as the stock market in a down day or stock market that has lost more point value than some individual stocks.  The overall level of volatility surrounding one particular stock is defined as a beta factor.

The stock market is up by a full per cent in one day where the market has increased by one percentage point in measured point value.  Some stocks have jumped more than 10% during this very same day.  This is a beta factor of roughly 10 or 10% return on one single equity (stock) divided by the 1% return on the stock market.  The next day nearly the opposite happens.  The stock market slides (or some will say plunge) more than the same one percent.  Some stocks are slammed and pounded; they tumble by double digit percentages.  This means that they consists of a beta factor higher than 10 on the downside.  It is clear that some stocks can be very reactive based on the overall performance of the equity market.  Some stocks outpace the rest of the equities market by such large multiples that who can say no to investing in these particular securities (also equities and another term is financial instruments)?

What faster way to get a quick buck and grow your wealth?  This is such a lucrative return that every investor will be guaranteed success in obtaining the dollar amount and rate of return that they thought they can only dream of, except that not so fast.  I just noted that some stocks behave much more erratically than the stock market as a whole and can also slide faster.  The reality is that there is only limited potential for upward ascention in the price of a stock, and there is also plenty of room for the downward diminution.  It is always illegal to guarantee to an investor a preset rate of return in percentage value or specified dollar amount.  That does not lessen the legitimacy of being realistic about how these returns occur.

The best performing of companies will inevitably plateau, and the stock will hit its ceiling (the highest pinnacle that the stock price is able to climb to).  It is indicative of the adage “What Goes up Must Come Down”.   This will occur in varying degrees.  Companies with more stable personnel practices and management structures will be able to limit downside risk better than those companies with more frequent turnover and unreliable job training practices.  This still does not mean the upside potential is limitless or forever.  That will never be the case.  Therefore in the most profitable and optimistic of circumstances losses can occur.  Without question a company where the job training is deficient, a high turnover rate, and morale is strained here the downside risk can be a plunge almost straight to the bottom.  Continually elevated and/ or climbing stock prices present another set of concerns worth thinking about.

While I just addressed the life lesson of “What Comes up Must Come Down”, another question to ask is simply why does the stock keep going up when this is not the case for competing firms or other industries altogether?  An upward trajectory in the stock price can be subverting managerial and in some cases accounting problems.  If an equity price is exceedingly high and it remains that way continuously this at the very least obviates a high rate of return.  High rates of return at least could mean that there is a lot of risk and hence a lack of stability.  This begs the question how much higher will the stock price go and for how long?  Often times these are the equities where the prices tumble the fastest and with the greatest percentage in lost market value.

This may mean any number of things.  Some of the possibilities include an erratic management, e.g. high turnover, mismanagement of funds, poor accounting, chronic personal difficulties such as tardiness, calling in sick, missed project deadlines, and lack of quality control among others.  A high stock price and rate of return are only beneficial when the company structure is in place to support it.  Otherwise when the situation unravels it unwinds very quickly with hardly any warning.  This has the investor ‘holding the bag”.  As discussed here stock prices can rise and fall for countless reasons, some impossible to explain and also to greatly varying degrees.  Previously I talked about bonds as the fixed income side of the market and investing.

Although bonds are stated to have a fixed income stream or flow of funds (also known as liquidity), bonds have their own risk.  There can be issues with individual creditors.  Their funding might be unreliable and unstable.  Just as liquidity has to do with the flow of funds, the other component is whether or not funds are fungible.  Fungible refers to the ability to transfer the funds.  If funds are problematic for transfer and they are difficult to access in terms of liquidity this means that the bonds will be more risky and hence susceptible to default.  Therefore as with stocks there is a higher rate of return because investment is more speculative.  Additionally bonds have 2 major categories.

One is GO (general obligation/ municipal), and the other is revenue bonds.  General obligation bonds are backed by the full faith and credit of the tax payer.  They fund municipal structures such as public libraries, public schools, police stations, and the county court houses.  Revenue bonds are funded by what are known as covenants.  Covenants have to do with the reputation of the borrower or company.  Unlike general obligation bonds revenue bonds are about the underwriting and capital funding of a new structure.  Broadly speaking this has to do with office space, but it also includes an extensive gamete of businesses.  There are multiple examples of structures that are funded in this manner including malls, corporate centers, doctor’s offices, warehouses, factories, incinerators, car manufacturing plants, bridges, tunnels, and much more.

