Redstate

She might take that the wrong way.

Veritas magna est et praevalet.

I don't want to defend Nancy Pelosi, but pretending that changing the minimum wage for Samoa is going to affect the stock price of a company with $9 billion in annual sales, almost all of which is generated in plants outside of Samoa, is beyond ludicrous.

Oppose the minimum wage on the merits. Oppose Nancy Pelosi because she believes all the wrong things. Don't blow your credibility making arguments that no one with any financial sophistication is going to treat with anything other than derision.

Relax. Politics isn't rocket surgery.

The exemption was put in there for some reason, surely? What do you think it was?

As someone else noted in another thread, the exception for American Samoa has long been there. The question is, why was it treated differently from the exception for the Marianas.

I'm guessing some good lobbyists - the Democratic Jack Abramovs, if you will - worked to keep the exception in. Who the clients are, can't say. I'm guessing that the currency was the standard stuff, such as PAC contributions, along with maybe some tickets to Barbara Streisand concerts.

I'm not saying that DC isn't corrupt. I'm not even saying Nancy Pelosi isn't corrupt, or at least corruptible. I'm just saying that if you think changing the minimum wage at one mechanized plant that is a tiny pimple on the rump on a huge corporation is going to move the stock price, you don't really understand how massive today's Fortune 100 companies are or what factors affect their stock prices. It's a silly argument. It makes RedState look silly to plaster it all over the front page.

Relax. Politics isn't rocket surgery.

Lurk in the background here for a week or two. Don't assume you know more about free market economics than the people here. Don't assume that economics and politics are the same thing.

I'm just saying that if you think changing the minimum wage at one mechanized plant that is a tiny pimple on the rump on a huge corporation is going to move the stock price

Nobody here has made the claim that it will affect the stock price.

If it isn't going to affect the stock price, how is it going to affect the Pelosi family? If the value of their investment is effectively unaltered by the Samoan minimum wage, why are we acting like their stock ownership could affect public policy?

Relax. Politics isn't rocket surgery.

If it isn't going to affect the stock price, how is it going to affect the Pelosi family? If the value of their investment is effectively unaltered by the Samoan minimum wage, why are we acting like their stock ownership could affect public policy?

Relax. Politics isn't rocket surgery.

you seem a bit slow up the uptake. Read my "helpful hints" above.

Relax. Politics isn't rocket surgery.

Helpful Hint™ = Shut up?

I agree that the discussion so far is lacking economic sophistication.

...how is it going to affect the Pelosi family? "

It isn't going to impact the stock price or the Pelosi family. But I can pretty much guarantee that its going to impact the H*ll our of the people of American Samoa ... but who cares, they don't vote.

John
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Why would God create something like whiskey? To keep the Irish from ruling the world of course.

and whether the concerns are accurate or alarmist, the influence must have come from someone invested in the world tuna market. I don't know the current factors and conditions of the tuna market, myself, and I really don't know who the largest foreign competitors to StarKist are but I'm sure they spend less on labor than any US-based company.

Whether this particular bill is good or bad, I hope we'll see fewer unfair exemptions in the future. High hopes, maybe, but at least the Internet is inspiring more people to read actual legislation and share their findings. And I definitely feel our territories deserve fairness.

lesterblog.blogspot.com

Since including them will do just that.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

...the laws of economics apply in Samoa, but not, apparently, in the U.S.

If the minimum wage is bad policy in American Samoa, why not in S. Central L.A.?

You gotta admit, it's pretty funny how quickly they threw Samoa under the bus, unless, of course, you're Samoan.

I'd only point out the same standard has not been used in regards to any Republican politician.

Don't know about your degree of "financial sophistication" but the fact is that people and the corporations they run are subject to lots of human impulses, like avarice. A person of "financial sophistication" would have laughed at the idea of Martha Stewart risking a prison term to make an illegal trade that saved her about 50K. But she did.

Look, if you have a substanitve argument to make on this, make it. But you haven't posted here long enough to get away with a response like this more than once.

I firmly believe that avarice and self interest were involved. It is odd that American Samoa got special treatment, and I'm ready to believe that something of value changed hands somewhere to make that happen.

I just don't think it's credible that propping up the Heinz stock price is where self interest intersected public policy. It's too small a part of Heinz, too small a part of the Starkist subsidiary of a subsidiary, and probably too small a part of the profitability of the plant, to really affect the overall corporate finances.

Relax. Politics isn't rocket surgery.

would have no effect on the profitability of the plant?

