Ultra-Conservative Congressman Jeff Flake Calls for Lowering Minimum Wage to Zero; Claims Change Will Boost Employment

This newswire story got buried this week, but we wanted to call it to your attention:

A Republican congressman from Arizona today called for lowering the minimum wage to zero -- in order, he said, to boost hiring and reduce high levels of unemployment.

Asked about Connecticut Senate candidate Linda McMahon's proposal to lower the minimum wage, Rep. Jeff Flake (R-Ariz.) said he would prefer that the minimum wage be lowered to zero.

"It's an assault on freedom to force employers to pay their workers a certain level of salary," Flake told a Capitol Hill news conference on the eve of the congressional recess for the election campaign. "Further, the minimum wage is definitely a culprit in our high unemployment rate. It discourages corporations and small business owners from hiring more people at low -- or even no -- wages."

Flake said that the minimum wage was clearly unconstitutional as contemplated by the founding fathers. "People like Washington, Jefferson and Madison certainly didn't intend this as a legitimate role for government. It's a kind of slavery they surely wouldn't approve of. It's too bad that we strayed so far from their principles."

The Arizona congressman said he will introduce a bill in the next session of Congress to lower the minimum wage to nothing. His own re-election is considered a foregone conclusion.

Why the Fanatic Free-Market Fundamentalism of Jeff Flake and the Tea Party Is a Global Laughingstock

Anatole Kaletsky, the chief economist of a Hong Kong-based investment advisory fim and the author of Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis, has a compelling op-ed piece in today's New York Times, "Blaming China Won't Help the Economy."

After discussing why Japan last week chose to ignore U.S. pleas and decided, like China, to manipulate its currency -- the value of the yen fell drastically after Japanese government market intervention -- Kaletsky goes on to say [emphasis ours]:

Japan’s action suggests that, in the aftermath of the recent financial crisis, the dominance of free-market thinking in international economic management is over. Washington must understand this, or find itself constantly outmaneuvered in dealings with the rest of the world. Instead of obsessing over China’s currency manipulation as if it were a unique exception in a world of untrammeled market forces, the United States must adapt to an environment where exchange rates and trade imbalances are managed consciously and have become a legitimate subject for debate in international forums like the Group of 20.

Market fundamentalists [this means you, Jeff Flake] who feel that government interference with free markets is anathema should be reminded that, by today’s dogmatic standards, Ronald Reagan is one of the great manipulators of all time. He presided over two of the biggest currency interventions in history: the Plaza agreement, which devalued the dollar in 1985, and the Louvre accord of 1987, which brought this devaluation to an end.

The fact is that the rules of global capitalism have changed irrevocably since Lehman Brothers collapsed two years ago — and if the United States refuses to accept this, it will find its global leadership slipping away. The near collapse of the financial system was an “Emperor’s New Clothes” moment of revelation.

In this climate, the market fundamentalism now represented by the Tea Party, based on instinctive aversion to government and a faith that “the market is always right,” is a global laughingstock. Yet more moderate figures from both parties largely hold the same view: a measure to punish China over its currency passed the House Ways and Means committee on Friday with bipartisan support.

Outside America, however, a strong conviction now exists that some new version of global capitalism must evolve to replace what the economist John Williamson coined the “Washington consensus.”

If market forces cannot do something as simple as financing home mortgages, can markets be trusted to restore and maintain full employment, reduce global imbalances or prevent the destruction of the environment and prepare for a future without fossil fuels? This is the question that policymakers outside America, especially in Asia, are now asking. And the answer, as so often in economics, is “yes and no.”

Yes, because markets are the best mechanism for allocating scarce resources. No, because market investors are often short-sighted, fail to reflect widely held social objectives and sometimes make catastrophic mistakes. There are times, therefore, when governments must deliberately shape market incentives to achieve objectives that are determined by politics and not by the markets themselves, including financial stability, environmental protection, energy independence and poverty relief.

