What harm do minimum wages do? • Hacker News Board

Re: What harm do minimum wages do?

#501

Post by sudosysgen » Wed, Aug 19, 2020, 11:37 PM UTC

colinmhayes wrote: post #200

Fargren wrote: post #72

Earlier quoted context omitted.

If I dig one hole a day with my hands and ten holes a day with a shovel, I still dug the nine extra holes even if I don't own the shovel.

Not really sure what you're saying as this is an example of my point. The growth was caused mostly by the shovel, and partly by the worker learning to use the shovel. Wages have grown to show that.

The construction of the shovel itself is ultimately due to past labour and land, as well as by the invention of the shovel (labour). Capital is always ultimately a product of labour and land. In accordance, rises in productivity in the absence of discovery of new land is because of unrealized past labour. Therefore, this newfound productivity is to be attributed almost entirely to labour.

This is why Adam Smith, for example, cites labour as the primary factor of production, followed by land with capital as the last. In modern parlance you might hear that said as "human capital is the most important", but human capital really is a politically correct way of saying "labour potential".

Re: What harm do minimum wages do?

#502

Post by bravo22 » Wed, Aug 19, 2020, 11:38 PM UTC

gjulianm wrote: post #4

> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > Just as a monopolist can set prices higher than would be the case in a competitive market, a monopsonist can set prices artificially lower. A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiatio…

Which is why instead of mispricing labour through minimum wage you can have a negative income tax which makes up the difference. The nice thing is that it will apply to everyone -- working or not, sick or not, on mat leave or not, can't work because of covid or not. You top-up people's income and that's paid for through taxes.

You take the benefit of efficiency and productivity from the entire economy and return it to the people at the bottom.

You don't have a right to a job, or a particular income. You have a right for society to not leave you dangling when in need. Your ability to get a job or have more income should be determined by market forces.

Put a negative income tax in place and ensure a minimum level of funds for every citizen and see how quickly Amazon's treatment of its warehouse workers improve. Far more than any union could provide.

Re: What harm do minimum wages do?

#503

Post by sudosysgen » Wed, Aug 19, 2020, 11:38 PM UTC

AnimalMuppet wrote: post #108

Fargren wrote: post #72

Earlier quoted context omitted.

If I dig one hole a day with my hands and ten holes a day with a shovel, I still dug the nine extra holes even if I don't own the shovel.

I believe that colinmhayes' point is that you dug the extra nine holes because there was a shovel, not because you got better at digging holes with your hands. The productivity gain was because a shovel was being used. It didn't matter who owned the shovel, it mattered that you were digging with one. But that's not completely true, because a person who only knows how to dig with their hands still only digs one hole a…

Well yeah. But the thing is, someone had to make the shovel to begin with. The gains in productivity of the shovel are just unrealized value of the original labour (and materials).

Re: What harm do minimum wages do?

#504

Post by bravo22 » Wed, Aug 19, 2020, 11:40 PM UTC

throwaway894345 wrote: post #85

gjulianm wrote: post #4

> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > Just as a monopolist can set prices higher than would be the case in a competitive market, a monopsonist can set prices artificially lower. A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiatio…

> A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiation, they have more information and, most important of all, they can deal with a job opening not being covered most of the time. Workers can't usually live too much without finding a job. I'm generally in favor of stronger job protections and so on, but I'm not aware of any definition of "free…

That actually does not satisfy free market. Free market is freedom from coercion. When you have monopolies you're not free to participate in the labour market.

Freidman and Hayek both emphasize this point in their works.

Re: What harm do minimum wages do?

#505

Post by shirakawasuna » Wed, Aug 19, 2020, 11:41 PM UTC

gjulianm wrote: post #4

> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > Just as a monopolist can set prices higher than would be the case in a competitive market, a monopsonist can set prices artificially lower. A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiatio…

If workers were paid the value of what they produce, there would be no profit, no payoff for investors / owners. Classic Economist, laundering in free market sociopathy through bad economics.

If you're ever interested in taking a more removed perspective view of that particular magazine, take a look at their old articles. 1850s-60s (e.g., slavery). Late 1800s and early 1900s (labor rights). Nazi-related stuff.

Re: What harm do minimum wages do?

#506

Post by Retric » Wed, Aug 19, 2020, 11:43 PM UTC

bravo22 wrote: post #502

gjulianm wrote: post #4

> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > Just as a monopolist can set prices higher than would be the case in a competitive market, a monopsonist can set prices artificially lower. A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiatio…

Which is why instead of mispricing labour through minimum wage you can have a negative income tax which makes up the difference. The nice thing is that it will apply to everyone -- working or not, sick or not, on mat leave or not, can't work because of covid or not. You top-up people's income and that's paid for through taxes. You take the benefit of efficiency and productivity from the entire economy and return it t…

Having a negative income tax is reasonable without removing minimum wage as they deal with different things.

Removing the minimum wage is effectively a subsidy for companies and industry’s that would then pay below the old minimum wage. Considering how often people in the US make below minimum wage even when it’s illegal, it seems like a bad idea. Instead even higher minimum wages can be used to drive automation.

