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Thursday, July 27, 2006

Gentlemen, start your engines

Hey, Portland City Council members, Chicago is leaving you in the dust... again!

Comments (1)

Actually the fix (work around) for this stupid rule is quite easy. From this point forward no one builds a store with more than 89,999 square feet. I might build two stores close to each other but none of them would have more square feet than what was allowed.

I also wouldn't do business inside Chicago proper, lots of places to build around it - sorta like stay out of COP - Gresham, Beaverton, Hillsboro, etc are much friendlier to businesses.

Posted by: mmmarvel at July 27, 2006 06:52 AM

What was the ruling in Baltimore when they tried to make WalMart pay for more benefits because it was bigger than 100K sqft?

I thought the basic principal of making the law apply the same to everyone regardless of sqft was the law. I realize there is an exception for number of employees, but come on, this law targets WalMart exclusively.

Don't give Sam Adams anymore ideas about WalMart.

Posted by: Steve at July 27, 2006 07:26 AM

Sam Adams and fidel are jumping with joy. How much does starbucks or subway pay with benefits? They seem to be in high favor with the coucil and PDC.

Posted by: ace at July 27, 2006 07:32 AM

I meant council - the cowsills were a band from the 6o's

Posted by: ace at July 27, 2006 07:34 AM

Interesting approach. What was it Mao said? Something about "from the barrel of a gun"??

Must be a regional thing. I have a buddy that works at Home Depot in Beaverton, he started at $13.50/hr, and he just walks the floor. And I have another friend who is a checker at Walmart in southern Oregon, she makes $13/hr w/full benefits. And she started higher than $10/hr.

Posted by: Jon at July 27, 2006 07:53 AM

What was the ruling in Baltimore when they tried to make WalMart pay for more benefits because it was bigger than 100K sqft?

I believe that was ruled unconstitutional...
And I would agree.

I dont have a problem with raising the min. wage, but they need to make it for everyone, or none.

Posted by: Jon at July 27, 2006 08:24 AM

So this amply demonstrates that "minimum wage" is not about protecting workers, it's about sticking it to employers.

Elsewise, why wouldn't the minimum wage apply to all employees in the jurisdiction?

How is it that an employee of Wal-Mart in a 90K square foot store is in any way more deserving or in need of wage "protections" than an equivalent employee in the next store over which happens not to be as large?

Never mind equal protection for the businesses, what about equal protection for the employees?

Posted by: David Wright at July 27, 2006 09:24 AM

Why does city hall support a big box store that sells cheap furniture to middle and upper class white people, that has similar practices as Wal-mart?

Posted by: gl at July 27, 2006 10:58 AM

All big box retailers must realize they have certain obligations because of their sheer size and effect on a locality.

Their large footprint requires traffic improvements and maintenence...

Their immense economies of scale provide cheaper goods, sometimes at the cost of existing locally-owned businesses of all sizes, not just 'mom-n-pop' shops (jobs created during construction only exist until the job is done)...

They can create a couple hundred jobs, but they may come at the loss of others, and health care/benefits costs are often avoided whenever possible...

So while the obvious solution is to raise the minimum wage for every sector, that endeavor is often met with furious opposition from the business lobby. Big box stores, due to the reasons stated above, are logical places to start. If you're going to move into an area, be it Portland or Peoria, the message is "We're letting you muscle into the local economy, the least you can do is pay a decent wage".

Wal-Mart and other mass retailers have examples of $10+/hr wages, but it often comes as a trade-off while keeping employees under 40 hours and without benefits of a full-time employee.

Again... review the numbers and you'll find our incomes (adjusted for inflation) haven't actually rised in the past 2-3 decades. Contrast that with the cost of living anywhere in the U.S. and the disparity is alarming. Big Box retailers, with hundreds of thousands of employees, are like small countries in-and-of-themselves... with that power comes great responsibility, or so the saying goes.

So why is this perceived to be some liberal-commie pet issue? In the face of all the damning evidence, we're still avoiding any difficult decisions or responsibility. A city-wide min. wage law may not be the answer, but it's filling a 'do-SOMETHING' void.

Posted by: TKrueg at July 27, 2006 11:46 AM

Oh, I'm just sick and tired of the whole charade.

I don't know about you, but I've noticed that each year when Oregon's "minimum wage" goes up - mine doesn't.

It's all about cutting my wages to pay unskilled people to work in retail.

Oregon has one of the worst economies in the country, but also among the top "minimum wage" requirements. Gee. I wonder if there's any correlation there.

I figure that in another ten years or so, I could quit my present job and earn more by flipping burgers.

Posted by: Max at July 27, 2006 11:58 AM

"Oregon has one of the worst economies in the country, but also among the top "minimum wage" requirements"

I'd love a link proving this, cause I'm skeptical.

Posted by: justin at July 27, 2006 12:08 PM

Dear Mayor Potter and City Council,
I want to thank you for all your concern for my well-being.

First: you gave me CHEAP TRANSPORTATION with light rail. I only have to pay a little over a $1 for a ride which actually costs over $30 per ride. All of that money comes from other people...

Secondly: you gave me CHEAP HOUSING with subsidized housing in the Pearl and North Macadam. Now I only have to pay 80% of the real cost of my new condo. Somebody else gets to pay the other 20% and I don't have to pay any property taxes for 20 years!

