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Is there a reason why a $15/hour minimum wage would not function something like a helicopter money drop (http://www.economicshelp.org/blog/5937/economics/helico

Is there a reason why a $15/hour minimum wage would not function something like a helicopter money drop (http://www.economicshelp.org/blog/5937/economics/helicopter-money-drop/ http://www.economicshelp.org/blog/5937/economics/helicopter-...) and be helpful in times of low inflation (e.g., now)?

CyberDildonics 11y ago
So to be clear, you think paying the people who make the least more money is the same as dropping money from a helicopter?
- briandh 11y ago
  If my understanding of the term is correct, NPMaxwell's comparison to a helicopter drop is a poor one. However, not only is it an established term of art, but he/she provided a reference for background. The glibness of your response is entirely unwarranted.
- NPMaxwell 11y ago
  Actually, yes. Like a helicopter drop, a minimum wage increase shifts money from those who would save it to those who have the greatest incentive to spend it quickly. As noted in the earlier comments, what I was missing was that a helicopter drop is done by printing money, rather than shifting it from others. An EITX is closer to a helicopter drop, and I'm starting to see part of why it's a better idea.
federicobond 11y ago
I recommend you read some of the articles that the economist Donald Boudreaux has written on this topic. Most of them are short and well written. http://cafehayek.com/?s=reich http://cafehayek.com/?s=reich
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Symmetry 11y ago
If you do a "helicopter drop" the money is created by the central bank out of thin air which is basically why it tends to increase aggregate demand. There's more money but prices don't adjust instantly so more stuff gets bought. Raising the minimum wage does the opposite. Hiring workers becomes more expensive and 70% of that increase in prices is empirically passed on to consumers in the form of higher prices. So now the money to price ratio goes down and aggregate demand decreases. Your plan was tried in the Great Depression and it backfired spectacularly.
- Eridrus 11y ago
  > 70% of that increase in prices is empirically passed on to consumers in the form of higher prices This depends entirely on the price elasticity of demand.
  - Symmetry 11y ago
    Yes but I don't think we have any reason to expect major changes in that. And if that were to change then I'd expect us to see minimum wage hikes to start causing unemployment.

CyberDildonics 11y ago

So to be clear, you think paying the people who make the least more money is the same as dropping money from a helicopter?

briandh 11y ago
If my understanding of the term is correct, NPMaxwell's comparison to a helicopter drop is a poor one. However, not only is it an established term of art, but he/she provided a reference for background. The glibness of your response is entirely unwarranted.
NPMaxwell 11y ago
Actually, yes. Like a helicopter drop, a minimum wage increase shifts money from those who would save it to those who have the greatest incentive to spend it quickly. As noted in the earlier comments, what I was missing was that a helicopter drop is done by printing money, rather than shifting it from others. An EITX is closer to a helicopter drop, and I'm starting to see part of why it's a better idea.

federicobond 11y ago

I recommend you read some of the articles that the economist Donald Boudreaux has written on this topic. Most of them are short and well written. http://cafehayek.com/?s=reich http://cafehayek.com/?s=reich

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Symmetry 11y ago

If you do a "helicopter drop" the money is created by the central bank out of thin air which is basically why it tends to increase aggregate demand. There's more money but prices don't adjust instantly so more stuff gets bought. Raising the minimum wage does the opposite. Hiring workers becomes more expensive and 70% of that increase in prices is empirically passed on to consumers in the form of higher prices. So now the money to price ratio goes down and aggregate demand decreases. Your plan was tried in the Great Depression and it backfired spectacularly.

Eridrus 11y ago
> 70% of that increase in prices is empirically passed on to consumers in the form of higher prices This depends entirely on the price elasticity of demand.
- Symmetry 11y ago
  Yes but I don't think we have any reason to expect major changes in that. And if that were to change then I'd expect us to see minimum wage hikes to start causing unemployment.