Re: What harm do minimum wages do?

#507

Post by gjulianm » Wed, Aug 19, 2020, 11:46 PM UTC

tastyfreeze wrote: post #480

gjulianm wrote: post #426

Earlier quoted context omitted.

> In this discussion a country's population is irrelevant. It's not. You'll see that a lot of the top companies in Singapore are operating at global level while headquartered in Singapore. It's a little bit like looking only at the economy of the main US cities. > There is no requirement that everybody succeed at the same level. The measure of a country's success is improvement of society over time. Inequality is a p…

There is always inequality in all aspects of life. We all do not perform on the same level. Looking at a specific point in time and comparing inequality is a poor measure of society. The only measure that matters is improvement over time. Upon independence, "Singapore faced a small domestic market, and high levels of unemployment and poverty. 70 percent of Singapore's households lived in badly overcrowded conditions,…

> Compared to today, Singapore has about 1000 homeless, 3.16 persons per household, a literacy rate of 97.3%, GDP per capita of $602 billion, an unemployment rate of 4.11% and a median household income of $9,293. The income distribution isn't bad either. From what I could find the cost of living (minus rent) for an individual is $575 a month.

By that same link, the bottom 10% of the population have less average income than your cost of living.

But I read a little bit more, and it looks like that they are indeed tackling the income inequality problem [1]. Which is where country size and GDP per capita comes into play: a richer country has more money to implement inequality-reducing measures, and implementing them for a 5M people country is far easier than for bigger countries.

> The better society is the one where everyone has an opportunity to improve their lot in life by satisfying a need of others.

Well, that's why inequality is important as a metric. If you're born in a poor household, statistically you'll have far less opportunities than if you're born in a better situation. Want everybody to have an opportunity to improve and succeed? Fight poverty.

1: https://www.straitstimes.com/politics/parliament-inequality-...

Re: What harm do minimum wages do?

#508

Post by curryst » Wed, Aug 19, 2020, 11:47 PM UTC

cogman10 wrote: post #455

Ekaros wrote: post #188

Earlier quoted context omitted.

That's not very good argument. As we are where we are now because our productivity has increased insanely since invention of agriculture... If burger flipping robot is more productive than human, we should replace all humans with such robots.

There's a lot of blind faith in "New jobs will appear as old ones are obsoleted". That's certainly has been true, but I don't think it's absolutely always going to be true. Further, what we've seen is that primarily low skill high wage jobs have been replaced with high skill jobs. This is evidenced by the fact that you simply can't make a good living off a high school degree. Based off this https://www.careerprofiles…

> There's only so much productivity we can utilize. What happens when we've saturated? Unemployment.

There's only so much productivity we can utilize _at a given price point_. It's possible wages could fall instead, although there's definitely a floor to that.

That's one of the interesting implications of UBI; it would theoretically make it easier to find free or close to free labor. I still don't think it would be plentiful, but I would guess there will be an uptick in the number of people like amateur astronomers who will sit and watch the sky at night for free.

Re: What harm do minimum wages do?

#509

Post by shirakawasuna » Wed, Aug 19, 2020, 11:48 PM UTC

dpedu wrote: post #488

aidenn0 wrote: post #401

Earlier quoted context omitted.

>> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. This sentence is just wrong. First of all a rational actor will not intentionally pay a worker the value of their production; you get no profit. Textbooks actually say that a worker will be paid no more than the marginal product of labor, and if labor is in short sup…

>> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > This sentence is just wrong. First of all a rational actor will not intentionally pay a worker the value of their production; you get no profit. It's correct. You're assuming whatever the worker produces is sold at cost.

No? If value isn't defined as the price at which the product is selling (could easily be above cost), what is it in basic econ?

1. Worker(s) make a thing.

2. Worker(s) sell a thing.

3. All the above worker(s) (if there's more than one) receive a portion of the proceeds. If it reflects their actual contribution to that thing at its selling price, it's their marginal product of labor, putting aside things like reinvestment and power imbalances. This leaves nothing left over for profits, for owners / investors to take, who did not contribute the labor to production (otherwise, they'd also be workers and we'd call that part of their compensation, not profit).

Re: What harm do minimum wages do?

#510

Post by nojokes » Wed, Aug 19, 2020, 11:48 PM UTC

bravo22 wrote: post #502

gjulianm wrote: post #4

> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > Just as a monopolist can set prices higher than would be the case in a competitive market, a monopsonist can set prices artificially lower. A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiatio…

Which is why instead of mispricing labour through minimum wage you can have a negative income tax which makes up the difference. The nice thing is that it will apply to everyone -- working or not, sick or not, on mat leave or not, can't work because of covid or not. You top-up people's income and that's paid for through taxes. You take the benefit of efficiency and productivity from the entire economy and return it t…

I do not think it would help workers.

What is more likely to play out is that assuming that when currently minimum pay for a hour is $10 and tax 0% then with negative tax X and no minimum the pay would become $10 / (1-X/100). The worker will get the same (hopefully) and the company will pay less.