The funding streams are very complex regarding the above entities I have mentioned.  There is the question of how reputable the individual funder is.  It is widely known about some of our cities having filed for bankruptcy.  Detroit has been in the news throughout this past month about that.  Harrisburg, the Capital of PA, is another city that has faced this.  Many of these cities have had decades of mismanagement.  It is often contended that the pension liabilities are driving this.  That argument is only true insofar as those who are on the top of the management ladder getting in extreme multi-million pension payouts each year.  For everyone else the overwhelming majority of retirees are living very modestly or are in poverty altogether.  The cost of doing business, both in the public and private sectors, is blamed largely on retirement pensions because pensions have what are known as legacy costs.

Legacy namely means that the costs are ongoing and permanent.  The longer a retiree lives the longer the pension payout.  While it is true that pensions can last decades depending on the individual pension holder, there are many other examples of legacy costs that also must be examined.  Social Security, Medicare, Medicaid constitute this cost structure.  There is the expression that these entitlements are on ‘autopilot.”  They happen automatically, and they can’t be controlled.  Much of the reasoning behind that argument is false.  They are paid into through income, payroll, and other taxes.  These expenditures recur each year because they are paid into, not because they exist on their own.  Legacy costs pertain to our infrastructure including roads, bridges, and tunnels, but also transportation including bus, rail, and the airports.  Businesses and real estate have legacy costs due to the property value of corporations and private residences alike.  Wars have these permanent cost structures because of indebtedness to other countries.  The expense structure related to our pension is only one element.

As reflected above legacy costs come in many forms, and occur for a wide range of reasons.  Regardless of how large the dollar amount maybe, pensions and also medical benefits, only make up so much of the equation.  What has occurred in the 2 cities I have mentioned, Detroit most recently and Harrisburg, PA, is poor planning and management.  This has come from a culmination of unsecured business deals with private contractors, tax abatements which put pressure on property taxes, and lack of coordinated planning with developers regarding traffic flow and its impact of commerce.  These reasons would not be the only explanations for the need to obtain bankruptcy protection.  Lack of building maintenance leading to non-compliance with fire codes, weak emergency management, and poor plumbing leading to frequent flooding shutting down entire roadways eventually shuttering some local businesses entirely have caused the costs of running these cities to simply become insurmountable.  Funding pensions through 401k rather than 403b only adds these costs.

Because 401k’s are based on defined contributions they are also based on speculative funding and the rate of return.  The financing comes from corporations with funding streams that are tied to rate covenants.  The relationship with respective contractors and developer is often unclear and not established.  While feasibility studies are designed to address this they never can and never will eliminate the cost of unsecured contracts and irresponsible underwriting.  403b pensions are based on and funded by entities funded through the full faith and backing of the taxpayer including libraries, the police precincts, fire houses, publics schools, the post office, and other public facilities.  This is why we need the old retirement and pension restored.

I noted at the opening of this piece that a 401k is a defined contribution plan because the employee contributes to it.  403b is a defined benefit, which means that it is fixed in dollar amount or rate of return.  Therefore 403b pensions have a guaranteed payout whereas that’s not the case for a 401k plan under a defined contribution system.  403b pensions are funded through public facilities that build reliability and trust in communities, not private contractors and corporations within unknown reputations that are often negative as with the 401k pension system we now have.

Why the balanced Budget Amendment is not Balanced

The term Balanced Budget amendment is misleading.  This is a full US Constitutional addition; it is not simply another US House and Senatorial vote.  That means that 2/3 (must be 67 or more US Senators voting Yea) in order to pass it.  Then it gets sent to the states where ¾ (38 out of 50 or more) agree to ratify it.  What balanced stipulates is that all annual US budgets as assigned by the US Congress must be revenue neutral.  There are several steps required to getting there.

The first is known as a committee vote.  In the US House it starts with The Ways and Means Committee where the agreement must be approved by the committee Chairman and someday Chairwoman.  In the US Senate it is the Budget Committee.  Individual spending appropriations are established under the US Senate through a Congressional Budget Authority (CBA) with the minimum of a 60 vote majority in favor in this case.  Bicameral adjustments between the US House and Senate are known as budget reconciliations, which then become combined into what is known as an omnibus bill with respective budgetary appropriations under multiple government agencies.  A short time frame for approval is still several months, and sometimes can be year or more.  Adding a balanced budget provision will also require a vote by The US Judiciary (Supreme Court).

