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>>Deregulated markets devolve into might makes right (by size), regulated ones are facing the problem of justification for everything. The existence of regulat

>>Deregulated markets devolve into might makes right (by size), regulated ones are facing the problem of justification for everything. The existence of regulatory restrictions on free market exchange, that distort the free market, will rarely justify further regulatory infringements on contract rights, like the minimum wage. The additional regulatory restriction will generally add to, and not counter-act, the existing market distortions. >>The proper way to evaluate the minimum wage is to compute local Purchasing Power Parity, check how many PPP-dollars are required for life, then set the minimum wage at slightly higher level to compensate for how rarely it is adjusted. These numbers will be a bit different per state in plain US dollars. That in no way determines if a price floor of labor will do harm to public welfare and the economy. >>From capitalist point of view, a business that cannot supply a minimum wage is insufficiently competitive and should fail. That is not a "capitalist point of view". It's just a pure economic fallacy that harms all those who are priced out of work, and capital that is less efficiently utilized as a result. I recommend you read the Wikipedia article on price floors: https://en.wikipedia.org/wiki/Price_floor https://en.wikipedia.org/wiki/Price_floor And then consider how a price floor would affect available labor.

AstralStorm 6y ago
But what effect would lack of price floor have on labor? You guessed it right, serfdom. The ultimate "capitalist" system. Labor is not a typical price elastic product, when it is required to live, its price is relatively inelastic. The capitalist always has a way to drive the cost of labor down, whether it is by overloading workers or not. The workers do not have the means to negotiate hiring price in most instances, so equilibrium analysis does not apply either way. One side has a smooth choice, the other has barely a binary choice, and ofte not even that. Setting a price floor on a price inelastic good will not increase the price because people will not buy/sell less of it. Demand and supply is unchanged. Additionally, employers are not buying people's labor off a market. There's not a "list of all employees where they set the price they want to work for" which would be required for employment to be an actual market. When an employee cannot set the price, market price discovery just does not work by definition. The "job market" is a glib lie. Only the employers compete, but employees do not. And employers do everything to prevent price discovery or make their option the only possible one. Ever heard of work rules to not share your wage with coworkers? Is that compatible with free market?
- CryptoPunk 6y ago
  A lack of a price floor would lead to 1. higher employment and 2. higher rates of wage growth over time, because it means more people are employed contributing to the production of economic resources that can then be invested into new productivity-enhancing capital. >> The capitalist always has a way to drive the cost of labor down, whether it is by overloading workers or not. The workers do not have the means to negotiate hiring price in most instances, so equilibrium analysis does not apply either way. One side has a smooth choice, the other has barely a binary choice, and ofte not even that. This is simply not true. Wages tripled in China over the last 20 years: https://www.ineteconomics.org/perspectives/blog/chinas-wage-growth-how-fast-is-the-gain-and-what-does-it-mean https://www.ineteconomics.org/perspectives/blog/chinas-wage-... Another example is the so-called Gilded Age US. During the late 19th century in the US, there was no income tax, personal or corporate, little-to-no labor regulations, and very weak unions (largely because of the lack of labor regulations granting them extra-contractual rights at the expense of the free market). Wages grew at records in the US during the late 19th century, and this was amidst massive immigration of low-income laborers from Europe, who increase the supply of low-skilled labor and thus apply downward pressure on wages. In neither of these cases was this because of regulations. It was because of investment of surplus output into new capital by profit-motivated individuals, that increased productivity and thereby allowed even larger surplus outputs. All these additional economic resources led to labor being bid up. We see a microcosm of that in Silicon Valley amongst tech workers. So productivity growth, derived from the [ investment -> productivity-boost -> greater investment ] cycle is the primary source of wage growth, and the reason wages are 20X higher today in the US (after adjusting for inflation) than they were 200 years ago. We're nowhere near the limits of what levels of productivity this fundamental market process can attain. Adam Smith: "As every individual, therefore, endeavours as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce maybe of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it."

AstralStorm 6y ago

But what effect would lack of price floor have on labor? You guessed it right, serfdom. The ultimate "capitalist" system. Labor is not a typical price elastic product, when it is required to live, its price is relatively inelastic. The capitalist always has a way to drive the cost of labor down, whether it is by overloading workers or not. The workers do not have the means to negotiate hiring price in most instances, so equilibrium analysis does not apply either way. One side has a smooth choice, the other has barely a binary choice, and ofte not even that. Setting a price floor on a price inelastic good will not increase the price because people will not buy/sell less of it. Demand and supply is unchanged. Additionally, employers are not buying people's labor off a market. There's not a "list of all employees where they set the price they want to work for" which would be required for employment to be an actual market. When an employee cannot set the price, market price discovery just does not work by definition. The "job market" is a glib lie. Only the employers compete, but employees do not. And employers do everything to prevent price discovery or make their option the only possible one. Ever heard of work rules to not share your wage with coworkers? Is that compatible with free market?

CryptoPunk 6y ago
A lack of a price floor would lead to 1. higher employment and 2. higher rates of wage growth over time, because it means more people are employed contributing to the production of economic resources that can then be invested into new productivity-enhancing capital. >> The capitalist always has a way to drive the cost of labor down, whether it is by overloading workers or not. The workers do not have the means to negotiate hiring price in most instances, so equilibrium analysis does not apply either way. One side has a smooth choice, the other has barely a binary choice, and ofte not even that. This is simply not true. Wages tripled in China over the last 20 years: https://www.ineteconomics.org/perspectives/blog/chinas-wage-growth-how-fast-is-the-gain-and-what-does-it-mean https://www.ineteconomics.org/perspectives/blog/chinas-wage-... Another example is the so-called Gilded Age US. During the late 19th century in the US, there was no income tax, personal or corporate, little-to-no labor regulations, and very weak unions (largely because of the lack of labor regulations granting them extra-contractual rights at the expense of the free market). Wages grew at records in the US during the late 19th century, and this was amidst massive immigration of low-income laborers from Europe, who increase the supply of low-skilled labor and thus apply downward pressure on wages. In neither of these cases was this because of regulations. It was because of investment of surplus output into new capital by profit-motivated individuals, that increased productivity and thereby allowed even larger surplus outputs. All these additional economic resources led to labor being bid up. We see a microcosm of that in Silicon Valley amongst tech workers. So productivity growth, derived from the [ investment -> productivity-boost -> greater investment ] cycle is the primary source of wage growth, and the reason wages are 20X higher today in the US (after adjusting for inflation) than they were 200 years ago. We're nowhere near the limits of what levels of productivity this fundamental market process can attain. Adam Smith: "As every individual, therefore, endeavours as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce maybe of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it."