7 ms·

increasing the minimum wage Be careful what you wish for: http://marginalrevolution.com/marginalrevolution/2015/03/how-effective-is-the-minimum-wage-at-support

increasing the minimum wage Be careful what you wish for: http://marginalrevolution.com/marginalrevolution/2015/03/how-effective-is-the-minimum-wage-at-supporting-the-poor.html http://marginalrevolution.com/marginalrevolution/2015/03/how... legislation increasing entitlements such as social security Expected to run structural deficits by a certain point. Theoretically speaking, an endogenously determined fiat money system doesn't really have "government debt" what with it being the sovereign issuer of debt to begin with, but in reality politics and the economy don't exist in frictionless vacuums and there are political costs to pork barreling, logrolling, unsound investments and so forth.

toomuchtodo 11y ago
I argue my ideas only need to hold water for another 10-30 years, depending on if technology advancement keeps up. Japan's been running structural deficits for decades, and still has a very high quality of life. > but in reality politics and the economy don't exist in frictionless vacuums and there are political costs to pork barreling, logrolling, unsound investments and so forth. As basic minimum income solves this without the messy politics surrounding it.
- vezzy-fnord 11y ago
  I argue my ideas only need to hold water for another 10-30 years, depending on if technology advancement keeps up. Given that the AI community's prediction making skills have been just slightly better than those of Nostradamus, that's a very tough gambit to rely on. Japan's been running structural deficits for decades, and still has a very high quality of life. Except for the aftermath of the whole Lost Decade thing and aging population taking tolls on aggregate productivity. I'm not qualified enough to say whether causes were monetary, fiscal, sociological or some combination thereof, but listing Japan as a positive example here doesn't strike me as wise. As basic minimum income solves this without the messy politics surrounding it. UBI would theoretically handle a minimum transfer of purchasing power for every individual. We're talking about public programs and initiatives unrelated to that. Though, if you're idealistic enough to think the UBI is a prospect soon realizable, I wonder why you're advocating minimum wage increases over say, stronger collective bargaining? Denmark for instance has never had a minimum wage law.
  - dragonwriter 11y ago
    > > I argue my ideas only need to hold water for another 10-30 years, depending on if technology advancement keeps up. > Given that the AI community's prediction making skills have been just slightly better than those of Nostradamus, that's a very tough gambit to rely on. That's a weird comment; "technology" is a lot broader than "AI".
    - vezzy-fnord 11y ago
      I made some perhaps overly hasty generalizations. HN is a community that is heavily skewed towards a belief in transhumanism (especially that AGI will be coming very soon) and moreover that high rates of technological unemployment are upon us, necessitating a UBI or stronger reforms to make sure the general-purpose labor saving of AGI doesn't cause social unrest from crowding humans out of the labor market. I can't imagine what else could the GP have been referring to other than mass automatized labor for most sectors, hence either AGI or lots of narrow AI.
      - dragonwriter 11y ago
        I think you accurately characterize a fringe of HN, but I think support for UBI, etc., isn't all (or even mostly) about imminent AI singularity (though certainly some is based in that belief), much of it is a belief that the Band-Aid over traditional capitalist economic relations provided by the modern mixed economy, particularly as implemented in the US, which remains heavily based on the assumption of steady wage labor with one primary employer (which, itself, is almost a pre-capitalist, feudal/manorial model) as the normal means for people to earn income, is fraying given present levels of automation and preferences for ad hoc interactions, necessitating a more efficient model of support to cushion the blows of long-term and short-term dislocation in an increasingly automated and increasingly fluid market, a need which will only get more acute with increasing automation (even fairly mundane automation that falls well short of AGI.)