This will lengthen the process for sure often times resulting in a whole additional debate on whether the full omnibus budget is considered constitutional or not.  Although the Supreme Court is charged with interpreting the US Constitution there are repeated criticisms about the court legislating from the bench.  Do we really want the US Supreme Court to add to the budget approval process?  We just had the fiscal trauma of the fiscal cliff voted on roughly 2 years ago along with the debt ceiling debacle in August 2011.  As costly and timely as all of this has been The US Supreme Court has not till date been an added layer in the final step of the process where under balanced budget mandates it will be.  The US has had its very first ever credit downgrade due to the exceedingly contentious debt ceiling negotiation nearly 2 years ago.  Adding the Supreme Court to this discussion means one more step in the process leading to more economic uncertainty and hence more cost.

The longer the delay in budget appropriations the longer revenues are strained and lost because this costs thousands of jobs and hurts business growth.  We know plenty about this currently with the fiscal cliff and budget sequesters fight where mandatory budget cuts kick in automatically.  For those who only want to talk about spending amounts they neglect to note that lost revenue can in fact be more costly than additional spending or appropriations.  In other words budget outlays cannot be lessened by enough to offset the lack of income revenue.  Also no deficit spending is permitted under this arrangement.

Zero deficit spending during a recession is a sure recipe for putting the country into an outright depression.  This can quickly result in a loss of over a trillion dollars in revenue and very easily as well.  During the final 3 months or quarter of 2012 the economy slowed to nearly negative growth because of the extended uncertainty and anticipation resulting from this current fiscal cliff fight (it is reported to be a tiny gain but still very worrisome).  2 quarters or more of economic GDP (Gross Domestic Product) contraction are what define a recession.  The one US credit downgrade has not been known to increase short or long term interest rates, but future downgrades will no doubt drive up the cost of borrowing harshly stifling business growth.  With no debt financing allowed during a declared recession revenues will be greatly lessened, and almost no amount of budget cuts will be enough to offset this loss in revenue for a revenue neutral budget deal.  Hence the budget outflows will continue to exceed the inflow where a balanced budget will simply never occur.  This will add more pressure on the individual states because they will have to adjust their budgets without future help from the US Government, which has never been done the extent that there are no appropriations granted to the states.  This will drive up property taxes displacing families and shutting down local businesses.  These loses will lead to future credit downgrades driving up interest rates further and causing deeper erosion in the value (purchasing power) of the US dollar because foreign nations will pull more and more of their international and business investments out of the US dollar.  This is a whole additional layer. The economic model is that when interest rates go up the US dollar also strengthens and then the dollar is worth more in purchasing power, not less.  This would mean that a rise in commodity, food, and energy prices would reverse where these items then cost less each month for the home owner and renter.  Here instead higher interest will sour the value of the dollar all the more because they will be rising as a result of no investor confidence.  A deteriorating dollar will lead to higher commodity prices, likely double digits which would indicate hyperinflation.  This all but choke off all purchasing power on the part of the consumer and severely limit any business growth.  Businesses will not borrow at even the lowest interest rates because there will be no growth potential.  Some of this is plenty prevalent right now since the financial meltdown nearly 5 years ago.

Much of the economic loss from this most recent crisis is already not retractable or reversible.  If this current trend continues more and more of our business financing will be based on bailout agreements and not investment.  Higher interest rates will simply be all about the inflated costs of these artificial funding streams.  Liquidity (flow of money) will continue to tighten, and there will be a permanent credit crunch where even the wealthiest and most credit worthy of borrowers can no longer do so.  This is why there is so much now being spent on stimulus packages and retaining near 0 interest rates.

The economy has now become reliant on the corporations initiating their own investments rather the consumer going out and spending.  Therefore job creation is at best weak, and it is staying that way.  Investment in public sector jobs restores communities.  This includes expanded mass transit, facelift of road surfaces and bridges with full realignment of plumbing and sewage.  Building upgrades and updated construction to satisfy necessary fire code standards are part of this.  Building more hybrid cars with more electrical outlets for them are other jobs in demand.  Non-manufacturing and non-construction jobs including more teachers, guidance counselors, nurses, paramedics, and police being hired for emergency personnel and the public schools are other professions very much needed.

This is true in individual municipalities and well as entire countries throughout each of our 50 states.  This would amount to a few million more permanent paid jobs throughout the full US every year.  Disposable income would be a few hundred billion dollars more annually with a reliable cash inflow stream because these jobs will be permanent.  The demand and need for them is only intensifying.  This is why debt financing needs to be available during recessions and economic expansions alike.  This does require government spending, but consumer demand will add to the federal revenue eventually erasing the deficit and ultimately resulting in budget surpluses because the economic growth will be sustainable and able to last.  A Balanced Budget Amendment will just entangle the budget appropriation process making it all the more political and confusing for consumers and producers alike.  A balanced budget amendment is the worst possible policy prescription for the budget deficits and our cumulative national debt.

