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> If you make it illegal to provide bad jobs, those jobs will not be substituted one-for-one for good jobs. That's not how an economy works. I think this betra

> If you make it illegal to provide bad jobs, those jobs will not be substituted one-for-one for good jobs. That's not how an economy works. I think this betrays a fundamental misunderstanding of how markets work. If you are a smart business, you don't charge what's "fair", you don't start by saying "I'm going to pay $X to my workers, so let's see how many I can hire with that money." Those are bad ways to run a business. You hire the number of workers you need to run your business at the price the market will bear. This is something that gets drilled into you if you take any entrepreneurship classes: things cost what the market will bear, there is no concept of "fairness" that entrepreneurs should be thinking about. You pay as little as you can to make something, and you charge as much as you can for it, and those are largely independent variables from each other. The idea that Amazon is going to stop hiring workers if they get more pee breaks... that's just not how markets work. If Amazon could afford to let those workers go, it would have done it already. If it doesn't need those workers and it's hiring them anyway, then it's just a badly managed company. Similarly, if you get rid of labor laws and reduce the minimum wage for Amazon's workers, it's not going to hire twice as many people just because it has the money. It'll increase its profit margins, because it's a business being run by smart people who understand how supply/demand works. You're talking about the market like supply and demand form a constant ratio with each other. They don't. It's not just wrong because reality is more complicated and in practice the simplistic models don't always bare out (although reality is more complicated and these simplistic models rarely capture how everything will work out), it's also wrong because it's fundamentally bad market theory on a simple level. Nobody starts a business deciding that they're going to pay a constant amount of money that gets divided equally among all of their workers. At least, they don't think that way if they want to stay in business for very long.

