Columns

SMITHEREENS: Reflections on Bits and Pieces

Gar Smith
Friday October 07, 2016 - 01:50:00 PM

"Equity Permits": from Oaksterdam to Wall Street

SF Chronicle columnist Otis R. Taylor Jr. recently ripped the "equity program" that some Oakland community members want to see incorporated into the city's new laws legalizing the cultivation and sale of marijuana ("Half-baked Oakland Pot Plan a Buzzkill," September 30, 2016). Taylor noted that established weed-dealers fear the compensatory codicil could "bottleneck the city's pot trade." 

What would it do? Well, for starters, councilmembers Delsey Brooks, Larry Reid, and Noel Gallo want all potential pot-venders to hand the city 25 percent of their profits and give the city a seat on each company's board of directors. The money would be used for small business loans, neighborhood beautification projects and job training programs. 

Even more controversially, "equity" would require that half of all new business permits be set aside for community members who (1) have been convicted and jailed for drug offenses over the previous decade or (2) live in East Oakland neighborhoods with the highest rates of drug busts. These new entrepreneurs also would need to be majority owners, controlling at least 50 percent of the business. 

Meanwhile, if California's pro-pot Initiative passes in the November 8 vote, new businesses would be required to hire at least half of their employees from local neighborhoods and set aside 25 percent of the new jobs for people living in the city's poorest neighborhoods. 

Taylor fears this unique business model could prove a major bummer—a cumbersome process that would drive business away from Oakland. 

It occurs to me that Taylor—and the "equity"-conscious councilmembers—aren't thinking big enough. 

This business model actually makes some sense. It's just that it isn't being targeted at the right sector of the economy. 

Instead of mom-and-pop pot pop-ups, the concept of "equity" permits should be applied to America's too-big-to-fail corporations. I'm thinking, Wells Fargo. 

If Wells (or Bank of America or CitiBank or JPMorgan Chase) wants to continue doing business in Oakland (or Berkeley or San Leandro or San Francisco) they could be required to 

(1) hire at least 50 percent of their workers from the local community, 

(2) hire at least 25 percent of those workers from the poorest sectors of the local economy, 

(3) fork over 25 percent of their capital earnings to the city and 

(4) place a voting member of the local community on their board of directors. 

In the second quarter of 2016, Wells Fargo reported a net income of $5.6 billion. If Oakland were the only city to require an "equity permit" for Wells to continue operating in the city, Oakland's share of that quarterly take would factor out to $1.4 billion. That could pay for a lot of beautification. 

And, in the spirit of the "equity" movement, the ownership and management of Wells would have to change so that at least 50 percent of the company would be owned by a new CEO who (1) had been victimized by Well Fargo's predatory banking practices over the past 10 years and/or (2) lives in a neighborhood adversely affected by "redlining" and persistent poverty. 

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How the Minimum Wage Has Diminished Over the Years 

President Franklin D. Roosevelt's Labor Secretary, Frances Perkins, was the country's first female cabinet member. "Fannie" Perkins was a defender of the working class who called for fair labor practices, safety regulations, child labor laws and Social Security. 

In mid-1930s America, Perkins imposed the first national "minimum wage." It stood at 45 cents per hour. Adjusted for inflation (an adjustment of 1,638 percent), that would be $7.82 in today's devaluated dollars. 

This is a pretty shabby sum, considering that today's Federal minimum wage is only 7.25 per hour—57 cents less than the comparable minimum wage for a worker in 1936. 

The Federal minimum wage hasn't even kept up with inflation!  

This is a good reminder why it's duplicitous to propose an incremental rise to $15 per hour by 2020. Inflation could erode (or completely eclipse) the "increase" over those years. 

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Taxing Social Security 

Social Security checks saw no cost-of-living adjustment for 2015. Instead, in my case, the monthly allotment was actually decreased by $20. The Social Security Administration explained the $20 was deducted to help pay for the rising cost of MediCare. 

This is a troubling trend. Social Security money represents a portion of wages American workers forfeited over their working lives with the expectation that the money would provide a "nest egg" in their retirement years. 

Traditionally, Social Security earnings have not been taxable. Now, this money is, for the first time, being subjected to a health care "tax." 

If the cost of profit-driven corporate medical care continues to rise, the actual benefits of Social Security could diminish in lockstep. 

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The US Constitution Needs to Be Adjusted for Inflation 

The rising cost of living has left the US Constitution in the dust. While this cherished document was conceived and written "for the ages," there is one section that remains locked in the past. 

Article 7 of the Bill of Rights reads: 

"In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law." 

But that was in 1776 dollars. 

The federal government's CPI Inflation Calculator only goes back to 1913. But that's long enough to tell us that, over the past 103 years, $20 has decreased in value more than 24-fold. (It now takes $487 to buy what $20 could purchase in 1913.) 

Other sources estimate that, in 2015, one 1776 dollar would have been worth $27.78. 

It looks like the "twenty dollars" enshrined in our hallowed Constitution could be worth more than $555 in today's devalued bucks. 

Anyone up for amending the Constitution to account for inflation?