Puerto Rico files for biggest ever U.S. local government bankruptcy

Post by zeteo » Wed, May 03, 2017, 10:36 PM UTC

Shivetya wrote: post #151

zeteo wrote: post #80

Earlier quoted context omitted.

Minimum wage only causes unemployment if the labor market is competitive. This is not currently the case in the US as a few big companies (Walmart, McDonald's) have disproportionate market power, and most economic sectors are becoming even more concentrated. Under such oligopsony conditions, increases in minimum wage will generally come out of profits (which are at historically high levels of the GDP [1]). Since wage…

but they don't. studies have shown that increases in minimum wage laws tend to benefit those who are in not poor families and a 10% increase in minimum wage can cause prices in the local area to increase four percent. throw in that even as recently as 2011 President Obama had to sign into law a bill postponing minimum wage laws and increases in America Samoa because it was literally destroying their economy after bei…

Post by ue_ » Wed, May 03, 2017, 10:38 PM UTC

dragonwriter wrote: post #160

ue_ wrote: post #114

Earlier quoted context omitted.

>If they can't produce enough value to justify minimum wages There are alternative views on this. Marx's theory for example says that workers are not paid according to the value they create, or what their labour creates, rather they are paid at the rate which is required to sustain them. The commodity which the worker produces and sells is termed 'labour power', requiring among other things food, enough to support a…

> There are alternative views on this. Since in the post you were responding to, I was challenging the premise you quoted, I think that I am quite aware that there are alternative views to it.

Post by lf275 » Wed, May 03, 2017, 10:39 PM UTC

vkou wrote: post #162

lf275 wrote: post #123

Earlier quoted context omitted.

It's not an ethical failure because most of the participants understand that it is high risk/reward. That is why most start-up firms offer equity to their employees, and it is almost impossible for a new startup to borrow debt from banks (unless its personally guaranteed, or extremely expensive) before it has gained traction with its business model. On the other hand, governments are perceived to be reliable borrower…

> this could aggravate the financial distress of many high indebted public entities that are already struggling to pay the bills. Governments don't make payments at adjustable-interest rates. If sovereign borrowing rates rise, because the financial markets decide that sovereigns have a higher rate of default then they thought before, this doesn't affect outstanding debt - only the ability to get more.

Post by kirse » Wed, May 03, 2017, 10:43 PM UTC

Post by enraged_camel » Wed, May 03, 2017, 10:46 PM UTC

ryandrake wrote: post #108

savanaly wrote: post #23

Earlier quoted context omitted.

That's true in any individual case. But if we make it our social norm that bankruptcy is nothing to be ashamed of and to be taken lightly, won't it change the equilibrium for future generations of lenders and borrowers such that an inefficiently low amount of lending goes on? If everyone has the expectation that the lenders and borrowers will try their best to live up to the contract they made in good faith, wouldn't…

> But if we make it our social norm that bankruptcy is nothing to be ashamed of and to be taken lightly I don't know about "taken lightly" but bankruptcy and defaulting on a debt should not be something to be "ashamed" of, for an individual, a company, or a government. Default is an option specifically written into every debt contract out there. There should be no more shame in choosing to default as there would be f…