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  • Another Picture Worth 1000 Words [View article]
    That's not true. Federal taxes as a percentage of GDP have not trended lower since World War 2, except in the last 5 years. Until 2010, they've been quite steady, fluctuating in a range of 15% to 20% of GDP. (They tend to spike up during recessions, not because taxes go up, but because GDP goes down.) In the chart linked below, we see a sharp drop over the last 5 years, but that's not long enough to call it a trend. In fact, what we're seeing there almost certainly is the revenue effects of the Great Recession. What's really happening is the federal tax burden is gradually shifting away from excise and corporate taxes and toward greater reliance on individual income taxes and employment taxes (the latter counts Social Security and Medicare). As of 2015, we're barely taxing corporate income anymore. Summing up, the revenue mix is becoming more regressive, not shrinking. If a divided Congress manages to pass corporate tax reform, corporations will get streamlining and lower nominal rates, but not a lower overall tax burden. The political pressures from the general public will be in the opposite direction, to shift some taxes from individuals back to the corporate sector, and this will impact net profits. This won't happen overnight, but investors should view this likelihood as a future drag on shareholder returns over the long term. I'm trying to jump over the emotion-laden partisan clutter and be realistic about what's going to happen. Corporate profits have benefited from low taxes, low wages, and low interest rates; and what I'm arguing is all three of those tailwinds are temporary, so we have to expect slower forward profit growth.
    Nov 27, 2015. 11:00 AM | 1 Like Like |Link to Comment
  • Another Picture Worth 1000 Words [View article]
    I think you missed a headwind: Corporate taxes are at the lowest level since World War 2, and that won't last either. Companies are likely to pay more taxes going forward. Although the U.S. has a high nominal corporate tax rate, few large companies actually pay that rate, and some pay little or nothing. Tax reform, if and when it comes, probably will trade a lower nominal rate for closure of many of the loopholes that have turned the nominal rate into a fiction.
    Nov 27, 2015. 01:01 AM | Likes Like |Link to Comment
  • Why Icahn Is Wrong About Freeport-McMorRan [View article]
    I sold FCX last week, preferring a certain tax loss to a potential total loss. Sure, FCX may turn around if copper and/or oil recovers, but that's a dice roll. In my view, buying or holding FCX is gambling, not investing.
    Nov 27, 2015. 12:25 AM | Likes Like |Link to Comment
  • Major fast-food restaurant strikes planned for today [View news story]
    So she admits 60% of her "team members" are over age 21 (so much for the argument that minimum wage only affects kids; also, note that the legal age of adulthood is 18 in most places, and quite a few people leave the nest and are solely responsible for supporting themselves at that age), yet she wants to pay them $7.50 an hour, and expects them to live on that? How many of her other suppliers does she insist provide goods and services to her business at less than their cost?