      - toomuchtodo 11y ago
        > I can't imagine what else could the GP have been referring to other than mass automatized labor for most sectors, hence either AGI or lots of narrow AI. * Renewables generating the majority of power consumed world wide * Self driving electric vehicles * Universal basic income Nothing outlandish like transhumanism.
ap22213 11y ago
So, the alternative is what? Allow wages to move toward zero? Then what?
- theseatoms 11y ago
  A global minimum income. Or the strictly-superior-to-a-minimum-wage Earned Income Tax Credit [1]. [1] https://en.wikipedia.org/wiki/Earned_income_tax_credit https://en.wikipedia.org/wiki/Earned_income_tax_credit
  - creshal 11y ago
    Why is it superior? That looks a lot like making the government subsidize worker exploitation.
    - vezzy-fnord 11y ago
      How does a negative income tax subsidize any of that? If anything, it's much more neutral regarding wage labor (since it's based on the broader definition of income in tax codes) than, obviously, minimum wage mandates.
  - Yrlec 11y ago
    http://www.wsj.com/articles/better-than-raising-the-minimum-wage-1432249927 http://www.wsj.com/articles/better-than-raising-the-minimum-...
- eru 11y ago
  Allow competetion to set the wages, just like all other prices. Singapore doesn't have a minimum, and wages there are not zero. (Neither did Germany until recently.)
  - crdoconnor 11y ago
    Singapore wages aren't zero but they are really low for the non-managerial classes (i.e. the people who do all the work) and oversized for the managerial classes. It's about 3x the size of San Francisco and clearly has aspirations of becoming a similar center for startups but with the prevailing wages for the people who do all the actual work so low the quality of what is produced is usually shitty. It's not a place you'd want to emulate.
ZenoArrow 11y ago
> "increasing the minimum wage Be careful what you wish for: http://marginalrevolution.com/marginalrevolution/2015/03/how-effective-is-the-minimum-wage-at-supporting-the-poor.html http://marginalrevolution.com/marginalrevolution/2015/03/how... " Let's look at what is being said: "Unlike most public income support programs, increased earnings from the minimum wage are taxable. Over 25 percent of the increased earnings are collected back as income and payroll taxes" Is that a problem? The minimum wage should be the minimum needed to live on, that includes taking taxes into consideration. " Adopting this empirical scenario, the analysis demonstrates that an increase in the national minimum wage produces a value-added tax effect on consumer prices that is more regressive than a typical state sales tax and allocates benefits as higher earnings nearly evenly across the income distribution." So the argument is that raising the minimum wage increases prices, thereby negating the potential benefits. Here's the thing, competition drives prices down, but if low wage earners have limited options to shop around (because they look towards the big chains to get low prices), then competition can't fulfil this function. This quote would seem to support this view: "Even after taxes, 27.6 percent of increased earnings go to families in the top 40 percent of the income distribution."
- vezzy-fnord 11y ago
  Competition drives prices down, but chances are people with limited options to shop around and who disproportionately head towards mass retailers already, by example, live in areas with imperfect competition and in the worst case, food deserts. As such, a minimum wage would seem to negate itself again.
  - eru 11y ago
    > Competition drives prices down, [...] Tell that to Google and Facebook bidding on programmers.. Or people trying to buy real estate in London.
    - vezzy-fnord 11y ago
      The competition in Google and Facebook's case isn't "programmers", but "exceptionally skilled programmers," which is a different good, a much scarcer one and with less diminishing returns than the former. I'm not aware of the real estate situation in London to make a comment.
