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I think something similar has happened with minimum wages. It appears to me that the natural next step is to make the minimum wage grow with inflation. Unfortu
by puzzledobserver 7y ago
I think something similar has happened with minimum wages. It appears to me that the natural next step is to make the minimum wage grow with inflation.
Unfortunately, this hasn't happened, so we're stuck with various government-mandated minimum wage levels that are tied to the value of money from several years before.
Companies can now point to the law, and use this obsolete number as a metric by which to set their own salaries. What was intended to protect the laborer is therefore perversely being used to protect their corporate employer.
- buzzkillington 7y agoMake them grow with productivity.
- logicchains 7y agoThis destroys incentive to invest in productivity improvements, because the gains are eaten by wages. Most productivity gains in the economic sense don't come from people working smarter/harder, they come from investment in better machines and technology (capital). If you took the most productive worker today back two thousand years, their productivity would be massively reduced without access to any modern tools or equipment.
- buzzkillington 7y agoThat is only true if your only expense is labour, something that's true out-call prostitution and little else.
- logicchains 7y agoProductivity is defined as output per unit labour. This means any profitable investment the firm makes will increase productivity (assuming the number of employees remains the same). If the minimum wage was indexed to productivity, then any such investment would increase labour costs.
- buzzkillington 7y agoYes, so the only way to increase profits is to increase automation. A much better use of human brains then using them to flip burgers.
- manigandham 7y agoSo automate away all the jobs? What are people supposed to do then?
- buzzkillington 7y agoThe sewers have put all the nightsoil men out business, yet I say society is better for automated toilets.
- manigandham 7y agoIt remains to be seen whether we will really have enough "creative" work for people to do.
- fnenrjfkdke 7y agoEnjoy themselves.
- SuoDuanDao 7y agoLive humbly on UBI, grow vegetables in your yard and invent a better method of automation in your garage. If you succeed at the latter, who knows? To me the point of UBI+Automation is that we unlock the potential of more people following a muse without needing to spend too much time surviving.
- pshc 7y agoLatte art and craft brewing.
- Intermernet 7y ago
- dragonwriter 7y ago> This destroys incentive to invest in productivity improvements, because the gains are eaten by wages. No, the share of returns that go to labor is constant, so productivity gains are split between labor and capital the same as returns prior to the gains are. In the alternative, capital captures an ever greater share of the returns over time because they are incentivized to invest in those areas that creates the most return to capital.
- dnautics 7y agoMinimum wage doesn't grow with inflation because the point of inflation is to steal wealth from the working class: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi...
- edanm 7y agoThat's not the point of inflation, and I don't think that article backs what you're saying up.
- dnautics 7y agoIt absolutely does. Krugman comes out and says that it's a way to use policy to cut the wages of the working class. Read it carefully.
- clairity 7y agoinflation is used to keep the "time value of money" working so that capital is incentivized to be reinvested, lest it lose all its value over time. this impetus leads capital to relentlessly seek returns, which over time compresses returns to labor in favor of capital. so suppressing labor is certainly a consequence of our positive inflation policy. the intention can be debated, but note that various govermental units tolerated prejudiced efforts like mccarthyism and redlining too.
- dnautics 7y agoI think the intent is to 'keep employment numbers up at any cost'. But that there is a (predictable, and evidenced) unintended consequence to the prescribed method of attaining that objective is an indictment of the class-blindness of the liberal economic polity, and, secondarily, the brokenness of modern 'science' and 'scientistic' pursuits. (not saying the right is much better on that front)
- clairity 7y agoi'm sympathetic to the original indictment that capital holders (like many hbs grads) realized, and then moved to solidify, this tilting of the board in their favor by supporting inflationary policy. i'm not sure that the liberal economic polity is a distinct class from those same capital holders (but i generally disfavor left-right political framing anyways).
- gumby 7y ago> It appears to me that the natural next step is to make the minimum wage grow with inflation. I feel that way too, but remember that indexing wages to inflation made the stagflation of the 70s significantly worse (I don't believe it was the cause, though it is often blamed). That doesn't mean it's not a good idea, in particular for the minimum wage, but some further thought is required.