    If you're going to think of labor as a commodity instead of human beings, then at least give some thought to what it costs to produce a commodity. Workers need sustenance to provide their labor. Even slave owners had to provide a subsistence living to their slaves if they wanted to get work out of them. If you let employers pay less than subsistence wages, then you have to pay taxes for government welfare to make up the difference, in effect subsidizing those employers' labor costs from your pocket.
    Nov 22, 2015. 02:20 PM | Likes Like |Link to Comment
  • Freeport-McMoRan: Is This A Buying Opportunity? [View article]
    I wish the best of luck to whoever picked up my 200 shares for 8 bucks and change.
    Nov 22, 2015. 02:16 PM | 1 Like Like |Link to Comment
  • Freeport-McMoRan: Is This A Buying Opportunity? [View article]
    Bought FCX in 2013 at $30, dumped it yesterday at a large loss, before the dividend is eliminated and the stock goes even lower. A stock that steadily trends lower, lower, lower is not my ideal for an investment. I don't foresee copper, gold, or oil prices recovering anytime soon, so I don't see the outlook improving for this debt-burdened company. They have some good assets, but even good assets lose their practical value in a weak market for their products. The entire mining sector is in the tank; I owned a total of four mining stocks (ACI, BTU, FCX, and KGC), of which I've now sold three, and I've taken a bath on all four. With no turnaround in commodity pricing in sight, this is not the time to invest in resource companies, IMHO.
    Nov 21, 2015. 12:33 PM | 3 Likes Like |Link to Comment
  • Major fast-food restaurant strikes planned for today [View news story]
    To the extent this is relevant, and it's not, cash pay is only one part of military compensation. You didn't count reenlistment and retention bonuses, housing allowances, or incentive pay, overseas pay, hazardous duty pay (when applicable), etc., nor the free health care and pensions that active duty service members get. And, unlike many minimum wage workers, the E5 can look forward to annual COLAs, and his/her basic pay rising with increased years of service and promotions to higher pay grades. (Fwiw, during my Vietnam tour of duty, after being promoted to E4 my max military pay was $258 a month including all allowances, which was less than the $1.60/hr federal minimum wage at the time x 40 hrs a week. After I got out, the VA paid my tuition and gave me $160 a month for living expenses while in school. Now, at age 69, I get VA partial disability benefits of $1,447 a month, plus I'm eligible for free VA medical care. Do I feel shortchanged? No, I feel I've been treated fairly well. I defended our country in time of war, without expectation of reward, as millions of other Americans have done before and after me; and then I came home to a civilian career, supported my family, paid taxes, voted, and contributed unpaid community service, as countless other Americans have done.) The minimum wage debate involves whether people working 40 hours a week -- the majority of whom are adult breadwinners -- can earn enough to live on. In our work-centric society, every full-time adult worker should earn at least subsistence. The current federal minimum wage of $7.25 an hour does not satisfy that need. The simple fact is that if a person can't support himself or herself by working, then you and I as taxpayers will be forced to help support these people through government welfare programs. Even if you don't care a whit about your neighbors, it's in your self interest to support a subsistence-level minimum wage. If you don't, the effective consequence is that you will pay taxes to subsidize employers' labor costs.
    Nov 21, 2015. 12:08 PM | Likes Like |Link to Comment
  • Is Noble Corp. A Buy Right Now? [View article]
    The dividend wasn't "surreal" to those of us who bought NE years ago when the share price was in the 30s. My yield on cost, which is what matters to me, is now >1.7%. I'm not saying the dividend cut wasn't necessary or prudent. Obviously it was in present circumstances. But trying to put lipstick on this pig can't change the fact NE has been a disaster for its long-time shareholders. Buy more? Nah. I'm waiting for a chance to get out. For one thing, as fracking costs continue coming down, how will undersea oil compete, especially in a glutted market?
    Nov 18, 2015. 02:08 PM | 3 Likes Like |Link to Comment
  • Major fast-food restaurant strikes planned for today [View news story]
    The world's population of horses declined precipitously after cars, trucks, and tractors came into widespread use, but despite machines and robots there are more humans than ever, and we're all getting food somehow. Modern economies work fine without human slaves or paying workers starvation wages. Companies can pay liveable wages and still provide good returns to investors.
    Nov 18, 2015. 11:08 AM | Likes Like |Link to Comment
  • Non-Farm Friday - Is Our Economy Working? [View article]
    I'm pretty sure it's not the average voter (Republican or Democrat) who's behind that.
    Nov 18, 2015. 11:01 AM | Likes Like |Link to Comment
  • Major fast-food restaurant strikes planned for today [View news story]
    Care to share which restaurant it is? I live in Seattle, and this issue has been extensively debated in local blogs, where some commenters have made similar assertions, i.e., that Seattle's $15 min. wage is killing restaurant jobs. There are several things wrong with these claims. First of all, Seattle doesn't even currently have a $15 min. wage -- it's phasing in a $15 min. wage over a 3 to 7 year period, depending on size of business -- so if any Seattle restaurant closed recently, it's not because it has to pay its workers $15 an hour, which is not required of any Seattle business at this time. Secondly, the restaurant industry is characterized by a multitude of small businesses that come and go, so one anecdote about one restaurant going out of business is not indicative of anything more than normal business turnover. City business license data do not support that Seattle is experiencing a net loss of restaurants. In fact, the restaurant business is booming here, in part because Seattle has a large population of single Millennials in well-paying tech-industry jobs who provide a solid customer base for local restaurants. I have no idea what your friend's story is, and it's possible he's closing a Seattle restaurant due to labor costs, but if so, that's atypical of what's going on in this city and suggests management issues specific to his business. My own neighborhood has plenty of restaurants, many of which have been in business for many years, and to my eyes they all appear to be thriving. It also should be noted that Seattle has a very high cost of living and even $15 an hour is a bare-bones income here. Washington's statewide minimum wage is $9.47 ($8.05 for youths under age 16), and you couldn't live on $9.47 an hour, working 40 hours a week, in Seattle due to this city's high housing costs.
    Nov 17, 2015. 10:17 AM | 2 Likes Like |Link to Comment
  • Major fast-food restaurant strikes planned for today [View news story]
    That's an argument for raising EMT wages, not keeping fast food wages below subsistence.
    Nov 16, 2015. 10:28 AM | Likes Like |Link to Comment
  • Non-Farm Friday - Is Our Economy Working? [View article]
    "The GOP used to be honorable."

