8 ms·

supply and demand have an important quality called elasticity, which is not taken into account in libertarian discourse. unlike a simple commodity market, like

by bakhy 12y ago

supply and demand have an important quality called elasticity, which is not taken into account in libertarian discourse. unlike a simple commodity market, like coffee for example, where a buyer can say "these prices are too high, i'm not going to buy any", a worker cannot simply say, "these wages are too low, i'm not going to work". (unless the government plans to give them all sufficient social security so that they can live comfortably without any work, which is unlikely and probably undesirable.) likewise, when a coffee producer sells a lot due to good prices, he will increase his production, and thus the supply. in the labor market, a company that seeks workers and offers them a great wage will easily find workers, but i find it incredible that it's managers will then think "hey, we had such a great demand for work, let's hire more people just because of that!" it will not increase demand, limiting the effect a single positive agent can have. not every market is exactly the same, and considering the dynamics of various markets will enable you to understand why so many countries have minimum wage, why they subsidize food production and are very interested in influencing the prices of basic commodities, and why they often meddle in real estate. these are things people simply cannot do without, and the stability of governments and regimes depends on somehow ensuring them for as many people as possible.

glenra 12y ago
If workers are so desperate that they can't not work, then putting them out of a job by making it illegal to work for low wages is especially cruel. If you doubt that the minimum wage causes unemployment, how do you explain that the countries in Europe with a national minimum wage law have such consistently higher unemployment rates than the countries in Europe without one?
- bakhy 12y ago
  "If workers are so desperate that they can't not work" - did you really put an "if" there? :D i presume you come from privileged background? "then putting them out of a job by making it illegal to work for low wages is especially cruel." - assuming they will all lose work. which they will not. not even a large minority will. despite the libertarian scaremongering, companies always somehow find the money to keep the workers, and their business running. go figure. as for the other claim, do you have proof of this? in any case, it is ingrateful to draw such conclusions, due to large cultural and economic differences between these countries, and (the part which annoys me personally the most) the ever varying methodology of determining the unemployment rate. P.S. No reference to the market dynamics? I believe it nicely explains where the extra money to cover for the minimum wage hike is going to come from, and why the hike will not result in a proportionate loss in jobs. I will take your silence as a sign of agreement ;)
  - glenra 12y ago
    > did you really put an "if" there? Yes, I put it there because a large fraction of minimum wage workers are teens who live with their parents or are otherwise in a living situation where they aren't the only breadwinner. Hence, they aren't so desperate that they can't not work. Since choice exists (yet again, on the margin), labor employment is a normal good that responds to supply and demand. > do you have proof of this? Quoting from http://www.themoneyillusion.com/?p=24759 http://www.themoneyillusion.com/?p=24759 : Regarding the minimum wage, here is some data for Western Europe: There are nine countries with a minimum wage (Belgium, Netherlands, Britain, Ireland, France, Spain, Portugal, Greece, Luxembourg). Their unemployment rates range from 5.9% in Luxembourg to 27.6% in Greece. The median country is France with 11.1% unemployment. There are nine countries with no minimum wage (Iceland, Norway, Sweden, Finland, Denmark, Austria, Germany, Italy, Switzerland.) Five of the nine have a lower unemployment rate than Luxembourg, the best of the other group. The median country is Iceland, with a 5.5% unemployment rate. The biggest country in Europe is Germany. No minimum wage and 5.2% unemployment. Still want to raise our minimum wage to $10? Germany used to have really high unemployment. Then they did labor reforms to allow more low wage jobs, combined with subsidies for low wage workers. Now they don’t have high unemployment. Still want to raise our minimum wage to $10?" > No reference to the market dynamics? Your "market dynamics" claim doesn't make sense. I'm familiar the concept of elasticity, but it doesn't have any obvious relevance. I suspect you don't have the economic background to paraphrase the argument you're trying to make - could you perhaps point me to a link where somebody else makes it? One problem is that you're making an "argument from personal incredulity" - you just say "I find it incredible that..." rather than giving any actual, you know, evidence or even argument - but the other problem is that the claim you "find incredible" is so weirdly phrased that I can't really tell what it is. AFAIK, the best story labor economists have come up with in defense of their own claims involves theorizing that the employers have excess "monopsony power", but it's not actually a plausible story. Anyway, we're probably well past the point of diminishing returns here.
    - bakhy 12y ago
      "a large fraction of minimum wage workers are teens" -- how large? source? in the end, it does not matter - if they don't need to work, where is the problem? why should we even encourage them to work, to bring down the price of labor of those who already earn the least? the data on minimum wage you quote is incorrect. i happen to know that Austria does have minimum wage, just not a single global one. i was offered work there, and then found out that they have minimum wages defined per occupation (country-wide collective bargain), and there exists a minimum wage for programmers in Austria. i actually found that unnecessary :D i believe in Sweden there is a similar situation, the unions are very politically strong there. as for Germany, when exactly did it have high unemployment, and how high? this is very sketchy. also, a factor for Germany is that a lot of people work part-time, which has reduced reported unemployment here. but i must admit, even if unemployment is slightly greater, i don't care. because i believe that removing minimum wages in those countries that have it, even if it would hire some people, would cause a big drop in the pay and quality of life of many, many more people who would have been employed anyway. this is something that ultimately needs empiric check (Germany is also soon about to introduce minimum wage so there's another opportunity), but you already waved that off - what was it you said, we should not be fooled by lack of evidence to support your claim? :D lastly, yes, i do not have economic background so i cannot phrase things in expert terms, but i would appreciate hearing some reason why it does not make sense. the point is, since demand is always equally present, and the supply is limited and independent of the demand (that is what i found incredible in the comment above - a company that offers great pay will easily find employees, but it will not choose to hire more simply because a lot of people applied, which is specific for labor markets), then the price of low-educated labor simply goes down until it hits some bottom, i.e. it becomes too low to earn a living, or it becomes comparable to social security payments. is it really so hard to grasp? or are you simply trying to discredit me and avoid the whole argument?

