Ep. 36 LIVE FROM SEATTLE: Krugman’s Greatest Hits

23 May 2016     |     Tom Woods     |     24

This episode was recorded before a live audience in Seattle on May 21, 2016, as part of the Mises Institute’s event in Seattle. Krugman had been giving us thin gruel all week, but then, the day before the event, he gave us such a whopper of a column it was like a giant gift with a big red bow on it.

Krugman Column

Obama’s War on Inequality” (May 20, 2016)

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Related Episodes

Ep. 19 Enough About Inequality Already; Here’s the Truth
Ep. 6 Enough About Denmark Already: Here’s What Krugman and Sanders Left Out

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  • Pat Williams

    Will this be posted as a video at some point?

  • Jan Masek

    So why do you think Krugman is like that? Psychologically I mean. Is he a dishonest corrupt liar who knows deep down Austrians are right? Or is he a complete retard who doesn’t get? Or someone who is smart but dishonest and just ignores the arguments coming from the Austrians and is aware of it but persuades himself that Austrian ideas are not worth dealing with?

    Just trying to get into his psyche

    • Jan Masek

      *who doesn’t get it

    • Its Me

      I think it likely he is so invested in keynes dogma that he probably shuts down his mind when confronted with contradictory evidence. It is the disease of big govt statists to avoid honest debate at all cost.

    • P Michael

      Economics is just a means to an end. If you get the end, you get Krugman.

    • http://www.medievalrecruiter.com/ Medieval Recruiter

      If I had to guess, id say he’s a standard liberal who simply lets his ideology dictate the ‘acceptable’ conclusion. It’s likely not even a conscious lie, he just knows this or that is what’s ‘supposed’ to be, and reasons backwards using whatever framework is convenient.

  • travis690

    I can come up with a two-word answer that rebuts everything said by Krugman: Gold Standard.

    The income gap that he refers to started when Nixon took America off the gold standard in 1971. After that time, the financialization regime took over, and asset values increased faster than incomes. This was because there was nothing to hold in check the amount of currency units that could be created by the central bank. This allowed people who owned assets to be able to borrow against those assets and invest in other assets that were also growing in value due to monetary inflation. This is what caused the spread of income inequality that Krugman moans about.

    But I assure you that Krugman would not want America to go back to a gold standard, since this reduces the power of the central bankers that he loves so much. Yet it is those same central bankers that cause income inequality to be maximized, due to their penchant to create extra currency units.

    In other words: Krugman wants the people in charge that would compound the problems that he blames business for.

    Krugman the Straw Man Creator strikes again!

  • Kurt Tischer

    Just wanted to say that this is one of the best episodes I’ve heard so far. Definitely, the source material had a lot to offer, but I think the energy of presenting before a live audience helped.

  • http://www.medievalrecruiter.com/ Medieval Recruiter

    I find it hilarious that so called Austrians think employers paying 50% more for hours beyond forty is anathema, but employees having to work 50% more hours for no extra pay is perfectly acceptable thanks to a GOVERNMENT regulation that allows employers to classify them as ‘exempt.’ I’m sure in a purely free market with no jobs shortage and a currency that wasn’t completely debased, all employees would be literally jumping for the chance to work unlimited hours while being paid for a nominal forty. They’d be all over that option…

    And why is it the one margin not subject to change in the economy is the employer’s profits? Employees? They must always be ready for less pay, diminished benefits, less time off, more work, etc. But dare to suggest an employer can perhaps pay their employees more, and you’ve invited Armageddon. The world will end shortly after such a declaration, four horseman are already riding…

    Give me a frigging break. If your business is dependent on your employees working perpetual overtime for no pay, you’re an incompetent moron and should go out of business anyway, because your business wouldn’t likely survive in a free market where labor actually had some power and you actually had to compete for it with decent pay and hours.

    • http://www.propertyrightsmatter.com/ Teapolicy

      “I find it hilarious that so called Austrians think employers paying 50% more for hours beyond forty is anathema, but employees having to work 50% more hours for no extra pay is perfectly acceptable thanks to a GOVERNMENT regulation that allows employers to classify them as ‘exempt.'”
      1. What employees are working 50% more hours for no pay? When you get promoted to a salaried position to negotiate the salary and stipulate your availability, etc up front, meaning the 50% extra hours they are working are factored into the current salary. Negotiating a salary rarely means negotiating X pay for precisely 40 hours, it means X pay per month or year for whatever variable amount of hours your employer expected of you from the start. What work aren’t salaried employees being paid for?

      2. With that said, it is my understanding of reality that employers are actually able to offer potential employees a contract to work for a salary prior to government making any laws whatsoever. What makes you say that it is the government is that enables this arrangement, presumably implying that its just as artificial as some mandated base-pay and time-and-half scheme?

