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That depends if it were enough to live on. If it was then it would give those minimum wage workers the freedom not to work. If not, then all it would likely do

That depends if it were enough to live on. If it was then it would give those minimum wage workers the freedom not to work. If not, then all it would likely do would be to let employers lower wages. IIRC there was actually a town in Canada that did this and this happened. Then it was taken away entirely and the poorest citizens ended up even worse off (wages did not go back up again).

jessaustin 11y ago
What mechanism do you propose to explain this phenomenon? ISTM that if an employer is paying a market-clearing wage, and then she decides to just pay less, she's going to have either fewer employees, or less capable employees, or both.
- asgard1024 11y ago
  I propose a mechanism of free market being the wrong model of reality. ;-) Some people are simply greedy and they will pay less at the expense of having less capable employees. These people will "poison the well", so to speak, for other market participants who actually wouldn't actually mind to pay higher wages. And as was eloquently put by Keynes - "Markets can remain irrational longer than you can remain solvent". In short, asymmetric information is the key problem of free markets.
  - eru 11y ago
    Why don't they already pay less now?
    - asgard1024 11y ago
      Well, here's a model I propose. So-called "market equilibrium" is actually a steady state of various powers at oligopoly-oligopsony price point (therefore, there are non-zero profits and above-subsistence wages, unlike in the ideal free market, which predicts zero profits and subsistence wages). This implies some sort of "social contract" about profit sharing which can be enforced by strikes of either party, because they essentially need each other. So capitalists to pay less means breaking that contract (with consequences, that's why you cannot easily do it). However synchronized breaches of the contract may take some time before this settles into another steady state, because of information asymmetry - the information about contract breach takes time to propagate to all interested parties.
      - eru 11y ago
        There's no such contract. And there's no coalition of neither workers nor capitalists. See http://slatestarcodex.com/2014/09/14/does-class-warfare-have-a-free-rider-problem/ http://slatestarcodex.com/2014/09/14/does-class-warfare-have...
        asgard1024 11y ago
        Facepalm. It's not an explicit contract in the sense of them coming to one table and agree with it, it's implicit in them having the common interest. Steve Keen did models where independent agents can become oligopolists even without any communication whatsoever, just by virtue of seeking maximal profit. There are many similar dynamical systems.
zo1 11y ago
Do you recall the name of that town/study? I've seen that a similar example used for pro-UBI points, and it'd be interesting to find out that it actually didn't work out as it's been claimed.
- deleted 11y ago
  [deleted]
- teh_klev 11y ago
  Dauphin, Manitoba. It's mentioned about a third of the way into the article...if you read it that is :P
elgenie 11y ago
From the article (read by all commenters, of course): """ The scale of the consensus on the idea is a far cry from a long-buried experiment in the rural Manitoba town of Dauphin in the 1970s, a comprehensive, five-year trial that is now regularly cited by advocates as the strongest proof yet that it works as a poverty reduction strategy. The experiment, known as ‘Mincome’, was jointly bankrolled by the then provincial New Democratic government and Pierre Trudeau’s Liberals, and offered an unconditional annual income to every family. Those that worked had their Mincome cut by 50 cents for every dollar earned. The idea was to offer a cushion for shifting crop prices or crop failures. The governments were interested to see whether such a support would produce a disincentive to work, a town full of lay-abouts. If successful, the long game was to roll out a similar plan nationwide. But the scheme ended up costing $17 million, much more than had been envisaged. It was scrapped as recession hit Canada at end of the decade. Almost 2000 boxes’ worth of data on the trial were packed away, not to be heard from again until University of Manitoba health sciences researcher Evelyn Forget tracked them down in 2009. She found that there was essentially no reduction in working hours with two notable exceptions: women who were mothers of young children, or had elderly or disabled relatives and who were now choosing to stay home, and teenagers, who now felt free to continue in school and not help out their parents on the farm. Meanwhile, there were fewer work-place injuries, fewer car accidents, less domestic abuse and hospital visits declined by 8.5 percent. """

jessaustin 11y ago

What mechanism do you propose to explain this phenomenon? ISTM that if an employer is paying a market-clearing wage, and then she decides to just pay less, she's going to have either fewer employees, or less capable employees, or both.

asgard1024 11y ago
I propose a mechanism of free market being the wrong model of reality. ;-) Some people are simply greedy and they will pay less at the expense of having less capable employees. These people will "poison the well", so to speak, for other market participants who actually wouldn't actually mind to pay higher wages. And as was eloquently put by Keynes - "Markets can remain irrational longer than you can remain solvent". In short, asymmetric information is the key problem of free markets.
- eru 11y ago
  Why don't they already pay less now?
  - asgard1024 11y ago
    Well, here's a model I propose. So-called "market equilibrium" is actually a steady state of various powers at oligopoly-oligopsony price point (therefore, there are non-zero profits and above-subsistence wages, unlike in the ideal free market, which predicts zero profits and subsistence wages). This implies some sort of "social contract" about profit sharing which can be enforced by strikes of either party, because they essentially need each other. So capitalists to pay less means breaking that contract (with consequences, that's why you cannot easily do it). However synchronized breaches of the contract may take some time before this settles into another steady state, because of information asymmetry - the information about contract breach takes time to propagate to all interested parties.
    - eru 11y ago
      There's no such contract. And there's no coalition of neither workers nor capitalists. See http://slatestarcodex.com/2014/09/14/does-class-warfare-have-a-free-rider-problem/ http://slatestarcodex.com/2014/09/14/does-class-warfare-have...
      - asgard1024 11y ago
        Facepalm. It's not an explicit contract in the sense of them coming to one table and agree with it, it's implicit in them having the common interest. Steve Keen did models where independent agents can become oligopolists even without any communication whatsoever, just by virtue of seeking maximal profit. There are many similar dynamical systems.

zo1 11y ago

Do you recall the name of that town/study? I've seen that a similar example used for pro-UBI points, and it'd be interesting to find out that it actually didn't work out as it's been claimed.

deleted 11y ago
[deleted]
teh_klev 11y ago
Dauphin, Manitoba. It's mentioned about a third of the way into the article...if you read it that is :P

elgenie 11y ago

From the article (read by all commenters, of course): """ The scale of the consensus on the idea is a far cry from a long-buried experiment in the rural Manitoba town of Dauphin in the 1970s, a comprehensive, five-year trial that is now regularly cited by advocates as the strongest proof yet that it works as a poverty reduction strategy. The experiment, known as ‘Mincome’, was jointly bankrolled by the then provincial New Democratic government and Pierre Trudeau’s Liberals, and offered an unconditional annual income to every family. Those that worked had their Mincome cut by 50 cents for every dollar earned. The idea was to offer a cushion for shifting crop prices or crop failures. The governments were interested to see whether such a support would produce a disincentive to work, a town full of lay-abouts. If successful, the long game was to roll out a similar plan nationwide. But the scheme ended up costing $17 million, much more than had been envisaged. It was scrapped as recession hit Canada at end of the decade. Almost 2000 boxes’ worth of data on the trial were packed away, not to be heard from again until University of Manitoba health sciences researcher Evelyn Forget tracked them down in 2009. She found that there was essentially no reduction in working hours with two notable exceptions: women who were mothers of young children, or had elderly or disabled relatives and who were now choosing to stay home, and teenagers, who now felt free to continue in school and not help out their parents on the farm. Meanwhile, there were fewer work-place injuries, fewer car accidents, less domestic abuse and hospital visits declined by 8.5 percent. """