The Nobel Prize liberal economist Paul Krugman recently argued (http://krugman.blogs.nytimes.com/2015/04/06/the-fiscal-future-i-the-hyperbolic-case-for-bigger-government/?_r=1) that we need more government because people tend to make poor education/career decisions. Shortly after reading Krugman's case for bigger government, I read an article in the LA Times (http://www.latimes.com/local/lanow/la-me-ln-guest-worker-visa-lawsuit-20150319-story.html) about how some people in the Philippines were lured to America with the false promise of high wages.
Somewhat inspired by this very popular blog entry... A Week of Shorter Rod Drehers (http://alicublog.blogspot.com/2015/04/a-week-of-shorter-rod-drehers.html)... I patched together some relevant snippets from Paul Krugman...
Krugman (http://www.pkarchive.org/trade/harvard.html): The world economy is a system -- a complex web of feedback relationships -- not a simple chain of one-way effects
Krugman (http://www.pkarchive.org/trade/harvard.html): Wages, prices, trade, and investment flows are outcomes, not givens
Krugman (http://www.pkarchive.org/cranks/LivingWage.html): Wages are a market price--determined by supply and demand
Krugman (http://www.nytimes.com/2014/04/25/opinion/krugman-the-piketty-panic.html?_r=0): Money still talks â€" indeed, thanks in part to the Roberts court, it talks louder than ever
Krugman (http://www.nytimes.com/2015/03/02/opinion/paul-krugman-walmarts-visible-hand.html?ref=international&_r=0): Raise minimum wages by a substantial amount
Krugman (http://www.pkarchive.org/cranks/LivingWage.html): The price of labor--unlike that of gasoline, or Manhattan apartments--can be set based on considerations of justice, not supply and demand, without unpleasant side effects
Krugman (http://krugman.blogs.nytimes.com/2015/04/06/the-fiscal-future-i-the-hyperbolic-case-for-bigger-government/?_r=0): Your decision to stay in school or go out and work will shape your lifetime career
Krugman (http://krugman.blogs.nytimes.com/2015/04/06/the-fiscal-future-i-the-hyperbolic-case-for-bigger-government/?_r=0): Now, the fact is that people make decisions like these badly
Krugman (http://krugman.blogs.nytimes.com/2015/04/06/the-fiscal-future-i-the-hyperbolic-case-for-bigger-government/?_r=0): Bad choices in education are the norm where choice is free
Krugman (http://web.mit.edu/krugman/www/hotdog.html): He and his unwary readers imagine that his conclusions simply emerge from the facts, unaware that they are driven by implicit assumptions that could not survive the light of day
If you'd like the context, just click the links. As you can see... Krugman used to be an opponent of minimum wages... but now he's a proponent.
From my perspective, a minimum wage is a problem because it doesn't accurately communicate the demand for unskilled labor in any given area. This increases the chances that people will make really bad career/education decisions. Here's how I've illustrated this...
(http://1.bp.blogspot.com/-_nsqJYyKP5M/VP_T6D7uqWI/AAAAAAAAAjA/x7rb-MDO6iM/s400/Pragmatarianism-minimum-wages-inefficient-allocation-labor-migration.jpg)
And here's another attempt...
(http://2.bp.blogspot.com/-7j2n4Ph5Rsg/VSuepj3clNI/AAAAAAAAAto/OBSxupkHhVM/s400/Pragmatarianism-unskilled-labor-allocation-minimum-wage-problem.jpg)
My drawing skills aren't that great... but hopefully you should get the idea that, in this drawing, the US has more than enough people pushing brooms (unskilled labor). In economics... "more than enough" means that there's a surplus. Usually when there's a surplus of something the price will accurately communicate this information to the entire world. A low price says "hey, we have more than enough!". This important information helps people make informed decisions. When this important information changes, people's decisions will change accordingly. So in order for the US to have ended up with such a massive surplus of unskilled labor... something must have gone wrong with the price system. And that something is the minimum wage. A minimum wage says, "hey, we don't have enough unskilled labor!".
A minimum wage creates a vicious cycle. When wages falsely signal that the US has a shortage of unskilled labor... this increases the chances that people will make big mistakes. Students are more likely to make the big mistake of dropping out of school and unskilled immigrants are more likely to make the big mistake of risking their lives to move here. The logical consequence of so many people making big mistakes is an increase in poverty... which is then used to justify an increase in the minimum wage.
(http://3.bp.blogspot.com/-JOvJ5xvuypo/VSvBFkKXT9I/AAAAAAAAAt4/4Nwstb29er4/s400/Pragmatarianism-vicious-cycle-minimum-wage-poverty-inefficient-allocation-labor.jpg)
So what would happen if we eliminated minimum wages? I'm guessing that wages for unskilled labor will decrease. And I'm sure that proponents of a minimum wage would guess the same thing. Right? Because if we eliminated the minimum wage... and wages didn't decrease... then there wouldn't be a need for a minimum wage.
If proponents of a minimum wage want to guess that eliminating the minimum wage would result in a huge decrease in wages... then, assuming that they are correct, this huge decrease would reveal that there is indeed a huge surplus of unskilled labor in the US. This would conclusively confirm the problem with lying to people about the demand for unskilled labor (aka "a minimum wage").
Would chaos ensue if we learned that there actually was a huge surplus of unskilled labor in the US? Well... no. Take China for example. They used to have a huge surplus of cheap labor... but now they don't...
QuoteCosts are soaring, starting in the coastal provinces where factories have historically clustered (see map). Increases in land prices, environmental and safety regulations and taxes all play a part. The biggest factor, though, is labour. - The Economist, The end of cheap China (http://www.economist.com/node/21549956)
Wages in China
really didn't skyrocket because of a minimum wage... they skyrocketed because of the massive demand for cheap labor...