      “I’m sure in a purely free market with no jobs shortage and a currency that wasn’t completely debased, all employees would be literally jumping for the chance to work unlimited hours while being paid for a nominal forty. They’d be all over that option…”
      3. If your trying to say that workers are disempowered because the labor and capital markets are already restricted then I fail to see how adding another restriction that further restricts the options on the table is going to help the still disempowered workers with mandated overtime scheme in place.

      • http://www.medievalrecruiter.com/ Medieval Recruiter

        1) Employers are rarely if ever honest about the overtime work required for exempt employees, even when asked directly what the hours are. In fact, asking directly can often nix people from the running when it comes to the job because they’ll be immediately seen as ‘troublemakers’ for having the sheer unmitigated gall of asking what the company’s work-life balance is like, and expecting the company to respect the fact that they may not want to live out of the office permanently. If companies were honest and open about hours worked, you’d be right, but they’re not, so you’re wrong. And their motivation for being dishonest is multifold. For one, it will scare away employees if they knew up front that 50 – 60 hours per week were standard, whereas many people will tolerate it for a good while if roped in and then presented with the opportunity of working extended hours or finding another job, which itself is not only daunting in today’s economy, but won’t look good on their resume when they’ve got a short tenure and no references from one particular company. For another, in rare instances the DOL might actually look at their labor practices and see if their employees are categorized correctly, and if they’re not they will be forced to reconstruct their actual hours worked over a period of time and then pay them overtime for the work over 40 hours. This is highly unlikely though, so most of the time they just get to classify people as ‘exempt’ regardless of whether or not they really qualify, and then tell them to go scratch when it comes to overtime.

        The vast majority of salary negotiations are undertaken with the assumption that some overtime is necessary, but that a regular 40 hour work week is standard. As an exempt employee it’s understood that there will be overtime you won’t be paid for, it is not supposed to be every day of every week of every year. In fact it’s not supposed to be that way by law that these employers expressly agree to follow and quote in their employment contracts. But, it’s been increasingly common for many companies to unofficially redefine their ‘standard’ weeks as 50-60 hours. Of all the companies I’ve worked for and with, and counting the latter that’s hundreds at this point, I’ve seen one get sued successfully for back overtime. I’ve seen more than I can count questionably categorize the majority or even the entirety of their workforce as ‘exempt’ and refuse to pay overtime to people who have worked in excess of 60 hours a week, and that’s after these companies’ reps signed a contract agreeing to abide by the laws of state X, Y, or Z, which often expressly prohibit that practice. Funny, when employees aren’t happy about a job the standard libertarian answer is, “Well, don’t work there…” But, when employers decide to open up shop in a certain area, with the understanding of potential employees that they’re to abide by certain rules while there, and then totally chuck that in the trash, somehow they become the poor widdle victims.

        2) Who do you think lobbied for the laws? Do you think it was a grassroots movement of workers who said loud and clear to the government, “We want the option to work as many hours as possible for no overtime pay at all!” Or do you think lobbying by companies might have had something to do with the passing of FLSA in the 30s? Gee, who would gain, who would benefit, or qui bono, I wonder, if entire swaths of the workforce could be reclassified as ‘exempt’ and not be paid overtime with the excuse of, “Sorry, it’s the law, your job doesn’t ‘qualify’ for overtime…”

        3) It’s only ‘disempowering’ if they want the option, in my experience the vast majority would prefer to be paid for their time, especially as, over the years, the hours they’re expected to work as exempt employees have gone up and up and up and up and up and up and up and up and up and up, and absolutely no additional benefits or compensation have come their way as a result.

        In a pure and untrammeled free market there would be no such laws and employers and employees would be on equal footing. My point is we don’t live in that world, there are such laws, and the vast majority of them empower employers over employees. Employers are the ones with the concentrated benefits to gain, the ones with the money to lobby at local, state, and federal levels, for favorable laws and policies, subsidies and other free monies and benefits.

        If employers are going to devote themselves to using the political system to restrict and crush competing employment opportunities and debase their employees’ wages and savings so they can get free money and cheaper labor, I’m simply not going to shed any tears over minor legislation that basically says they have to pay some of those employees for their time and not work them to burnout and a potential heart attack for a 40k a year job. What should happen is all the special favors and subsidies businesses get should stop, and end the central banking cartel, and then employees wouldn’t be perpetually screwed by a persistent jobs shortage and debased wages. But that’s not going to happen, not for a long time at least, and as long as employers use the weapon of the government against their employees, I see no problem with those employees occasionally using that same weapon against their employers. The former is the norm, the latter is rare, and yet somehow and for some reason even as employers large and small use every opportunity to use the political system to screw over their workers, it’s those one in a billion times when the workers potentially see something beneficial come their way from the political system that really gets libertarians all riled up. I do wonder why that is.

