5 ms·

> raising the minimum wage or some kind of socialist initiative What would be wrong with that anyway?

asperous 13y ago
Money doesn't come from nothing, there are side effects of raising the minimum wage. Besides the fact that a small percentage of US work force are actually paid minimum, most more or less than it.
- wavefunction 13y ago
  We can reduce CEO compensation then. There's your money from something.
  - danielweber 13y ago
    Although CEO pay has lots of problems, that money is coming from shareholders, not employees. Picking WalMart (just because they are such an icon of this), if you zero'd out their CEO pay and distributed it to employees, each employee would see a raise of 20 cents a week.
  - yummyfajitas 13y ago
    CEO pay is generally an insignificant fraction of labor costs. Suppose we split the pay of Walmart's CEO (about $20M) between Walmart's 2M employees. That's $10/year per employee.
    - wavefunction 13y ago
      Sure, if you apply it in such a simplistic manner. Why would you give $10 to the guys making 6 figures as well? Whatever, Walmart encourages its employees to apply for food-stamps and other transfer payments so their economics are already all f'd up.
      - yummyfajitas 13y ago
        How much do you believe the average low skill walmart could receive if we redistributed the CEO's pay? $20/year? $40/year?
    - fnordfnordfnord 13y ago
      That's a specious argument. It's pretty easy to see that CEO pay (the entire pay package, not just salary) is often closely tied to corporate profits, often in ways that incentivise short term gains over longer term strategic planning.
      - yummyfajitas 13y ago
        What's wrong with incentivising short term gains? If anything, CEOs and corporate management in general tend to overvalue long term gains, so financial incentives for short term benefits probably push incentives back closer to optimal.
- fnordfnordfnord 13y ago
  >there are side effects of raising the minimum wage. Yeah, like more people who don't require social assistance, and eventually, more people spending money in local economies. >Besides the fact that a small percentage of US work force are actually paid minimum, most more or less than it. That's only because it just isn't survivable to earn minimum wage, at least not for any reasonable definition of survivable.
  - wnewman 13y ago
    Insignificant price controls don't make much difference, so it's basically a wash. Significant price controls tend to have predictable perverse effects. It seems to be impolite to report them: for some years, every time I read a story about long gas lines somewhere, I go searching for information to verify that yes, it was under a system of gas price controls, and generally I can verify it with enough poking around in search engines. But it seems very uncommon for it to be reported in the news story about gas lines. Because gas lines just happen, like sunspots, you know? If you think modern levels of intervention in the labor market --- not just minimum wage, but mandatory benefits and a host of other things --- have been imposed with such a marvellously deft touch that they shouldn't cause persistent failure of labor markets to clear, it is possible to dream up other reasons that might conceivably explain the observed outcome of historically high long term unemployment. Not everyone finds those explanations convincing, though.
    - fnordfnordfnord 13y ago
      >Insignificant price controls don't make much difference, so it's basically a wash. Significant price controls tend to have predictable perverse effects. It seems to be impolite to report them: for some years, every time I read a story about long gas lines somewhere, I go searching for information to verify that yes, it was under a system of gas price controls, and generally I can verify it with enough poking around in search engines. But it seems very uncommon for it to be reported in the news story about gas lines. Because gas lines just happen, like sunspots, you know? What is this? I don't even... >If you think modern levels of intervention in the labor market --- not just minimum wage, but mandatory benefits and a host of other things --- have been imposed with such a marvellously deft touch I don't. >that they shouldn't cause persistent failure of labor markets to clear, it is possible to dream up other reasons that might conceivably explain the observed outcome of historically high long term unemployment. Not everyone finds those explanations convincing, though. Whether you like the fact that our economy is putzed around by central planners is a different topic. I'll approach this with the foregone conclusion that it's what we're stuck with, and that we have to find a way to live with it. Actually, central planning has little to do with the obvious necessity that the people who live in and around our communities must be able to support themselves, and if they cannot; then that problem will sort itself out either through social programs paid by taxes, charity, the population's mobility, or as a last resort theft and violence.