gohrt 11y ago
Form the linked article: > allocates benefits as higher earnings nearly evenly across the income distribution OK by me. Note that it doesn't allocate benefit to idle owners f investment income. > Even after taxes, 27.6 percent of increased earnings go to families in the top 40 percent of the income distribution. "top 40%" is rather silly bucket. That includes basically the median family, all the way to billionaires. > Over 25 percent of the increased earnings are collected back as income and payroll taxes (aka effectively a tax on businesses that pay the minimum wage) It takes massive concern trolling to argue that this effect is worst than not raising the minimum wage Pardon me if I overlooked the anti-minimum-wage camp yelling "lower taxes on the working poor!"
- dragonwriter 11y ago
  > "top 40%" is rather silly bucket. That includes basically the median family No, top 40% does not include "basically the median", by any remotely reasonable standard.
  - gnaritas 11y ago
    That's why he said basically, it's pretty much the upper half which yes, includes middle class families and billionaires and is a silly bucket to put in one group.
crdoconnor 11y ago
>Be careful what you wish for: http://marginalrevolution.com/marginalrevolution/2015/03/how.. http://marginalrevolution.com/marginalrevolution/2015/03/how.... tl;dr if you raise the minimum wage imperceptibly, poverty reduction is affected imperceptibly and prices are affected imperceptibly. In general if something will have a negative effect on corporate profits (minimum wage hikes have an outsized effect on corporate profits) you will be able to find a legion of economists who will lie to you about what it really does.
- vezzy-fnord 11y ago
  The reason many economists are unsure or against the minimum wage is not because they're some agents of bourgeoisie capitalists, but because arguments in favor of it tend to be moral, not economic. For instance, here's a case for the minimum wage presented by an (otherwise very knowledgeable, I'll grant) Post-Keynesian economist: http://socialdemocracy21stcentury.blogspot.com/2013/02/the-easiest-argument-for-minimum-wage.html http://socialdemocracy21stcentury.blogspot.com/2013/02/the-e... It's pretty weak. The first two are very flimsy normative/moral arguments that, even if true, do not at all imply minimum wage is the solution over say, basic income, unionization, community-based mutual credit or a variety of other initiatives. The third one is a can opener assumption. "Oh, minimum wage might work, but only in the case of Post-Keynesian full employment with buffer stocks of labor." You might as well speak of spherical cows in a vacuum. Followed by an unsourced claim about post-WWII prosperity being strictly due to Keynesian policies, when there's no consensus what factors exactly caused it.
  - crdoconnor 11y ago
    I'm not at all concerned about economists who are "for" or "against" the minimum wage. They can hold whatever opinions they want if they don't lie. It's the economists who poorly design studies with the intent of demonstrating that it either causes prices to rise uncontrollably (which it doesn't), causes unemployment to rise (which it also doesn't) and who pointedly never, ever, ever look at the effect it has on profits (it is savage towards profits, which is why the marketing budgets for stuff like this gets approved: http://kron4.com/2014/07/18/new-sf-billboard-says-workers-will-be-replaced-by-tech-if-15-minimum-wage-is-approved/ http://kron4.com/2014/07/18/new-sf-billboard-says-workers-wi...). They all know where the money is in their profession: it's at ideological corporate think tanks. If you can tread the fine line between not lying and saying things which they really like you've got a good career ahead of you. As it happens, 'moral' arguments that say that you shouldn't raise the minimum wage work better when you can claim that it will hurt the people it is designed to help. Those arguments fall flat on their face when it becomes apparent that raising the minimum wage just transfers profits into workers' pockets directly.