        And, make no mistake, a law that allows a limited number, a very limited number given the salary levels in the law, of employees to say, “I’ll work overtime, but you will pay me for it,” is what the vast majority of them want. Admittedly I have only my own anecdotal experience to back that up, but after ten years in HR and staffing it’s something I’m confident enough to bet substantial money on.

        Oh, and no one wants to answer that other point I raised: why do employees always have to be willing to accept lower salaries, but employers never have to potentially accept lower profits due to increased labor costs? Employment is just an exchange, no one party is actually superior to the other in it; an entrepreneur whose idea requires ditches to be dug, but who isn’t willing to pay ditch diggers the wage they want, may as well be a lunatic screaming on a street corner for all their effectiveness. But unfortunately we live in a country where labor has been so devalued and competing employment opportunities so crushed and strangled, that employers are basically able to dictate terms and employees more and more simply have to accept what is offered as if it were some altruistic gift. The entrepreneur has used the government and central banking to make sure there are fewer jobs for ditch diggers and that the wages the ditch diggers receive are increasingly worth less and less, and then they turn around and offer the ditch digger those devalued wages and libertarians act like all the preceding debasement hasn’t even occurred, and the ditch digger should just accept the relative peanuts he’s being offered and count himself lucky. I say that’s a load of crap, and while I don’t agree in principle with his efforts to use the same government coercion to gain some of that lost value of his labor back, I understand it and don’t begrudge him the misguided attempt, given how badly he’s been getting screwed over the years.

        We don’t live in a free market, we live in a highly managed and controlled one, and the government is the enforcement weapon used to keep that control. It is wielded primarily by businesses, at all levels from local to federal, and by all sizes of businesses, not just giant mega corporations. I’ve seen local businesses bribe local government officials for favors with everything from outright money to crumbcake. They have been using their influence for years to debase the currency and cut off competing businesses, and thus competing employment opportunities. They have suppressed the wages of their employees and debased and devalued the wages they’ve managed to keep. And now I’m supposed to believe that a law saying they have to pay overtime to most people making in the lower-mid 40K range is going to derail the economy and destroy labor markets, when that’s barely even enough to afford housing in many markets?

        Not buying it. Given the never ending line of benefits, subsidies, favors, and free money that finds its way into most businesses’ pockets at the expense of the general public, I find it hard to believe that a law that, hypothetically, might squeeze a few extra bucks out of every employer for every thousand or so bucks they steal via government coercion, and redirects those few bucks to their employees, will cause major damage, or somehow dramatically hurt those employers. Like I wrote earlier, if your business model relies on perpetual unpaid overtime from your employees, you’re likely an incompetent business owner anyway, you should go out of business and release those resources to someone who knows better how to use them. People should be free to accept such arrangements if they want, but businesses should also not be receiving any freebies and favors and protections from the government, much less ones that suppress the wages of their employees.

        And of course that’s not even taking into account that various studies from chambers of commerce and I/O Psych outlets have been politely telling employers for years that the vast majority of people max out their productive output at 35-45 hours, and their productivity drops like a rock if pushed beyond that for very long, and takes a roughly equal amount of time to recover. And, businesses have been politely ignoring them for years because it’s easier to work their employees to burnout and then replace them, because labor has been so devalued at this point that it is seen as a disposable commodity. Not all of this comes under praxeological approaches, some things actually can be measured and studied in a more traditional scientific sense, and every scrap of research I’ve seen strongly suggests that labor has been so devalued that it’s highly mismanaged. You hire people because they can do something productive for you and they add to your revenue stream, much like capital equipment. However, people, employees, are more often than not treated as a pure cost. Which means in reality they are often treated worse than the equipment they use, the latter of which employers understand carries value, depreciation, and maintenance needs, all of which are virtually ignored when it comes to employees, their main maintenance need being time off to recover, which they get less and less of every year thanks to the fact that they get absolutely jack in terms of paid time off and are working ever longer hours, often at no cost to their employers because even the replacement costs of labor have gone down the tubes thanks to the high unemployment and low labor participation we see these days.

        And now, my god!, some people might finally get overtime?! Stop everything! We can’t have people getting paid for their time, such a thing is unheard of in this world…

        • http://www.propertyrightsmatter.com/ Teapolicy

          I think this might just be the longest Disqus post I have ever seen. I am intimidated, but here it goes…