QuoteWhile corporations may look elsewhere for still cheaper labor, there are no more Chinas out there. Other countries that establish themselves as low-wage havens will soon be overwhelmed by the inflow of capital from the United States, Europe, Japan, and now China. They cannot possibly have the same dampening effect on wages in the United States over the next three decades as did China and other developing countries in the last three decades. - Dean Baker, Living in the Short-Run: Comment on Capital in the 21st Century (http://www.cepr.net/documents/piketty-comment-2014-04.pdf)
In case you didn't actually dig through all those Krugman articles that I shared earlier, I'll point out that he vociferously argued against the idea that the massive increase in the global supply of cheap labor had anything to do with wages stagnating in the US. Eventually he acknowledged (http://www.economist.com/node/11050137) that perhaps there were some issues with his "implicit assumptions".
Let's review! Here are two possibilities of eliminating the minimum wage here in the US...
1. Wages don't plummet. Then there's really no point in having a minimum wage.
2. Wages do plummet. Then the US "will soon be overwhelmed by the inflow of capital from the United States, Europe, Japan, and now China".
We really don't help
anybody by giving people bad directions. If you truly want to help poor people... then start a business. Give poor people a better option (builderism).
Especially if you have a strong theory that some existing business is making a stupid mistake. Put your strong theory to the test by starting a business that doesn't make the same stupid mistake. Maybe you want to argue that starting a business is too difficult? Well there you go. You've successfully identified a huge problem. It's a huge problem when it's too difficult to give poor people better options. Please figure out how to make it easier for somebody as intelligent as yourself to start a business. And if you can't figure it out... then please have some respect for anybody who does manage to successfully start and run a business that employs/serves
any amount of people.
Who knows? Economics is not an exact science. It's possible that it could be, but it is highly ideological with both conservative and liberal economists using it to support political ideologies. I know Krugman is renowned with his Noble prize and all, but in recent years, he seems to favor ideology over science. Having said that, I support the minimum wage (but for purely ideological reasons). I can't even tell from your post whether Krugman is for or against it. It doesn't matter. He has lost credibility with me as a scientist.
So screw the people who work the hardest and may not have the same opportunities (college and other resources) as the rich. We should just fucking let the rich pay slave wages (which they already do) and get away with it.
News flash immigrants are going to come here no matter what we do with wages they are under false impressions to begin with. You can't justify dropping minimum wage to stop immigration! That's like saying I'm gonna stop feeding my kids because the cats are hungry. If anything minimum wage should be increased. Then employers can be more picky about who they hire. We are already going that direction. And trust me there is no shortage of so called unskilled people around.
This guy's a lunatic pandering to the rich.
The fuck is this guy babbling about?
I'm not going to try to make a point by point argument because I am not an economist. My viewpoint comes from a blue collar, lived through it perspective.
I like the idea of a minimum wage because when it was implemented it set a bottom level for employers to meet. I worked for 25 cents an hour as a teenager doing hard labor jobs like digging ditches and even some construction. Try that for a living wage. Then, up to a dollar an hour as a janitor in high school. The issues for me are not about a living wage but the loss of upward mobility in a society. If you start out at a certain level and then are given opportunities to improve, situations where education is encouraged and incentives provided for doing so, you have upward mobility and a dynamic economy.
And further, what you are proposing is what the Republican party wants. They want an economy built on a long disproved trickle down economy a la Reagan. It is not socialism to provide people a living wage. You may be right in the assumption that people seek a lowest common denominator in working, but given the incentive to improve their lives the smart ones will do so. The incentive to me is the issue, not the wage.
Nothing personal, but I'll believe Krugman before I believe you.
If you really want to give people incentive to get an education we should take a page out of japan's book. Those kids live education and don't even think they have a choice. It's society that needs to change . If that's the main concern any how. No amount of messing with minimum wage is going to change our attitude. Especially for people who don't have the mental capacity for learning and there are plenty of people like that around. I don't think saying screw them they don't deserve a livable wage is a very good way to improve anything. It's not going to help the people who are just doing the best they can and those who can't get an breaks in life.
I think the fact that college costs between 5k and 15k per year, at a COMMUNITY COLLEGE might have a tad more to do with why poor people are opting out of higher education than a living minimum wage.
Is someone somewhere seriously suggesting that paying people fairly is the cause of poverty? Fuck.
Like others, I can't tell weather he is for or against a minimum wage from the post, looks like he's got points on both side....
Dreaming of your libertarian utopia once again Xerox? You must have a notion that people quit school merely so they can look forward to the wonderful world of minimum wage.. You further think that companies will happily just pay higher wages because they can? Man, you really ought to get out of the house once in awhile and see just how rosey it is to work for almost nothing.. Eliminate minimum wage and guess what...not only will people starve, but you'll drive many more people to a life of crime. You have to remember that it's far easier to knock someone over the head for $10 a day than sweat your ass off for $10 a day.
or sell drugs
just saying
If they got rid of the minimum wage in the UK around 1386000 people would suddenly be very poor. And probably hungry.
Sales of burglar alarms would probably go up though.
In conservaspeak poverty is always the fault of the people trapped in it.. Xero must truly believe that lower wages is the cure for poverty..
Quote from: Aroura33 on April 15, 2015, 01:46:18 PM
I think the fact that college costs between 5k and 15k per year, at a COMMUNITY COLLEGE might have a tad more to do with why poor people are opting out of higher education than a living minimum wage.
Is someone somewhere seriously suggesting that paying people fairly is the cause of poverty? Fuck.
Like others, I can't tell weather he is for or against a minimum wage from the post, looks like he's got points on both side....
Well said. Students going into debt for years after receiving an education and paying ridiculous interest rates on loans is no incentive, certainly. I got an education via veteran's benefits and working a full time job with a working spouse to get me through. Fortunately I owed nobody nothing after I got my degree, even though it took nearly 7 years.