toomuchtodo 11y ago

I argue my ideas only need to hold water for another 10-30 years, depending on if technology advancement keeps up. Japan's been running structural deficits for decades, and still has a very high quality of life. > but in reality politics and the economy don't exist in frictionless vacuums and there are political costs to pork barreling, logrolling, unsound investments and so forth. As basic minimum income solves this without the messy politics surrounding it.

vezzy-fnord 11y ago
I argue my ideas only need to hold water for another 10-30 years, depending on if technology advancement keeps up. Given that the AI community's prediction making skills have been just slightly better than those of Nostradamus, that's a very tough gambit to rely on. Japan's been running structural deficits for decades, and still has a very high quality of life. Except for the aftermath of the whole Lost Decade thing and aging population taking tolls on aggregate productivity. I'm not qualified enough to say whether causes were monetary, fiscal, sociological or some combination thereof, but listing Japan as a positive example here doesn't strike me as wise. As basic minimum income solves this without the messy politics surrounding it. UBI would theoretically handle a minimum transfer of purchasing power for every individual. We're talking about public programs and initiatives unrelated to that. Though, if you're idealistic enough to think the UBI is a prospect soon realizable, I wonder why you're advocating minimum wage increases over say, stronger collective bargaining? Denmark for instance has never had a minimum wage law.
- dragonwriter 11y ago
  > > I argue my ideas only need to hold water for another 10-30 years, depending on if technology advancement keeps up. > Given that the AI community's prediction making skills have been just slightly better than those of Nostradamus, that's a very tough gambit to rely on. That's a weird comment; "technology" is a lot broader than "AI".
  - vezzy-fnord 11y ago
    I made some perhaps overly hasty generalizations. HN is a community that is heavily skewed towards a belief in transhumanism (especially that AGI will be coming very soon) and moreover that high rates of technological unemployment are upon us, necessitating a UBI or stronger reforms to make sure the general-purpose labor saving of AGI doesn't cause social unrest from crowding humans out of the labor market. I can't imagine what else could the GP have been referring to other than mass automatized labor for most sectors, hence either AGI or lots of narrow AI.
    - dragonwriter 11y ago
      I think you accurately characterize a fringe of HN, but I think support for UBI, etc., isn't all (or even mostly) about imminent AI singularity (though certainly some is based in that belief), much of it is a belief that the Band-Aid over traditional capitalist economic relations provided by the modern mixed economy, particularly as implemented in the US, which remains heavily based on the assumption of steady wage labor with one primary employer (which, itself, is almost a pre-capitalist, feudal/manorial model) as the normal means for people to earn income, is fraying given present levels of automation and preferences for ad hoc interactions, necessitating a more efficient model of support to cushion the blows of long-term and short-term dislocation in an increasingly automated and increasingly fluid market, a need which will only get more acute with increasing automation (even fairly mundane automation that falls well short of AGI.)
    - toomuchtodo 11y ago
      > I can't imagine what else could the GP have been referring to other than mass automatized labor for most sectors, hence either AGI or lots of narrow AI. * Renewables generating the majority of power consumed world wide * Self driving electric vehicles * Universal basic income Nothing outlandish like transhumanism.

ap22213 11y ago

So, the alternative is what? Allow wages to move toward zero? Then what?

theseatoms 11y ago
A global minimum income. Or the strictly-superior-to-a-minimum-wage Earned Income Tax Credit [1]. [1] https://en.wikipedia.org/wiki/Earned_income_tax_credit https://en.wikipedia.org/wiki/Earned_income_tax_credit
- creshal 11y ago
  Why is it superior? That looks a lot like making the government subsidize worker exploitation.
  - vezzy-fnord 11y ago
    How does a negative income tax subsidize any of that? If anything, it's much more neutral regarding wage labor (since it's based on the broader definition of income in tax codes) than, obviously, minimum wage mandates.
- Yrlec 11y ago
  http://www.wsj.com/articles/better-than-raising-the-minimum-wage-1432249927 http://www.wsj.com/articles/better-than-raising-the-minimum-...
eru 11y ago
Allow competetion to set the wages, just like all other prices. Singapore doesn't have a minimum, and wages there are not zero. (Neither did Germany until recently.)
- crdoconnor 11y ago
  Singapore wages aren't zero but they are really low for the non-managerial classes (i.e. the people who do all the work) and oversized for the managerial classes. It's about 3x the size of San Francisco and clearly has aspirations of becoming a similar center for startups but with the prevailing wages for the people who do all the actual work so low the quality of what is produced is usually shitty. It's not a place you'd want to emulate.

ZenoArrow 11y ago

> "increasing the minimum wage Be careful what you wish for: http://marginalrevolution.com/marginalrevolution/2015/03/how-effective-is-the-minimum-wage-at-supporting-the-poor.html http://marginalrevolution.com/marginalrevolution/2015/03/how... " Let's look at what is being said: "Unlike most public income support programs, increased earnings from the minimum wage are taxable. Over 25 percent of the increased earnings are collected back as income and payroll taxes" Is that a problem? The minimum wage should be the minimum needed to live on, that includes taking taxes into consideration. " Adopting this empirical scenario, the analysis demonstrates that an increase in the national minimum wage produces a value-added tax effect on consumer prices that is more regressive than a typical state sales tax and allocates benefits as higher earnings nearly evenly across the income distribution." So the argument is that raising the minimum wage increases prices, thereby negating the potential benefits. Here's the thing, competition drives prices down, but if low wage earners have limited options to shop around (because they look towards the big chains to get low prices), then competition can't fulfil this function. This quote would seem to support this view: "Even after taxes, 27.6 percent of increased earnings go to families in the top 40 percent of the income distribution."