The mentality of this Tea Party is to end all government spending. The US Senate Tea Party Leaders such as Rand Paul of KY, Mike Lee of UT, and Ted Cruz of TX will have us believe that any and all government spending is bad for business.  They are not even stopping at austerity.  They want all government spending to stop.  The trouble with this way of thinking is that it fails to recognize that our corporations rely on government contracts and government expenditures in order for business to be able to operate.  This is why I have emphasized earlier that fewer budget expenditures and outlays will not be revenue neutral.  The loss of cash inflows and revenues will invariably outpace any purported savings from lesser spending, thus making our deficits even larger adding all the more to our accumulated national debt.

Repealing all Right to work Laws

Repealing all Right to work Laws goes to the heart of much of what I have been discussing about the need for a higher minimum wage.  Right to Work Laws is about the right to fire and the right to work for lower wages. Right to work provisions cost jobs because they lead to the outsourcing of jobs. When companies can run roughshod over its workers the decreased wages lead to diminished purchasing power causing a loss of jobs because of lower demand for goods and services. Right to work leads to sector and industry instability resulting in divestments. This propels mistrust stifling investment because of the ravaged consumer confidence and hence lesser consumer spending hampering job growth. This lack of confidence and investment lead to further difficulties in capital budgeting and financing also driving up borrowing costs and interest rates. Having civil service job protection, collective bargaining, organized labor, and union representation builds trust and in turn grows communities.

Small and large businesses alike function better in the presence of unions because there is heightened accountability and transparency making business planning more straight forward and predictable. Right to work laws have shut down many factories and manufacturing plants that have been in existence as far back as the Great Depression of the 1930’s and WWII. This destroys entire communities and countless livelihoods also causing higher property taxes because of less ratable. Higher property taxes are the single biggest expenses in many households hampering consumer spending power. We need a higher minimum wage that is also indexed for inflation, which allows purchasing power to grow with the expansion of the economy. More vocational training and education will help our manufacturing sector for skilled and unskilled labor alike. Our job market will only improve when union labor is strong. There needs to be a moratorium of these job killing measures. The more solvent the consumer is the more solvent are our job growth and economic activity.

This goes to my work arrangement about having civil service protection.  Those of us as government workers know that union contracts are hardly lucrative at all.  Therefore our purchasing power is barely sustaining rather than growing because we are now lucky if we can get pay raisers that cover the cost of inflation.  Previous contracts used to outpace the cost of living where the pay increase was higher than inflation.  When union membership was higher there was more money flowing through the economy because much more of the workforce knew what to expect.  The contentions about Right to Work defy all this.

Increasingly in the public and government sector workers can be fired without prior warning.  This precludes decision making and planning.  Any individual spending that does occur happens in a reactionary fashion, and does almost nothing to help grow the economy.  Those who continue to work in this sector as I do are working to educate the voting public that union labor is not a drag on the local economy and a burden to taxpayers.  I see a lot of this evidenced by the chronic homelessness in this county.

If more of these very same residents were put to work, crime would be down along with drug use, and there would be more marketable skills, making the labor force more competitive.  Many of the computer and job training centers have shut down due to virtually zero enrollments.  Another cost comes from unused space and capital.  More work must be done to convince the surrounding community that this is not a cost savings but a waste of finite resources.  All Right to Work Laws do is foment instability and distrust subverting and masking systemic community problems due to many residents being left untrained and especially in the present labor market chronically unemployed.  Wal-Mart gets a lot of bad press and protest about abuse of its workers and also flagrant discrimination, but this is also a small symptom of a much larger problem.

All of the emphasis is on satisfying the bottom line, but how do we obtain the bottom line?  For one Right to Work provisions do nothing to answer and address this.  In a related piece I have discusses why thorough job training boosts the profitability of companies through improved performance.  Job training must never be ignored for countless reasons. While improved worker morale may just sound like a state of mind it translates into a better corporate atmosphere for multiple reasons.  There is less turnover, less presenteeism (physically being at work, but in too poorer health to do any of the work), less calling in sick, fewer transactional errors and hence fewer returned goods, faster and more concise problem solving plus other areas of improvement.  The Right to Laws creates a work environment whereby the bottom line is just about shareholder wealth and gain.

While an optimal performance is priority number one the emphasis is less about efficiency and more directed at shareholder wealth, e.g. a higher stock prices and higher earnings per share.  Quality control and customer satisfaction is not discussed while all of the emphasis and capital budgeting is on cutting medical benefits, hours, overtime, and any of other form of compensation to lend the appearance of sustained profits.  As I have indicated the horror stories described about Wal-Mart apply to much of the rest of the retail industry as well.