Quote from: Jason78 on April 15, 2015, 02:10:23 PM
If they got rid of the minimum wage in the UK around 1386000 people would suddenly be very poor. And probably hungry.
Sales of burglar alarms would probably go up though.
See? If you Brits would just let school children carry guns you wouldn't have that problem..
1. Robert, a business owner, either is, or isn't, making a mistake by paying his employees $X dollars.
2. If you truly believe that Robert is making a mistake... then it either is, or isn't, easy for you to start a business to exploit his mistake.
3. The bigger Robert's mistake, the more profitable it will be for you to exploit it
4. If it isn't easy to start a business, then a minimum wage doesn't solve this problem
5. If it is easy to start a business, then a minimum wage isn't necessary
By arguing that a minimum wage is necessary... you're arguing that it's really not easy for liberals to start businesses to exploit mistakes made by Robert and all the other business owners.
You can't have your cake and eat it too. You want to argue that we need a minimum wage? Great! But please understand that you're arguing that it's really not easy to start a business. And who are you going to blame for this fact? Robert?
Robert's guilty of...
1. making the mistake of not paying his employees enough money
2. making it difficult for liberals to start businesses that pay employees enough money
Seriously? Robert's preventing you from starting a business that pays employees the optimal amount? Robert's preventing you from profitably exploiting his big mistake? Can you please elaborate? Can you please explain in great detail how Robert prevented you from starting a business? If not, then evidently you've never tried to start a business. Yet, here you are so confident that Robert is making the big mistake of not paying his employees enough money.
I want to live in a world where atheists aren't incredibly incoherent. Is that really too much to ask for?
If you truly care about the poor... then think your position through. Set aside your bias for a few seconds and figure out whether it was a minimum wage... or the demand for labor.... which lifted millions and millions of people in China out of poverty.
Thank you for a half page if......then statement. go back and read what you wrote.
if you truly believe Robert is making a mistake
if the bigger Robert's mistake....
If it isn't easy
If it is easy, then.........
Then you jump to whether it is easy or hard for liberals and another set of if then arguments.
First of all I'm not even sure what point you're trying to make, and second your entire argument is an unproven construct and nothing more.
Quote from: stromboli on April 15, 2015, 09:09:56 PMFirst of all I'm not even sure what point you're trying to make, and second your entire argument is an unproven construct and nothing more.
Here are two ways to increase wages...
1. By decree (minimum wage)
2. By demand (more businesses)
By arguing for the first, you're arguing that the second is inadequate. But you need to explain why the second is inadequate.
Quote from: Xerographica on April 15, 2015, 09:20:13 PM
Here are two ways to increase wages...
1. By decree (minimum wage)
2. By demand (more businesses)
By arguing for the first, you're arguing that the second is inadequate. But you need to explain why the second is inadequate.
The second is inadequate because without increase in minimum wage, there isn't any demand for more business (consumers cannot buy a product if they do not have sufficient income).
Inflation and recession will continue to occur because a single country's economics does not occur in isolation - the global market affects the costs of goods and services. War, poverty, ebargos, sanctions, and mutual agreements all affect the economies of a given country. Political policy affects the value of the labour force. Insufficiently educated workers means more unskilled labour than skilled labour - this affects the quality and quantity of goods and services a country has to offer. Insufficient wages means less opportunity for a labour force to afford an education and therefore remains unskilled labour - causing a surplus of workers with little demand for them. This in turn drives down demand for business since consumers (the mostly unskilled labour force) cannot afford the products or services.
When a country reaches this point, then it seeks external economies to encourage business development and may outsource more skilled labour from other countries. This does nothing for the unskilled labour force of a given country, but keeps businesses going and encourages the development of skilled labour forces in external countries. A possible remedy to such an odd predicament is to use the revenue generated from these outsourced businesses via taxation to offer incentives and programs for the unskilled labour to better afford an education, increase the minimum wage so they maintain a cost of living, and slowly create new jobs for skilled labour which in turn will increase demand for business at home as the consumer base increases buying power.
Once a country reaches this level, other countries may choose to outsource to them therefore driving the economy of the country to new heights with more creation of jobs.
I'm not an economist, but I suspect the unskilled labour problem isn't going to be fixed by simply dropping the minimum wage.
Lol. I started typing a response and then Aletheia said it better than I could. The middle class, a robust middle class, is the lifeblood of any country. Upward mobility, adequate wages and job availability is the key.
The minimum wage was created in 1938 by the Fair Labor Standards Act as a means to provide a living wage as part of the cure for the Depression. I do not understand how you see it as any part of the economic problem when it was implemented as a solution. Several countries since than have done the same. I don't buy your reasoning at all.
Quote from: Xerographica on April 15, 2015, 09:02:02 PM
I want to live in a world where atheists aren't incredibly incoherent. Is that really too much to ask for?
What does atheism have to do with economics?
I'm not convinced starting a business is easy. It'll be even less easy if no one is being paid a livable wage because minimum wage was dropped.
And any one trying to exploit another persons weakness isn't going to pay their employees a fair wage. They sound corrupt from the start. I guess there will be no ethics in your business plan?
Why can't you have a business that just offers a superior product or service?
Quote from: doorknob on April 16, 2015, 07:54:45 AM
Why can't you have a business that just offers a superior product or service?
I wonder about this all the time. It seems so straight forward.
Quote from: Xerographica on April 15, 2015, 09:02:02 PM
1. Robert, a business owner, either is, or isn't, making a mistake by paying his employees $X dollars.
2. If you truly believe that Robert is making a mistake... then it either is, or isn't, easy for you to start a business to exploit his mistake.