This doesn’t necessarily mean that governments get bigger. The new model of capitalism evolving in Asia and parts of Europe generally requires government to be smaller, but more effective. Many activities taken for granted in America as prerogatives of government have long since been privatized in foreign nations — even in what so many Americans view as socialistic Europe.

In France, Germany, Japan and Sweden, water supplies, highways, airports and even postal services are increasingly run by the private sector. For home mortgages to be backed by government guarantees would be unthinkable anywhere in Asia or Europe. Tax systems, too, are in some ways less redistributionist in Europe and Asia than they are in the United States. According to the Organization for Economic Cooperation and Development, the proportion of income tax raised from the richest tenth of the population is 45 percent in America, compared with only 28 percent in France and 27 percent in Sweden. These countries raise money for public services mainly from middle-class voters, through consumption and energy taxes, not by soaking the rich.

AS a result, these nations’ budgets are more stable and their governments have more ability to support their economies in times of crisis. They are also better positioned to manage their currencies and their trade relations, subsidize long-term investment in nuclear and solar energy, and spend money on infrastructure, job retraining and education. In America, by contrast, the tax system’s dependence on revenues from the richest citizens means that the social safety net and long-term goals like energy independence can be achieved only if the rich keep getting richer.

Which brings us back to Delaware. What if America decides to ignore the global reinvention of capitalism and opts instead for a nostalgic rerun of the experiment in market fundamentalism? This would not prevent the rest of the world from changing course.

Rather, it would make it likely that the newly dominant economic model will not be a product of democratic capitalism, based on Western values and American leadership. Instead, it will be an authoritarian state-led capitalism inspired by Asian values. If America opts, for the first time in history, for nostalgia and ideology instead of pragmatism and progress, then the new model of capitalism will probably be made in China, like so much else in the world these days.

The free market is not the solution to our problems. Neither is government - as a twenty-first century liberal, I know that. However, effectively using government to manage the market when necessary, as is being done so well by China - a country that is also leading the world in green technology as well as a state-of-the-art national infrastructure - is what we need after the collapse of our financial system two years ago.

But Jeff Flake is partying like it's still 1979.

Out-of-touch, living-in-the-past Jeff Flake will do all he can to put China ahead of the United States by the time his thirty or forty years in Congress are finally over.

China couldn't ask for a better American congressman than free-market fanatic Jeff Flake. He's doing a lot more for Guangdong and Shanghai than he's ever done -- or ever will do -- for Mesa and Gilbert.

How the Republican Party of Jeff Flake Destroyed the American Economy: Lies and Damn Lies About the Federal Deficit Exposed by David Stockman

Free-market laissez-faire fanatics like Jeff Flake worship the free market. No taxes are always better than any taxes, no regulation is always better than any regulation, and so what if the rich keep getting much, much richer and the rest of us are losing ground? Republicans more hateful than Flake blame the immigrants and ethnic minorities for taking the jobs of Tea Party conservatives who would otherwise be getting hired as cleaning women and janitors, gardeners and laborers, bus boys and restaurant takeout delivery girls. (In Arizona, most white Republicans don't have college educations as most people we know do.)

For the few people in the East Valley with a modicum of intelligence, we're reprinting some of today's important New York Times op-ed on Republicans and the national debt written by David Stockman, Ronald Reagan's first budget director and a former Michigan congressman who always a little too intelligent to be a party to what his party has wrought:

IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.

More fundamentally, Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.

This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy. More specifically, the new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one.

The first of these started when the Nixon administration defaulted on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world. Now, since we have lived beyond our means as a nation for nearly 40 years, our cumulative current-account deficit — the combined shortfall on our trade in goods, services and income — has reached nearly $8 trillion. That’s borrowed prosperity on an epic scale.

It is also an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves. Just let the free market set currency exchange rates, he said, and trade deficits will self-correct.

It may be true that governments, because they intervene in foreign exchange markets, have never completely allowed their currencies to float freely. But that does not absolve Friedman’s $8 trillion error. Once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors.