vezzy-fnord 11y ago
Competition drives prices down, but chances are people with limited options to shop around and who disproportionately head towards mass retailers already, by example, live in areas with imperfect competition and in the worst case, food deserts. As such, a minimum wage would seem to negate itself again.
- eru 11y ago
  > Competition drives prices down, [...] Tell that to Google and Facebook bidding on programmers.. Or people trying to buy real estate in London.
  - vezzy-fnord 11y ago
    The competition in Google and Facebook's case isn't "programmers", but "exceptionally skilled programmers," which is a different good, a much scarcer one and with less diminishing returns than the former. I'm not aware of the real estate situation in London to make a comment.

gohrt 11y ago

Form the linked article: > allocates benefits as higher earnings nearly evenly across the income distribution OK by me. Note that it doesn't allocate benefit to idle owners f investment income. > Even after taxes, 27.6 percent of increased earnings go to families in the top 40 percent of the income distribution. "top 40%" is rather silly bucket. That includes basically the median family, all the way to billionaires. > Over 25 percent of the increased earnings are collected back as income and payroll taxes (aka effectively a tax on businesses that pay the minimum wage) It takes massive concern trolling to argue that this effect is worst than not raising the minimum wage Pardon me if I overlooked the anti-minimum-wage camp yelling "lower taxes on the working poor!"

dragonwriter 11y ago
> "top 40%" is rather silly bucket. That includes basically the median family No, top 40% does not include "basically the median", by any remotely reasonable standard.
- gnaritas 11y ago
  That's why he said basically, it's pretty much the upper half which yes, includes middle class families and billionaires and is a silly bucket to put in one group.

crdoconnor 11y ago

>Be careful what you wish for: http://marginalrevolution.com/marginalrevolution/2015/03/how.. http://marginalrevolution.com/marginalrevolution/2015/03/how.... tl;dr if you raise the minimum wage imperceptibly, poverty reduction is affected imperceptibly and prices are affected imperceptibly. In general if something will have a negative effect on corporate profits (minimum wage hikes have an outsized effect on corporate profits) you will be able to find a legion of economists who will lie to you about what it really does.

vezzy-fnord 11y ago
The reason many economists are unsure or against the minimum wage is not because they're some agents of bourgeoisie capitalists, but because arguments in favor of it tend to be moral, not economic. For instance, here's a case for the minimum wage presented by an (otherwise very knowledgeable, I'll grant) Post-Keynesian economist: http://socialdemocracy21stcentury.blogspot.com/2013/02/the-easiest-argument-for-minimum-wage.html http://socialdemocracy21stcentury.blogspot.com/2013/02/the-e... It's pretty weak. The first two are very flimsy normative/moral arguments that, even if true, do not at all imply minimum wage is the solution over say, basic income, unionization, community-based mutual credit or a variety of other initiatives. The third one is a can opener assumption. "Oh, minimum wage might work, but only in the case of Post-Keynesian full employment with buffer stocks of labor." You might as well speak of spherical cows in a vacuum. Followed by an unsourced claim about post-WWII prosperity being strictly due to Keynesian policies, when there's no consensus what factors exactly caused it.
- crdoconnor 11y ago
  I'm not at all concerned about economists who are "for" or "against" the minimum wage. They can hold whatever opinions they want if they don't lie. It's the economists who poorly design studies with the intent of demonstrating that it either causes prices to rise uncontrollably (which it doesn't), causes unemployment to rise (which it also doesn't) and who pointedly never, ever, ever look at the effect it has on profits (it is savage towards profits, which is why the marketing budgets for stuff like this gets approved: http://kron4.com/2014/07/18/new-sf-billboard-says-workers-will-be-replaced-by-tech-if-15-minimum-wage-is-approved/ http://kron4.com/2014/07/18/new-sf-billboard-says-workers-wi...). They all know where the money is in their profession: it's at ideological corporate think tanks. If you can tread the fine line between not lying and saying things which they really like you've got a good career ahead of you. As it happens, 'moral' arguments that say that you shouldn't raise the minimum wage work better when you can claim that it will hurt the people it is designed to help. Those arguments fall flat on their face when it becomes apparent that raising the minimum wage just transfers profits into workers' pockets directly.