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Regarding income inequality, I recommend listening to some of the speeches/debates with Bernie Sanders. E.g. he argues that the greatest receiver of welfare in

by sce 11y ago

Regarding income inequality, I recommend listening to some of the speeches/debates with Bernie Sanders. E.g. he argues that the greatest receiver of welfare in the US is the wal-Mart family, because they get even richer paying their workers so little that the workers have to live on welfare. (In other words the welfare is "paying" the workers so that Wal-Mart don't have to.) He proposes to rise the minimum wage. https://www.youtube.com/watch?v=eYFueqv0iIQ https://www.youtube.com/watch?v=eYFueqv0iIQ

harryh 11y ago
This assumes an obligation on Wal-Mart's part to pay people according to their need. In a market economy, people are paid according to their ability.
- beagle3 11y ago
  But welfare payments are paid according to need. My understanding on Sanders' statement is that it could be paraphrased: "If walmart employes didn't get state welfare, waltons wouldn't be as rich, because they would have to pay more (employees who can't afford food and shelter can't work for you) ... ergo, walmart employees are, at the moment, practically, a conduit of welfare from the state to the waltons". (That is how I understand his statement -- I don't agree or disagree, I don't know the details well enough to do either)
  - harryh 11y ago
    It's not clear to me that they would have to pay more. In previous generations people leaved in much worse poverty and still managed to show up to their various jobs.
    - sce 11y ago
      In the case of minimum wage, they would indeed be forced to pay more, rendering the need for welfare to those same people unnecessary, thus shifting the cost from the state/government to the employer. That is in effect wealth distribution, which again closes the big income inequality. (That's the intended effect anyway.)
      - harryh 11y ago
        beagle3 argued that in a world without welfare, Wal-Mart would have to pay more or their employees would be unable to work due to lack of basic necessities. I was only arguing against that assertion.
        beagle3 11y ago
        I was merely paraphrasing my understanding of sanders' argument. But the argument has merit if the wage is not livable. The two issues the make this an issue (or a nonissue) is what is a minimum livable wage, and whether or not it is the governments role to enforce that or not. (No idea about the first, I think Yes about the second)
        harryh 11y ago
        Ya, I get that you were paraphrasing. And you did a fine job in my opinion, so my refutation was more aimed at Bernie than you. With regards to enforcement of a minimum wage I would say that if we, as a society, want to enforce minimum living standards that is a burden that should fall on all of us and not just companies that employ low skilled labor.
      - Plough_Jogger 11y ago
        > thus shifting the cost from the state/government to the employer. This would simply shift the cost from the state/government (read taxpayer) to end consumers (read taxpayer).
        sce 11y ago
        If the employer responds by increasing the prices of the goods/services they sell, then yes. However, in the market the consumers have a choice, so they can choose to not buy something, or buy somewhere else, and the market thus regulates itself. Don't want to pay taxes? Not much choice there. So I think having the market regulate itself is better than enforcing the cost of labor through taxes. (Who knows, maybe the employers would be forced to cut their margins even.)
  - wutbrodo 11y ago
    > ergo, walmart employees are, at the moment, practically, a conduit of welfare from the state to the waltons This doesn't make any sense (though you have paraphrased Sanders accurately). While technically true for some definition of "conduit of welfare", the same is true of almost everybody in society. Welfare recipients are integrated into the economy enough that "if X didn't get welfare, person Y wouldn't be as rich" is true for many, many, many values of Y (neighborhood stores in poor areas, people benefiting from reduced crime ("stealing bread to feed your family" used to be more than a trope), etc). To give an example in microcosm: if you buy a used car on Craigslist from someone, the fact that the seller is a welfare recipient doesn't mean that you're a beneficiary of welfare because you're not paying him enough to live off of. To the extent that society is responsible for helping the poor (FTR, I personally believe in this responsibility), it makes absolutely no sense to claim that employers (as opposed to the welfare system) are responsible for filling the gap between "market value of a person's labor" and "how much income he needs to reasonably survive". This particular claim of Sanders is absolutely idiotic: people are blindly pattern-matching it to support for the poor when in reality he's arguing for shifting the burden of subsidies from all of society to arbitrary consumers/business owners/employees affected by artificial wage floors.