3. The bigger Robert's mistake, the more profitable it will be for you to exploit it
4. If it isn't easy to start a business, then a minimum wage doesn't solve this problem
5. If it is easy to start a business, then a minimum wage isn't necessary
By arguing that a minimum wage is necessary... you're arguing that it's really not easy for liberals to start businesses to exploit mistakes made by Robert and all the other business owners.
You can't have your cake and eat it too. You want to argue that we need a minimum wage? Great! But please understand that you're arguing that it's really not easy to start a business. And who are you going to blame for this fact? Robert?
Robert's guilty of...
1. making the mistake of not paying his employees enough money
2. making it difficult for liberals to start businesses that pay employees enough money
Seriously? Robert's preventing you from starting a business that pays employees the optimal amount? Robert's preventing you from profitably exploiting his big mistake? Can you please elaborate? Can you please explain in great detail how Robert prevented you from starting a business? If not, then evidently you've never tried to start a business. Yet, here you are so confident that Robert is making the big mistake of not paying his employees enough money.
I want to live in a world where atheists aren't incredibly incoherent. Is that really too much to ask for?
If you truly care about the poor... then think your position through. Set aside your bias for a few seconds and figure out whether it was a minimum wage... or the demand for labor.... which lifted millions and millions of people in China out of poverty.
Hi folks, Your friendly multi business owner here. Xero, much like every economist/econ student Ive ever met, you are missing several very important factors in your calculations.
1. The act of starting a business isnt hard, HOWEVER it is expensive, time consuming, draining, risky, and requires an immense level of knowledge in the field of the business.
2. Most people don't have the ability to take 2-5 years of sub minimum wage pay to get a business off the ground. Contrary to what you are proposing a business does not go: day 1 start business, day 2 profit. It simply doesn't happen that way.
3. Minimum wages is necessary because there are some shady ass fuckers out there running businesses that would think of nothing to slash their employees pay if it meant more money for them.
I think that most economist fail time and time again to consider the human factor in all of their "Fantasy Land" ideas. In fact every conversation with an economist reminds me of this:
https://www.youtube.com/watch?v=YlVDGmjz7eM
Quote from: Moralnihilist on April 16, 2015, 10:54:53 AM1. The act of starting a business isnt hard, HOWEVER it is expensive, time consuming, draining, risky, and requires an immense level of knowledge in the field of the business.
I think you and I have different definitions of "hard".
Quote from: Moralnihilist on April 16, 2015, 10:54:53 AM2. Most people don't have the ability to take 2-5 years of sub minimum wage pay to get a business off the ground. Contrary to what you are proposing a business does not go: day 1 start business, day 2 profit. It simply doesn't happen that way.
Where did I propose overnight profits?
Quote from: Moralnihilist on April 16, 2015, 10:54:53 AM
3. Minimum wages is necessary because there are some shady ass fuckers out there running businesses that would think of nothing to slash their employees pay if it meant more money for them.
According to you, a minimum wage is necessary because business owners would slash wages. But business owners would only be able to slash wages if workers could easily be replaced. Business owners really wouldn't be able to slash wages if workers could easily replace their jobs.
When there are too many workers and too few jobs... then bosses have the upper hand. When there are too few workers and too many jobs... then workers have the upper hand.
Right now you're arguing that the US has a surplus of unskilled labor. However, you don't think that the surplus of unskilled labor has anything to do with the minimum wage. So if you don't attribute the surplus of unskilled labor to the minimum wage... then what do you attribute it to?
Starting a business is more than just difficult for someone making minimum wage. I've tried several times and failed every time to one degree or another. The only one I did succeed at to any level was in scrap metal and that was only because of extreme luck and a good knowledge of metals and even then I ended up selling appliances instead because a close friend taught me how to repair appliances and I was able to get my hands on plenty of used appliances that needed repairs.. Even though I was able to sell maybe 20 refrigerators a week it was never enough to move to the next level and when my best asset fell apart I was out of business..First my truck died then my health . I could never afford to pay for help so when my legs fucked up I was shit out of luck. Perhaps I could have found someone desperate who might have worked for a buck a day, but hey, I'm not a Republican...
Anywhoooo..
QuoteFrom the Dailykos... http://m.dailykos.com/stories/1377628
Republicans tend to talk like there are two distinct groups of people: working people, and moochers on government aid. This doesn't mean Republicans support policies that benefit working people, like a minimum wage increase or paid sick leave, but it's a strong moral distinction they like to make. In reality, though, most peopleâ€"73 percent of themâ€"receiving government aid are from families where at least one adult is working at least part-time.
A new study from the University of California Center for Labor Research and Education looks at participation in four key aid programsâ€"Medicaid and the Children's Health Insurance Program, Temporary Aid to Needy Families, the Earned Income Tax Credit, and the Supplemental Nutrition Assistance Programâ€"finding that:
... between 2009 and 2011 the federal government spent $127.8 billion per year on these four programs for working families and the states collectively spent $25 billion per year on Medicaid/CHIP and TANF for working families for a total of $152.8 billion per year. In all, more than halfâ€"56 percentâ€"of combined state and federal spending on public assistance goes to working families.
More than half of fast food workers are enrolled in one of these programs; nearly half of child care and home care workers are, as are one in four part-time college faculty. That means these are industries where low pay from employers is subsidized by public assistanceâ€"by taxpayers. Some states are looking to combat this, and not just by raising the minimum wage:
In Connecticut, for example, a legislative proposal calls for large employers to pay a fee to the state for each worker who earns less than $15 an hour. In 2016, California will start publishing the names of employers that have more than 100 employees receiving Medicaid, and how much these companies cost the state in public assistance.