- enraged_camel 13y ago
  >>Money doesn't come from nothing, there are side effects of raising the minimum wage. These are simply a front, though. Most people object to minimum wage due to purely ideological reasons.
  - asperous 13y ago
    Everyone who comments on this thread needs to read this: * Raising the minimum wage doesn't shift the distribution of wealth (companies lay off workers, companies no longer have profit margin close down, companies shift highering demographic). * Raising corporate Tax doesn't shift the distribution of wealth (the increase is absorbed by the consumer) * Income Tax on rich & (with exceptions on groceries/utilties/rent to make it non-regressive) sales Taxes & Social Programs do change the distribution of wealth, (danger being lower rewards = less risk taken, but this is debatable). If I was a liberal, I would be pushing strongly for social programs & taxes instead of minimum wage. The economic benefit of having more workers actually working (because they are allowed to work for $4 an hour) is HUGE. and with social programs their life would be like you wanted it.
    - asperous 13y ago
      for the argument against (lower rewards = less risk taken by ceos/entrepreneur) that says "Bill Gates's decendants have never worked a day in their life and they are rich. (Actually Bill Gates is a good parent & powerful philanthropist, just replace that with some other rich dude) Anyway for that reason we have a variable estate tax up to %40. Yes, there are probably loopholes to this and they should be closed.
runjake 13y ago
Raising the minimum wage allows for a (very) short term benefit, but in the medium and long run, it drives inflation up. The minimum wage and inflation are effectively proportional.
- smacktoward 13y ago
  Economists call what you're describing "cost-push inflation." And these days most believe it's a myth. But surely that's just an artifact of liberal Krugmanite thinking infecting our institutions of higher learning! Let's see what the reliably conservative Cato Institute thinks: http://www.cato.org/pubs/pas/pa106.html#4 http://www.cato.org/pubs/pas/pa106.html#4 There are several problems with the notion of cost-push inflation. The primary error in this analysis is that it confuses a shift in the structure of relative prices with a general rise in the level of prices. If the labor costs of businesses are increased and they succeed in passing on the costs to consumers in the form of higher prices, they will have managed to change the structure of relative prices at the expense of businesses that are unable to raise their prices because of more-intense competition. This is quite distinct from a general increase in the level of prices, which would be possible only if the real supply of money was increased. Many firms, however, may be unable to pass on their increased costs to consumers. It is consumers who ultimately determine the price of any good on the market, and they may decide that a business's product is not worth a higher price. Producers cannot force consumers to buy what they produce, and businesses cannot always arbitrarily increase the prices of their products simply because the government has arbitrarily increased their costs. Oh. Well, how about free market champion Milton Friedman? What did he think? http://www.investopedia.com/articles/economics/08/1970-stagflation.asp http://www.investopedia.com/articles/economics/08/1970-stagf... Milton Friedman did not believe in cost push inflation. He believed that "inflation is always and everywhere a monetary phenomenon." In other words, he believed prices could not increase without an increase in the money supply. Oh.
- eru 13y ago
  Interesting. In Germany, people usually fret about potential job losses if a general minimum wage would be introduced (they didn't have one last time I checked), not inflation.
- 13y ago

