Questioning the economy

Kalamazoo-based economist George Erickcek provided a rosy picture of this region’s economic outlook Tuesday morning — decreasing unemployment numbers, rising wages and a faster-than-expected recovery from the recession that ended four and a half years ago.
Marie Havenga
Feb 5, 2014

“It’s great to be able to give good news,” said Erickcek, senior regional analyst for the W.E. Upjohn Institute for Employment Research.

More than 100 community leaders attended Tuesday’s forum at the Grand Haven Community Center. They were looking for answers to many questions: What would a higher minimum wage do to the recovery? What will it take to provide sustainable long-term positive growth? Should we worry about the recent stock market decline?

Stocks suffered steep declines in recent days because of slower-than-expected manufacturing growth, wicked January weather cutting into car sales and developing countries feeling the pinch of higher interest rates, according to Erickcek.

Erickcek said he’s hanging onto his stocks. Although the economy and manufacturing sector are expected to expand, he said the growth may be slower than we would like.

“What my imagination can’t provide is the new products — new products that create demand,” Erickcek said.

The economist said he's excited about self-driving cars that are currently being tested in the auto industry. With an aging population, he said that innovation would allow older people to continue driving — to the casinos and elsewhere — without worry of their children trying to snatch their car keys from them.

Erickcek said the effect of a minimum wage hike would have a “marginal” impact on employment, but a “pretty good” impact on purchasing power. The local mom-and-pop shops would likely have to raise prices, but he doesn’t foresee a shopping stall.

“The ice cream you buy at the harbor would cost 10 cents more, but I feel most tourists would be willing to accept that,” Erickcek said. “Especially when it’s 80 degrees and there’s a soft breeze off Lake Michigan.”

But he does think a higher minimum wage could backfire on those who hope to benefit from it. By raising the minimum wage, he predicts there would be more competition for jobs from skilled workers.

“The very people who hope to be helped by this could be shut out,” Erickcek said.

He feels a more effective way of helping low-wage earners would be to increase the earned income tax credit.

“That way it doesn’t affect the cost structure of business,” Erickcek explained.


Former Grandhavenite

But... but... wait, which side is he on? How are we supposed to know which set of talking points to recite?

Seriously though, I do agree with him that the earned income tax credit should be increased. I might even accept it as an alternative to raising the minimum wage, if the credit was expanded enough to increase low wage earnings by the same amount as a minimum wage increase. Raising EITC is an interesting alternative that I've never considered, and it would largely eliminate the concern that low-wage jobs might be cut with a big jump in the minimum wage.

Barry Soetoro

Is there any way we can entice you back to town to run for Mayor?


I was going to suggest he take a break.

Former Grandhavenite

Hey, I probably wouldn't even need to move back. I remember for awhile in (I think) the early 90's GH had a mayor who lived in Florida for 8 months out of the year. Wish I could remember the name, but I think he was the next mayor following Howard Meyer. It would be great if the Trib could once again run headlines like, "Mayor Visits City" and "Mayor to City Council: So Long Suckers!"

If I'm going to throw my hat into the mayoral ring my toughest choice'll be whether to run under the banner of the Socialist Workers Party or Socialist Party USA. Given the massive level of support both parties enjoy in online forums that I frequent, I can only assume that they're quite popular in West Michigan as well! Anyway, just look for the hammer and sickle logo amid all the donkeys and elephants on your ballot. And assuming I win, check out the giant bust of Karl Marx on top of Dewey Hill.

Tri-cities realist

Thanks for the laugh. On a more serious note, if I recall correctly, you stated in another post that you were a fiscal libertarian, and a social communist. Did I recall correctly? If so, I'm trying to understand how the 2 philosophies mesh.

Former Grandhavenite

I think the traditional left-right one-dimensional model of political views isn't very good at describing the full range of political opinion out there. If you're interested, take the brief quiz at

The Political Compass is a two-dimensional model where one axis measures economic beliefs ranging from extreme laissez-faire free market capitalism on one end to complete collective ownership of all industry and resources on the other end with collective distribution of profits, and regulations to limit the power of the wealthy along with a tax system that tries to eliminate inequality. The other axis measures where someone falls ranging from hard core authoritarianism (not just governments, but views of authority figures in general) on the one end, to the belief that individuals should be free to make their own decisions as much as possible on the other end of that axis. Within this model I fall into the extreme lower left of the graph which is the left-libertarian quadrant.

I've generally always held fairly extreme anti-authoritarian views in the sense that I think all authority figures should be viewed with suspicion and all "common sense" assumptions should be questioned. I just don't buy into the whole idea that, "I don't like X, therefore X should be illegal!" which is unfortunately almost the default view for a lot of people. A lot of Tea Party types use libertarian rhetoric about getting Big Government out of people's lives, but then they turn around and try to have Big Government regulate which drugs you can put into your own body and whether or not you can marry another consenting adult for example.