    Half of the Eisenhower-Nixon ticket was honorable. Sorry, couldn't resist posting it. I'm one of those who remembers the 1950s, although I was pretty young then.
    Nov 15, 2015. 04:07 PM | Likes Like |Link to Comment
  • Major fast-food restaurant strikes planned for today [View news story]
    "Can't those 'on call' workers also do freelance jobs?"

    Uh-huh, yep, write the Great American Novel then try to find a publisher. I've been working on that myself for going on 50 years now ...
    Nov 15, 2015. 04:03 PM | Likes Like |Link to Comment
  • Major fast-food restaurant strikes planned for today [View news story]
    I wasn't born into a well-off middle class family. I was the third of six children of a father with a demanding professional but rather low-paying job (newspaper reporter) and as tay-at-home mother. (News reporting has never paid very well, but does anyone want to argue that job isn't important, or doesn't require professional skills?)

    I was raised in a neighborhood that was solidly middle class by 1950s standards, but we didn't have much compared to kids I went to school with. I left home in my teens, and from then on was extremely poor while working my way through college in a succession of dirty hard-labor minimum wage jobs. Other than a couple of very small scholarships, nothing was given to me. Between college and professional school, I volunteered for military service and served in Vietnam, then went to law school on my G.I. benefits (which I don't think of as a gift or freebie).

    For me, everything came through hard work and sacrifice, and the only way I ever got anything was by working hard for it, about which I have absolutely no complaint because millions of my fellow Americans have done the same thing. There definitely were people who had it much easier than me simply by accident of birth. I didn't complain about that then, and I'm not complaining about it now, and above all I'm not asking for them to have less because I didn't have as much as them.

    Not everyone is as tough and persistent as I was; my point here is, there's a lot of truth to the belief that hard work and grit can take you far in our society, but that's not a solution for the masses facing the need to make at least a bare living. It takes exceptional individuals to do what people like me have done. And yes, the rewards should be exceptional for those who do it (although they aren't always). (I'm now 69, retired, and my circumstances are well above average, but I wouldn't call myself rich, although today's minimum wage worker probably would consider me rich, at least compared to them. I'm worth about $1 million.)

    But what we're talking about here is minimum wage, not success. At issue is whether people who show up for a job, follow the boss's directions, work 40 hours and are productive, should be paid enough to pay their basic expenses like food and rent. If they're not, then taxpayers have to make up the difference with food stamps, rent subsidies, and other forms of welfare, because these low-wage workers still have to live. When that happens, taxpayers are in effect subsidizing the labor costs of low-paying employers. From this perspective, legislation to raise the minimum wage can properly be seen as a taxpayer-protection measure. It protects taxpayers from having to subsidize those employers.

    I don't think it's reasonable to demand that people work 60 or 70 hours a week just to survive. In any case, it's not realistic to expect that, because many employers won't offer over 40 hours due to overtime laws, which means to work that many hours you'd need a second and maybe third job. But that's not possible if your primary employer expects you to work rotating, split, or weekend shifts. Many minimum wage workers have unpredictable work schedules that make holding a second job difficult or impossible. There are also issues with child care, etc.

    For many minimum wage workers, especially those in the retail sectors, even getting 40 hours is a major problem. The worker generally has little or no control over how many hours employers offer. Employers make this decision based on their business needs and convenience, not the workers' need for enough hours. If you're working only 25 or 30 hours a week, at minimum wage, and you can't work another job because you're essentially on call all the time, your $7.25 an hour paycheck brings in far less than $15,000 a year.

    Raising the minimum wage to some higher level isn't a panacea. It won't make everyone happy and prosperous. With the economy now approaching full employment, many employers above the bottom rung are now finding they have to raise wages to attract workers. But at the bottom, there still seems to be a need for a mandated minimum wage at some level. I don't see how any reasonable person can dispute a simple inflation adjustment to the 2009 level. Anything more than that can be subject to debate.

    The author essentially argued, in one of his comments, that fast food workers shouldn't get a raise because then they'd be making more than low-paid graduate research assistants. The academic pay system has its own issues, but the logic of keeping someone's wages down to prevent them from making more than someone else in a completely different occupation escapes me. Especially when we're talking about subsistence, not middle class incomes.

    Finally, I'm completely unimpressed by posters who diss minimum wage workers as "unskilled." It's untrue, for one thing; all paid jobs require skill. These commenters also apparently are unaware that some minimum wage jobs require training and certification, such as nursing assistants and child care workers. Don't call these people "unskilled," because you or I couldn't get one of these jobs, because we're not qualified for them. Unfortunately, much of the minimum wage debate seems driven by emotion rather than facts.
    Nov 13, 2015. 04:18 PM | 3 Likes Like |Link to Comment