They certainly put workers needs, front and center, as the REAL Engine of the Economy ...
(Nothing "Voodoo" about it ...)
AND ...
[Thom Hartmann]: ... So your four points that you were suggesting about how to get this economy back on track.
[Ravi Batra]: Well, the first thing we just talked about was we should raise the minimum wage about one dollar per hour every year until it hits $10 an hour. And then we should index it with inflation. That's the first thing I would do. As the minimum wage goes up, all other wages will rise. That's one thing I would do.
The second thing, instead of increasing government spending on the bailout, of Wall Street and banks and so on, they should increase government wages. They're going to increase government spending anyway. Wages of those the government employees should go up, maybe about 10% this year and slowly they should rise until we catch up with everybody's higher productivity. By the way, recently, I think last month, China announced a raise in the wages of government employees by 10% and I think we should do the same thing and they understand the importance of domestic demand.
[Thom Hartmann]: So, exactly, so you are suggesting that by raising wages of government employees, you're going to do, you're going to accomplish two things: number one, you're setting a new bench mark for the cost of labor, because government employees constitute what, between a quarter and a third of all the workers, directly or indirectly?
[Ravi Batra]: That's right, yeah.
...
[Ravi Batra]: He first said that people don't spend much money out of a temporary rise in income, which is what will happen when they cut the taxes. But from a permanent rise in income, people spend a lot of money. So if you raise their wages, then people will look at as a permanent rise in income so there will be a big increase in consumer demand out of increased wages. Whereas if you cut taxes, then there will be some rise in demand, but not much, so, not as much at least.
[Thom Hartmann]: And at the high end, for people who earn more than they spend and thus save it, cutting taxes doesn't increase demand at all, because they just stash that away.
[Ravi Batra]: Exactly. That's right. You're right about that. And then, and if the wages go up it really instills a lot of confidence in your outlook towards the economy. They'll say okay, the economy is depressed but now I'm doing better so you spend more, and that's what we need. We have too much supply--not enough demand--and they are busy trying to raise demand through these government bailouts of the banks and banks are saying, "Well fine! Give us the money but we're not going to lend any more because our past loans are not being repaid right now." So that policy, you are creating more deficit but it's not helping the economy and the funny part is the policy has failed for the past two years and still they are repeating it.
[Thom Hartmann]: Yeah. Yeah. So, point number three?
[Ravi Batra]: Yeah, OK, so those are the two points and then point number three, I would do something real about our trade deficits; that we have to really start reducing sharply because if we don't do that, every other measure is going to have limited success. This trade deficit is killing our manufacturing base and all the problems we have from the auto manufacturing, manufacturing disappearing is because of the trade deficits.
[Thom Hartmann]: So we can do that by what, going back to what tariff-based trade system?
[Ravi Batra]: Well, if we do tariffs, then they're going to have, again, Wall Street is going to jump on them and that will perhaps initially cause a stock market loss and the worldwide confidence will go down, so I don't recommend tariffs right now. Later on, maybe but not right now. So later on we can do that if things don't work out.
[Thom Hartmann]: So what can we do right now to correct the trade imbalance?
[Ravi Batra]: Well, what I suggest now is that we should fix the value of the dollar at low levels with respect to Japanese currency, China's currency, and the Euro.
[Thom Hartmann]: Won't China just track us? I mean that's what they've been doing for the last decade.
[Ravi Batra]: Ah! They will do that but then we can fix it back later. The thing is, lower, even lower. Because they have it fixed and we can...
[Thom Hartmann]: So you're saying, over the short term, monetary policy, over the long term, trade policy as your third point.
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[Ravi Batra]: Okay, the fourth point is that we should, instead of bailing out the auto industry, buy the stock and sell the stock to the workers. And at the same time the government can assume a part of those legacy costs. So that to the level of the costs that the foreign transplants have, like Toyota and Honda and so on, so in terms of legacy costs, our domestic auto industry has the same cost structure as the foreign transplants and then at the same time they control the ownership of the company and then they will be very motivated to do this, so this will cost a lot less and we'll have a plan for success. Whereas the current system in which the failed management has made such a huge mess and now they're being rewarded with a lot of money and the workers have to either be laid off, or pay back their bonuses, or wages, is not going to be a good, good plan, this current plan.
[Thom Hartmann]: I would add to that, and tell me if you think this is, wise or not, to immediately institute something close to a single-payer national health care program so that we are not only, domestically, state-by-state competitive, in other words, so not only is the Toyota plant in Tennessee or whatever the company is in Tennessee, competitive with GM in Detroit in terms of the biggest part of the legacy costs being health care, because the pensions by and large were paid into by the workers over the years, so (a) it does that within the country but it also equalizes us with countries like Canada which has a national health care program so we’re competitive internationally.
[Ravi Batra]: Yeah. This is a very good idea and I think in my book I have mentioned it, that we need to have a national healthcare plan, not of the kind that Hillary Clinton was offering; one where we have a single-payer like the government is in charge of, like the Canadian plan, that's essentially what it is.
[Thom Hartmann]: With care for all, Medicare for all. Care for all. Okay, let's pick up a few phone calls here. Mike in Fort Worth, Texas, has a question for you, Ravi. Mike, you're on the air.
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Is there a Dr. in the House?