chordalkeyboard 6y ago
> Similarly, if you get rid of labor laws and reduce the minimum wage for Amazon's workers, it's not going to hire twice as many people just because it has the money. It'll increase its profit margins, because it's a business being run by smart people who understand how supply/demand works. No, they will lower prices and keep margins constant. This prevents competitors from moving in. Similarly, increased benefits from collective bargaining will result in higher prices for amazon goods and services, and more automation.
- danShumway 6y ago
  > No, they will lower prices and keep margins constant. This prevents competitors from moving in. I'm not sure what to say about this other than, no, they won't. If you're a publicly traded company, your investors want profit margins to go up, not stay the same. Unless you can convince them otherwise because you're growing -- but even then, they still want your profit margins to eventually rise. If you go into a business thinking "I want to make $X, and I'll lower my prices until I hit that target", then you're approaching your business the wrong way. Even in cases where companies are trying to cement a monopoly or drive competitors out of business, they still don't make their pricing decisions based on the cost of material/labor, they make their pricing decisions based on what prices will drive competitors out of business. Companies like Uber famously lose money on many of their services because they're trying to cement monopoly statuses for those industries. They get VC money and they price based on what they think they need to price. Their decisions are based on what the market looks like, and they're willing to have negative profits in order to hit the prices that they think are necessary. In both cases, no competent business owner is thinking "I only want to hit $X profits this year, and anything over that is going to the consumers as a gift so that they'll like me." > Similarly, increased benefits from collective bargaining will result in higher prices for amazon goods and services See above, that's not how markets work. You don't charge what a product costs to make, you charge what the market will bear. Literally the first thing you should learn in an economics class. Products cost what people will pay for them. This is (arguably) the entire cornerstone of free market Capitalism -- the idea that the value of a set of inputs into a business is not necessarily the same as the value of its outputs. One of the big points of Capitalism is that products get priced based on what people are willing to pay, not based on what they cost to produce or based on some kind of predetermined formula. If you have to pay your workers more, tough luck. Under Capitalism, your products are still only worth what the market is offering. > and more automation As opposed to right now, where Amazon isn't trying to automate any part of its warehousing or delivery process? And in any case, automation is good. We want to eliminate bad jobs. And even among automation-critics who worry about lost jobs and the cost of retraining, their goal in opposing automation is not to make those jobs periodically worse and worse to try and keep pace with the price of machines.
  - 6y ago
CryptoPunk 6y ago
>>The idea that Amazon is going to stop hiring workers if they get more pee breaks... that's just not how markets work. If Amazon could afford to let those workers go, it would have done it already. They will hire fewer workers.. there will be fewer profitable business ventures when the cost of one of the inputs to production increases. In some case, it's true that higher wages will reduce profits, instead of reducing the number of jobs available, but that is not a good thing. High profit margins encourage greater investment. Take N95 masks for instance. If there is a shortage, any one producing them will raise prices and earn a huge profit. Now let's say a progressive politician is elected and decides that those profits should be reallocated to the workers producing the N95 masks, so imposes an industry-specific minimum wage for N95 mask creators. Now profit margins decline for producing N95 mask makers, and N95 mask maker employees earn more. What's lost is the massive influx of investment capital that high profit margins would otherwise have elicited, that would have raised N95 mask supply, which would have made the masks more affordable and plentiful. Price controls don't work to increase net welfare. They reduce social welfare for reasons Economics explains in depth. Prices are a collectively generated signal produced from a complex network of interlocking exchanges that are based on a vast array of localized calculations. They are the product of a super collective intelligence that tells us where economic resources should be allocated. >>It's not just wrong because reality is more complicated and in practice the simplistic models don't always bare out Basic supply and demand theory tells us that the minimum wage, to the extent that it has an effect, harms wage growth. In the absence of the ability to conduct controlled experiments to prove definitively its effect one way or another, we should opt to trust basic economy theory. There are a bunch of outlier situations in which artificial price bounds might theoretically not create economic deadweight losses, but it's nowhere as simple as "the economy doesn't conform to a simplistic model therefore a price floor is good". It's entirely possible for price controls to still create losses while the market is not perfectly competitive.
- danShumway 6y ago
  > They will hire fewer workers.. Why isn't Amazon hiring fewer workers right now? Is the board wasting money on workers that it doesn't need? If Amazon could hit the shipping volumes it needs to hit with 50% of the current workforce, then it would be hiring ~50% of the current workforce -- if that's not the case, then somebody in the company that's making hiring decisions needs to be fired. > Price controls don't work to increase net welfare. A) no one is talking about price controls on final products, they're talking about price increases on one of the inputs. B) on the subject of wages and worker prices, minimum wage increases have been shown on multiple occasions to increase net welfare. We can debate the theory, but we can also just look at reality and say, "we've tried this before, and when handled correctly, it works." > Prices are a collectively generated signal produced from a complex network of interlocking exchanges that are based on a vast array of localized calculations. I would be on board with your argument if the original comment starting this thread didn't boil down to "costs go up, prices go up". You're not talking about a complex signal at that point, you're talking about basic economic principles, and basic economic principles is that in Capitalism, price is what people will pay, not what a product costs to produce. Even your N95 example shows this point. Why did prices go up for N95 masks? Not primarily because of costs of production, primarily because demand changed. The basic principle economic principle is demand, not costs of production. If you want to step away from those basic principles and talk about the complicated realities of what people will invest, and how safe they feel, and the size of the payout influencing investment enthusiasm, and so on -- then fine, that's reasonable, but the complicated reality is also that economic experts have looked at minimum wage increases, weighed up all of the complicated inputs that go into final product prices, and regularly concluded in multiple studies that minimum wages don't consistently increase prices or decrease market investment. > It's entirely possible for price controls to still create losses while the market is not perfectly competitive. Possible, but definitely not guaranteed. > but it's nowhere as simple as "the economy doesn't conform to a simplistic model therefore a price floor is good". Agreed, but "the economy doesn't conform to a simplistic model therefore a price floor is good" is much closer to reality than saying "the economy does conform to simplistic models, therefore a price floor is always bad." You're arguing that the simplistic model isn't applicable, in a thread that was started with you arguing that the simple model was that price and material/wage costs would always move in the same direction. That's just not true, it's both an oversimplification and just bad economic theory.

chordalkeyboard 6y ago

> Similarly, if you get rid of labor laws and reduce the minimum wage for Amazon's workers, it's not going to hire twice as many people just because it has the money. It'll increase its profit margins, because it's a business being run by smart people who understand how supply/demand works. No, they will lower prices and keep margins constant. This prevents competitors from moving in. Similarly, increased benefits from collective bargaining will result in higher prices for amazon goods and services, and more automation.

danShumway 6y ago
> No, they will lower prices and keep margins constant. This prevents competitors from moving in. I'm not sure what to say about this other than, no, they won't. If you're a publicly traded company, your investors want profit margins to go up, not stay the same. Unless you can convince them otherwise because you're growing -- but even then, they still want your profit margins to eventually rise. If you go into a business thinking "I want to make $X, and I'll lower my prices until I hit that target", then you're approaching your business the wrong way. Even in cases where companies are trying to cement a monopoly or drive competitors out of business, they still don't make their pricing decisions based on the cost of material/labor, they make their pricing decisions based on what prices will drive competitors out of business. Companies like Uber famously lose money on many of their services because they're trying to cement monopoly statuses for those industries. They get VC money and they price based on what they think they need to price. Their decisions are based on what the market looks like, and they're willing to have negative profits in order to hit the prices that they think are necessary. In both cases, no competent business owner is thinking "I only want to hit $X profits this year, and anything over that is going to the consumers as a gift so that they'll like me." > Similarly, increased benefits from collective bargaining will result in higher prices for amazon goods and services See above, that's not how markets work. You don't charge what a product costs to make, you charge what the market will bear. Literally the first thing you should learn in an economics class. Products cost what people will pay for them. This is (arguably) the entire cornerstone of free market Capitalism -- the idea that the value of a set of inputs into a business is not necessarily the same as the value of its outputs. One of the big points of Capitalism is that products get priced based on what people are willing to pay, not based on what they cost to produce or based on some kind of predetermined formula. If you have to pay your workers more, tough luck. Under Capitalism, your products are still only worth what the market is offering. > and more automation As opposed to right now, where Amazon isn't trying to automate any part of its warehousing or delivery process? And in any case, automation is good. We want to eliminate bad jobs. And even among automation-critics who worry about lost jobs and the cost of retraining, their goal in opposing automation is not to make those jobs periodically worse and worse to try and keep pace with the price of machines.
- 6y ago

