Some of the rich are getting poorer, and some of the poor are getting richer.

The Des Moines Sunday Register published a lead article (Page 1) titled, “The rich keep getting richer”.  (See link below.)  Included were a number of misleading statistics or misleading conclusions based on the statistics.  For example, according the think tank, Iowa Policy Project, the median hourly wage in 2016 was $16.04 per hour.  37 years ago, the average wage, adjusted for inflation, which is fair, was $15.91.  The Register concluded, “This means a typical wage earner  working 40 hours per week for a full year would have seen a real increase of $270.40 over a 37 year span.”  While the statistics are technically true, you cannot logically conclude and that any specific person or group of people did not move themselves from a lower wage to a significantly higher wage.  I’m sure it is true some people moved down while some people moved up.  An interesting study would be to see how wages correlate to the number of years in the employment market.  It would be interesting to know the median starting hourly rate for a young inexperienced worker versus and an experienced worker who has been in the labor market to 30 years.  The fact that the average stays about the same my be a problem, but almost no one stays at the average wage for 37 years.

Another statistic was that the number of people who earned $1 million or more during specific years increased from 5,031 in 2010 to 8,325 in 2015.  Their “slice” of the state’s total adjusted gross income grew 37%.  Meanwhile, the number of Iowans claiming gross incomes of $40,000 to $99,999 climbed by 23%  while their slice of the state’s total adjusted gross income fell 2%.  First, I would venture to guess that a significant majority of the $1 million+ earners are people who sold their businesses or had other one-time income.  So, again,there is no logical reason to presume that the $1 million+ club is made up of the same people year-after-year.  At the same time, from 2010 to 2015 the Iowa economy was generally continuing to improve, so values and prices of businesses likely climbed.  Also, in the case of an “expanding pie”, the fact that any group gets a smaller percentage of the total does not mean that their real income is not increasing.

Finally, the Register reported that their analysis of U.S. Census data showed that the bottom fifth of earners saw practically no growth in household income – going from $13,798 in 2006 to $13,848 in 2016, again adjusted for inflation.  Here again, there is no logical reason to believe that the specific group of people who were in the bottom 20% in 2006 are the same people who were in the bottom 20% 10 years later.  It would be interesting to know what percent of the people in the bottom 20% in 2006 were still in the bottom 20% 10 years later.   My guess is there would be some, but not a majority.

As a society we need to make sure we don’t put hurdles in front of people who are trying to improve their lot in life.  In many cases this means removing government created regulatory barriers to entry into certain jobs.  The Register has done very good work exposing job licensing regulations that are in place more to protect existing businesses from competition and to protect the profits of licensing education businesses, than to protect the public.  Yet, the Iowa Legislature has done precious little to address this real problem for low income workers who are trying to work their way up in our economy.

Link to Register article:  https://www.desmoinesregister.com/story/money/business/2017/11/25/most-iowa-wages-have-stagnated-but-rich-keep-getting-richer/818770001/

 

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We are over-licensed. We do need to reduce licensing requirements in Iowa.

Contrary to the opinion of almost every person who already has a government required license to work, many of the licenses required by the State of Iowa are not only unnecessary, their primary purpose seems to be to protect existing licensees against competition, rather than to protect the public.

I am sure that certain state licensing requirements do help to ensure the safety and quality of the service provided, but in almost all cases, private certification programs could serve the same purpose without involving the use of force by government, and without giving government backed protection to existing licensees.  A great example of this is Certified Financial Planners (CFPs).  Financial professionals who want to hold themselves to a higher standard can get this private certification, and then advertise that fact.  The same is true of Realtors.

I’m sure that many licensed professionals also have various college degrees, private certifications, and other professional credentials.  In many cases, these private credentials should be sufficient.  Those who have them should advertise the fact, and not ask government to prohibit others from competing against them.

 

 

Register link:  http://www.desmoinesregister.com/story/opinion/readers/2017/03/19/professional-licensure-protects-public/99176434/

How to lower the cost of college.

The cost of a four year degree, even at our public universities, has gone up much even faster than medical care.  For many college graduates, their post-graduate pay does not justify the amount of student debt that they accumulated.
Similar to community colleges, our public four-year universities should offer certificate programs that focus on specific skills, take less time, and cost less.  The certificate should indicate that the student has specific specific skills that employers demand, without the extra classes, time and cost of a broad, liberal four year degree.  If desired, students could live on campus and gain some of the non-classroom experience and relationships  that colleges offer.  This could go a long way towards lowering the cost of college while providing a college education.