In fact, since chronic current-account deficits result from a nation spending more than it earns, stringent domestic belt-tightening is the only cure. When the dollar was tied to fixed exchange rates, politicians were willing to administer the needed castor oil, because the alternative was to make up for the trade shortfall by paying out reserves, and this would cause immediate economic pain — from high interest rates, for example. But now there is no discipline, only global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve.

The second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.

In 1981, traditional Republicans supported tax cuts, matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration’s hastily prepared fiscal blueprint, however, was no match for the primordial forces — the welfare state and the warfare state — that drive the federal spending machine.

Soon, the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending exempted from the knife most of the domestic budget — entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans’ fiscal religion.

Through the 1984 election, the old guard earnestly tried to control the deficit, rolling back about 40 percent of the original Reagan tax cuts. But when, in the following years, the Federal Reserve chairman, Paul Volcker, finally crushed inflation, enabling a solid economic rebound, the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts.

By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s. Then, after rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures, George W. Bush surrendered on domestic spending cuts, too — signing into law $420 billion in non-defense appropriations, a 65 percent gain from the $260 billion he had inherited eight years earlier. Republicans thus joined the Democrats in a shameless embrace of a free-lunch fiscal policy.

The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008.

But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives. They could never have survived, much less thrived, if their deposits had not been government-guaranteed and if they hadn’t been able to obtain virtually free money from the Fed’s discount window to cover their bad bets.

The fourth destructive change has been the hollowing out of the larger American economy. Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12 percent, to 68 million from 77 million. The only reason we have not experienced a severe reduction in nonfarm payrolls since 2000 is that there has been a gain in low-paying, often part-time positions in places like bars, hotels and nursing homes.

It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy.

The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing — as suggested by last week’s news that the national economy grew at an anemic annual rate of 2.4 percent in the second quarter. Under these circumstances, it’s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.

We'd love to hear a Jeff Flake response to any of this. But his is a mind that isn't open to new ideas that conflict with the ideology he worships as a God. He knows his constituents are too stupid to understand how he's fucked them over. And he's right.

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Our friend from our 2004 race for Congress in North Florida, Rep. Corrine Brown (D-Jacksonville) said this week on the floor of Congress in relation to legislation supported by our creep of a congressman, "If it's Flake, it's bad." (Hat tip to the hardworking Pennsylvania Federation, Brotherhood of Maintenance of Way Employes Division, International Brotherhood of Teamsters.)

Feckless Fanatic Congressman Jeff Flake Calls for "More Pain" for America; Entrenched Arizona Politician Wants New Great Depression to Balance Budget

Today at a Capitol Hill news conference, Arizona Republican Rep. Jeff Flake called on Americans to endure "more pain" and "a new Great Depression" in order to reach his goal of a balanced budget.

"Americans, and Arizonans, have not really suffered at all during this so-called recession," Flake told reporters. "Balancing the federal budget is something we have to do immediately. That's why I've voted twenty-three times against bills that would spend money to help those admittedly unfortunate Americans who've lost their jobs or are facing minor financial difficulties like not being able to afford probably uneccessary spending on items like junk food and needless medical care."

"I'm proud to have voted a total of seventeen times against increasing or extending unemployment benefits, which is a wasteful social spending scheme," Flake replied in answer to a reporter's question asking how the Congressman felt about Arizona's maximum weekly unemployment benefits, third lowest among the states, recently going down to $216 from $241. "The unemployed need to value the free market a bit more and pull in their belts."

"I had no problem surviving a week with no money at all on a desert island for a week," Rep. Flake said, "so I think everyone collecting unemployment benefits or other unnecessary government benefits like food stamps, Medicare or Medicaid need to be a little more self-reliant like me."

Flake derided commentators like Nobel Prize-winning Paul Krugman who've said that imposing financial austerity can cause a new Great Depression. "Maybe we need a new Great Depression," the Congressman told reporters. "It would help voters see that they've been living off the government teat for too long."