    - sce 11y ago
      > To give an example in microcosm: if you buy a used car on Craigslist from someone, the fact that the seller is a welfare recipient doesn't mean that you're a beneficiary of welfare because you're not paying him enough to live off of. I think the difference here is that it's not a matter of a single transaction, it's an employment, so what the employer is basically paying for is the employees time (and time is finite). So a better example would be that you pay someone on craigslist for a service, e.g. paint your house. If the painter works full time painting houses and still needs welfare, then the taxpayers are basically subsidizing house painting ("conduit of welfare" as it was phrased). Why can't those that need their house painted pay what it actually costs to get the job done? Because if the full time painter needs welfare, they're in reality paying him too little.
      - wutbrodo 11y ago
- panic 11y ago
  In a market economy, people are paid just enough so they don't leave. Salary depends more on the typical economic situation of an employee than their ability.
  - harryh 11y ago
    Ya, ability isn't really the best word to use there. I was being cute by using the words of Marx. In reality "output" is probably a better word here.
walshemj 11y ago
Which is something that George Osbourne a Conservative has said in the UK.
clarkmoody 11y ago
Walmart employees are not compelled to work for Walmart; the employment contract is agreed upon voluntarily by both parties. The employees know how much they will be paid and agree to accept the terms. Walmart is operating within the legal employment framework set up by the government, including the welfare state and the minimum wage. That will not change by raising the minimum wage. Rather, Walmart will simply add automation and reduce its employment. Minimum wage is arguably the worst idea when it comes to improving the lot of the poor. If someone cannot command more than the minimum wage when it comes to productivity, intelligence, etc, then raising that wage means that person will be unemployable. That is, their skills are not worth the minimum amount an employer is allowed to pay, so they will not be able to find a job. Ever. That person will be a permanent liability of the State.
- WoodenChair 11y ago
  I must commend you - I have never seen the main detrimental effect of the minimum wage explained so succinctly. Not in Friedman, not in Hayek, not anywhere.
- danieltillett 11y ago
  The problem with this analysis is it assumes that the power to negotiate a wage is equal between the parties. The second is wages are set at the margins. This means it takes very little excess labour supply to drive wages to subsistence levels.
- gnaritas 11y ago
  > Walmart employees are not compelled to work for Walmart Yes they are, poor people are compelled by lack of opportunity to take whatever they can find even if it sucks. Pretending they have the option of just saying no to a low salary is a bit of willful misunderstanding of the reality of their situations. > Minimum wage is arguably the worst idea when it comes to improving the lot of the poor. No it isn't. > If someone cannot command more than the minimum wage when it comes to productivity, intelligence, etc, then raising that wage means that person will be unemployable. That person will be a permanent liability of the State. That is the point, a minimum wage allows people the opportunity to get into welfare because minimum wage is part of the welfare system, it sets the low bar. It's better to not have a job and qualify for benefits than it is to have a job that pays so little it's not worth having. The minimum wage forces society to deal with the problem of people who lack the skills to make a market wage, and that's a good thing.
mcginleyr1 11y ago
Sanders also, least in my mind, poses the question to us, is this morally just? We have a large group of people who are born and cannot afford to go to college, are strapped with debt to go to college, or simply can't make it in college. Do we allow an economic natural selection to weed these people out and suffer or do we as a society take a road based on moral principles to help each other by all of us paying in. Something interesting that I've been thinking about. I also wonder how much it hurts us in expansion of ideas. We have all this engineering talent focused on how to get people to click on ads, optimize e-commerce sales, and much more. What more could be done? Also when food chains break down and fully automate drive thru restaurants.. we'll there go lots of labor jobs... random thoughts feel free to ignore me.