          A. So are employers generally dishonest when asked what the hours are going to be or do they not hire employees if they ask about what the hours are going to be? Why lie to the guy you aren’t hiring anyways?
          If the problem is that employers are generally dishonest, then why not pass a law mandating that employers put their expectations in writing so that the employee can simply file a civil lawsuit if the employer in fact tries to bait and switch. I don’t think it’s necessary but it certainly makes more sense than mandating one specific kind of employment and overtime arrangement for everyone, which only very indirectly even addresses the problem.
          B. Apparently the DOL doesn’t enforce the labor regs on the books now, so altering one of those regs that they currently aren’t enforcing (or only selectively enforce) will really help move the needle, how?
          C. “The vast majority of salary negotiations are undertaken with the assumption that some overtime is necessary, but that a regular 40 hour work week is standard. ” Do you have any data to support this assertion? That does not fit my experience in the hotel industry, nor my parents experience in the HVAC and banking industries which they worked.
          D. “In fact it’s not supposed to be that way by law that these employers expressly agree to follow and quote in their employment contracts.” To which part of the FLSA are you referring? I wasn’t aware that exempt employees could not be expected to work more than 40 hours a week regularly.
          E. “it’s been increasingly common for many companies to unofficially redefine their ‘standard’ weeks as 50-60 hours.”
          If companies have the bargaining power to unofficially redefine their standard work weeks unilaterally then what’s to stop them from officially redefining their employees base salaries lower by 25% or whatever it takes to compensate for the new overtime mandate? The mandate doesn’t increase worker bargaining power so they are just as disempowered now as they were before. Their just disempowered hourly employees instead of salaried.

          2. A. “Who do you think lobbied for the laws? Do you think it was a grassroots movement of workers…”
          Who do you think lobbies for every law? It’s never a grass root movement, that’s utter fiction. I don’t know about other works, but I for one want the option to work as many hours as possible for the highest salary possible. I don’t give half a crap whether some or all of it is labelled “overtime.”
          B. “who would gain…if entire swaths of the workforce could be reclassified as ‘exempt’ and not be paid overtime with the excuse of, “Sorry, it’s the law, your job doesn’t ‘qualify’ for overtime…”
          ? There’s nothing in the FLSA that bars employers from paying any employee overtime. Any employer who gave that as an “excuse” is an idiot. Do you think workers would work for free if there wasn’t a minimum wage mandating they get paid at all?

          3. A. “In a pure and untrammeled free market there would be no such laws and employers and employees would be on equal footing. My point is we don’t live in that world, there are such laws, and the vast majority of them empower employers over employees. Employers are the ones with the concentrated benefits to gain, the ones with the money to lobby at local, state, and federal levels, for favorable laws and policies, subsidies and other free monies and benefits.”
          Agreed. Now can you explain how the hell does this mandate increases worker bargaining power like I asked originally? If workers have little or no bargaining power before the mandate, they will simply watch their salaries get adjusted to compensate for the mandate, and they will not see a raise, just as they saw their regular schedules adjusted without recourse in the first place. So, given your assumptions that cause you to support the mandate, how does the mandate even increase pay?

          B. “no one wants to answer that other point I raised: why do employees always have to be willing to accept lower salaries, but employers never have to potentially accept lower profits due to increased labor costs?”
          That’s because its a canard. Employees don’t have to always be willing to accept anything; they can leave and go do whatever else they want at any time. And if labor costs are rising then companies must either accept it and pay them or go do something else. Seems pretty analogous to the employee.

          • http://www.medievalrecruiter.com/ Medieval Recruiter

            “So are employers generally dishonest when asked what the hours are going to be or do they not hire employees if they ask about what the hours are going to be? Why lie to the guy you aren’t hiring anyways?”

            Both, they are not mutually exclusive. I’ve worked for companies that did it, until I put a stop to it. I’ve also worked as a recruiter with companies that did it, and heard first hand from candidates what the interview and subsequent job experience is like. Also in that capacity I have had hiring managers frequently reject candidates, who they admitted had all the qualifications for the job, simply because they asked a question during the interview like, “So what are the typical hours?” If you even intimate on the slightest level that you might want a life outside of work, it’s often enough to remove you from the running for a job.

            “Apparently the DOL doesn’t enforce the labor regs on the books now, so altering one of those regs that they currently aren’t enforcing (or only selectively enforce) will really help move the needle, how?”

            It might not, however in the past the employers also had the salary level argument in their favor, which is specifically what has been updated. Larger companies will likely comply because they are just larger, more frequent targets of the DOL and independent lawyers. The risk is minimal, but it will still likely be addressed to some degree.

            “Do you have any data to support this assertion? That does not fit my experience in the hotel industry, nor my parents experience in the HVAC and banking industries which they worked.”

            It fits my experience. Your industry might be different and there are exceptions, such as industries like accounting with firms like KPMG, where it’s common knowledge that you will be working long hours when you start there. What most people don’t assume is that for random job X at private label toilet paper manufacturer Y, which is mostly grunt work and not ‘exempt’ by any stretch of the imagination, all of a sudden they will have to work 60 hours a week with no overtime, no notice, no breaks, no benefits, etc. Most companies will not release information contained, for example, in their employee handbooks which govern the relationship. Basically you’re not allowed to see the contract until you’re ready to sign it in many cases.