I won't suggest it's a major impact on the total corporation's profits but in many industries, labor costs are a major portion of the cost of production. In a competitive market (where the company has little pricing power), this could be the difference between having a profitable operation and losing money. Most corporations won't continue a money losing operation for long unless they have a chance of reversing the loss. I'd expect that plant to shut down and the tuna production to move somewhere with lower wage costs (AKA, non-US territory).

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

And it might explain why major employers in American Samoa would bring the usual sorts of pressure to bear on their local Congress men and women.

It's also not a good thing over the long to intermediate run for the minimum wage workers of American Samoa. This, and other plants, might be moved, or they might be further mechanized to reduce the use of low skilled labor, but if the normal laws of economics apply there will be fewer workers at the bottom of the wage pyramid next year in American Samoa than this year.

That I don't think this is a material event for the Heinz Corporation stock price does not mean I think it's a good idea.

Relax. Politics isn't rocket surgery.

is always a material event for a corporation. The costs associated with closing a plant and writing off any remaining value will also impact profitability (if only by a penny or less per share). That DOES affect the stock price.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

Materiality isn't a term or a concept I made up. It's part of the securities laws and has been around a long time.

In a big corporation, such as Heinz, with plants all over the world, nearly 9 billion in sales, and nearly double that in market capitalization, it's not likely that one plant shifting from profitable to unprofitable (if that were to happen) would be a material event. For an organization that immense, it's got to be a big deal, a very big deal, to be material. It's got to be big deal to affect the business prospects, the profitability and the valuation of the company.

You don't need to take my word for it. Go look at their securities filings and study the material events they disclose. I haven't looked, but even without peeking I can assure you they don't list which plants have shifted in and out of profitability.

Relax. Politics isn't rocket surgery.

but take a look at some quarterly reports and you're likely to see "Allowance for discontinued operations" which IS a material event.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

Setting aside the preliminary issues that we don't know whether the change in minimum wage will make the plant unprofitable (it might do just fine with a bit more mechanization, leaving the poor Samoans as the only victims), much less lead to its closing, you still aren't quite right.

Publicly traded corporations are required to make certain financial disclosures. Generally, in a GAAP financial statement, they will disclose a figure for discontinued operations.

Whether that figure is material, as a legal matter, depends, among other things, on how big the number is. Contrary to what you state, not every allowance for discontinued operations is "material" in the legal sense.

Whether it is material, in the sense of affecting the market value of the company, depends not only on the size of the number but how it fits into the overall picture of the company's prospects. It's not at all unusual for a company's stock to rise when it drops a line of business that, even if profitable, was low growth or too demanding of capital or other resources.

This is getting fairly far afield from the original point, and taking on too much of the flavor of a tutorial in basic business concepts, so this is my final post on the topic.

Relax. Politics isn't rocket surgery.

issue is: Is it ethical for Nanacy Pelosi to draft a bill that has a specific exemption in which her husband owns a large (from her point of view not the corporation's) interest in one of 2 companies that benefits and the other is headquartered in her district?

In my opinion, the husband's interest in the corporation should cause her to recuse herself from all votes in the matter (or to remove the exclusion). Voting to benefit a local constituent could be considered part of her job and is less problematic if there is no quid pro quo (that's a big IF). Either way, this exclusion smells of an ethical lapse on Ms. Pelosi's part.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

There is no proof of said ownership.

or not...Heinz is not the parent of StarKist; Del Monte is. Heinz is a whole other kettle of stinky fish (Theresa and John).

You may not be interested in war, but war is interested in you.

The minimum wage should be left to the market, so that private individuals can make whatever agreement they want to make.

The minimum wage hurts the most vulnerable - exactly the people the demagogues will tell you it is supposed to help. By raising the minimum that has to be paid, it removes from the job market people who might be worth hiring, and training, at some lower wage, but not at the statutory minimum. It keeps these people from getting that starter job that gets them on the path to better jobs. It moves them to the permanent underclass of the unemployed and unemployable.

The problem is not solved by leaving it to the states. The problem is solved by leaving it to free individuals who can decide what wages to offer and accept.

Relax. Politics isn't rocket surgery.

The labor market is not a free market though. Remove the ability for the Federal Reserve to set interest rates and instead let the world market set them, and then it would be a free market.

Whenever the economy is growing too fast, jobs are created, and unemployment drops too low, labor shortages develop which drive up the price of labor and hence leads to inflationary pressures. To counter this, interest rates are raised to slow the economy down, which has the side effect of slowing business expansion and hence the supply of jobs.

I don't remotely get what you are trying to get at here.

Setting aside slavery, the labor markets are indeed free markets. That they are subject to business cycles, to rising and falling interest rates, to greater or lesser demand or supply, in no way means the market doesn't function. That central banks still have some effect, althought less than I think you are assuming, on the inputs and cycles of those markets, doesn't mean that people aren't free to meet and agree on what price they will exchange cash for labor.