Much of the merchandise is manufactured at nearly no cost in 3^rd world factories while the mark up on the sale price is 10 times or more.  Product returns are common place.  I see this with many of the local merchant in Jersey City, NJ where I live.  In many of the cafeterias where I frequently get breakfast and lunch sometimes dinner I see this all of the time.  Turnover is constant.  Problem solving is about crisis management rather than about prior job training and emergency preparedness.  This is similarly true about the clerical support staff in many of the doctor’s offices I utilize. Many workers last for just weeks no more than months at a time.  This causes quality to suffer.

Therefore output is not being maximized.  The units of output are stained by the lack of emergency preparedness and problem solving skills.  Many items are returned that are already broken, don’t work, and in the case of perishables being thrown away.  What this is illustrating is that both quantity and quality are suffering.  All of this helps Wall Street?  If quality control and output was truly being maximized Wall Street would in fact be much more profitable.

Higher rates of output coupled with better quality increase profit margins thus boosting stock prices and earnings per share.  We are painfully learning that stagnant and falling wages, absence of medical benefits, and loss of pension payouts are placing companies in a permanent financial stranglehold.  Companies thrive and grow in turn helping Wall St. with competitively livable wages, reliable medical benefits, secure pensions, and lastly but of course not least comprehensive and thorough job training.

How the minimum creates jobs.

A minimum is adjusted and set by the US Legislative Branch.  This means that it has to receive majorities both in the US Senate and House of Representatives.  The legislation about changing the assigned wage is known as HR for House Resolution and S for Senate Resolution.  Wages are measured by a rate per hour.   In the labor market is known as the price of labor.  This is because this is the minimum hourly compensation an individual firm or entire company can pay.  Final adoption requires the US Legislature (legislative branch), and being signed off by the sitting President (Executive Branch).  Since the assigned rate is initiated by the US Legislature and signed into federal law by the current president, it is a minimum baseline standard that all 50 of the United States must adopt.

What minimum baseline means is that all states must pay at the federally adopted wage rate and never any lower.  Conversely some states have made their minimum wages rates higher than that of federal law.  Currently it is at $7.25, but some states have agreed to bring theirs to over $9 per hour.

The following hyperlink is a state by state schematic of the United States map as follows:

http://money.cnn.com/interactive/pf/state-minimum-wage/

There are many states with the minimum allowable rate of $7.25 per hour, and the highest current state rate is $9.19 in Washington (State).  Because wages are measured as a rate and also intervals they are considered microeconomic.  Wages and prices are measured on an individual basis.  Therefore any future increase in the minimum wage will impact each industry and each firm within that industry differently.  This is most closely reflected on a firm’s balance sheet as accounts payable, or in some cases the account ledger maybe itemized as wages payable.   I am providing below another hyperlink about sample balance sheets as follows:

http://www.google.com/search?q=balance+sheet&hl=en&tbm=isch&tbo=u&source=univ&sa=X&ei=tEtkUfuvJs-64AOElYGYDQ&ved=0CD4QsAQ&biw=1280&bih=561

The ledger known as accounts payable or wages payable is less than 10 % of the budget.  If a firm’s budget is $10,000,000 then paid wages would be $1,000,000 or even less than that.

Let’s use the current wage rate of $7.25, and a proposal of $9 an hour as recommended by President Barack Obama.  This translates to:

This is less than 2 ½ % more spent in paid wages.

If the minimum wage was to fully double then $1,000,000 spent on paid wages would be raised to $2,000,000.  Still this would be only $1,000,000 out of a $10,000,000 budget and hence would be 10%.

This additional $1,000,000 spent on paid wages can more than be paid for with improved productivity (units of output), reduced absenteeism, lower turnover of the workforce, and fewer customer complaints on the part of the external clientele.

One way to know this is that more of the budget is spent on inventory purchases than paid wages.  If sales improved by a full $1,000,000 this would already cancel out any cost increased cost from the higher payroll expenditures.  This is barring better attendance, less turnover, and fewer administrative and/or transactional errors.  With even a full doubling of paid wages the company can easily add to its profits by lessening these other costs.  Less worker turnover, tardiness and missed days, and fewer employee errors can easily yield another $1,000,000 in revenue.

Another factor to consider is less time spent on these personnel matters.  Less time will be spent in the byte room about sour morale and frequent client complaints.  Time spent offline would be more allocated to job training.  Proper job training is partially about job enlargement where there is benchmarking.   Bench marking measures prior output targets and results against future goals.  Performance reviews address output levels and just how satisfactorily or unsatisfactorily the expectations had been met.