On April 15, workers in several of the industries where low wages force high use of public assistanceâ€"fast food and home care and, yes, higher educationâ€"will be joining together to fight back with a national day of action. With median wages stagnating and economic inequality soaring, this is a fight for the broader middle class.
people remain unskilled for various reasons some to complicated to list here. Not all minimum wage workers are unskilled though, some have college educations and couldn't find work in their field of study. So now you have skilled workers competing with unskilled workers for the same entry level jobs. It has little to nothing to do with minimum wage. It has more to do with the fact that there are less livable wage jobs to go around than people needing work. Educated or not.
QuoteI think you and I have different definitions of "hard".
Ever even attempt hard physical labor as a means to make a living? I hauled scrap metal for many years in 100+ degree weather.. Tell me oh sage one..WHAT exactly is hard for you?
So it's entirely impossible for labor (unskilled or otherwise) to be inefficiently allocated?
No one is saying it isn't possible to be inefficiently allocated what we are saying is that dropping minimum wage is not a good solution to the problem.
So it is possible for labor to be inefficiently allocated. Great, glad we can agree on that! The next question is... how does labor become inefficiently allocated?
Ah I said it's possible. First we have to prove that, that is the case.
Here's the great American ethic, starve poor people out of existence and reallocate the most efficient way. Create MORE poor people! What's the matter Xerox..Your gardener won't cut your grass for 38 cents anymore?
I'll just leave this here (http://www.theregister.co.uk/2015/01/14/silicon_valley_proposes_settlement_deal_to_kill_wage_fix_lawsuit_says_report/)
Seems to me the vicious cycle in the boardrooms should be a big concern.
Quote from: Xerographica on April 16, 2015, 11:29:52 AM
1. I think you and I have different definitions of "hard".
2.Where did I propose overnight profits?
3.According to you, a minimum wage is necessary because business owners would slash wages. But business owners would only be able to slash wages if workers could easily be replaced. Business owners really wouldn't be able to slash wages if workers could easily replace their jobs.
4. When there are too many workers and too few jobs... then bosses have the upper hand. When there are too few workers and too many jobs... then workers have the upper hand.
5. Right now you're arguing that the US has a surplus of unskilled labor. However, you don't think that the surplus of unskilled labor has anything to do with the minimum wage. So if you don't attribute the surplus of unskilled labor to the minimum wage... then what do you attribute it to?
1. The act of starting a business isn't the hard part. All it takes is an idea and the willingness to put everything on the line. This is why most new businesses are started by the young or wealthy. They can take the risk.
Making the business successful is the hard part. I know Ive done it 3 times.
2. Nice avoidance of the ACTUAL issue presented in this point. Here Ill say it again:
Most people don't have the ability to take 2-5 years of sub minimum wage pay to get a business off the ground. Remember, making the business successful is the hard part and most people have responsibilities(wife, kids, house payment, etc) that wont allow them to take sub minimum wage pay for 2-5 years.
The thing most economists miss is what I like to call acceptable risk. IF you have a wife and 2 kids to support then the idea of losing your home while you attempt to get a business off the ground is not an acceptable risk. Another example is that I can cook my ass off(Ive taken several years of culinary school) People have suggested that I open my own restaurant. The fact that over 50% of new restaurants fain in the first year is not an acceptable risk to me, even though I can afford to take the hit.
3. There are, on average, 118 applicants for every job. Employers know this(I know I do). Most of those are people trying to get into the field and are competing against experienced people. Another thing is that ALL jobs require a skill today. "Unskilled" labor is a misnomer. Field work, for example, requires a very specific set of skills that few people have. You need to be able to not only recognize what item is ready, but be able to pick/pull it leaving the correct amount of the plant undamaged, and then preform any clean up of the item before placing it into the basket so that it can continue on its merry way to the store. Oh did I mention that you need to be able to do this at an incredible rate of speed?
4. The days of bosses or all employees having the upper hand has come and gone. Now its the good vs the lazy/unscrupulous. Lazy workers who only want to do the bare minimum(often less) to get their paycheck. Unscrupulous business owners who know that there are hundreds of people who would take ANY job, even if for only a short time, at ANY pay and use this to fuck over their employees as often as they think that they can get away with it.
5. No there a shortage of GOOD workers. People who show up on time and do their jobs well. Again I will state something that your fantasy land ideals never takes into account. "Unskilled" labor is a misnomer. ALL jobs require a level of skill, even if only a basic skill, it is still a skill. The unskilled laborer has gone with the advent of automation.
Quote from: Moralnihilist on April 17, 2015, 10:25:28 AM
1. The act of starting a business isn't the hard part. All it takes is an idea and the willingness to put everything on the line. This is why most new businesses are started by the young or wealthy. They can take the risk.
Making the business successful is the hard part. I know Ive done it 3 times.
2. Nice avoidance of the ACTUAL issue presented in this point. Here Ill say it again: Most people don't have the ability to take 2-5 years of sub minimum wage pay to get a business off the ground. Remember, making the business successful is the hard part and most people have responsibilities(wife, kids, house payment, etc) that wont allow them to take sub minimum wage pay for 2-5 years.
The thing most economists miss is what I like to call acceptable risk. IF you have a wife and 2 kids to support then the idea of losing your home while you attempt to get a business off the ground is not an acceptable risk. Another example is that I can cook my ass off(Ive taken several years of culinary school) People have suggested that I open my own restaurant. The fact that over 50% of new restaurants fain in the first year is not an acceptable risk to me, even though I can afford to take the hit.
3. There are, on average, 118 applicants for every job. Employers know this(I know I do). Most of those are people trying to get into the field and are competing against experienced people. Another thing is that ALL jobs require a skill today. "Unskilled" labor is a misnomer. Field work, for example, requires a very specific set of skills that few people have. You need to be able to not only recognize what item is ready, but be able to pick/pull it leaving the correct amount of the plant undamaged, and then preform any clean up of the item before placing it into the basket so that it can continue on its merry way to the store. Oh did I mention that you need to be able to do this at an incredible rate of speed?
