Cliff Curry posted a blog entry in support of raising the minimum wage.

My comment turned out rather long so I'll post it here instead.

I would compare the minimum return on labor with the minimum return on capital assets. Uncle Sam prints money like crazy, either literally or through grotesque leveraging schemes like that of Fannie Mae, that benefit only capital owners. Home prices were boosted dramatically as an express policy to fuel the economy. The increased value (though only paper value) only partially translated to general economic growth that helped the masses. The tweaking of taxes on stock dividends rates also were designed to reward capital, by boosting stock values (through forecasted future benefit) through the device of leverage. The “permanency” of the Bush tax cut thing is to lock in those (now boosted) stock prices so as to extract those capital gains.

If you want to be real you would demand that the minimum wage adjustment keep pace with the increase in currency and likewise demand that the measure of currency go beyond M3 to factor in stock market speculative pricing and government induced home price boosts.

That is, the wage issue must be viewed only as relative and not an absolute number. Do not use the CPI as a reference.

The business of lobbying has transcended any measly expectation of making a profit through hard work in one’s own business. Capitalism is not a bad word. The low capital gains rate coupled with hyper-inflationary asset appreciation, as express government policy, are the pillars of something that is not capitalism at all. Adjusting the minimum wage cannot remotely keep up.

This is tied to your concern for homelessness. The 9 out of 10 homebuyers who borrow to buy a home are committing 30 years of work to give the prior seller a capital gain and are no better than glorified renters. If you carry the reasoning one step further you will find complicity in both state and local government to keep prices high so that they can use property values as collateral for borrowing to do pet projects.

If we raised the minimum wage to 20 dollars an hour it would not remedy the structural problems. Do not forget that most homes in inner NE Portland either tripled or quadrupled in just the last ten years. Land use issues can explain away the price rises with the same nexus of rationality as an owl can explain away unsustainable yields in logging. Here is the kicker – if we do not raise the wage to 20 then we have lost ground big time on one measure of the success of an economic system – equitability.

Only Alice Rivlin seems hip to the recognition of the unfair distributional effects of capital gains crap.

Treating residential home resale speculation a capital gain -- as if it had even a remote connection to producing something of value to the community at large -- is absurd. But it does tie a lot of people into the belief that they have a vested interest in lowering capital gains for all activity. Home sales have a huge transaction cost too. The mortgage finance (refinance business) feed on the existence of the debt and have about as much sympathy as a Ken Lay when peddling stocks --- it is just that they are feeding the hunger of local governments to build a tax base rather than Ken Lay. This scheme seems to be treated as mere blameless uncertainty in the tax reform debate -- particularly when it is tied to capital gains in purely speculative leveraged gains.

It seems no wonder that Oregon's tax problems attract Dick Armey, who is one of the chief proponents for treating speculative asset appreciation, with direct government help, as an issue of personal wealth that the government cannot tax -- under the guise of capitalism and individual liberty.

Look upon homes as you would gasoline -- the higher it gets the worse it is for every one. Except then there would be little or no capital gains and no tax base; because residential real estate produces nothing. It is does however represent an opportunity for someone to perpetually extract one third of the income from 9 out of ten borrowers.

Wages need not go up if the home prices were not artificially boosted and there would be less need to raise the minimum wage. blah blah blah . . .

The clearest way to paint this relationship of wages to home prices and capital gains would be to limit government home loan assistance to $100,000. Perhaps we could tie the maximum home loan assistance to the minimum wage itself -- where they could move in lock step.

for
http://chuckcurrie.blogs.com/chuck_currie/2004/05/increase_the_mi.html