Thirdly: you gave me CHEAP ENTERTAINMENT with a new City Tram that will allow me to travel back and forth to OHSU. That really doesn't cost me anything, either. I'm just sorry that my fellow Portlanders have to pay for the COST OVERRUNS, LAND COST, MAINTENANCE COST and so on. But, I'll get over that, too.

Lastly: you're now stopping WALMART from coming to town. But you might be bribed if you can increase the MINIMUM WAGE and BENEFITS just for WALMART'S employees. Hey, if you do, I'm all over that because I didn't take advantage of free education to get my high school degree. And the Lord knows, it was too much trouble to go to any of the community colleges in the area which would have given me the opportunity to get a job ABOVE MINIMUM WAGE. I never did agree with my dad and mom who told me that MINIMUM WAGE was just that, and I had to work hard and study to make more money. Boy were they wrong! I can get everything I need without really working hard. I LOVE PORTLAND!

Posted by: carol at July 27, 2006 12:17 PM

Max- Part of the problem is that the GOP doesn't want a national minimum wage that sets the bar for the entire country. Thus allowing states to compete in a race to the bottom.

Whoever offers more tax abatements and a cheaper minimum wage gets promises of manufacturing plants, with roads paved with gold. This is why you see foreign car companies building in places like Mississippi, who have sold the farm just to get ANY economic activity.

Ever notice the least desirable places to live are the ones that have the lowest property values? That they're also the places that need to give huge concessions to any and all corporations. Oregon doesn't have that luxury, so it's competing in terms it can't possibly win, unless a company feels strongly enough to place value in location. The coastal states will ALWAYS have higher costs than much of the interior... don't pin this on our minimum wage.

Posted by: TKrueg at July 27, 2006 12:17 PM

Some people are being disingenuous about the concept of raising the minimum wage.

Much of the country has held static on the their rate, without increases that correspond to the economy. Who the hell thinks that a $8 or $10/hr wouldn't still be a motivator to move up in the world?? It's still not anything close to a living wage. Heck, the way things are, a person making $40K/yr (a seemingly median income for average 'professionals') can't pay for a house and family, thus making a 2nd wage earner necessary.

Yes, espouse those 'family values' again. Make sure that only those with trust funds and inherited wealth can find that elusive American dream.

Posted by: TKrueg at July 27, 2006 12:30 PM


You do realize minimum wage jobs are usually held by teenagers and part time workers, don't you? Adults stuck in a full-time, minimum wage job obviously made some ridiculously bad choices in their lifetime. I mean, with the free education and all, even a high school drop-out can make up to $25/hr running a water truck.

Christ, immigrants from south of the border are flocking to this country to work. Why are they able to live here AND send a considerable sum of money back home? Maybe because they live frugally and don't spend their earnings on cell phones, plasma screens, Nike shoes and PS2s.

It might help if you removed those partisan Democrat blinders. There's a whole world of personal responsibility, work ethic and achievement out there.

Posted by: chris McMullen at July 27, 2006 01:16 PM

Yeah, look at that self-made man, George W. Bush.

Posted by: Jack Bog at July 27, 2006 01:19 PM

As a former Portlander recently relocated to Maryland, I'll report that the MD law that sought to force Wal Mart to spend at least 8% on health care was struck down because it was pre-empted by ERISA (which pre-empts just about everything), not on constitutional grounds. Also, the law was based on an employer's size (i.e. number of employees), not the size of the buildings.

The law's opponents claimed that it would keep Wal Mart from building here, but that didn't happen. Wal Mart proceeded with its plans even after the law was passed. According to the Baltimore Sun, the law also pressured the company to increase its health benefits and build in-store clinics.

Posted by: ginseng at July 27, 2006 01:50 PM


That doesn't make it good. Anything done at the point of a gun will result in the victim waiting for the first opportunity to flee the situation.

As for TK, only 3% of the population works in minimum-wage jobs. Most of the starting pay at even big-box retailers is above the minimum wage. If you aren't providing $7.50 an hour in value, then why should I pay you $7.50 an hour? If you're worth more than that, you should be able to find a job or start your own business earning that.

This notion that all citizens are subject to the wage whims of greedy CEO's is nonsense. You are a commodity, so go sell yourself for what you're worth. Show up on time, work hard, and see how far that takes you. I guarantee that anyone who does that won't be at minimum wage for long. Problem is, ask retailers how reliable their lowest-paid employees are.

Posted by: Don Smith at July 27, 2006 02:03 PM

Sorry, forgot -

Posted by: Don Smith at July 27, 2006 02:04 PM

There you have it, folks. If you're poor, it's just your own damn fault. Minimum wage job? There's something basically wrong with you. Maybe you worked for Enron and lost your job and your 401k balance. Was that a dumb move on your part, or what? Why should I care? People in our economy always earn what they're worth. How convenient.

Posted by: Allan L. at July 27, 2006 02:45 PM

You know the Mattress World couple, Allan? The ones advertising on local TV all the time? Check out his story:


The guy went through hell and back in order to bring his dream to fruition. If half the "working poor" population had his will and determination, they'd be living comfortably.

It amazes me that after years of the New Deal, welfare, minimum wage and public schools, we still have carping about how bad the 'poor' have it.