There are qualitative as well as mathematical measurements weighed about the workers performance.  Could the performance be suffering because of an unprofessional tone?  Was incorrect information provided about the product or service?  Customer loyalty cannot in of itself fully indicate why sales and / or transactional benchmarks are improving or deteriorating.   This is why job enlargement must be complimented with job enhancement and job rotation.

Job rotation simply means having exposure and involvement in other departments and work units.  Job enhancement has to do with the variety of tasks, and it is not exclusively about enlarging them.  These other job training components are necessary for a multitude of reasons.  Job enhancement allows for different ways of meeting output targets.  This can also allow for discerning what issues are problematic with respect to organization and application of the task.  This is where making the necessary corrections and changes can make meeting the agreed to output targets not only tenable but also a reality.  Still job rotation must also be part of the training equation.

Rotating from one department and work unit to another is critical for two major reasons.  One is communication as well as experience.   Are certain departments having distinguishably more difficulty with proper management than others?  Are the personnel matters of tardiness, absenteeism, lack of teamwork, and high error rates especially glaring in certain areas of the firm as compared to every other section?  Better communication also begets more transparency.  More involvement in other facets of the business allow a worker to help identify what personnel issues are potentially and even likely weighing down on the company’s output and production.  What this demonstrates is that the cost of labor only emanates from the wage in very limited measure.

Productivity and proper management don’t lessen the payroll expenditures.  They do however make a place of business profitable or unprofitable based on their practices.  Cutting costs does not in turn saved cost unless revenues are maximized.  Output often times will double with some of the training issues being more closely examined.  Lower turnover saves on costs because more sales will be completed, and there is more consumer loyalty.  There will be fewer instances of workers calling in sick.  Therefore more units can be produced with more of an established team.  The learning lesson is that higher wages and payroll expenditures don’t drive up the cost of labor.  The loss of productivity and lack of skills training are what make the wages unaffordable.

Why there must always be a federal minimum wage law and why turning it over to the states is unnecessarily costly

An argument that some opponents of a federal minimum wage will make is that it should be left up to the states.  States can better set their own wage rates.  The cost of living varies greatly from one state to the next, and states from one region have a much different cost of living than other regions do.  This argument is not that concrete.

The basis for this claim is that it arises from differences in rent and also home prices.  If it costs twice as much to rent or home values are twice the price for a home owner’s mortgage, then the cost of living is purportedly twice as much.  In fact it is not that simple at all.  Rentals and mortgages are determined based on demand; that is true.  Cheaper rates either for a home owner or renter only indicate a lower cost of living in limited measure.  Market demand maybe a lot lower in blighted neighborhoods, but there are often other reasons for this.

Rural areas cost less in terms of these monthly payments than in major cities.  Therefore it is much cheaper to live in these places.  In fact this is not necessarily the case.  The higher cost of food, utilities, and travel often cancel out these savings or at the very least will great lessen them.  For instance the average apartment rent is $1,000/ month in one state and only $500/month in an adjacent state or a different region.

This means that $500 a month only costs half as much.  This is false.  Rents can be lower in poor neighborhoods and in rural areas.

Here is why $500 a moth is not half the price as $1,000.  Longer commutes often add $100 or more to the cost of gas consumption.   Wider extremes in temperatures put upward pressure on the cost of utilities both with respect to heating and air conditioning.  Temperature extremes are categorized in 2 ways.  One is how much the rises during the day and then drops back off at night.  This is known as the diurnal range because of the contrast between day and night.

The other measurement has to do with the overall monthly mean.  For some communities well inland the monthly means changes by more than 50 degrees (sometimes 60 to 80 degrees) from the summer to winter and vice-versa.  This places extensive pressure on the use of utilities during the summer and winter alike regarding air conditioning and heating respectively.  As with gas consumption the continually elevated need for heating oil and ventilation can add easily $100 to $200 a month and in some cases more than that.  Food prices are another factor.

This can be true for fruits, vegetables, meat, poultry, dairy, cattle, livestock, and other food related produce.  Due to the extensive variability of both altitude and latitude, different sources of food require different climate conditions for proper growth.  This is also true about livestock, cattle, and farm animals.  Some function best in the hot dessert while others also thrive in the heat but also require more moisture as is the case in tropical and humid subtropical climates.   Other species need very cold weather while others still need very high terrain, sometimes an altitude of 10,000 ft. or more.