4. The days of bosses or all employees having the upper hand has come and gone. Now its the good vs the lazy/unscrupulous. Lazy workers who only want to do the bare minimum(often less) to get their paycheck. Unscrupulous business owners who know that there are hundreds of people who would take ANY job, even if for only a short time, at ANY pay and use this to fuck over their employees as often as they think that they can get away with it.
5. No there a shortage of GOOD workers. People who show up on time and do their jobs well. Again I will state something that your fantasy land ideals never takes into account. "Unskilled" labor is a misnomer. ALL jobs require a level of skill, even if only a basic skill, it is still a skill. The unskilled laborer has gone with the advent of automation.
Right. I've worked many jobs. I can't think of but a few where I was unskilled going in, and that was back working for my brother as a hod carrier when I was 14; and later working in landscaping when in high school. Even as a Firefighter out of the Navy I had previous training. Working part time as a cook for Sambo's I had training. Every job I had I had some form of prior training for, mostly because of skills learned in the Navy.
Lazy people in my experience don't last long at any level. Even waitresses, which many people think of as unskilled, require smarts and hustle to do their job. I had a Hispanic dishwasher at Sambo's that worked his ass off and eventually learned to cook. Dude watched me while I worked and asked questions. The big problem I had working for the DOD was that they wouldn't give you the leeway to do what you were capable of. Everywhere I worked I did extra stuff, running the coffee fund, running the MIC in the welding shop, eventually assistant facilities manager on the last job. Some jobs might reward laziness, but I'm not aware of them.
Laziness is a chronic problem where I've lived. I remember working entry level jobs where I was so frustrated because my job depended on them to do their job. Essentially I was doing both jobs and not getting paid for both jobs. I complained and nothing was done about it. after a while though they did start firing and hiring people at a rapid turn over and the problem did not go away. The new employees were equally lazy as the fired ones. I eventually left that job. But I've had several other entry level jobs with that same problem. And the problem seems to be in direct correlation with how close to the city the job was.
Also I will like to point out that I was not treated very well in these jobs despite being a really damn good worker. Trust me when I say employers are always looking to get away with paying less or offering less benefits as they possibly can.
I also look at my poor sister who thankfully has an office job now that is much more relaxing, how ever she worked for a CVS. She worked and worked her butt off. Every night she would come home screaming because of how stressed she was from that job! They expected a lot from her and weren't willing to match the wages at the giant across the street. But that didn't matter since my sister applied at giant and they wouldn't hire her. So she applied all over the place and no one else would hire her, despite her being a really hard worker. She had such mental issues to the point where she developed a fear of working for minimum wage. She went a long time with out working before my mom finally hooked her up with her current job.
I can go into further details with why I never became a successful business owner and how it relates to minimum wage. You can't get ahead working a minimum wage job end of statement. If you drop minimum wage employers will pay less and we will have a compounding problem. No one can get ahead as it is let alone if wage is dropped all together! We have enough poor people who depend on a shrinking welfare system. They wouldn't need welfare if they were being paid a livable wage to begin with.
Dropping minimum wage is the most asinine thing I've ever heard of. You've basically already said screw the poor people who's situations you have no knowledge of. They deserve being poor right?
Agreed Doorknob, there is intense laziness among the entry-level/minimum wage jobs, but could you really blame people for being apathetic? Hard work is rarely rewarded and advancement is nearly impossible. Couple that with nepotism, and you're stuck in a dead end job. There is a glass ceiling 10 feet thick when you're at the bottom.
I'm relieved I have a job that does appreciate all that I do, and a manager who does fight the uphill battle for me, but everyone gets so tired of fighting the bureaucracy. It's tedious, thankless, and often ends in failure - usually because of irrational reasons. If they can't reduce your wage, then they'll reduce your hours and hire more people - more people working fewer hours means less overtime pay. When people quit, the hours stay low and they just hire replacements.
The tactics are obvious, but the solutions are substantially more obscure.
Quote from: doorknob on April 17, 2015, 12:28:48 PMDropping minimum wage is the most asinine thing I've ever heard of. You've basically already said screw the poor people who's situations you have no knowledge of. They deserve being poor right?
If the minimum wage isn't a problem... then neither are free-riders.
Let's try and visualize things...
(http://3.bp.blogspot.com/-PjuqI0dNH60/VTG15tn6h0I/AAAAAAAAAuM/OID4TMrb9SU/s400/Pragmatarianism-market-exchange-cake-gay-trade-value-paid-too-little-cash.jpg)
Is this a better market? Gabe (the gay) is paying Alex (the atheist) for a cake. Isaac, who's wondering what to do with his life, is observing this exchange take place. Because neither Alex nor Isaac are omniscient... they can't see how much Gabe values the cake. All they can see is how much he pays for the cake. Only Gabe knows that he values the cake a lot more than he's paying for it.
By sharing the wrong information, Gabe increases the chances that Isaac will do the wrong thing (not supply cakes). Garbage in, Garbage out (https://en.wikipedia.org/wiki/Garbage_in,_garbage_out).
(http://2.bp.blogspot.com/-M97k8SXFb4A/VTG2IIbxUeI/AAAAAAAAAuU/27fB9e1Ndbk/s400/Pragmatarianism-market-exchange-cake-gay-trade-value-paid-too-much-cash.jpg)
Is this a better market? In this scenario Gabe is paying a lot more than he values the cake. Gabe is lying again. This increases the chances that Issac will do the wrong thing (supply cakes). Garbage in, Garbage out.
X < Y = free-rider problem
X > Y = forced-rider problem (https://en.wikipedia.org/wiki/Forced_rider)
A minimum wage is an example of the forced-rider problem.