Posted by: Chris McMullen at July 27, 2006 03:06 PM

Chris and Don, you still haven't addressed the issue I raised.

Do you feel that having a static minimum wage relative to the growth of our ecomomy makes any logical sense? Wouldn't it make sense to at least build in some increases tied to inflation rates?

If I'm wearing Democrat blinders, how is it that you fail to recognize the impact of min wage on the entire wage scale?

I'm sure you'd also find a way to defend double-digit compensation increases for executives, while the bottom half is nickel-and-dimed. I'm all ears...

Posted by: TKrueg at July 27, 2006 03:44 PM

Tk: But doesn't Oregon have a minimum wage that is somewhat adjusted with inflation?

Posted by: MIchael at July 27, 2006 04:03 PM

Not sure, but I know some states do tie it to inflation or other models, and that the federal standard does not. I think it's at $5.15/hr nationally. I heard today that the U.S. House is putting a raise up for a vote soon... probably won't pass, as the Senate voted it down recently.

Posted by: TKrueg at July 27, 2006 05:08 PM

Good for them!!!

Posted by: Dan Clay at July 27, 2006 06:10 PM

Yeah, hope they gave themselves a pay raise though.

Posted by: TKrueg at July 27, 2006 06:14 PM

Ah, Chris, always the single anecdote to prove the case. Why didn't you cite Oprah? She is the granddaughter of sharecroppers. Doesn't she prove that racial disadvantages don't exist in the US?

After you read the bio of the mattress world guy, go check out this book. It might open your eyes.

Posted by: paul at July 27, 2006 06:54 PM

Whoever offers more tax abatements and a cheaper minimum wage gets promises of manufacturing plants, with roads paved with gold. This is why you see foreign car companies building in places like Mississippi, who have sold the farm just to get ANY economic activity.

I wonder why states like Mississippi feel the need to do this. Could it be that they actually WANT economic activity. Why would they want that when there's a better way - Socialism (TK's enlightened version, of course).

I'm sure you'd also find a way to defend double-digit compensation increases for executives, while the bottom half is nickel-and-dimed. I'm all ears...

Odd, I always thought you were all lefty hyberbole.

Posted by: rickyragg at July 27, 2006 07:13 PM

or possibly hyperbole, I'm not sure...

Posted by: rickyragg at July 27, 2006 07:17 PM

Chris's argument is that minimum wage workers don't deserve a sufficient wage to support a family of four because they choose such low pay jobs out of laziness, rather than necessity. The idea that every minimum wage worker can become the Mattress World guy if he just "pulls himself up by his bootstraps" is patently, laughably absurd.

Please note, Chris, that the service industry is the only growth industry in the US, since your beloved corporatists have outsourced most of the manufacturing and high tech jobs to India and China. The unskilled lower working class isn't going away, it's only getting bigger. How does it hurt the economy for the poorest to have enough to be comfortable, and the richest to be merely rich rather than obscenely rich?

Posted by: Sam at July 27, 2006 08:06 PM

If Wal-Mart was bringing 300-400 UNION JOBS to Portland, those traffic bottlenecks and concerns about "small businesses" would quickly evaporate.

But Wal-Mart is a decidedly anti-union shop, which makes the left (Sam Adams) get all worked up and leads to all the hand wringing about fair trade, and living wages, and increasing parking lot crimes, and traffic congestion.

A Socialist Enterprise like IKEA gets a free pass because they're FROM EUROPE, and they're VERY ENLIGHTENED. Never mind that 90% of the crap they sell at IKEA is now Made in China.

Sam Adams is exploiting the NIMBY complainants that live on Hayden Island with the same gusto they employed while ignoring the NIMBY complainants living in CTLH who opposed the Tram (Rimshot).

Maybe the City could permit a 1st and 2nd floor retail Wal-Mart in South Waterfron if Wal-Mart agreed to put 25 floors of condos on top?

Posted by: Mister T at July 27, 2006 08:30 PM


I don't believe in minimum wage. There, I said it. All it does, in reality, is give employers an excuse to pay crap. "It's the minimum wage, it's government approved." If there were no minimum, you would argue that it's a race to the bottom, but tell me, where in history have conditions gotten worse under a truly free market? Except for global depressions, it never happens.

And you don't have to become a rich, self-empoyed matress salesman to symbolize the American dream. Just show up. You show me one person who's shown up to work every day for a year ANYWHERE who's still making minimum wage, and we'll have something to discuss, but you won't. That person soon learns other employers would be glad to have them. If they aren't willing to sell themselves to better their position, shame on them. Especially at the lower levels, people should ALWAYS be looking to step up. Unemployment is ridiculously low. Anyone with drive can earn a living. Sell other people's crap on ebay if you have to. Heck with free wi-fi and a free-geek setup, there's not even a barrier to entry.

Again, if employers couldn't fall back on the government-approved minimum wage, they'd have to fight that much harder for their labor, because they'd have to price it accordingly.

And you show me evidence that companies who offer $10/hour to start would offer $8 if the minimum wage went away. They pay ten because it's worth ten.

If you're so concerned about the unskilled entry-level laborer feeding his family of four, then propose legislation to bump minimum wage to $20/hour. See what happens. Unemployment is what happens.