Money doesn't come from nothing, there are side effects of raising the minimum wage. Besides the fact that a small percentage of US work force are actually paid minimum, most more or less than it.

wavefunction 13y ago
We can reduce CEO compensation then. There's your money from something.
- danielweber 13y ago
  Although CEO pay has lots of problems, that money is coming from shareholders, not employees. Picking WalMart (just because they are such an icon of this), if you zero'd out their CEO pay and distributed it to employees, each employee would see a raise of 20 cents a week.
- yummyfajitas 13y ago
  CEO pay is generally an insignificant fraction of labor costs. Suppose we split the pay of Walmart's CEO (about $20M) between Walmart's 2M employees. That's $10/year per employee.
  - wavefunction 13y ago
    Sure, if you apply it in such a simplistic manner. Why would you give $10 to the guys making 6 figures as well? Whatever, Walmart encourages its employees to apply for food-stamps and other transfer payments so their economics are already all f'd up.
    - yummyfajitas 13y ago
      How much do you believe the average low skill walmart could receive if we redistributed the CEO's pay? $20/year? $40/year?
  - fnordfnordfnord 13y ago
    That's a specious argument. It's pretty easy to see that CEO pay (the entire pay package, not just salary) is often closely tied to corporate profits, often in ways that incentivise short term gains over longer term strategic planning.
    - yummyfajitas 13y ago
      What's wrong with incentivising short term gains? If anything, CEOs and corporate management in general tend to overvalue long term gains, so financial incentives for short term benefits probably push incentives back closer to optimal.
fnordfnordfnord 13y ago
>there are side effects of raising the minimum wage. Yeah, like more people who don't require social assistance, and eventually, more people spending money in local economies. >Besides the fact that a small percentage of US work force are actually paid minimum, most more or less than it. That's only because it just isn't survivable to earn minimum wage, at least not for any reasonable definition of survivable.
- wnewman 13y ago
  Insignificant price controls don't make much difference, so it's basically a wash. Significant price controls tend to have predictable perverse effects. It seems to be impolite to report them: for some years, every time I read a story about long gas lines somewhere, I go searching for information to verify that yes, it was under a system of gas price controls, and generally I can verify it with enough poking around in search engines. But it seems very uncommon for it to be reported in the news story about gas lines. Because gas lines just happen, like sunspots, you know? If you think modern levels of intervention in the labor market --- not just minimum wage, but mandatory benefits and a host of other things --- have been imposed with such a marvellously deft touch that they shouldn't cause persistent failure of labor markets to clear, it is possible to dream up other reasons that might conceivably explain the observed outcome of historically high long term unemployment. Not everyone finds those explanations convincing, though.
  - fnordfnordfnord 13y ago
    >Insignificant price controls don't make much difference, so it's basically a wash. Significant price controls tend to have predictable perverse effects. It seems to be impolite to report them: for some years, every time I read a story about long gas lines somewhere, I go searching for information to verify that yes, it was under a system of gas price controls, and generally I can verify it with enough poking around in search engines. But it seems very uncommon for it to be reported in the news story about gas lines. Because gas lines just happen, like sunspots, you know? What is this? I don't even... >If you think modern levels of intervention in the labor market --- not just minimum wage, but mandatory benefits and a host of other things --- have been imposed with such a marvellously deft touch I don't. >that they shouldn't cause persistent failure of labor markets to clear, it is possible to dream up other reasons that might conceivably explain the observed outcome of historically high long term unemployment. Not everyone finds those explanations convincing, though. Whether you like the fact that our economy is putzed around by central planners is a different topic. I'll approach this with the foregone conclusion that it's what we're stuck with, and that we have to find a way to live with it. Actually, central planning has little to do with the obvious necessity that the people who live in and around our communities must be able to support themselves, and if they cannot; then that problem will sort itself out either through social programs paid by taxes, charity, the population's mobility, or as a last resort theft and violence.
enraged_camel 13y ago
>>Money doesn't come from nothing, there are side effects of raising the minimum wage. These are simply a front, though. Most people object to minimum wage due to purely ideological reasons.
- asperous 13y ago
  Everyone who comments on this thread needs to read this: * Raising the minimum wage doesn't shift the distribution of wealth (companies lay off workers, companies no longer have profit margin close down, companies shift highering demographic). * Raising corporate Tax doesn't shift the distribution of wealth (the increase is absorbed by the consumer) * Income Tax on rich & (with exceptions on groceries/utilties/rent to make it non-regressive) sales Taxes & Social Programs do change the distribution of wealth, (danger being lower rewards = less risk taken, but this is debatable). If I was a liberal, I would be pushing strongly for social programs & taxes instead of minimum wage. The economic benefit of having more workers actually working (because they are allowed to work for $4 an hour) is HUGE. and with social programs their life would be like you wanted it.
  - asperous 13y ago
    for the argument against (lower rewards = less risk taken by ceos/entrepreneur) that says "Bill Gates's decendants have never worked a day in their life and they are rich. (Actually Bill Gates is a good parent & powerful philanthropist, just replace that with some other rich dude) Anyway for that reason we have a variable estate tax up to %40. Yes, there are probably loopholes to this and they should be closed.

runjake 13y ago

Raising the minimum wage allows for a (very) short term benefit, but in the medium and long run, it drives inflation up. The minimum wage and inflation are effectively proportional.

smacktoward 13y ago
Economists call what you're describing "cost-push inflation." And these days most believe it's a myth. But surely that's just an artifact of liberal Krugmanite thinking infecting our institutions of higher learning! Let's see what the reliably conservative Cato Institute thinks: http://www.cato.org/pubs/pas/pa106.html#4 http://www.cato.org/pubs/pas/pa106.html#4 There are several problems with the notion of cost-push inflation. The primary error in this analysis is that it confuses a shift in the structure of relative prices with a general rise in the level of prices. If the labor costs of businesses are increased and they succeed in passing on the costs to consumers in the form of higher prices, they will have managed to change the structure of relative prices at the expense of businesses that are unable to raise their prices because of more-intense competition. This is quite distinct from a general increase in the level of prices, which would be possible only if the real supply of money was increased. Many firms, however, may be unable to pass on their increased costs to consumers. It is consumers who ultimately determine the price of any good on the market, and they may decide that a business's product is not worth a higher price. Producers cannot force consumers to buy what they produce, and businesses cannot always arbitrarily increase the prices of their products simply because the government has arbitrarily increased their costs. Oh. Well, how about free market champion Milton Friedman? What did he think? http://www.investopedia.com/articles/economics/08/1970-stagflation.asp http://www.investopedia.com/articles/economics/08/1970-stagf... Milton Friedman did not believe in cost push inflation. He believed that "inflation is always and everywhere a monetary phenomenon." In other words, he believed prices could not increase without an increase in the money supply. Oh.
eru 13y ago
Interesting. In Germany, people usually fret about potential job losses if a general minimum wage would be introduced (they didn't have one last time I checked), not inflation.
13y ago