            “To which part of the FLSA are you referring? I wasn’t aware that exempt employees could not be expected to work more than 40 hours a week regularly.”

            Depends, salaried does not necessarily equal exempt, and it also depends on the state labor laws. The federal law doesn’t impose such limits, however several states do, and the language of how the bill was sold to the public as I remember from my PHR was squarely aimed at ‘ensuring’ a forty hour week. Also, the deductions that are potentially made from the paycheck would reclassify them as non exempt if the employer makes those deductions, that was the key off that got that one company sued I mentioned; an ‘exempt’ employee needed a leave which they should not have been docked for, but they were. The company ended up coughing up several million in back wages.

            Which all lends itself to my point: the bill was, like all special interest legislation, lobbied for under false pretenses to allow employers to pay people progressively less and less and less for more work. There is also case law which makes it hard to to determine, because while ‘sales’ people are supposed to be exempt, pharmaceutical sales people have won lawsuits in the past because they don’t actually sell anything, and got back pay for overtime.

            So, generally speaking, the bill was pushed as ensuring a forty hour week and overtime pay for some people, and it really just let employers classify a lot of people as ‘exempt,’ often wrongly, so they could avoid over time. Once more, a deal I’m sure every single worker would have jumped at in a heart beat. Who doesn’t want to work 60 hours a week instead of 40 for the same pay?

            “If companies have the bargaining power to unofficially redefine their standard work weeks unilaterally then what’s to stop them from officially redefining their employees base salaries lower by 25% or whatever it takes to compensate for the new overtime mandate? The mandate doesn’t increase worker bargaining power so they are just as disempowered now as they were before. Their just disempowered hourly employees instead of salaried.”

            In some instances nothing. In other instances employees will have in demand skills that will allow them to retain their salaries and tell their employers to go scratch or pay when it comes to overtime.

            What’s to stop employees from saying, “Take your rock bottom salary and shove it?” Oh, that’s right, the government, employers, banksters, and other assorted scum have created a permanent jobs shortage by using monetary debasement and strangling competing job opportunities with regulations and laws. Like I said in my original post, if this does cause a systemic collapse sooner rather than later, so be it. I have no problem with the ones who will be forced to pay overtime to their people even though some others might be hurt.

            You’re missing the point, I am an anarcho capitalist, I want NO government, NO regulation, NO fiat laws. However, I also realize we don’t live in that world right now, and the world we do live in has a legal infrastructure dominated by special interests who have screwed over a fair amount of the population by debasing their wages and cutting off other opportunities for employment.

            This regulation will help some, it will hurt others, much as every other regulation does. It will hurt some employees, I don’t care because it will also hurt some employers, specifically the ones who have built businesses on the model of perpetual overtime for no pay under the current regulation. For them, I have no sympathy. $&%* them, as far as I’m concerned.

            “There’s nothing in the FLSA that bars employers from paying any employee overtime. Any employer who gave that as an “excuse” is an idiot. Do you think workers would work for free if there wasn’t a minimum wage mandating they get paid at all?”

            Are you honestly that naive? Do you really think employers, knowing full well how bad the job market is, would volunteer overtime to people when they can just say, “Sorry, this job is exempt, it’s a compliance issue…?” You’ll be happy to know that every single employer I’ve worked for or with in my entire career, is an idiot, as you put it.

            “Now can you explain how the hell does this mandate increases worker bargaining power like I asked originally?”

            As I’ve said, and as I said in my original post, it might not. For some it will, for some it won’t. I don’t care, I get joy from abusive employers getting a taste of their own medicine the same way I enjoy videos of muggers picking the wrong mark and getting their teeth kicked in. Employers have the advantage, they are NOT all powerful though. And employers who build their businesses on perpetual unpaid overtime are likely to get stung by this. One, their wages already tend to be rock bottom, good luck lowering them and seeing what workers they get, even in this crap economy. Two, they are often already running at the barest minimum headcount necessary and can’t cut much. Three, in the unlikely event that there is an actual recovery sometime in the near future, everyday people might see a return on it sooner as their bargaining power and the regulation bolsters their positions.

            Up until six months ago I spent my entire day trying to get people jobs in this economy. Ten years of it, I would stand before God almighty and swear one thing and accept hell as a punishment if I were wrong because I’m so sure it’s right: employers are the problem. The employers who have arisen and built businesses in this fascist economy are symbiotic with it. With their practices they likely would not survive in a real free market. Once they put an Inc. or an LLC or any other such legally defined suffix at the end of their name, they’ve part of a cabal to screw over as many people as possible using government force, nothing more.

            “That’s because its a canard (and possibly because your post was so long, no one ever got around to reading it). Employees don’t have to always be willing to accept anything; they can leave and go do whatever else they want at any time.”