This country doesn't need a minimum wage. It artificially sets the bar low. Don't believe me? Look what happens when price controls are released on commodities. They go down because companies have to compete, but sales go up, because more people will pay that amount.

Drop minimum wage and companies have to pay more attention to what they offer. Some idiot companies will offer $4 an hour. They will get the dumbest, laziest, most unqualified employees and eventually, learn from their mistake.

Posted by: Don Smith at July 27, 2006 08:58 PM

Because I know some very consciencious volunteers, and because I believe that some of the most important work is not compensible in cash (raising children, for example), I am not sure about your argument, Don.

But what I really wanted to say is that I find Sam the Tram's "good guy" activist antics pretty amusing when viewed in the context of the shady dealings surrounding the tram (rim shot), SoWhat, and favored developers generally. There was an opinion piece in yesterday's O by writer Mark Acito announcing "PoBo" (Portland Bohemianism) as the new name for "Portland's independent spirit". That got me thinking: Shouldn't we also have a name for Portland's anything-but-independent spirit? For the City's tendency toward backroom deals with favored insiders, For the lawyers and journalists who advance in their careers by NOT representing their clients or covering stories? For the custom of giving perks to those who backstab whistleblowers and reformers?

How about PoHo?

Posted by: Cynthia at July 27, 2006 10:41 PM

I am sure many on this list will not appreciate it, but an argument for the minimum wage is to discourage low productivity jobs in the economy.

The argument is that people who would get below the minimum wage should be trained so that they can make higher wages. Of course for this to work well and fairly you need to have good community colleges and income supports while people are getting retrained.

Business owners might respond that they can provide on-the-job training better than community colleges. However, my experience in the workplace is that employers have very little long term commitment to lower wage workers, and vice versa.

Posted by: Anon at July 28, 2006 12:04 AM

TKrueg Chris Don,

Could you buy the notion of eliminating guaranteed rates of returns on capital? Such capital must belong to someone.

Posted by: Ron Ledbury at July 28, 2006 01:04 AM

I think Maryland, and Chicago are on the right track, for years we have heard how the lack of health care or insurance has radically raised the cost of everyone's insurance in that indigent health care has become part of the overhead of the industry, and last minute health care in an emergency room is more expensive and neglected health problems cost more. Kitzhaber's example he gives of the person cut off from his anti-seizure drugs then lingering in a coma in intensive care for months and millions as a result of not taking said meds is an extreme but illustrative example.

The health care issue was also at the heart of the strife with the unions at the major grocery chains, that are increasingly competing with Wal-Mart.

I think Maryland went at it wrong, and so I think is Chicago. What needs to be done is the KISS approach. There should be a minimum standard set for health insurance for any employee, and the cost and benefits defined for a full time employee. If the part-time employees do not qualify, the employer should not get a free ride, for every hour worked they should be required to deposit a fee, like unemployment insurance, or transit tax, into a pool to provide access to affordable insurance. It should be about 10% more than their full time insurance costs, to pay for administration of the pool by the state, and to encourage businesses to instead offer it themselves to part time employees, and to provide competition to any insurance monopoly the state would establish to provide this service. It should provide for employees working two part-time jobs to be able to pool this fund for insurance benefits.

Many good and honorable businesses then would not be forced to cut benefits to thier employees to remain competitive with the bloodsucking ones.

I would also encourage any folks to watch the Frontline Episode on Walmart, as well as the Wal-Mart movie which is out on DVD, before they espouse how wonderful unregulated free enterprise is, and before we want to worship it like Germany did once.

Posted by: John Capardoe at July 28, 2006 08:16 AM

When did Germany do that, John? Please tell me you're referring to Nazi Germany because I can't believe this thread has failed to invoke a Nazi reference.

Posted by: Anahit at July 28, 2006 10:03 AM


The cause of the high medical costs is the monopolization of the industry by folks who demand to be able to extract economic rent, monopolistic rent. They do not wish to merely make a reasonable profit but an extraordinary profit. The vast pool of public employees that use their services, at the monopolistic prices, make them uninterested in serving the rest of the folks at any reasonable price, nor even less than a monopolistic price. The game is to milk the taxing power of government to assure profits. This scheme will assure that inflation rates for health care will continue to out-pace other parts of the economy for years to come.

It is, or was at a time in the past, OK to limit the power of companies to abuse monopoly power. Today the monopolists have a nearly blank check so long as the people within government do not personally experience the pain from those higher prices.

The intermediate solution is to offer only straight pay to public employees without the specific reference to health care delivery by reason of an employee's status as public versus private. This will of course focus the attention of public employees for themselves to call for a reduction in the monopolistic prices for health care, much to the chagrin of the private owners who cringe at the very notion of risk, the risk they could lose money just as easily as they earn it. The public employees have been bought off already and have only one more thing to do, and that is to make the medical industry monopolists even more profitable.

Don't buy the talking points of the private capitalists, but that of a genuine economist. Dare I ask if PERS/OIC holds an ownership interest in hospitals, and demand a guaranteed return there too, just with their ownership interest in Safeway AND WALMART.

Posted by: Ron Ledbury at July 28, 2006 10:20 AM


One thing I do not understand about the "intelligencia" (such as it is) in Portland, is why it tends to be so smug about Nazi references. Hannah Arendt, writing in "Totalitarianism" says it is not about the German national character and could happen anywhere without most people realizing what was happening. She shows us that the essential nature of evil is banal. Doesn't it, therefore, make sense to try to understand the factors that lead to totalitarianism and to keep the memory of Nazi Germany alive, so as to avoid going down that road unwittingly?