It's way off point, but I'm not at all sure you are right on your central assumption, that the US Fed sets interest rates and the world markets don't. I will leave that debate to someone else.

Relax. Politics isn't rocket surgery.

You're right about business cycles. There is a natural tendencies to have ups and downs in any economy. What has happened since the mid 80s is we have gotten quite good at predicting and manipulating the economy through federal reserve policy, mainly interest rates.

If the economy gets too hot, the interest rates are raised, slowing it down. When it starts to slow down, interest rates are cut, which encourages business expansion and growth.

When rates are increased, costs to borrow to businesses goes up. When rates are decreased, those costs go down.

The creation and loss of jobs are tied to the health of the economy and businesses.

So what happens when the economy grows too fast, jobs are created and shortages of labor occur. During these times, you'll see places like McDonald's advertising for help at starting wages way above minimum wage. So this supports proof that the minimum wage is really not needed. But alas, the Feds step in to cool off the economy. Why? Because if this job growth is left unchecked, increasing wages will trigger inflation.

Now, the question is, is this a good thing? The Feds manipulate the market so it's not entirely free. But on the other hand, it's far more predictable. Absent manipulation one could argue that the long-term growth of the economy would be better than with manipulation, and if the feds let the world market decide our interest rates (ie, banks in an attempt to attract foreign investment would price their rates to compete with other nation's banks) then the U.S. dollar would end up being stronger.

I'm not sure what the answer is, I'm just stating that the labor market is not really free due to other manipulations happening.

Some good reading on this at Cato.org site.

The only thing I know for sure is, anyone who doesn't develop some sort of skill is at a serious disadvantage. Unskilled labor is the pits. But truthfully, it doesn't take an advanced degree or trade skill to develop a sought-after skill. Ask any business owner and they'll tell you one of the most highly sought after skills is someone who will just show up for work when scheduled and put in an honest days work. It doesn't take that much effort to set yourself apart from the competition, so I'm not having a bleeding heart here for anyone who can't "get ahead" even though the system is a bit rigged.

That is a highly contestable statement. The fact that it's also an unshakable pillar of the conventional wisdom on macroeconomic management makes it all the more suspect.

Inflation is a monetary phenomenon. You can pursue monetary policies that will result in a deterioration of the risks that businesses and investors are willing to take. That's what causes wage increases to correlate with inflation, but in reality both are effects. The one does not cause the other.

(For what it's worth, there is anecdotal evidence that this is happening right now.)

I should have said, setting aside slavery and direct government interference such as minimum wage laws, labor markets are free markets.

Relax. Politics isn't rocket surgery.

This sounds like something you read in Business Week or in some econ textbook.

if misguided, purpose. The most significant problem in America coming out of the Great Depression was the appalling economic circumstances in The South. There are some very good books out there on how the peonage imposed on the former slaves and non-landowning whites in agriculture held down the wages in the nascent industrialization in The South, thus even industrialization did nothing to increase the general standard of living above a general level of ricketts, toothlessness, and illiteracy.

Just as the federal MW is meaningless in high cost states with high value labor today, it was meaningless in the industrialized parts of the Country in 1938, the year of the Fair Labor Standards Act's enactment. I don't know whether it worked or not, Southern wages remained appallingly low and it really wasn't until the diaspora of Southern agricultural workers after WWI and especially after WWII that there began to be a slow but steady increase in the general standard of living in The South. That diaspora was brought on more by mechanization and the growth of mass media than anything else to my mind. Once it was readily evident that there were places one could live as something other than a peon and where the first question on the job application wasn't "what does your daddy do?", Southerners fled the rural areas and even The South. Ergo, end of the peon labor and the labor surplus in The South.

In Vino Veritas

legal immigration status?
_______________________________
If "pro" is the opposite of "con", what is the opposite of "progress"...

all agricultural workers are exempt from the FLSA, as are most fisherpeople, some domestic help, seamen, and others.

In Vino Veritas

While Pelosi works to give tax cuts to the wealthiest Americans, she is doing nothing to ensure that domestic help is paid at least the minimum wage. There are clearly two Americas, and Nancy is part of the rich one.

(Fisherpeople?)

Sort of a nouveau preppie folk group, with a repertoire that goes beyond just the standard anti-war stuff to the stirring Stem Cells Just Want To Be Free biopolitical anthem. They are very big in the coffeehouses around Berkeley.

Relax. Politics isn't rocket surgery.

I was a bureaucrat long enough that a certain amount of PC creeps into my vocabulary. It's "fishermen" to the "unreconstructed" among us.

In Vino Veritas