Let's think about water. Is Isaac always going to value water equally?
(http://4.bp.blogspot.com/-V9CAxdXeMSQ/VTHOZrri64I/AAAAAAAAAuw/Vp7alucwOA4/s400/Pragmatarianism-Sahara-Niagara-value-water-shortage-surplus-abundance-scarcity.jpg)
In the Sahara... Isaac is suffering from a severe shortage of water (dehydration). In Niagara... Isaac is suffering from a severe surplus of water (drowning). Therefore, he values water very differently in these two very different circumstances...
Y1 > Y2
Whether it's water, cake, labor, a Netflix show or national defense... what we pay should accurately communicate our valuations. This increases the chances that other people will do the right things. Otherwise, we all end up with more of what we want less and less of what we want more.
Accurate information = treasure in, treasure out
Inaccurate information = garbage in, garbage out
Coincidentally, Alex Tabarrok recently shared some relevant thoughts in his review (Is Capitalism Making Us Stupid? (http://newramblerreview.com/book-reviews/economics/is-capitalism-making-us-stupid)) of Joseph Heath's new book
Enlightenment 2.0...
QuoteAdvertising may sometimes trick us into buying products that don’t serve our interests, but the more we are tricked the greater the incentive to become informed. In the market, we can act on information to improve our purchasing decisions. In politics, it doesn’t pay to be informed because as individuals we have nearly zero power to improve collective decisions. In the market, information is power. In politics, information is impotent.
Also...
QuoteHeath’s conservatism makes him unwilling to suggest radical ideas. But big problems often need radical solutions. Voting, for example, reduces the cost of ignorance and irrationality. Raise the cost and people become more informed and rational. When pollsters ask Democrats and Republicans factual questions such as did inflation fall during Reagan’s presidency or were weapons of mass destruction found in Iraq, they answer in a highly partisan manner. But partisan bias greatly diminishes when voters are told that they will be paid if they answer correctly. Betting is a more reliable guarantor of objectivity than voting. Or, as I once wrote, “A bet is a tax on bullshit.â€
Quote from: stromboli on April 15, 2015, 01:34:14 PMAnd further, what you are proposing is what the Republican party wants.
Which is sufficient grounds for dismissal as BS.
Why do I feel like I'm reading complete gibberish when I read Xero's posts? I really tried hard to understand that last one with the cartoons, but it makes no sense. He's drawing conclusions without anything except a thought experiment that makes NO SENSE to start with.
Anyway, I'll just share this here. A Seattle company decides to raise their own minimum wage to 70k.
http://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html?_r=0 (http://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html?_r=0)
I guess he's just setting his employees up for failure, right Xero?
Xero, at the end of the day, the most logical way to increase the economy of the workforce is to cull the excess unskilled labourers. The most logical way in which to cull them is to remove resources from them in which there isn't any meaningful return - most specifically food, water, and healthcare. This will ensure the surplus of excess unskilled labourers are removed from the workforce, therefore shifting resources to other areas in which they are more beneficial. Rounding up the carcasses can be rather costly, not to mention a health hazard for the rest of the workforce. The best solution would be to round up the surplus unskilled labourers into one location which allows for a massive die off in one manageable area away from the rest of the community. Less workers will be needed for clean up and general maintenance of such an area. Introduce the use of labour-saving robots, whose cost may be high initially, but earn their keep by preventing the spread of disease, psychological damage, and creation of redundant jobs. Designers of these machines can be pulled from the skilled labour force and only a few general labour workers will be required for maintenance and upkeep of the machines.
Imagine how much more efficiently the Nazi's could've eradicated the "useless" segment of society if only they had a more automated process from collection of undesirables to disposal? Yes, they saved a little labour costs by having the Jews do much of the work, but they still had to feed the Jews and perfectly good German workers had to assist in management and labour, when they could've been allocated to more beneficial areas with robots serving in their place.
Click Spoiler for Reality Check
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The reason why minimum wage cannot be dropped is because a lot of people will starve and die. America learned this during the depression. Economics is easy when you only focus on the numbers, it becomes substantially more complicated when you take into account the human element. A purely capitalistic society is built upon the death and destruction of others. That's why most capitalistic societies are tempered with socialist concepts. It's a balancing act between maintaining a budget and the value of human life.
Quote from: Xerographica on April 18, 2015, 04:55:02 AM
A minimum wage is an example of the forced-rider problem.
Let's think about water. Is Isaac always going to value water equally?
(http://4.bp.blogspot.com/-V9CAxdXeMSQ/VTHOZrri64I/AAAAAAAAAuw/Vp7alucwOA4/s400/Pragmatarianism-Sahara-Niagara-value-water-shortage-surplus-abundance-scarcity.jpg)
In the Sahara... Isaac is suffering from a severe shortage of water (dehydration). In Niagara... Isaac is suffering from a severe surplus of water (drowning). Therefore, he values water very differently in these two very different circumstances...
Minimum wage is not an example of a forced-rider problem, in that the value an average person has in their will to live is very high, barring mental distress that interferes with this valuation.
You are creating a straw man argument when you try to quantify the value of human life in a purely logical way. Human beings rarely value life in a purely logical way, and even less so in a purely financial way. Furthermore, devaluing human life can have a profoundly negative effect on an economy composed of human beings who are emotionally driven. In matters of self-interest you can convince society to devalue a person's life (such as in cases of murder, in which anyone risks personal harm should an individual remain in place). However, devaluing a person based on financial implications is seen as a risk of personal harm to the individuals who make up society and is not tolerated on an instinctual level. To do so risks eventual economic collapse and revolution.
Your view of economics cannot be free of the lessons history and human behaviour has to teach us. Failure to take that into account can lead to instability only unpredictable to the economist who didn't take into account human nature. Yes, we have greed and logic, but we also have empathy - which is what compels us to be cooperative enough to even have an economy.