Posted by: Cynthia at July 28, 2006 10:55 AM

Does anyone remember Dave Lister's comments about some citizens in portland being "Poor by Choice"

Posted by: gl at July 28, 2006 10:57 AM


I'd like to thank you for your weak ad hominem attacks on the messenger rather than the message. You make my points so much more thoughtful and insightful in comparison. By all means, keep listening/watching Sean Hannity and Rush to learn more ingenious ways to debate dishonestly.

Posted by: TKrueg at July 28, 2006 11:51 AM


You're welcome, if redundant.

In your posts, the messenger IS the message. You characterize irony as ad hominem attacks and don't seem to understand the difference.

Your posts are rife with your assumptions and conclusions passed off as fact: "So while the obvious solution is to raise the minimum wage for every sector...".

If what you so prolifically espouse isn't socialism, what is it? You're a "lefty" aren't you? No shame there; admit it. If that term is what bothers you, I'm sorry. Give me another to use. There seems to be no aspect of capitalism that passes muster with you and no amount of government intervention in people's lives and economic markets that doesn't (unless, of course, it's something conservatives push). I'm just calling it as I see it - just as you are.

I'm still waiting for your explanation of why poor, misguided Mississippi shouldn't seek "economic activity, BTW. The paragraph I quoted above is a perfect example of your rhetoric. The logical extension of your statement is that Mississippi shouldn't "sell the farm" to attract that nasty economic activity - they should tell their unemployed citizens to wait for the "right" industry, (code for "union industry", no?) to come along - and stay poor on principle.

By all means, keep listening/watching Sean Hannity and Rush to learn more ingenious ways to debate dishonestly.

Dishonest debate?

So anyone who questions the validity of your "facts" or point of view is dishonest? Now we're talking ad hominem.

Posted by: rickyragg at July 28, 2006 01:12 PM


Do you think it should be OK for a private company to REFUSE to accept investment (stock ownership) from government trustees of public employee savings, otherwise known simply as "private" Capital?

Posted by: Ron Ledbury at July 28, 2006 01:25 PM


Sure, why not? Are they prohibited from refusing now?

Posted by: rickyragg at July 28, 2006 01:35 PM


BTW, I think I get what you posted above and had never looked at the "market" that way.

Interesting dot-connecting.

Posted by: rickyragg at July 28, 2006 01:39 PM


I'll let your lack of comprehension skills slide, but I'll answer your question about Mississippi.

If you're car company or widget manufacturer looking to build a plant, it's likely you're going to build in the most economically depressed area possible (not Oregon). Even Mississippi is too expensive for many industries that would rather do so in SE Asia. But shipping cars overseas can negate much of that cost advantage. States like Mississippi get caught in a competitive race with other depressed states to attract these vultures, failing to realize they were on the short list all along.

They then forego potential long-term tax windfalls for the promise of a few hundred/thousand jobs that may or may not be there in 20 years. Plants this size are the stuff of legend, where cities and government budgets' survival hinge on this giant elephant in the room... when it leaves, the local economy falls like a house of cards, as if the initial job spike wasn't worth it to begin with. The plant will move on to whatever city/state/country has nothing to lose... rinse, repeat.

I think I know where you stand on Portland's tax-abated condos... how is this any different or better? In the case of Intel in Hillsboro, haven't there been debates along this line? Corporations know that when they come knocking, they've got all of us by the balls. I won't argue companies like Intel or Nike haven't had a significant impact on our economy, but when these giants of industry threaten to leave every 5 years, like clockwork, we all have to put our foot down. What kind of community partner tries to leverage its size against it??

The whole economic model is broke... i defy you to tell me otherwise. I'm a Lefty because the GOP doesn't care or want to fix it, and Dems traditionally haven't been as eager to let corporations exploit us. Simple. You see it as some socialist agenda, but my views aren't shaped by cliched political boxes. I'm a capitalist, a democrat, a socialist, a greenie and a libertarian. Yes, it's absolutely possible.

Posted by: TKrueg at July 28, 2006 02:01 PM


Dare I ask if PERS/OIC holds an ownership interest in hospitals, and demand a guaranteed return there too, just with their ownership interest in Safeway AND WALMART.

What are you talking about? OIC can't demand any return on investment for their ownership in Safeway or Walmart or any company. They might demand a specified ROI on money they lend to such entities, but corporations have no control over their stock prices, short of illegal market manipulation (reporting massive earnings, dumping corporate-owned stock, then repurchasing after restating earnings as losses, e.g.). How would OIC go about demanding a specified profit? Unless you're meaning something different, in which case, you should try to word your prose more clearly, as I usually can't understand what you're driving at anyway.

That's not a knock, but your posts generally have an obscure wording that borders on tin-hattedness and whispers - not that your points are tin-hatted, it just sounds like what you hear from the Tin-Hatted Class. Point being, all of us would be better understood if we would say what we mean and support or propose what we truly support or propose rather than obfuscating and beating around the Bush. So to speak. If you catch my meaning. See, there I go.