by sce 11y ago

harryh 11y ago

This assumes an obligation on Wal-Mart's part to pay people according to their need. In a market economy, people are paid according to their ability.

beagle3 11y ago
But welfare payments are paid according to need. My understanding on Sanders' statement is that it could be paraphrased: "If walmart employes didn't get state welfare, waltons wouldn't be as rich, because they would have to pay more (employees who can't afford food and shelter can't work for you) ... ergo, walmart employees are, at the moment, practically, a conduit of welfare from the state to the waltons". (That is how I understand his statement -- I don't agree or disagree, I don't know the details well enough to do either)
- harryh 11y ago
  It's not clear to me that they would have to pay more. In previous generations people leaved in much worse poverty and still managed to show up to their various jobs.
  - sce 11y ago
    In the case of minimum wage, they would indeed be forced to pay more, rendering the need for welfare to those same people unnecessary, thus shifting the cost from the state/government to the employer. That is in effect wealth distribution, which again closes the big income inequality. (That's the intended effect anyway.)
    - harryh 11y ago
      beagle3 argued that in a world without welfare, Wal-Mart would have to pay more or their employees would be unable to work due to lack of basic necessities. I was only arguing against that assertion.
      - beagle3 11y ago
        I was merely paraphrasing my understanding of sanders' argument. But the argument has merit if the wage is not livable. The two issues the make this an issue (or a nonissue) is what is a minimum livable wage, and whether or not it is the governments role to enforce that or not. (No idea about the first, I think Yes about the second)
        harryh 11y ago
        Ya, I get that you were paraphrasing. And you did a fine job in my opinion, so my refutation was more aimed at Bernie than you. With regards to enforcement of a minimum wage I would say that if we, as a society, want to enforce minimum living standards that is a burden that should fall on all of us and not just companies that employ low skilled labor.
    - Plough_Jogger 11y ago
      > thus shifting the cost from the state/government to the employer. This would simply shift the cost from the state/government (read taxpayer) to end consumers (read taxpayer).
      - sce 11y ago
        If the employer responds by increasing the prices of the goods/services they sell, then yes. However, in the market the consumers have a choice, so they can choose to not buy something, or buy somewhere else, and the market thus regulates itself. Don't want to pay taxes? Not much choice there. So I think having the market regulate itself is better than enforcing the cost of labor through taxes. (Who knows, maybe the employers would be forced to cut their margins even.)
- wutbrodo 11y ago
  > ergo, walmart employees are, at the moment, practically, a conduit of welfare from the state to the waltons This doesn't make any sense (though you have paraphrased Sanders accurately). While technically true for some definition of "conduit of welfare", the same is true of almost everybody in society. Welfare recipients are integrated into the economy enough that "if X didn't get welfare, person Y wouldn't be as rich" is true for many, many, many values of Y (neighborhood stores in poor areas, people benefiting from reduced crime ("stealing bread to feed your family" used to be more than a trope), etc). To give an example in microcosm: if you buy a used car on Craigslist from someone, the fact that the seller is a welfare recipient doesn't mean that you're a beneficiary of welfare because you're not paying him enough to live off of. To the extent that society is responsible for helping the poor (FTR, I personally believe in this responsibility), it makes absolutely no sense to claim that employers (as opposed to the welfare system) are responsible for filling the gap between "market value of a person's labor" and "how much income he needs to reasonably survive". This particular claim of Sanders is absolutely idiotic: people are blindly pattern-matching it to support for the poor when in reality he's arguing for shifting the burden of subsidies from all of society to arbitrary consumers/business owners/employees affected by artificial wage floors.
  - sce 11y ago
    > To give an example in microcosm: if you buy a used car on Craigslist from someone, the fact that the seller is a welfare recipient doesn't mean that you're a beneficiary of welfare because you're not paying him enough to live off of. I think the difference here is that it's not a matter of a single transaction, it's an employment, so what the employer is basically paying for is the employees time (and time is finite). So a better example would be that you pay someone on craigslist for a service, e.g. paint your house. If the painter works full time painting houses and still needs welfare, then the taxpayers are basically subsidizing house painting ("conduit of welfare" as it was phrased). Why can't those that need their house painted pay what it actually costs to get the job done? Because if the full time painter needs welfare, they're in reality paying him too little.
    - wutbrodo 11y ago
panic 11y ago
In a market economy, people are paid just enough so they don't leave. Salary depends more on the typical economic situation of an employee than their ability.
- harryh 11y ago
  Ya, ability isn't really the best word to use there. I was being cute by using the words of Marx. In reality "output" is probably a better word here.

walshemj 11y ago

Which is something that George Osbourne a Conservative has said in the UK.

clarkmoody 11y ago

Walmart employees are not compelled to work for Walmart; the employment contract is agreed upon voluntarily by both parties. The employees know how much they will be paid and agree to accept the terms. Walmart is operating within the legal employment framework set up by the government, including the welfare state and the minimum wage. That will not change by raising the minimum wage. Rather, Walmart will simply add automation and reduce its employment. Minimum wage is arguably the worst idea when it comes to improving the lot of the poor. If someone cannot command more than the minimum wage when it comes to productivity, intelligence, etc, then raising that wage means that person will be unemployable. That is, their skills are not worth the minimum amount an employer is allowed to pay, so they will not be able to find a job. Ever. That person will be a permanent liability of the State.

WoodenChair 11y ago
I must commend you - I have never seen the main detrimental effect of the minimum wage explained so succinctly. Not in Friedman, not in Hayek, not anywhere.
danieltillett 11y ago
The problem with this analysis is it assumes that the power to negotiate a wage is equal between the parties. The second is wages are set at the margins. This means it takes very little excess labour supply to drive wages to subsistence levels.
gnaritas 11y ago
> Walmart employees are not compelled to work for Walmart Yes they are, poor people are compelled by lack of opportunity to take whatever they can find even if it sucks. Pretending they have the option of just saying no to a low salary is a bit of willful misunderstanding of the reality of their situations. > Minimum wage is arguably the worst idea when it comes to improving the lot of the poor. No it isn't. > If someone cannot command more than the minimum wage when it comes to productivity, intelligence, etc, then raising that wage means that person will be unemployable. That person will be a permanent liability of the State. That is the point, a minimum wage allows people the opportunity to get into welfare because minimum wage is part of the welfare system, it sets the low bar. It's better to not have a job and qualify for benefits than it is to have a job that pays so little it's not worth having. The minimum wage forces society to deal with the problem of people who lack the skills to make a market wage, and that's a good thing.

mcginleyr1 11y ago

Sanders also, least in my mind, poses the question to us, is this morally just? We have a large group of people who are born and cannot afford to go to college, are strapped with debt to go to college, or simply can't make it in college. Do we allow an economic natural selection to weed these people out and suffer or do we as a society take a road based on moral principles to help each other by all of us paying in. Something interesting that I've been thinking about. I also wonder how much it hurts us in expansion of ideas. We have all this engineering talent focused on how to get people to click on ads, optimize e-commerce sales, and much more. What more could be done? Also when food chains break down and fully automate drive thru restaurants.. we'll there go lots of labor jobs... random thoughts feel free to ignore me.