All of these topographical, meteorological, and biological factors affect transportability.  This means that certain food related products cannot be produced in that town or city.  They need to be imported or transported from elsewhere.  Changes in elevation are one consideration.  Long distances are no doubt another.  It would seem that traveling long distances on flat open road is easier than ascending or descending in a mountainous valley.  The flat open road is known for major and common weather hazards that clearly refute this notion.  Tornadoes, pummeling thunderstorms, hailstorms, and dust storms can occur on uneven terrain, but they are very much common place in flatlands.  The culminations of these factors affect one more layer, insurance rates.

The price of insurance is determined by volatility and variability.  This is true for car payments, mortgages, and rentals.  Some vehicles may cost a lot more to ensure than others not just because of size but also how prone they are to collisions and what they are used for.   Homes and dwellings frequently pounded by violent weather cost thousands a year more to insure hence costing a few hundred a month more to insure.

The price contrasts I used were between $500 and $1,000 a month.   In more expensive markets the difference maybe $1,000 versus $2,000 a month.  The wider the separation in price from one locale to another the greater are the likelihood that the lower rate will yield some savings.  The $1,000 a month location may not lead to $1,000more a month in expenditure outflows regarding these other variable expenses.  Still $1,000 per month is very unlikely to cost $1,000 less than $2,000 given the broad depth of these other budgetary outlays.  This is why the cost of living is a relative and not a nominal measure.

Monthly rents and mortgage payments are nominal figures.  They are agreed to prices by the rental office or bank as in the case of a mortgage.  These other variable expenses and cash outflows are variable and not fixed by a signed contract.  This is why it is unrealistic to conclude that much lower rents or mortgages payment translate into proportionate savings.  These monthly contracted rates are usually much lower because the living standards are also a lot less desirable.  Services are often much further from the place of residence and hence more costly to provide to the community.  Everything discussed here has to do with outflows as confronted by the renter and mortgage holder.  There are also administrative reasons why letting each state set its own minimum wage rate is problematic.

Many of the personal budget items discussed above pertain to small business and corporate offices as well.  Letting all of the 50 states set its own wage rate would lead to complete mayhem for the employer and employee alike.  This will lead to confusion about applicable labor laws and ultimately be a headache for the worker.   This is because places of businesses will not able to adjust to the lack of concrete regulations.

One state has a minimum wage that is twice that of a neighboring state, or perhaps the adjacent state has no set minimum wage whatsoever.  This is confusing for employers and employees alike.  Fliers can be posted all over the office.  Labor laws can be explained in the personnel handbook as well as the Department of Labor Manual.  With this much printed material transparency is still lacking.  It leads to repeated questions about how this is possible.  This is not just a hardship for the worker because hiring managers are also left wondering why is there so much contrast in labor laws within possibly as little as a few miles when considering interstate borders.

This level and type of confusion also emanates more litigation.  The complaints from both management and support staff become consternation as to why are some businesses lucratively rewarded for a lack of wage compensation while savagely punished over another state line.  The best public relations campaigns about these contrasts will not eliminate litigation.  All this can possibly do is lead to management/ worker strife where excessive expenditure will be lent to answering questions about these practices.  Morale will always be strained and productivity will in turn suffer.  All of this serves to show that the cost of labor is most correctly measured by productivity.  Here is one more distinction that must be made.

Productivity and output is not necessarily the same thing.  Like the hourly wage and price per unit, the rate of output and cumulative units produced are concrete and quantitative numbers.  Therefore they are not qualitative pinnacles.  The most number of units produced can also be the most profitable if they are also the most efficient.   Customer loyalty may not answer everything about the level of efficiency.  Still this dependability will do a lot to help a business discern how well are the units produced and not merely how many of them are there.  Often times the fixation on quantity leads to many items being returned.

When items are returned the cost is not just a lost sale.  This disrupts future production.  For example if the item originally cost $25 and it is returned that now becomes $50 because another sale of $25 is lost.  High rates of return will drive these loses into the hundreds and thousands of dollars very quickly.  This is why maximum productivity and quality of output will best determine the cost of labor rather than wage rate.  This issue is better simply viewed as quality control.  Quality control will be the most beneficial and meaningful through well- developed product knowledge and job training.   As discussed earlier there are several sub-parts to proper job training.

This needs to include not just enlargement of the tasks but also enhancement and rotation.  Having interdepartmental exposure facilitates transparency both with respect to troubleshooting and updates about any known changes.  Job enhancement allows for the worker to respond to sudden changes in production, irate clients, and customer complaints.  This will make it more possible for those customers who are dissatisfied to continue conducting future business because the place of business will be accepting greater responsibility for the errors committed and allay ensuing confusion.  Hence the worker will be much better equipped to communicate with the external clientele and garner future consumer trust.  Taking these steps will foment better working relationships with consumers rather than the funds being directed at resolving elongated and unresolved worker grievances.  This can best be illustrated by the topography of our landscape in 2 key ways.