Posted by: Don Smith at July 28, 2006 02:13 PM

state pension ownership in public companies can team with other institutional investors and once they get over the 5% hurdle can dictate changes and actions to the board.
Carl Ichan ring a bell?

Posted by: gl at July 28, 2006 02:56 PM


Plants this size are the stuff of legend

True. Legend. As in not fact. If a municipality brings in a factory with massive tax breaks, it brings jobs which boost revenue to that municipality even if the factory itself never pays any property taxes. If the land was unused before (i.e. no revenue) and is completely untaxed with the factory (which doesn't happen that way anyway), the municipality is STILL better off because of the economic engine. Places like Raleigh, NC that have these industry zones get it. The industry pay little tax, but pays for infrastructure in and around the zone, to cover the cost of people getting in and around the zone.

If those factories leave, they have to go somewhere that doesn't have that built-in advantage, so they won't likely leave. Workers in the area become more skilled and it becomes a regional specialty, bettering conditions for the factory and the municipality.

Where cities get in trouble is whent hey start banking on revenue that doesn't currently exist and making upfront investments (subsidies, which I as a libertarian abhor) in the hopes of future performance, which is invariably less than expected or under threat of being sucked away when the plant moves. To think that a company would invest in a property that creates massive revenues for a municipality, and then just up and move in five years is idiotic. Does it EVER happen? I'm sure. Some companies are idiotic. Does it usually happen? No. There's no "epidemic" of this type, just fearmongering and classist argumetns against the rich corporations.

Corporations don't have us by anything. They're trying to get reasonable wages for a given output. If that means they go to Mississippi because labor's cheaper, and the cost of living is lower, good for them. Alabama is becoming quite a powerhouse in that regard, and the people there, largely undereducated, are starting to make a decent living. What a horrible outcome....


Posted by: Don Smith at July 28, 2006 03:05 PM

Why shouldn't large corporate factories pay their share of taxes (presumably) like every other business? They've convinced us that we owe them a debt of gratitude for just showing up, but their revenue is proportionate to their size... I'm not arguing that bringing jobs to an area doesn't have a big impact, but tax concessions don't really fit with Free Market-ers logic. They're avoiding a responsibility that most businesses are faced with, and our governments have made it perfectly legal. Hooray!

I also think you misread my statement about companies threatening to leave every 5 years to keep the pressure on regional government. This was not meant to say a company would move a NEW large plant after only 5 years in operation. The tactic is (and has been shown with companies like Sony, Hyundai, and chip makers here in Oregon), get in the door and demand more. If you think this scenario hasn't been played out in every state thousands of times, you're kidding yourself.

By your logic, it's OK that American companies like Tyco have/had offices in Bermuda to avoid their tax and regulatory obligations. Or that it's fine that many professional occupations, in both white and blue-collar industries, have been moved offshore in the name of profits. We're headed for a serious crash, and if our static wages and rising debt and costs of living don't convince you, the decline of professional jobs should. Everyone should just make money off real estate while they can...

Neo-patriot: profit and party before country.

Posted by: TKrueg at July 28, 2006 03:47 PM

I did have a few more thoughts on health care and its delivery. I think the biggest problem is we are looking at health care as one big pot, instead of in three distinct areas. Actually I think the free market is starting to respond to that, but I do agree with Ron on some points even though I am not an economist.

Health care and delivery systems need to be broken down into three or four maybe five pots or catogories:

1. No Brainer Basic, this was the area I was so impressed with how Costa Rica handles it. No hospitals, no Drs. This lady who I presumed was a nurse praticioner has a little rolling cooler brief case and comes door to door on a regular basis (I think quarterly or biannually) and gives the Kids thier shots, and does a bloodpressure check, a look into the eyes, ears, nose and throat and a quick Q & A of adults off a checklist, and recommends they go into a clinic if they need be. Checks off thier chart and goes to the next house. Clearly cost effective deliver of basic services 99% of the folks need. No big facilities no, TRAM to get you there, everyone except a few religions who could opt out needs this routine care.

2. I know what I got gimme the drugs to fix it.

I have a problem with strepp, I know what it is when the white patches show up, over the years I have developed a relationship with my Doc, so I don't waste his time or mine and he phones in a perscription. The woman of the house has an occassional bout with bladder infections the family Doc is on board with that one as well as with our kids we when through the ear infection phase when they were toddlers. I think the Rite Aide quick stop clinics and other drug store chain nurse practioners when you have to go get the bubble gum penicillin with the kid are a good capitalistic alternatie as opposed to an emergency room on weekends are also a good solution to this.

3. I'm feeling weird what's wrong with me.

You do need a Doc and thank God we have a good one we trust. He is private and we gladly pay the additional over the co-pay of the insurance pays. Your GP is essential when you do have something seriously wrong with you or your family. But I would really like to be able to pay him a retainer, instead of the insurance premium.

4. Medical Savings Accounts,
I think the tax deductable medical accounts are great if you could only roll them over into a retirement account if you don't need them they would serve the purpose Ron wants to make people care about what they pay. They were a godsend when the kids needed braces and insurance only covered $500 of the $10 grand.

