3 ms·

We do get observational evidence, the only problem is it tells us the opposite of what we thought, eg minimum wage evidence contradicts what theory would say.

We do get observational evidence, the only problem is it tells us the opposite of what we thought, eg minimum wage evidence contradicts what theory would say. Somehow this doesn't seem to matter though, we still teach the theory.

imtringued 4y ago
It is actually very easy to build a theory that disproves the idea of minimumg wage affecting employment. If we assume the economy is already in perfect equilibrium then raising the minimum wage will cause inflation but the wages will adjust upwards with the same coefficient vs the minimum wage. Another factor is that if you give money to people who haven't met their basic needs yet is that they will spend their money faster which means it circulates faster which will generate another employment opportunity. This is effectively a scheduling problem akin to starvation in process/thread scheduling in the kernel. If you ignore a specific thread too much then it can block other threads and result in underutilization of resources. The latter tells you that you shouldn't prioritize the needs of the wealthy so that "wealth trickles down".
- jvmfjvfjvf 4y ago
  A $50 minimum wage wouldn't affect unemployment? Why not make it $100?
  - lordnacho 4y ago
    If it works at $100, why not? As long as you're clear about what tradeoffs you're making, and as a society we still want no employment effect, if it works at $100, what's the problem? You only have something to discuss if it's clear that unemployment will rise, and even so you need to decide how much is tolerable in exchange for whatever you get out of raising the minimum wage.
    - sokoloff 4y ago
      Do you have even the slightest doubt that unemployment would rise significantly if the minimum wage were suddenly raised to $100/hr? I am certain that it would.
      - lordnacho 4y ago
        My guess is it would. But the point isn't whether it should be $100, my point is we should use evidence to tell us what we're trading for what. If it's $100 minimum and great depression, I want to know that. If it's $100 and unemployment grows by 2%, I want to know that. If we don't use evidence we choose blindly.

imtringued 4y ago

It is actually very easy to build a theory that disproves the idea of minimumg wage affecting employment. If we assume the economy is already in perfect equilibrium then raising the minimum wage will cause inflation but the wages will adjust upwards with the same coefficient vs the minimum wage. Another factor is that if you give money to people who haven't met their basic needs yet is that they will spend their money faster which means it circulates faster which will generate another employment opportunity. This is effectively a scheduling problem akin to starvation in process/thread scheduling in the kernel. If you ignore a specific thread too much then it can block other threads and result in underutilization of resources. The latter tells you that you shouldn't prioritize the needs of the wealthy so that "wealth trickles down".

jvmfjvfjvf 4y ago
A $50 minimum wage wouldn't affect unemployment? Why not make it $100?
- lordnacho 4y ago
  If it works at $100, why not? As long as you're clear about what tradeoffs you're making, and as a society we still want no employment effect, if it works at $100, what's the problem? You only have something to discuss if it's clear that unemployment will rise, and even so you need to decide how much is tolerable in exchange for whatever you get out of raising the minimum wage.
  - sokoloff 4y ago
    Do you have even the slightest doubt that unemployment would rise significantly if the minimum wage were suddenly raised to $100/hr? I am certain that it would.
    - lordnacho 4y ago
      My guess is it would. But the point isn't whether it should be $100, my point is we should use evidence to tell us what we're trading for what. If it's $100 minimum and great depression, I want to know that. If it's $100 and unemployment grows by 2%, I want to know that. If we don't use evidence we choose blindly.