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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#721

Post by koonsolo »

aidenn0 wrote: post #401
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…

>> 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…

You are correct that prices are not set by value of what one produces.

Prices in the job market are set exactly the same way as any other market: by supply and demand.

Re: What harm do minimum wages do?

#722

Post by dragonwriter »

kojus wrote: post #720
cogman10 wrote: post #455

Earlier quoted context omitted.

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…

Why not simply reducing working hours for everyone? The risk of UBI is that rent-seekers might just engulf this guaranteed income by raising their prices, and then we will rapidly be back to square one. Working 40 hours a week is not a natural law, peasants in the Middle Age worked less hours annually than us today. Reducing work hours would also have a positive environmental effect. Otherwise, I wholly agree with yo…

> Why not simply reducing working hours for everyone?

Because either that reduces total wages for everyone, or it makes more people permanently unemployable by raising the cost floor per unit of labor value.

Also, you can't reduce working hours for everyone, only the currently employed, and in practice reliably only the near-full-time-employed-on-hourly-wages.

> The risk of UBI is that rent-seekers might just engulf this guaranteed income by raising their prices

Not really, since UBI funded by progressive tax increases compresses post-policy incomes rather than raising them uniformly. You'd need ironclad market segmentation that survives income distribution compression to “capture” any groups increase in post-policy income, and if you have that, you can just take all of that groups income anyway, which is a problem that needs addressed independently of whether UBI is adopted.

Re: What harm do minimum wages do?

#723

Post by TheOtherHobbes »

Spooky23 wrote: post #622
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…

In a free market you would be bidding up worker salaries to hire and retain the most efficient workers. Demand would often increase the price of labor and perhaps the output. In almost every sector of the modern American economy, the rules benefit capital over competition. In my area in New York, there were dozens of small bakeries pumping out good bread... today we pay more for shitty frozen stuff baked at the super…

Capitalism pretends to be an efficient competitive utopia of personal opportunity but in reality it's monopolistic, oppressive, hostile to small businesses, and even more hostile to resilience and collective initiative.

It inevitably generates huge concentrations of capital which have immense political, social, and economic leverage, with no effective democratic checks and balances - except patchy application of anti-trust action.

Re: What harm do minimum wages do?

#724

Post by dragonwriter »

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.

> You're assuming whatever the worker produces is sold at cost

It must be, in the same idealized (free, perfectly competitive, no transaction costs) market conditions being discussed.

Re: What harm do minimum wages do?

#725

Post by TheOtherHobbes »

IncRnd wrote: post #712
typ wrote: post #492

Earlier quoted context omitted.

> First of all a rational actor will not intentionally pay a worker the value of their production; you get no profit. The sum of the production of workers is not equal to the production of a business. Otherwise, if a business increases revenues significantly by simply replacing its CEO, does it mean that the CEO contributes to the increased revenue all alone?

The selection of a CEO absolutely contributes to the benefit or detriment of revenue.

But not in a way that scales linearly with CEO pay.

Re: What harm do minimum wages do?

#726

Post by qubex »

TheOtherHobbes wrote: post #723
Spooky23 wrote: post #622

Earlier quoted context omitted.

In a free market you would be bidding up worker salaries to hire and retain the most efficient workers. Demand would often increase the price of labor and perhaps the output. In almost every sector of the modern American economy, the rules benefit capital over competition. In my area in New York, there were dozens of small bakeries pumping out good bread... today we pay more for shitty frozen stuff baked at the super…

Capitalism pretends to be an efficient competitive utopia of personal opportunity but in reality it's monopolistic, oppressive, hostile to small businesses, and even more hostile to resilience and collective initiative. It inevitably generates huge concentrations of capital which have immense political, social, and economic leverage, with no effective democratic checks and balances - except patchy application of anti…

I think it’s time to pull out the ‘splitting’ distinction between “industrial capitalism” and “financial capitalism”. I’m an economist, but in no way enamoured with free markets and laissez-faire attitudes as the default for solving everything. I think Mark Fisher had it right in his Capitalist Realism that Capitalism has totally blinded modern western (and other) societies to the existence of any possible alternative form of organisation. However, the kind of financial capitalism we now live under in most of the West—the kind that generates huge income inequalities, concentrates power in the hands of the financial sector, disproportionately favours incumbents, and corrupts our political systems by means of lobbying by special interest groups—lacks all the oft-cited advantages that Capitalism is supposed to bring in tow in exchange for its shortcomings.