Yes, we may value goods and services differently and these value are subject to change, but the value of human life on an individual level remains consistent. Societies that violate this succumb to eventual ruin.
I have already offered a possible solution to increasing the productive value of unskilled labour surplus , which you were happy to ignore. It is a longer process, but one more likely to increase the wealth and stability of a country in the long run. What you propose will cause immediate gains at the cost of long term stability.
The lessons of history? The Great Leap Forward (https://en.wikipedia.org/wiki/Great_Leap_Forward). Millions died. Why? Inefficient allocation of resources. Deng Xiaoping's (https://en.wikipedia.org/wiki/Deng_Xiaoping) economics reforms (https://en.wikipedia.org/wiki/Chinese_economic_reform). Millions lifted out of poverty. Why? Efficient allocation of resources.
The efficient allocation of resources depends on accurate information. Which thread in this forum is the most valuable? Nobody knows. Is this a problem? Only if you care about the efficient allocation of resources.
Let's say that taxpayers could choose where their taxes go. Except for women. Would this be a problem? Why should we care about the valuations of women? Why should we care about women's valuations of defense, or the environment or welfare?
And if we don't care about women's valuation of public goods... then why should we care about their valuations of private goods? Why should we care about women's valuations of clothes, music and computers?
It's economically incoherent to think that the free-rider problem is a problem but that minimum wages are not a problem. Both are problems because inaccurate information results in the inefficient allocation of resources.
Preventing women from shopping in the private sector would result in the inefficient allocation of resources. Preventing women from shopping in the public sector does result in the inefficient allocation of resources.
Lying about your preferences results in the inefficient allocation of resources. Lying about your valuations results in the inefficient allocation of resources.
These things are all true because nobody is a mind a reader. Orange farmers can't read your mind to determine how much you value oranges. You have to give them this information. How? Communication. Specifically, cash. If you lie with your cash... then the supply of oranges will be wrong. The supply of oranges will produce less value than it should. Resources will be inefficiently allocated.
Like it was quoted from an undergraduate economics text book of supply and demand.
"These things are all true because nobody is a mind a reader. Orange farmers can't read your mind to determine how much you value oranges. You have to give them this information. How? Communication. Specifically, cash. If you lie with your cash... then the supply of oranges will be wrong. The supply of oranges will produce less value than it should. Resources will be inefficiently allocated."
once again an example of you living in magical fairly land. Sure if we could read minds but we can't and i hope we never will. And who are you to judge how much any one values anything. Maybe those oranges are worth more to bob in his mind but in reality only worth a few dollars. So we should charge bob more than some other person? That is insane oranges are only worth what oranges are worth regardless of who you are selling too. Or are you saying only the rich should get to eat oranges? Because maybe bob thinks highly of oranges but can't afford oranges? Then what genius? Bob goes hungry is what. And that is where the problem starts.
We will have an influx of poor people who can't afford to live if what you are proposing to do would happen. You are insane! No one lives in the world you are imagining and honestly I"m kind of glad I don't want to be ripped off just because I like oranges more than bob does.
Raising minimum wage isn't a bad idea, but it won't help society, in the long run. What will help is getting into neighborhoods that seem to be disadvantaged, and helping them to see the value of an education. The value of striving to reach for the stars. Raising minimum wage ...doubling it...etc...only keeps people's bar lowered.
Quote from: doorknob on April 20, 2015, 05:33:07 PM
"These things are all true because nobody is a mind a reader. Orange farmers can't read your mind to determine how much you value oranges. You have to give them this information. How? Communication. Specifically, cash. If you lie with your cash... then the supply of oranges will be wrong. The supply of oranges will produce less value than it should. Resources will be inefficiently allocated."
once again an example of you living in magical fairly land. Sure if we could read minds but we can't and i hope we never will. And who are you to judge how much any one values anything. Maybe those oranges are worth more to bob in his mind but in reality only worth a few dollars. So we should charge bob more than some other person? That is insane oranges are only worth what oranges are worth regardless of who you are selling too. Or are you saying only the rich should get to eat oranges? Because maybe bob thinks highly of oranges but can't afford oranges? Then what genius? Bob goes hungry is what. And that is where the problem starts.
We will have an influx of poor people who can't afford to live if what you are proposing to do would happen. You are insane! No one lives in the world you are imagining and honestly I"m kind of glad I don't want to be ripped off just because I like oranges more than bob does.
I'm living in magical fairyland? Ok, so fill in the blanks...
Day 1: Discover oranges
Day 2:
Day 3:
Day n:
Today: Abundance of oranges
How did we end up with oranges in every supermarket? Explain how we go from scarcity to abundance in the real world.
first of all I'm not convinced we have an abundance of oranges. Just because the supermarket has oranges doesn't mean we have an abundance of oranges. We probably have the right amount of oranges if some one is doing their job correctly.
Have you ever worked at a grocery store? I'm guessing not since you think we have an abundance of oranges!
Prove we have an abundance of oranges!
Quote from: Xerographica on April 22, 2015, 12:43:48 PM
I'm living in magical fairyland? Ok, so fill in the blanks...
Day 1: Discover oranges
Day 2:
Day 3:
Day n:
Today: Abundance of oranges
How did we end up with oranges in every supermarket? Explain how we go from scarcity to abundance in the real world.
First off there isn't an abundance of oranges. This is why the prices fluctuate. The cost of an orange is dependent on the crop yield. If there is a frost issue or an overly cold season and the yield is small then the cost of an orange is larger than if there is a bumper year in terms of production. You know supply and demand.
And to how we have oranges in every supermarket. If you don't understand interstate and or global goods transport then you are in no position to be trying lecture anyone on economics, as you obviously don't even understand supply and demand.