Who are you referring to here. The only economic segments that so far as I know that might conceivably advocate "open Borders" would be those segments of the economy that are seeking to hire workers to do jobs that few want to do at the wages that are offered. But I've never heard of anyone advocating for "open borders". Who are these people you call lefties? As far as I'm aware there are fairly tight controls on the number of people that are permitted to immigrate to the U.S. from various countries. Do you have a problem with that. Do you want the number cut to zero? What is it you would like.
Minimum wage, or Living wage
- Thread starter nitro
- Start date
Hello piezoe:
Isn't it a bit illogical and counter productive to say raising the minimum wage is “not a problem for any employers except those few who shouldn't be in business anyway.” The businesses that will fail with the higher minimum wage will result in higher unemployment and will lower the productivity of the economy. What you are doing is making it illegal for some one to work for less than the minimum wage even if they want to.
What ever happened to the idea of freedom of choice ? Shouldn't the people in an economy be able to decide for them selves what they are willing to accept for pay for their labor. And the person or business who wants to employ a worker should be able to decide for them selves what they are willing to pay the worker. And if they agree on a price then work can be done that improves the economy and the economy as a whole is better off. The worker has a job. The company or person has some one doing needed work. Customers of companies for example now have a product they want and every one is better off.
So what's wrong with that ?
Raising the minimum wage will not make workers more productive. It will just reduce the number of people who are employed.
If you want a living wage so workers “can afford at least some of the products they make and sell.” why not make it $ 100.00 an hour. May be the workers making those high end luxury cars can afford one or two of them for them selves. How about those poor yacht workers. Might need to up that $ 100 an hour a bit so they can afford a yacht.
You say:
“A rise in the minimum that is consistent throughout the economy, set at the right level and phased in at the proper rate, will help nearly every business in the long run, and will, as Donald Trump has famously said (more than once) make "America Great Again." “
And what level is that exactly and how will you find it ? The devil is in the details. May be you think $ 100 an hour is too high. So what price should labor be ? Here's one way. Say some people want to start a business selling a product. They believe they can sell the product for some price based on market research. Their expected profit after labor and expenses is acceptable to them and they start their business and hire workers. They produce their product and discover their product is well received. The workers decided to join the company and accept the wages offered. The customer decided the product was worth the price it was sold at and purchased the product. This is called the price discovery process. The company and the workers agreed on the price of labor and the customer agreed on the price of the product and every one is better off without some arbitrary one price fits all government price controls.
If one party has an ask price and the other has a bid price and the two prices meet a transaction is made and you have a market. And both parties are better off. Why are both parties better off, because they disagree on value. Each party to the transaction values what the other party has to offer more than what they have to exchange.
From “An Introduction to Economic Reasoning” by David Gordon
“An exchange is not an equality, but a double inequality. If I trade one of my apples for one of your oranges, then I value one orange more than one apple, and you value one apple more than one orange. Otherwise, no exchange would take place.”
Free markets are made up of people who disagree on value but agree on price. This price discovery process is decentralized because the people making up the economy make the economic decisions not some government bureaucrats or central planning committee setting a “minimum wage that is consistent throughout the economy”. The government setting a minimum wage just removes those workers from the economy if the expected profit after labor and expenses for those companies that would other wise employ them. Call it economics 101.
The idea of the government setting labor prices is elitist and anti-democratic because government bureaucrats or central planning committees are making economic decisions not the people who make up the economy. It a perfect example of elitist hubris for some bureaucrats to think they know better than the people who make up the economy what prices should be.
Government setting of labor prices is also irrational since there is no rational way for the government to do it.
Ludwig von Mises gave a good explanation for why the government setting of prices is irrational when he was criticizing socialism. The same logic applies here.
The biggest problem in an economy is how to distribute resources rationally. With socialism there is no rational method for doing this because there is no free market price mechanism.