            Unless of course you ignore the fact that they have turned the economy into a virtual slave plantation by creating such a shortage of jobs that people will do damn near anything to get one. Oh, and if this regulation will only hurt employees, why are so many businesses opposed to it? Do you honestly think it’s because the well being of their employees is their prime concern? Or, is there the merest hint of a chance of a possibility that maybe – just maybe! – they know some of their precious profits might end up where they NEVER want to see it go, their employee’s pockets, and that’s why they oppose it?

            “And if labor costs are rising then companies must either accept it and pay them or go do something else. Seems pretty analogous to the employee.”

            The employee has seen the legally empowered unions virtually disappear while the employers have done nothing but gain more power and state protection. Say what you want about unions, as long as they’re going to play the state game I don’t see why labor is somehow entitled to less legal protection than any corporation. MY point is that libertarians and anarcho capitalists need to stop getting their panties in a twist every time some proposed legislation which has the barest chance in hell of helping a laborer comes up, but simply ignore the MASSIVE advantage employers have over employees thanks to the government. If you were to go to any given business with generally dissatisfied employees and tell them that the reason they are treated badly is because their employer is too regulated, they would probably throw you out the window, and justifiably so.

            Companies DON’T just accept it, they lobby and cheat and steal and bribe their way to advantaged positions, and then someone comes along and says, “Well, gee, can you at least pay them some overtime…,” and the first thing libertarians do is jump on them for wanting to taint and distort some imaginary free market which doesn’t exist in the here and now. In the here and now, employers are doing anything and everything they can to destroy wages and get labor as cheap as possible, and then Obama comes along and at least optically does something which might benefit some workers, and the first thing libertarians do is defend a theoretical free market that doesn’t exist, while for all practical purposes what they’re really doing is rhetorically protecting the cartelized employers who have created this crap economy we all live in. Way to win hearts and minds, get up there loud and clear and explain why employers should have to pay over time. REAL employers that EXIST, here and now, TODAY, partnered with the government and accepting any and all benefits it offers and demanding more at all times, not some hypothetical group of companies owned by pure Randian ubermensch in some far away future which might exist someday.

            Will this legislation hurt some employees? Yes. It will also hurt some employers, and the specific ones it will hurt, I am all for it, no problem. Like I said, $^&* them.

            And sorry about the length, but this topic grates on my nerves with libertarians and anarcho capitalists. Working in HR and recruiting you see people get screwed every single day in the worst and most heinous ways possible, all because labor is so devalued, and Americans in particular seem to revel in their own misery, working some of the longest hours and getting some of the fewest benefits. Say what you will about European socialism, I don’t support it, but I’m not aware of any company that had to shudder their doors because they had to give people a few extra vacation days. One day Americans are going to realize how badly the banksters and all their compatriots have screwed everyone, and when that does happen I want them to realize libertarians are on their side. But they won’t realize that so long as, for all practical purposes, libertarians are seen as protectors of the ruling elite. To some degree that’s how they are portrayed, but they also walk right into it on issues like this when they start defending free markets that don’t exist from assaults that are just the results of people trying to get something, some small portion of the tax eater’s trough, to go their way for once.

          • http://www.propertyrightsmatter.com/ Teapolicy

            I’m going to try to transition from bickering over our anecdotal experiences to focus on the more central argument over the change in employment regulation. I’m still having difficulty understanding how this regulation helps very many workers given the reasons you’ve given to support it. That it might hurt businesses gives me no satisfaction in and of itself.

            It seems we agree that this change in regulation does not increase any particular worker’s bargaining power. We agree that it will benefit some workers, i.e. those who have enough bargaining power still on the table to turn the change into sustained raise in their take home pay. But logic dictates that, in most of those instances where workers have these in demand skills, they already could have told their employers to go scratch or pay them a higher salary or even just a bonus. What changes? You say employers used to cite “compliance costs” as the reason they couldn’t pay their exempt employees some kind of bonus in exchange for working more than they thought they were going to be working when they were hired, but why will those same employers not cite “compliance costs” as the reason why they can’t leave the employee’s base salary the same, or why they are making some other unintended change, after their transition to hourly work? You say we should favor the change because it will just hurt employers who currently employ low salary, exempt employees anyways, whereas I think it would mainly hurt employers who employ low salary, exempt employees with extra bargaining power left on the table, and who can afford to pay the higher costs without losing market share to other firms, foreign or domestic, and still remain a viable investment opportunity in capital markets. Otherwise the firm has to do something else — i.e. it outsources, restructures, cuts back, or fails, many actions which are at least not generally to the benefit of the employees.

