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Saying that something moves to China because minimum wage is too high has always been an interesting topic for me. With a positive spin this argument becomes "t

by zwkrt 8y ago

Saying that something moves to China because minimum wage is too high has always been an interesting topic for me. With a positive spin this argument becomes "the American government has set a standard of living which is too high to allow such manufacturing processes or subjective abuse of labor". Reducing regulations or lowering minimum wage would verly likely not result in a better standard of living, even though it would be most economically efficient for everyone to be working for peanuts 60hr/week. It seems to me that it is part of the governments job to say "yes this is economically feasible, but not socially acceptable." Outsourcing breaks this dynamic by introducing moral hazard--we can have our cake and eat it too. I think if there were a minimum global standard of living, most cheap plastic shit just wouldn't get made.

dgzl 8y ago
Brilliant comment, I've had this understand for a while myself. We can legislate ourselves to a higher standard of working/living, but the work then becomes a premium and will support fewer people, as outsourcing occurs, to automation and other workforce that doesn't demand such benefits. What does that make the person who demands a better working condition for themselves, but is fine that a percentage of work is outsourced to a sweatshop?
- drak0n1c 8y ago
  Labor and wage regulations economically function akin to a "carbon tax" on labor. In addition to encouraging outsourcing, they are encouraging the early adoption of technological alternatives (robots/AI) that face no such restrictions.
throwaway34241 8y ago
The traditional model is that US employment is driven by fiscal and monetary policy. So the Gov. and central bank stimulate the economy until it reaches full employment, then put on the brakes when inflation gets too high. With this model, even if some jobs shift to China or are automated, that just means the central bank can step on the gas a little bit more, and employment and standard of living is unaffected. One problem with this model is structural problems where say jobs are being created but are in a different place than the ones being destroyed. People may be unwilling to move or it may be too expensive. They also could require different skills. Another issue is that the central banks are limited in their ability to lower interest rates (their traditional way of stimulating the economy and getting out of recessions). Fiscal policy (Gov. borrowing and spending) is not expensive at all now (the Gov. currently pays hardly any inflation-adjusted interest on the debt), but if interest rates were ever to rise substantially having a large debt could be a problem. Spending the money efficiently also could be a challenge and it's politically controversial to do it at all. Personally I think something like a UBI is probably a good idea to insure against things just imploding. In the event of a recession they could just increase it to stimulate the economy, which probably can happen a lot faster than infrastructure projects etc. And if automation accelerates, it may be tough for large numbers of people to adapt quickly (even if they eventually do).

by zwkrt 8y ago

dgzl 8y ago

Brilliant comment, I've had this understand for a while myself. We can legislate ourselves to a higher standard of working/living, but the work then becomes a premium and will support fewer people, as outsourcing occurs, to automation and other workforce that doesn't demand such benefits. What does that make the person who demands a better working condition for themselves, but is fine that a percentage of work is outsourced to a sweatshop?

drak0n1c 8y ago
Labor and wage regulations economically function akin to a "carbon tax" on labor. In addition to encouraging outsourcing, they are encouraging the early adoption of technological alternatives (robots/AI) that face no such restrictions.

throwaway34241 8y ago

The traditional model is that US employment is driven by fiscal and monetary policy. So the Gov. and central bank stimulate the economy until it reaches full employment, then put on the brakes when inflation gets too high. With this model, even if some jobs shift to China or are automated, that just means the central bank can step on the gas a little bit more, and employment and standard of living is unaffected. One problem with this model is structural problems where say jobs are being created but are in a different place than the ones being destroyed. People may be unwilling to move or it may be too expensive. They also could require different skills. Another issue is that the central banks are limited in their ability to lower interest rates (their traditional way of stimulating the economy and getting out of recessions). Fiscal policy (Gov. borrowing and spending) is not expensive at all now (the Gov. currently pays hardly any inflation-adjusted interest on the debt), but if interest rates were ever to rise substantially having a large debt could be a problem. Spending the money efficiently also could be a challenge and it's politically controversial to do it at all. Personally I think something like a UBI is probably a good idea to insure against things just imploding. In the event of a recession they could just increase it to stimulate the economy, which probably can happen a lot faster than infrastructure projects etc. And if automation accelerates, it may be tough for large numbers of people to adapt quickly (even if they eventually do).