5. All hell breaks lose.
Two of our friends being 50 something boomers have battled cancer. This is where I like I believe Wyden and Smith's proposal on Catastropic care. Both these friends a man and woman battled cancer and lost but the man's wife confided in me it was a $400,000 battle and she and the kids would have been wiped out if not for insurance. One of the health care "talking points" as Ron likes to call them I have heard is a child being born with prematurely and a young couple having 20 years worth of payments to settle the $1/4 million hospital bill.

I think we could work around deliver systems for health care that made sense. If we broke it down. We also should be getting health and dental care to kids.

Anyone who lives or does business in this country should start talking to eachother and figure out how to solve this problem so we don't have winners and losers based on economic factors particularly children.

Posted by: John Capradoe at July 28, 2006 04:30 PM

Hey Jack... this seems to be your area of expertise. Weigh in! Teach us! Inquiring minds want to know...

Posted by: TKrueg at July 28, 2006 04:55 PM


Let me let you in on a secret: businesses don't pay taxes. They don't pay their fair share because there IS no fair share. Businesses merely collect taxes. Individuals pay taxes. Either directly to GOVERNMENT (see, that's big government) or indirectly through higher prices for the goods and services they buy. No business has ever paid a dime in tax. Because businesses don't own wealth. Individuals do.

All you lefties ever succeed in doing when you raise taxes on business is discourage economic growth, raise prices, and raise unemployment. You cannot honestly argue that "big business" should pay its fair share.

Follow the money. Business earns a dollar. They make 10 cents on that dollar. Business owner pays 2.5 cents to the government as personal income. Goverment sees that 7.5 cents sitting there and wants its cut. That 7.5 cents could either have gone to becoming more competitive by lower prices, or into expansion, hiring another person to hopefully bring in another dollar. But, no, government takes its cut and now the business is forced to do more with less. If the business owner wants to make the full 10 cents, he now has to raise prices to get the income he wants to make. If he can't raise prices, he's squeezed. He now can't expand his business or he makes less profit, making the venture potentially not worth the effort.

I now you don't appreciate that balance, as I bet you've never run a business, but that's real.

Oregon actually has a decent business climate because of it's lack of a corporate income tax. It's the personal income tax that hurts small business. And Portland proper's business fee which is an exorbitant cost of doing business for a municipality.

All of the above are why I support a sales tax, and the FairTax, which will in my opinion make this whole thread irrelevant. If there's no income tax, it won't matter where businesses settle, the entire country will become an enterprise zone. Nothing could be better for our economy, especially at a time where massive deficits and a slowing consumer and housing economy are looming.

Posted by: Don Smith at July 29, 2006 03:55 PM


Let's simplify the debate. Presume there are no incorporated entities, just sole proprietors. This would be consistent with your claim that "No business has ever paid a dime in tax."

Would it be fair for government to inject itself into the freedom to contract between two individuals, whereby one person could not hire another unless they were paid X?

Longer rant . . .

Posted by: Ron Ledbury at July 29, 2006 09:32 PM


As I posted in your blog, no, it would not be fair for government to step in and write clauses into our contract for employment without my consent. That's what a minimum wage is, that's what corporate subsidies are, that's what government-erected barriers to entry (licensing requirements) are. They are immoral and unfair in EVERY instance. You will find I oppose them all.

If I were to dismantle such government coercion, though, I would start at the top with subsidies, then licensing requirements, and finally minimum wage. Minimum wage is largely a red herring that doesn't much affect the economy. If it went away, no one would really notice much. Wages wouldn't change much. Only 3% of workers are at minimum wage.

However, giveaways are billions. Local licensing requirements for things as ridiculous as hair styling cost low-skill workers opportunity, and as any economist will tell you, every missed opportunity carries a cost.

I encourage all lurkers to click here for a great presentation on the theory of "No force, No Fraud", to which I subscribe.

Posted by: Don Smith at July 30, 2006 09:14 AM

Don, thanks for the link to FairTax.org, it's an interesting idea.

Unfortunately, while I'm sympathetic to the idea on its face, I fear there are a few things the plan's supporters aren't considering when making their rosy projections.

I've just posted an article on the subject.

Posted by: David Wright at July 30, 2006 05:33 PM


Thanks for highlighting the FairTax. You missed the major point, though, on embedded taxes. Embedded taxes aren't those corporate income taxes you pay - it's the cost of the taxes payed on the labor to produce a good. Let's say Wal-Mart sells something for $5.00. It's cost to purchase that good is $2.50. Its cost to sell that good is $1.50, and its profit margin is $1.00. The cost to sell the good itself, the $1.50, includes wages and FICA, keeping out admin. Take FICA out and you've saved 7.65% on the $1.50. But, lo!, the cost to produce it goes down, too, by some number. It is estimated that the cost of goods includes 15-25% embedded taxes. You may assume any amount in that range, but on the whole, prices will drop before going back up.

I'm not as optimistic as the authors on the range of embedded taxes, but I assume at least 15%, just accounting for FICA (both halves). Other taxes, including the corporate income tax, go away, too, but so do compliance costs, which are staggering.

As to your house example, you are simply wrong. You need to read the book before coming to your conclusions, especially if you're going to blog on it. Again, housing is labor intensive. Assuming only a 15% drop in cost-os construction, that leaves you at 85 cents to the dollar. 30% of 85 cents is 25.5 cents. Assuming the low end rise, your house now costs $1.105 per dollar of "old" house. That premium is not far beyond the "new" house premium now anyway. And what's wrong with "old" houses becoming more valuable? If you own one, you're sure going to be happy. But the bump will be one-time only. Once existing houses have appreciated due to the transition, the FairTax will be built in.