            By the way, I’m not ignoring the fact that large, concentrated economic interests have pushed for public policies that reinforce those same economic interests. I agreed with that point directly. I told you that I fail to see how this change in regulation sticks it to our proverbial plantation masters, because, as far as I know, it does nothing to decrease their political power, decentralize political power generally, increase the competition between firms or make it easier to run a small firm relative to a large one or even lower any barriers to starting a new one. IMO, if your proposed change isn’t going to improve on any of those things then it isn’t going to move the needle and I probably won’t support it. I greatly appreciate that you recognize that the state generally is not the solution to these problems. I simply do not think it is a viable solution in this particular instance, either, despite the myriad of other aggressions already being committed by the state on behalf of virtually all parties. If you think that I’ve missed how the change actually does do any of those things, or that I am neglecting some other way it could help people, please enlighten me.

          • http://www.medievalrecruiter.com/ Medieval Recruiter

            “I’m still having difficulty understanding how this regulation helps very many workers given the reasons you’ve given to support it.”

            It’s very simple, there is a sizable portion of people out there who would love to be able to tell their employers ‘no’ to overtime, or to get paid for overtime they are not currently being paid for. In a free labor market I don’t think it’s arguable that far, far, FAR more people than now would prefer to work 40 hours or even less. That businesses control the government and have devalued labor and their wages means the market has been rigged in their favor. They MAY lower wages in response to this; they are not however all powerful and that is just a possibility. They MAY have to accept lower profits – God forbid! – because people are likely already at the lower end of their tolerances for wages for work done right now.

            “But logic dictates that, in most of those instances where workers have these in demand skills, they already could have told their employers to go scratch or pay them a higher salary or even just a bonus. What changes?”

            Then employers have nothing to lose and need not oppose the rule change.

            That many if not most do oppose it suggests they DO have something to lose. Specifically, they know if they lower wages that their employees talk and word gets out, and it will affect their ability to hire. They know, or at least exist in and react to, the world being highly rigged in their favor which means wages are already being depressed and people aren’t likely to tolerate more of it. They also know they are not in control of their own image and brand anymore, with sites like Glassdoor allowing employees to rate employers, and many of them getting dismal ratings for the crap pay, stingy benefits, and non existent PTO time they offer. They are also aware that they are in an increasingly globalized market, and just as cheap labor exists in other countries, employees now have counterparts in Europe who, as if by magic, somehow enjoy more balanced lives without their companies going bust overnight because they have normal hours and significantly more PTO. In other words, the American employment method of churn and burn, don’t take any time off, work untold amounts of unpaid overtime, and go screw yourself when the company is done with you, is not the only way to run a company and people know that now, and are starting to question being treated like decaying dog crap by their employers. And finally, just as this legislation can affect marginal workers, it can also negatively affect marginal businesses. It will also place a compliance burden on larger corporations who will likely have to comply due to their status as targets for lawsuits, but marginal businesses who have been surviving on desperate low pay, unpaid overtime labor will likely have to close their doors. However, the demand they serve doesn’t just disappear from the market, so there will be potential jobs for those employees at companies not run by incompetents.

            “You say employers used to cite “compliance costs” as the reason they couldn’t pay their exempt employees some kind of bonus in exchange for working more than they thought they were going to be working when they were hired, but why will those same employers not cite “compliance costs” as the reason why they can’t leave the employee’s base salary the same, or why they are making some other unintended change, after their transition to hourly work?”

            Not compliance costs, compliance with the law. It’s very easy: employee asks for overtime, employer says sorry, your position is exempt and you don’t get any. Since most if not all employers classify every single job possible as ‘exempt,’ there’s few if any better deals out there. So, employee eats crap. Now this law will allow some of them to turn compliance on their employers and it will allow them to get overtime they likely should have been getting for years anyway, or work normal hours and not be burned out unproductive husks of human beings.

            “You say we should favor the change because it will just hurt employers who currently employ low salary, exempt employees anyways, whereas I think it would mainly hurt employers who employ low salary, exempt employees with extra bargaining power left on the table, and who can afford to pay the higher costs without losing market share to other firms, foreign or domestic, and still remain a viable investment opportunity in capital markets. Otherwise the firm has to do something else — i.e. it outsources, restructures, cuts back, or fails, many actions which are at least not generally to the benefit of the employees.”

            Who it will affect and how it will affect them is not predictable. For some reason though libertarians always assume employers will be omnipotent and will be able to lower wages, and employees will just have to eat it. That is NOT necessarily the case. All else equal, perhaps. All else is NOT equal, and employers have the majority of advantages, ergo their profits are inflated while their employees’ wages are depressed. Employers likely have WAY more wiggle room before hitting their margins.

            “I fail to see how this change in regulation sticks it to our proverbial plantation masters, because, as far as I know, it does nothing to decrease their political power, decentralize political power generally, increase the competition between firms or make it easier to run a small firm relative to a large one or even lower any barriers to starting a new one.”

