Letters to the editor: March 3

March 3, 2014 

  • At issue: Feb. 12 commentary by Dr. Cameron Schaeffer, "Wage-hike cure could do more damage to recovering economy"

Working to starve

In a Feb. 12 op-ed piece opposing a minimum-wage hike, the writer argues that the Community Reinvestment Act of 1977 caused the 2008 financial crash.

But it is a matter of public record that the housing bubble was driven not by banks but by independent mortgage companies (not regulated by the CRA) making risky loans at more than twice the rate of the banks and thrifts.

The economists cited also seem to be on shaky ground. Economist Thomas Sowell's ascribing the prosperity of Switzerland and Singapore to lack of minimum-wage laws is a confusion of cause and effect.

And if economist Walter Williams believes that both black and white youth, or any other sector of the work force, enjoyed "negligible" unemployment rates during the 1930s, he hasn't read the history.

As the writer points out, economics is a complicated proposition. When you raise the minimum wage for everyone, maybe you risk lower employment as a result of higher payrolls; or maybe you spur higher employment as a result of increased demand from customers who suddenly have enough money to buy products and services.

It's a striking fact that people who don't want to raise the minimum wage generally also oppose government aid to the poor, whom they exhort to "get jobs." But what if the jobs don't pay a living wage? Must people work to starve?

"There will always be a bottom 10 percent," the writer says. That's true by definition. But it doesn't always have to translate into poverty-level living standards.

Lela Stromenger

Lexington


Blame for recession

The urologist who writes against raising the minimum wage should talk to someone trying to survive on a minimum wage. Instead the doctor clings, like many non-reading conservatives, to the fantasy that the 2008 recession was caused by "bad economic policy" and the Community Reinvestment Act.

If the doctor would just read that law, he might learn that its only purpose was to prohibit the redlining of mortgages, whereby banks would not grant mortgages for homes where the majority of residents were black. Just read the law; it's not that long.

No one forced banks to "loan cheap money to people with bad credit." The banks were only too eager to grant such loans, if only because the profits were huge. The recession was the result of excessive leverage, aided by mortgage-backed securities) and over-the-counter derivatives, along with collateralized debt obligations, and the repo markets (repurchase agreements).

But, don't take my word for it. Read the analysis by Republicans who were at the scene of the disaster:

On the Brink: Inside the Race to Stop the Collapse of the Global Financial System by Henry M. Paulson, the former U. S. Secretary of the Treasury.

Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself by Sheila Bair, the most recent chairman of FDIC.

Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers by Lawrence G. McDonald, a former vice president of Lehman Brothers.

If only conservatives would read instead of just clinging to baseless fantasies.

Jim Horner

Lakeside Park

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