CryptoPunk 6y ago

>>The idea that Amazon is going to stop hiring workers if they get more pee breaks... that's just not how markets work. If Amazon could afford to let those workers go, it would have done it already. They will hire fewer workers.. there will be fewer profitable business ventures when the cost of one of the inputs to production increases. In some case, it's true that higher wages will reduce profits, instead of reducing the number of jobs available, but that is not a good thing. High profit margins encourage greater investment. Take N95 masks for instance. If there is a shortage, any one producing them will raise prices and earn a huge profit. Now let's say a progressive politician is elected and decides that those profits should be reallocated to the workers producing the N95 masks, so imposes an industry-specific minimum wage for N95 mask creators. Now profit margins decline for producing N95 mask makers, and N95 mask maker employees earn more. What's lost is the massive influx of investment capital that high profit margins would otherwise have elicited, that would have raised N95 mask supply, which would have made the masks more affordable and plentiful. Price controls don't work to increase net welfare. They reduce social welfare for reasons Economics explains in depth. Prices are a collectively generated signal produced from a complex network of interlocking exchanges that are based on a vast array of localized calculations. They are the product of a super collective intelligence that tells us where economic resources should be allocated. >>It's not just wrong because reality is more complicated and in practice the simplistic models don't always bare out Basic supply and demand theory tells us that the minimum wage, to the extent that it has an effect, harms wage growth. In the absence of the ability to conduct controlled experiments to prove definitively its effect one way or another, we should opt to trust basic economy theory. There are a bunch of outlier situations in which artificial price bounds might theoretically not create economic deadweight losses, but it's nowhere as simple as "the economy doesn't conform to a simplistic model therefore a price floor is good". It's entirely possible for price controls to still create losses while the market is not perfectly competitive.

danShumway 6y ago
> They will hire fewer workers.. Why isn't Amazon hiring fewer workers right now? Is the board wasting money on workers that it doesn't need? If Amazon could hit the shipping volumes it needs to hit with 50% of the current workforce, then it would be hiring ~50% of the current workforce -- if that's not the case, then somebody in the company that's making hiring decisions needs to be fired. > Price controls don't work to increase net welfare. A) no one is talking about price controls on final products, they're talking about price increases on one of the inputs. B) on the subject of wages and worker prices, minimum wage increases have been shown on multiple occasions to increase net welfare. We can debate the theory, but we can also just look at reality and say, "we've tried this before, and when handled correctly, it works." > Prices are a collectively generated signal produced from a complex network of interlocking exchanges that are based on a vast array of localized calculations. I would be on board with your argument if the original comment starting this thread didn't boil down to "costs go up, prices go up". You're not talking about a complex signal at that point, you're talking about basic economic principles, and basic economic principles is that in Capitalism, price is what people will pay, not what a product costs to produce. Even your N95 example shows this point. Why did prices go up for N95 masks? Not primarily because of costs of production, primarily because demand changed. The basic principle economic principle is demand, not costs of production. If you want to step away from those basic principles and talk about the complicated realities of what people will invest, and how safe they feel, and the size of the payout influencing investment enthusiasm, and so on -- then fine, that's reasonable, but the complicated reality is also that economic experts have looked at minimum wage increases, weighed up all of the complicated inputs that go into final product prices, and regularly concluded in multiple studies that minimum wages don't consistently increase prices or decrease market investment. > It's entirely possible for price controls to still create losses while the market is not perfectly competitive. Possible, but definitely not guaranteed. > but it's nowhere as simple as "the economy doesn't conform to a simplistic model therefore a price floor is good". Agreed, but "the economy doesn't conform to a simplistic model therefore a price floor is good" is much closer to reality than saying "the economy does conform to simplistic models, therefore a price floor is always bad." You're arguing that the simplistic model isn't applicable, in a thread that was started with you arguing that the simple model was that price and material/wage costs would always move in the same direction. That's just not true, it's both an oversimplification and just bad economic theory.