by bakhy 12y ago

glenra 12y ago

If workers are so desperate that they can't not work, then putting them out of a job by making it illegal to work for low wages is especially cruel. If you doubt that the minimum wage causes unemployment, how do you explain that the countries in Europe with a national minimum wage law have such consistently higher unemployment rates than the countries in Europe without one?

bakhy 12y ago
"If workers are so desperate that they can't not work" - did you really put an "if" there? :D i presume you come from privileged background? "then putting them out of a job by making it illegal to work for low wages is especially cruel." - assuming they will all lose work. which they will not. not even a large minority will. despite the libertarian scaremongering, companies always somehow find the money to keep the workers, and their business running. go figure. as for the other claim, do you have proof of this? in any case, it is ingrateful to draw such conclusions, due to large cultural and economic differences between these countries, and (the part which annoys me personally the most) the ever varying methodology of determining the unemployment rate. P.S. No reference to the market dynamics? I believe it nicely explains where the extra money to cover for the minimum wage hike is going to come from, and why the hike will not result in a proportionate loss in jobs. I will take your silence as a sign of agreement ;)
- glenra 12y ago
  > did you really put an "if" there? Yes, I put it there because a large fraction of minimum wage workers are teens who live with their parents or are otherwise in a living situation where they aren't the only breadwinner. Hence, they aren't so desperate that they can't not work. Since choice exists (yet again, on the margin), labor employment is a normal good that responds to supply and demand. > do you have proof of this? Quoting from http://www.themoneyillusion.com/?p=24759 http://www.themoneyillusion.com/?p=24759 : Regarding the minimum wage, here is some data for Western Europe: There are nine countries with a minimum wage (Belgium, Netherlands, Britain, Ireland, France, Spain, Portugal, Greece, Luxembourg). Their unemployment rates range from 5.9% in Luxembourg to 27.6% in Greece. The median country is France with 11.1% unemployment. There are nine countries with no minimum wage (Iceland, Norway, Sweden, Finland, Denmark, Austria, Germany, Italy, Switzerland.) Five of the nine have a lower unemployment rate than Luxembourg, the best of the other group. The median country is Iceland, with a 5.5% unemployment rate. The biggest country in Europe is Germany. No minimum wage and 5.2% unemployment. Still want to raise our minimum wage to $10? Germany used to have really high unemployment. Then they did labor reforms to allow more low wage jobs, combined with subsidies for low wage workers. Now they don’t have high unemployment. Still want to raise our minimum wage to $10?" > No reference to the market dynamics? Your "market dynamics" claim doesn't make sense. I'm familiar the concept of elasticity, but it doesn't have any obvious relevance. I suspect you don't have the economic background to paraphrase the argument you're trying to make - could you perhaps point me to a link where somebody else makes it? One problem is that you're making an "argument from personal incredulity" - you just say "I find it incredible that..." rather than giving any actual, you know, evidence or even argument - but the other problem is that the claim you "find incredible" is so weirdly phrased that I can't really tell what it is. AFAIK, the best story labor economists have come up with in defense of their own claims involves theorizing that the employers have excess "monopsony power", but it's not actually a plausible story. Anyway, we're probably well past the point of diminishing returns here.
  - bakhy 12y ago
    "a large fraction of minimum wage workers are teens" -- how large? source? in the end, it does not matter - if they don't need to work, where is the problem? why should we even encourage them to work, to bring down the price of labor of those who already earn the least? the data on minimum wage you quote is incorrect. i happen to know that Austria does have minimum wage, just not a single global one. i was offered work there, and then found out that they have minimum wages defined per occupation (country-wide collective bargain), and there exists a minimum wage for programmers in Austria. i actually found that unnecessary :D i believe in Sweden there is a similar situation, the unions are very politically strong there. as for Germany, when exactly did it have high unemployment, and how high? this is very sketchy. also, a factor for Germany is that a lot of people work part-time, which has reduced reported unemployment here. but i must admit, even if unemployment is slightly greater, i don't care. because i believe that removing minimum wages in those countries that have it, even if it would hire some people, would cause a big drop in the pay and quality of life of many, many more people who would have been employed anyway. this is something that ultimately needs empiric check (Germany is also soon about to introduce minimum wage so there's another opportunity), but you already waved that off - what was it you said, we should not be fooled by lack of evidence to support your claim? :D lastly, yes, i do not have economic background so i cannot phrase things in expert terms, but i would appreciate hearing some reason why it does not make sense. the point is, since demand is always equally present, and the supply is limited and independent of the demand (that is what i found incredible in the comment above - a company that offers great pay will easily find employees, but it will not choose to hire more simply because a lot of people applied, which is specific for labor markets), then the price of low-educated labor simply goes down until it hits some bottom, i.e. it becomes too low to earn a living, or it becomes comparable to social security payments. is it really so hard to grasp? or are you simply trying to discredit me and avoid the whole argument?