On economic issues, I see the complete and utter dominance that the 1% have over everyone else and the political system itself as a huge problem. The winner-take-all mercenary form of capitalism essentially consigns the vast majority of the population to a life of misery. I consider Karl Marx the greatest economist of all time for correctly realizing that social class plays a huge role in all aspects of life, and his pointing out that the extremely wealthy make money not through work, but by ownership of other people's work and the very means of production. To see that this is the case in the US today, all you have to do is consider that income from work is taxed more heavily than income from investments and capital gains. The famous example is that Warren Buffet's secretary is taxed at a much higher rate than he is.

The political compass gives a two-dimensional model, but I think there are more like five or six dimensions, at least. The left-right dichotomy is a complete scam and it plays a huge role in the polarization of society where you're on one side or the other. It prevents us from realizing that there are other choices out there. Don't think outside the box, instead realize that the box is an artificial construct, and we can easily tear it down or reshape it. Anyway, probably more detail than you were looking for! If you do take the quiz I'd be interested to know where you fall on the graph.

Tri-cities realist

Thanks for the link and the insight, the detail was good. So while in theory Marx may seem desirable, if you don't trust authority (I tend to agree with you on that), how could socialism ever be implemented without those in power benefiting through corruption or other means? People in power, whether it is capitalism, socialism, or any other, will likely try to maintain or grow their influence, whether it be control, money, or any other form of influence. So at least with capitalism there is the opportunity and incentive to succeed, I don't see that with socialism.

And while social class may play a big role, it doesn't relegate everyone to a life of misery. People move up (and down) the class ladder all the time. It is the opportunity of the free market that allows people to pursue and achieve their potential. So until we can ensure that everyone is truly created equal at birth (how boring if we are all equally identical), there will be winners and losers, hopefully the number of winners will increase, since it is not a zero-sum game.

Haven't taken the test yet, but plan to.

Former Grandhavenite

The question of how to implement socialism without a hefty dose of authoritarian policies is probably the biggest challenge facing me and my fellow left-libertarians. The Soviet Union did the kind of damage to the 'brand' of socialism and communism that the Rush Limbaughs of the world could only dream of. It's an open question whether the USSR became such a nightmarish police state because of terrible leadership on the part of Stalin, external pushback from capitalist-dominated countries and internal bourgeoisie elements, or because of an intrinsic problem with socialism itself. Speaking of Stalin, when a guy literally changes his name to "Man of Steel" (his actual name was Joseb Jughashvili) you know the dude has ego issues (assuming the Man of Steel in question ain't rescuing Lois Lane).

You're completely right that in both capitalism and socialism (and in fact any economic system) the people at the top have a natural tendency to game the system to increase their own power. I'd suggest that a third axis of political belief in addition to the two used by the political compass could be a measure of secrecy versus transparency. On the transparency side you'd have a very free, very aggressive media with a large number of independent voices and strong investigative reporting to reduce the impulse toward corruption by the leadership (whether the leadership consists of the 1% capitalist/investors or the central economic planners) and hold the leadership accountable to the public and reveal what is being done by their 'representatives' at all times and more importantly who is funding them. Journalism would be essentially the most important and respected job in such a society.

On the other end of the scale you'd have a government obsessed with secrecy and the media would be completely controlled by the establishment (whether that means North Korean style state media, or if it means Fox News is the only channel on TV and the Wall Street Journal is the only newspaper). Governments and authority figures always dangle the bait of 'access' in front of journalists. "You ask us tough questions, you don't get to ask a question next time". Unfortunately the US media has been largely neutralized as a force in the public interest by taking that bait time and time again, which is why if you watch just about any mainstream media you're told that the people in power are always right and if you step outside the range of acceptable political beliefs you're crazy, alone, immoral, and ideally afraid. The news becomes essentially just a collection of press releases from the establishment. You get debate theater with shows like Crossfire featuring Authoritarian Corporatist #1 vs slightly Less-Authoritarian but slightly More-Corporatist #2. You get presidential 'debates' with every question scripted in advance and truly independent views not allowed in the building, let alone onto the stage.

When George Orwell wrote 1984 and Animal Farm he knew that the desire for additional control over the population by authority figures is universal. While being a democratic socialist, he also was aware of how bad things were getting in the Soviet Union on the authoritarian axis, despite the fact that the USSR had his favored economic system. The true genius of 1984 was the whole concept of 'Newspeak' as the ultimate means of control. By restructuring the language itself Big Brother managed to restrict the range of possible ideas. When the words no longer exist to describe an independent thought, you're unlikely to ever have that thought or be able to communicate it to others if you do. In my view the false dichotomy of Democrat-Republican is the Newspeak of our day, socialism itself is considered a bad word in America (our form of 'thoughtcrime'). Ultimately any out-of-control corporation, investor, or government would be more than happy to fill the role of Big Brother if we turn our brains off and fight each other to the death in an epic struggle over the false and essentially meaningless choices that they tell us are the only two options.

Tri-cities realist

I think we all really have much more in common than we admit, thanks for the reply.



Tri-cities realist

Ouch my ears.


Hey old're caps lock is stuck on again.

So, Do you have anything intelligent and thoughful to bring to the conversation, or are screaming rants all we're going to be able to expect from you?

We already have our resident "old man who screams at clouds". Two of you would really be a case of overkill.

Tri-cities realist

I thought Lanny was a woman... kidding of course.


Of course. Ha. Hah.

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