This question was best answered by Ludwig von Mises in his essay
Economic Calculation in the Socialist Commonwealth
http://library.mises.org/library/economic-calculation-socialist-commonwealth
From the article:
Economic calculation problem
http://wiki.mises.org/wiki/Economic_calculation_problem
"The problem referred to is that of how to distribute resources rationally in an economy. The free market solution is the price mechanism, wherein people individually have the ability to decide how a good or service should be distributed based on their willingness to give money for it. The price conveys embedded information about the abundance of resources as well as their desirability which in turn allows, on the basis of individual consensual decisions, corrections that prevent shortages and surpluses; Mises and Hayek argued that this is the only possible solution, and without the information provided by market prices socialism lacks a method to rationally allocate resources...
So what is economics ?
Paraphrased from the book Basic Economics by Thomas Sowell
"If we all lived in the Garden of Eden we wouldn't have an economy because we could have any thing we want, when ever we wanted it.
So without scarcity, there is no need to economize and therefore no economics.
A classical definition of economics from the British economist Lionel Robbins is
“Economics is the study of the use of scarce resources which have alternative uses."
Since there is not enough goods and services to supply every ones needs real and imagined then there must be an economic system to accomplish this in the best way possible. Prices are used to ration these supplies to people and in a free market economy people express their demands for supplies with prices. These price signals tell producers what to produce more or less of and result in a very efficient economy. If prices fall because of an increased supply of a good or service then real wages as opposed to nominal wages have increased.
Anubis
Minimum Wage Mythbusters
https://www.dol.gov/featured/minimum-wage/mythbuster
https://www.dol.gov/featured/minimum-wage/mythbuster
I read your post, thank you. I'm not very interested in discussing the relative merits of various "-isms" , but I am very much interested in the question of whether the minimum wage should be raised and what might the effect of that be on the economy. My own view is that we should raise it, and if we raise it to the right point, the economy will get a big shot in the arm and everyone will do better. I have posted elsewhere my views on how to go about deciding what the target wage should be.( see my posts where I discuss the "true cost of minimum wage labor". I have a preference for actual case studies. the following is from: http://www.businessinsider.com/minimum-wage-effect-on-jobs-2016-5 and seems a nice review of those many, many economic studies that are available to us.
A report that analyzed every minimum-wage hike since 1938 should put a bunch of nonsense ideas to rest
- Nick Hanauer, Contributor
From the fear-mongering headlines marking passage of $15 statutes in New York and California, you would think nobody ever dared raise the minimum wage before.
"Raising minimum wage risky," the Lexington (Kentucky) Herald-Leader tersely warned.
"Raising minimum wage hurts low-skill workers," the Detroit News bluntly declared.
"Even left-leaning economists say it's a gamble," Vox solemnly cautioned.
Nonsense. We have been raising the minimum wage for 78 years, and as a new study clearly reveals, 78 years of minimum-wage hikes have produced zero evidence of the "job-killing" consequences these headline writers want us to fear.
In a first-of-its-kind report, researchers at the National Employment Law Project pore over employment data from every federal increase since the minimum wage was first established, making "simple before-and-after comparisons of job-growth trends 12 months after each minimum-wage increase."
What did the researchers find? The paper's title says it all: "Raise Wages, Kill Jobs? Seven Decades of Historical Data Find No Correlation Between Minimum Wage Increases and Employment Levels."
The results were clear. Of the nearly two dozen federal minimum-wage hikes since 1938, total year-over-year employment actually increased 68% of the time.
In those industries most affected by the minimum wage, employment increases were even more common: 73% of the time in the retail sector, 82% in low-wage leisure and hospitality.
"These basic economic indicators show no correlation between federal minimum-wage increases and lower employment levels," the authors write.
In fact, if anything, the data suggest that increases in the federal minimum appeared to encourage job growth and hiring.
Perhaps even more striking, of the only eight times that total or industry-specific employment declined after a minimum-wage increase, the US economy was already in recession (five times), technically just emerging from recession (twice), or about to head into recession (once).
Clearly, this handful of employment downturns would be better explained by the normal business cycle than by the minimum wage.
"As those results mirror the findings of decades of more sophisticated academic research," the authors conclude, "they provide simple confirmation that opponents' perennial predictions of job losses are rooted in ideology, not evidence."