First-time homebuyers will have more in their pockets, so buying that new home or first old home won't hurt any more than it did before.

Be careful before you decry something you don't fully understand, and I mean that in the sincere sense, not the "you aren't smart enough so be quiet" sense. I know you're smart enough, but the ripples in the pond on this one are big, and a glimpse just doesn't allow enough understanding.

And the 30% number isn't fair, either. Unless you're going to describe the 25% income tax bracket as the 33% bracket, or the 35% bracket as the 54% bracket, use the inclusive 23% number. If you spend a dollar, 77 cents go to the retailer, and 23 cents goes to the government. If you earn a dollar, 25 cents goes to the government and 75 cents goes to you. Apples to apples.

I say, "Jump on that bandwagon!"

Posted by: Don Smith at July 31, 2006 04:06 PM


Thanks for the remarks. I've responded in detail to your comments on my blog.

Bottom line... you're right about the FICA... but the math still just doesn't add up.

And the tax-inclusive versus tax-exclusive point is a bit of a red herring anyhow... since the basis for each tax is completely different, trying to compare percentages alone is pointless to begin with.

Anyhow, extensive comments here.

Posted by: David Wright at July 31, 2006 10:08 PM

OK, first, the money comes from:

a) visitors to the US, who spent over $100B here last year,

b) tax evaders of all stripes, including drug dealers and corporate raiders, each time the buy an Escalade or a Lear Jet, and

c) the repatriation of offshored money currently evading taxation.

Obviously, if receipts were ~$2TT last year, and these account for at least $300BB in new spending, our net tax burden, for those who paly by the rules, drops 15%. This doesn't even account for soft tax cheats, people who take a little bigger deduction than they should or pay landscapers cash, or whatnot.

On the whole, though, most people will wind up about the same, with one exception - the poor will be completely untaxed. Completely. There is no ambiguity on this. No FICA, no income tax, nothing. And no tax is more regressive than the payroll tax.

As for Walmart, their profit margins are so skinny, that the embedded taxes are smaller than most businesses. I think it's probably not representative to use them as a hypothetical. I know that's a bit of a dodge on the question, but most businesses don't operate on 4% margins. Soooo, Wal-mart's prices will be relatively higher, allowing Mom and Pops to be more competitive, which we all would assume is a good thing.

Let's go to a dollars scenario. You make $20/hour. Your employer pays you $21.422 an hour with your 7.11% FICA. You are in the 27% bracket with everything. Meaning you get to keep $14.6 an hour.

You would like to buy a widget. Today, the widget costs $14.60. You have to work one hour to pay for that widget.

Tomorrow, the FairTax goes into effect. Assuming your employer pays you $20/hour, but keeps the 7.11% so he can simply make more profit, prices soar 30%. Your widget now costs $18.98. 23% goes to the Feds and the employer keeps $14.60. You only have to work 57 minutes now to earn that widget.

And you get the prebate. And we haven't factored in any price drop for embedded taxes. And we haven't factored in any increase in economic activity due to the reduction in burden on business. And you still have an extra $1.02 in your pocket.


Not really. It just highlights the real math involved. Most people don't know what they pay now ("I got money back this year!"), so they see this new tax as worse. But it's not. Prices go up 30% (worst-case scenario), but you got a 37% raise! If you're poor and your tax burden was low, the prebate would be a bigger contributor to your bottom line, thus offsetting the price increase. The rich, who pay a lot in tax, will pay a lot in sales tax, because they tend to buy more. If they scrimp and save, they'll pay less, but Paris will spend it for them once they die, so the government will get theirs eventually.

Posted by: Don Smith at August 1, 2006 10:57 AM

Sorry to keep posting here, as we've strayed so far from the original thread... though I offer as meager compensation, a recent post about minimum wage hikes to get back on track. ;-)

Response to Don at TwoPennies.

Posted by: David Wright at August 1, 2006 11:04 PM

"the poor will be completely untaxed. Completely."

I would encourage you to expand your inquiry to include management of the money supply. The CPI as a proxy to measure the relationship between effective money supply (including M3 and even the leveraged exposure to risk of hedge funds) to wages from labor has been rendered almost fully useless.

The proof is the individual focus of the vast majority of folks on credit rating and the net-negative level of savings (or just unsustainable debt loads relative to wages to cover the personal debt). Lot's of assets are little more than just documents noting levels of personal debt; it is matter of PR framing.

Not all taxes are called "taxes." To restore equilibrium the minimum wage would have to leapfrog substantially to match that of the highly leveraged face value of the prices associated with corporate takeovers by those folks that are dedicated to monopolizing control of the bulk of economic activity.

Posted by: Ron Ledbury at August 2, 2006 02:41 AM

The unskilled lower working class isn't going away, it's only getting bigger.

You're right...its flowing across our borders by the thousands per day.

Posted by: Jon at August 2, 2006 09:43 AM

At least the FairTax encourages savings by detaxing capital gains. Our current system rewards profligate spending, by contrast.

Posted by: Don Smith at August 2, 2006 12:50 PM

[Posted as indicated; restored later.]

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