Export-Import Bank should go.

In the Register today, 1/30/2015, Daryl Bouwkamp, with the Vermeer Corp., advocated that the Export-Import Bank (Ex-Im Bank) be reauthorized by Congress to help exporters, such as Vermeer Corp.  He wrote, “Vermeer currently serves customers in more than 60 nations – some of whom could we could not reach without financing support from the Ex-Im Bank.”  I don’t understand why couldn’t Vermeer provide the financing or the guarantees needed?  Are there no banks that would loan money to Vermeer or its customers if Vermeer guaranteed that the loans will be paid back?  If not, why should taxpayers be on the hook?

This is a chance for Republicans to show whether or not they really mean what they say when they talk about ending crony capitalism.  It appears that the exporters and bankers that use the Ex-Im Bank have become dependent on the taxpayer guarantees.  We need to get back to true free market capitalism, where both the risks as well as the rewards are are kept in the private sector.  If Republicans allow the Ex-Im Bank to be reauthorized, it will send a clear signal that crony capitalism is alive and well in America.

 

Link to article:

Welcome Uber to Des Moines!

Des Moines and surrounding communities should welcome Uber, the internet based company that coordinates ride sharing as an alternative to taxis and limousines.  Uber is now available in the Des Moines area for both drivers (car owners) and for riders.  Uber takes advantage of the fact that most privately owned cars are very under used, and that many car owners have available time to provide a ride to those who need one.  What a great way to earn extra income, or to start your own business full time.  Uber does extensive background checks on people who want to provide rides in order to ensure a high level of safety.  Beyond that, Uber actively solicits riders to rate drivers on a scale from 1 to 5 with 5 being excellent.  It has been reported that Uber stops working with drivers who’s average rating falls below 4.6.  So, Uber strives for high quality.  (Uber drivers also rate passengers, so it is possible that Uber can also stop serving customers who are abusive.)  Although Uber will be very upsetting to existing taxi companies, the City of Des Moines and surrounding communities should make whatever legal and regulatory changes are needed to allow Uber to operate in the metro area.  If Uber is not doing enough to provide for reasonable customer safety, then laws and regulations should address those issues.  Licensing should not be necessary.  Generating tax revenues or protection of existing businesses should be considered in the process of making any needed changes.

Government protects special interests – casinos and greyhound breeders.

Only government could create a situation like we have with the casinos and the dog racing industry.  Casinos want to pay the dog racing people $92 million so that they won’t be required to continue to subsidize dog racing.
In any kind of free market situation, the casinos would either shut down the dog tracks or sell them to a private investors, if any could be found.  In a free market, casinos would have competition.  But, in Iowa, the casinos are protected from competition by government.  Recently the Racing and Gaming Commission ruled against a couple of proposed new casinos because they would “cannibalize” other casinos.  So, casino profits are protected and dog owners get bailed out.  This is cronyism at its best.
The only good thing about this whole situation is that taxpayers are not on the hook.

Stop subsidy for both dog and horse racing.

Iowa originally got into gambling by legalizing betting on horse racing and dog racing.  Legalization of gambling was sold to the public, in part, as an economic development idea.  Horse breeding and training jobs would be created.  Voluntary gambling would not only pay for the racing purses (and get the money to the animal owners and trainers to create the jobs), but would also provide money to governments and charities.  Of course, as it has evolved, there is not enough money being gambled on either horse or dog races to pay for the purses, much less any money for government or charities. Profits from traditional casino gambling are covering the tremendous losses from animal racing.

There is a proposal in the Iowa Legislature to end dog racing by paying $70 million dollars to the private dog racing industry.  There is no current proposal to end horse racing.  Both need to be ended, and there should be no payment to either the horse or dog racing industries. If the racing were eliminated, it should not be allowed to result in windfall profits for private, for-profit owners of casinos that are funding the current losses.  If the owners of the of race tracks are willing to pay $70 million to the dog owners in return for ending dog racing, then they should be willing to pay that same $70 million to either government to charities.