            Spend a decade or so working with people who have no practical choice but to work 60 or so hours a week with no overtime, crap benefits, and minimal PTO that they are ‘encouraged’ not use, and you’ll see how it will benefit them. You say this rule might lead to them losing their jobs, it might. Working less than sixty hours, which is what many of them wanted, lead to the same thing. And that schedule maintained over time lead to stress, stress related illnesses, heart attacks, diabetes, suicides, ruined marriages and families, and lives missed while they were slaving away for scumbags who could only build and maintain their archaic and abusive businesses in the current tax farm conditions.

            “I simply do not think it is a viable solution in this particular instance, either, despite the myriad other aggressions already being committed by the state on behalf of virtually all parties. If you think that I’ve missed how the change actually does do any of those things, or that I am neglecting some other way it could help people, please enlighten me.”

            There is no solution, the aggressions that empower businesses over their employees will not be repealed, ever. They will be expanded. Our society will follow the course of every other society as the rich and politically connected keep trying to steal more and more and more and more from people until they finally piss enough of them off that they kill the tax eaters and establish a new system… and immediately being repeating the previous cycle/pattern. My opinion is we will likely need to go through another few thousand years or so of such cycles before enough people achieve cranial rectal prolapse, and having sufficiently removed their heads from their asses finally give freedom a shot. Until then, oddball rule changes like this will benefit some people by allowing them to tell their employers to go scratch. Their employers want free overtime, this rule denies them that. They may lower salaries, they may not. They may curtail their workforces, they may not. Something tells me they have much, much wider margins to play with their employees, despite their bitching and moaning to the contrary. So, in our downward spiral into ever more extreme statism and eventual collapse, this rule gives SOME employees what they want at the expense of their employers, and I like it for that reason alone.

    • P Michael

      I would like to know wear an Austrian Economist has stated that people should work for free.

      • http://www.medievalrecruiter.com/ Medieval Recruiter

        I don’t recall saying they said that. I do recall pointing out that the exempt status was created by THE GOVERNMENT via regulation, and it is this legal employment status that companies fall back on when they want to consistently work people beyond 40 hours and not pay them for their time, and that Austrians conveniently ignore this. As I said, a deal I’m sure everyone would be lining up for in a free market…

        I also recall pointing out that people often don’t think proportionately, and while ten extra hours a week doesn’t seem like all that much in discrete units, if you base calculations on a 40 hour week that’s 25% more time worked for no pay, or what could be considered a 27% decrease in salary when you account for the time and 1/2 they would have gotten for overtime. Bump that to an extra twenty hours a week and you have a 42% decrease in salary based on what would be expected with overtime rates.

        Gee, I wonder why employers LOVE the idea of exempt status employees and want to hang on to it so badly…

        And good luck trying to ‘negotiate’ you way to overtime with most companies. If you qualify as exempt, they have to classify you as such or they risk compliance issues, which I’m sure they’re soooooooo regretful about.

  • MADSAFFY

    I have a super awesome salaried employee who works on my fruit orchard. Because the nature of farming is seasonal spring and autumn has us working up to 60 hours a week. The overtime hours accumulated is payed out in time off in lieu of money. My employee wanted this arrangement since he need flex time to take care of his young family.

    If I were to pay my employee the time and half for OT instead of time off, this would bump him up into another tax bracket, and then the taxman would collect MORE money from him.

    So much for the feds caring for salaried employees.

    • http://www.propertyrightsmatter.com/ Teapolicy

      But didn’t you read Krugman’s column? He clearly said millions of workers like your employee have been helped by this regulation. He even cited the “progressive” Economic Policy Institute! Look past your own greed, man!

      • P Michael

        I have read Krugman’s article, ” Obama’s War on Inequality.” Krugman mentions the success of Denmark. Can you name 50 entrepreneurs, 50 companies, 50 billionaires, 50 inventions from Denmark that has contributed to the prosperity of Mankind in the last century? I can’t, but I can name Americans. What if America’s or anybodies success did not find its way into Denmark, what then?
        How do you measure success? Is it poverty programs? Name 1 poverty program in which the rate of change, number of recipients, has decreased as the US population increased? I can’t. Obamas health care program was suppose to decrease the cost of healthcare and provide healthcare to all, has it?
        My prescription begins with facts and truth. I would never put my theories before Mankind’s prosperity. I could not condem a whole generation of people. A good understanding of economics would be a sports analogy. Do you have a favorite team? Don’t ask yourself why you want them to win, ask how do they win? It’s not what the government can do to make us equal, why your team wins, but what makes your team different, that is why they win.

  • Gary Grimes

    Are there no source links for the income quintile statistics Tom cited?

  • Eileen

    You like Seattle? Isn’t that the king of progressivism?