But while there is no evidence that raising the minimum wage is the "risky" "gamble" that doomsayers describe, the devastating economic costs of keeping wages too low are very well documented.
After decades of stagnant wages, 73 million Americans — nearly one quarter of our population — now live in households eligible for the Earned Income Tax Credit, a benefit exclusively available to the working poor.
And according to a 2014 report from the Organization for Economic Cooperation and Development, rising income inequality (and the reduced consumer demand that comes with it) knocked 6% to 9% off US economic growth over the previous two decades.
Wow. If the US economy were 9% bigger than it is today, it would have created about 11 million additional jobs. Imagine how great that would be for both American workers and businesses.
To be clear, I am not suggesting that there's no limit to how high we can raise the minimum wage. But minimum-wage opponents are not haggling over a number. They are not making a nuanced argument that the minimum wage might be bad for some people if it's too high or phased in too fast or if the economy is too weak to absorb the change.
No, their core claim is that the minimum wage always hurts the whole economy — that it will always reduce growth— that it is always a sure-fire "job-killer."
For decades, our minimum-wage debate has been dominated by ideology — the zero-sum claim that if wages go up, employment must inevitably go down — leading even many progressives to believe that the minimum wage is at best a necessary trade-off between fairness and growth.
But 78 years of evidence demonstrates that this old trickle-down model just isn't true. On the contrary: When workers have more money, businesses have more customers and hire more workers. That is the virtuous cycle that has always described the way market economies actually work.
So if you are genuinely worried about killing jobs, our current $7.25-an-hour minimum wage is arguably far riskier than $15.
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There is a huge fallacy here implicit in this post of yours. What you speak of only holds true in economics text books and theoretical models. In reality, there is hardly ever a free market where, as in in your scenario, labor and employer are equally free to accept or reject an offer. It's reality that intrudes and roughs up our tidy model! And that is why, in reality, we can get a stronger more robust economy by putting a floor under wages or a ceiling above welfare. The devil is in the details.
Hello nitro:
This "initiative was put on the ballot by a group of artists, writers and intellectuals".
No doubt they are starving artists, starving writers and leftist pseudo intellectuals who think they can just vote every one an increase in salary with no bad consequences.
This idea of just voting an increase in salary which does absolutely nothing to increase the productivity of the beneficiaries works in government say for example congress, because the number of parasites there is small relative to the host economy. The parasites get a little more and the host economy a little less, but the overall effect is small per person. But if there are too many parasites the economy the damage to the economy could be significant.
Btw nitro you have a great thread here.
Piezoe... stop being full of shit, have the balls to own up to the psychotic nature of the leftist/democrat platform of advocating for more cheap labor and then advocating for increasing for minimum wage.
Admit what is really going on.
As far as you feigning you have no idea about open borders.
Remember you tried this silly argument few months ago and with a few days almost every dem in the senate came out and said they were in favor of allowing illegals in as part of amnesty and all sorts of other votes and positions being pro illegal immigration.
The establishment Repubs are enablers of open borders too.
Admit what is really going on.
As far as you feigning you have no idea about open borders.
Remember you tried this silly argument few months ago and with a few days almost every dem in the senate came out and said they were in favor of allowing illegals in as part of amnesty and all sorts of other votes and positions being pro illegal immigration.
The establishment Repubs are enablers of open borders too.
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Huh? I am not a democrat, but I haven't heard any of the stuff your claiming coming from democrats. The only thing I have heard from them are suggestions on how to deal with the undocumented parents of American citizens , and how to deal with people who came here illegally and lived all their lives here and graduated from U.S. High Schools. The only practical solutions I've heard have all come from democrats or from Republicans who now seem to have changed their minds. The way of dealing with these folks proposed by many Republicans is completely impractical, bordering on both impossible and insane. How would you deal with them?
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Hello piezoe:
I asked in my post what is do you think the minimum wage should be and how exactly do you decide what it is. So what is your answer if you don't mind ?