It is almost immediately apparent what the bad area of city looks like, e.g. empty buildings, closed store fronts even during rush hour, rancid odors from the emissions, traffic bottlenecks, and lastly but of course not least neighborhood violence.  Then there is the rural poverty and many desolate towns that are dozens sometimes hundreds of miles from the nearest metropolis.   The state of South Carolina speaks largely to this very point.  Closer to the Atlantic Coast are cities such as Myrtle Beach, Florence, Charleston, and also Hilton Head Island.  Inland communities include the state capital Columbia, Greenville-Spartenburg, and Aiken.   This are of the state has many non-union jobs with low skilled workers.  There is little if any of a tax base to support public schools and other municipal structures including public libraries and post offices.  Here there have been many shut down factories and textile mills.  The following article outlines some of this

http://www.postandcourier.com/article/20130210/PC16/130219990

SC Governor Nikki Haley touts how SC is leading in private business growth in her state.  It is no wonder why she would never talk about this side of it.   While we know that the federal minimum wage is $7.25 Governor Haley does not believe in any minimum wage.  There is little or no collective bargaining, and at least many hourly workers receive no medical benefits.  This is also often no OSHA protection.  The high cost of crime and abject poverty places constant strain on municipal budgets.  This environment is no different than the poverty stricken cities often spoken about in other countries.  This is true in the Appalachian Mountains as well.

The Appalachian Mountains have been known about the severe and chronic poverty for decades.  In other mountainous area throughout the western United States the only difference is geography and altitude to some extent.  There are many shacks with no commerce for dozens of miles.  Much of the land is baron.  This is especially prevalent in the Rockies where the weather is very extreme throughout the entire year and also where transportability of resources is very limited in this region.  Government facilities including post offices, libraries, hospitals, and community centers lend some stability and reliability in employment.  Then higher terrain towns would become much more inhabitable.  During this past year’s presidential campaign former one-term governor of MA Mitt Romney was the Republican frontrunner who had the hope of defeating Barack Obama for reelection.

Mr. Romney’s private business experience in MA came from a venture capital firm known as Bain Capital.  Mr. Romney talked about how he created over 100,000 jobs, and Barack Obama knows nothing about the private sector because of being a Community Organizer.  This was virtually all we heard from Candidate Romney with nothing concrete to facilitate this argument. The farcical success story didn’t just come into question during last year’s national campaign.  When the now late Senator Ted Kennedy ran for one of his reelection cycles in 1994 Mitt Romney had his first known foray at trying to enter politics.  1994 was among one of the worst years for the Democratic Party.  Ted Kennedy had a great chance of losing his US Senate seat, and Mitt Romney would have his victory.

All of this was true until Mr. Kennedy successfully asked about Bain Capital/ Venture Capital what job creation?  It turns out there were net job losses from Bain Capital, not gains.  This was especially bared out because it was not just the Democrats who called Mitt Romney’s bluff.  Other Republican challengers have included former US House Speaker Newt Gingrich and former PA US Senator Rick Santorum.  Both of these Republicans have noted that venture capital is not about job creation.  In fact even Rush Limbaugh has made mention of this.  This refutes Mitt Romney’s premise much less any concrete numbers behind his purported job creation.  It also helps to explain another big employment miracle myth which is that of Governor Rick Perry’s TX.

Everyone wants to run to TX to work and do business there.  Business taxes are among the lowest and government is very much out of the way.  The oil and energy boom are second to none.  Really?  This is how TX actually focuses on job creation.  TX is always stealing from other states.  The link to this article below compares the state economies of TX to CA.  TX produces little for itself and borrows off other states besides CA as well.  This article reveals just why Texas is far behind in California regarding development and innovation.  It also exposes why the economy in TX is not much better than in CA.

http://www.thomhartmann.com/forum/2013/02/texas-job-myths

This next link below also explains why the TX employment miracle is temporary.  The lack of investment in both infrastructure and education along with severe income disparity and lack of attention to climate change will turn this concept right on its head.

http://www.texasobserver.org/erica-grieder-praises-the-texas-miracle-in-big-hot-cheap-and-right/

For obvious reasons our former President George W. Bush and preceding governor to Rick Perry is not mentioned.  What Rick Perry is doing is an extension and acceleration of his predecessor’s policies.  It is a matter of time before there will be even more job loses under Rick Perry than George W. Bush.  The labor market in TX is hardly ideal for many workers.  Many earn minimum wage or just barely above it with many workers having no medical benefits at all as in SC.