Re: What harm do minimum wages do?

#727

Post by madeofpalk »

bravo22 wrote: post #612
madeofpalk wrote: post #512

Earlier quoted context omitted.

I’m not all that educated on negative tax rate - what’s to prevent companies from just setting wages to obscenely low, knowing the government will just pick up the bill and pay out the difference?

The government doesn't foot the bill. People and businesses do. We pay taxes. Government has no money. The transfer payment is taken from the entire economy through a tax. A slice off the top. If a business has higher profits it would also pay larger portion of that transfer to low income persons. A key feature is indexing the maximum amount i.e. what a person with 0 income would receive to typical cost of living at…

I just think that businesses should pay employees a living wage to do work.

Re: What harm do minimum wages do?

#729

Post by ragnese »

ganafagol wrote: post #679
donw wrote: post #652

Earlier quoted context omitted.

There are a lot of flavors of nihilism, so I'm not sure that having a pessimistic worldview precludes joyfulness. I'd call myself a realist -- and I think there's a lot of overlap with nihilism there, in that I try and see the world "as it is", and not "how I wish it was". The world is a messy, ugly, dark place. It really is, and it's kind of amazing how people go out of their way to pretend that either that darkness…

> The world is a messy, ugly, dark place. [...] > There is a light in our world, though -- it's us, if we choose to be. I can easily argue the opposite. The world itself is beautiful. Just sit at a mountain top or in the forest or on a beach and take in their beauty. Look at stars, galaxies, how they interact, it's absolutely stunning. Or zoom in looking at microbes, cells, molecules, atoms. The world is a gorgeous p…

There's still darkness without people. Sickness, suffering, etc, exist without humans. Hell, even torture exists. Orcas play with their food as they're killing it. I believe cats do as well.

If you can zoom out from that at see it as some grand, beautiful, process, then you have to apply the same filter to all of the evil stuff humans do as well, IMO.

Re: What harm do minimum wages do?

#730

Post by ganafagol »

ragnese wrote: post #729
ganafagol wrote: post #679

Earlier quoted context omitted.

> The world is a messy, ugly, dark place. [...] > There is a light in our world, though -- it's us, if we choose to be. I can easily argue the opposite. The world itself is beautiful. Just sit at a mountain top or in the forest or on a beach and take in their beauty. Look at stars, galaxies, how they interact, it's absolutely stunning. Or zoom in looking at microbes, cells, molecules, atoms. The world is a gorgeous p…

There's still darkness without people. Sickness, suffering, etc, exist without humans. Hell, even torture exists. Orcas play with their food as they're killing it. I believe cats do as well. If you can zoom out from that at see it as some grand, beautiful, process, then you have to apply the same filter to all of the evil stuff humans do as well, IMO.

Fair point. Animals eat each other, and that process is pretty cruel at times. Do animals have a mental concept of cruelty though? Of guilt? I suspect most don't. That does not make their actions less cruel, but it reduces the blame perhaps.

We humans know exactly what's going on. Wr do it anyway. We keep animals in horrible conditions. And we know it. Yet we keep doing it. We treat each other horribly. We have really terrible weapons. We use them anyway. It's cruel and we know it. We spread hate and participate in racism and dehumanisation. Many of us thrive in either participating or at least watching conflict. We celebrate movies depicting humans mistreating or killing each other. We know it and we like it. Oh but it's only against the bad guys!!!1

I think it's not a fair comparison.

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