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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#731

Post by zaarn »

prewett wrote: post #638
donw wrote: post #634

Earlier quoted context omitted.

I know boxing is the "Sweet Science", and a quick search seems to indicate that "Gay Science"[1] comes from Nietzsche, and seems to refer to... poetry or song? A better translation from the original German is probably "Joyful Science", though. Not sure if that's where the parent was going, but I learned something new today. [1] https://en.wikipedia.org/wiki/The_Gay_Science

"Gay" originally meant "happy", and while "happy" and "joyful" are different, they are at least reasonably close. Wasn't Nietzsche nihilist, though? Seems like it would be hard to be joyful if your science leads to nihilism.

There is nothing inherently unhappy about nihilism or what Nietzsche wrote about. Personally, going into existentialism/nihilism has felt freeing since I do not feel obligated to follow societies view on what happiness is or how I'm supposed to have fun or that I have to share a common set of morals. TL;DR "The universe certainly doesn't give a shit, so why not have a bit of fun before it's over?"

Re: What harm do minimum wages do?

#732

Post by ganafagol »

donw wrote: post #709
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…

Fair warning: I'm going to get a little poetic here. :) Oh, there certainly is a lot of beauty in the world as well. But it comes at a cost. Every year or so, I try and get in at least one overnight backpacking trip, or at least one day of off-trail hiking. I'd do more, but I live in a country that cranked the "civilization" knob to 11 about a thousand years ago, and hasn't looked back since. You really begin to appr…

Yes, we can be. But most of us are just not.

You raise many good points though.

Re: What harm do minimum wages do?

#733

Post by Discombulator »

CraigJPerry wrote: post #700
Discombulator wrote: post #539

Earlier quoted context omitted.

All disciplines studying complex systems like societies down to something like the human body, simply do not have the luxury of absolute truths like in mathematics or even the ability to run experiments like in physics (often for ethical reasons, e.g., in medicine or economics). But does that mean that it is not worth doing? For these fundamental reasons economics is “hard”, but I argue that it is still worth doing b…

>> still worth doing This is really the point I’m wrestling with. For example, I’m persuaded by Taleb’s criticism of Value At Risk models, VAR. Plenty of people still value the use of VAR although it’s common to concede Taleb’s point that VAR claims to do the impossible - characterise rare events. The justification is simply, well what else would we do? There is sufficiently advanced use of VAR that people are willin…

From my understanding, Taleb criticizes the native use of synthetic quantitative models with strong assumptions like VaR because they give a wrong picture of the real risks. But I don’t think that his point is that risk management is worthless.

Re: What harm do minimum wages do?

#734

Post by xondono »

moth-fuzz wrote: post #336

I’m going to flip this one around and ask: why are businesses entitled to low-cost labor? In other markets, markets of objects, if you don’t have the funds to purchase something you don’t get to have the thing, and if you attempt to coerce the thing into your ownership, we call that robbery, and prosecute it accordingly. So why doesn’t that apply to human labor? Labor is a product, it exists in a market, and there is…

They aren’t, the problem is that the “baseline amount of money a person needs to survive“ is extremely low compared to modern standards, and generally way lower than what minimum wage dictates.

The result depends on how many people can do the job and how productive the job is.

If the job is reasonably productive but anyone can do it, the result is a bidding war between sellers fighting for a job (race to the bottom).

Re: What harm do minimum wages do?

#735

Post by sumtechguy »

CountSessine wrote: post #308
sumtechguy wrote: post #105

Earlier quoted context omitted.

For it to be basically unlimited inflation would mean there is an unlimited amount of cash and capital and capital in the system. That seems on the surface improbable. It strikes more as one of the formulas has gone off the chart and someone is making assumptions.

Why? If prices and wages keep going up in step, why did you need unlimited cash and capital? You just keep raising people’s wages with the increasingly worthless cash you earn in revenues?

Eventually there would be some sort of equilibrium. There can be 'infinite cash' which would be inflationary. But with capital there is a finite amount of it. Most central banks only allow a particular amount of cash into their systems. So the 'printing press' would probably not be true either. But it can if they crank it up. Cash is a short term proxy of capital. Capital is limited as you can not make infinite amount of things. At least that is what I am thinking. There would have to be a ceiling to it. Now if you erode trust in the capital to cash proxy (with massive amounts of inflation/deflation) the equilibrium is met quickly as unemployment would rise as people would not trust cash transactions and bartering would enter the picture again.

This is the downfall of most economic theories people hold. They miss taking it a step or two out and assume all conditions will hold true forever. The market changes. You can eat a bad egg for breakfast and decide you hate eggs forever. Yet the day before eggs would have been an acceptable form of breakfast transaction. Now these theories have a place to play 'what if'. But usually are not that good to follow.

Re: What harm do minimum wages do?

#736

Post by JoeAltmaier »

ccffpphh wrote: post #353
JoeAltmaier wrote: post #91

Earlier quoted context omitted.

...and because workers show up to make it run, and because everybody pays taxes for the roads and electricity, and on and on. We could have a dog-eat-dog society like Mad Max or something. Or we could set simple rules and live a decent life. Its kind of what Democracy is about.

You don't need taxes for roads or electricity. In the same way we don't need taxes for grocery shopping, or education. Workers indeed show up and make things run, but only because they voluntarily chose to agree to a contract where that is their duty. If they don't like the terms of their contract, they can not take it, renegotiate their current one, find a new one, or take on risk and start your own income. You can'…

About the "don't need taxes" thing: That's a laughable fallacy. In this modern world of interrelated dependencies, the days of "somebody will probably build a road just when its needed, Libertarianism could work. Really! Just let random people run the whole society at random, that'd work great"

We have to grow up, and recognize that as our country grew from 10M to 450M people, certain processes and activities have to be streamlined and organized. You don't run the company by letting folks show up for shifts at random and hope for the best. You don't run a country's infrastructure that way either.

Re: What harm do minimum wages do?

#737

Post by jiscariot »

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…

Agreed.

You also get the benefit of not pricing low skilled workers out of the labor market. It is much better for the government to subsidize a person at 40% while they are obtaining skills and building their social network, than subsidizing them at 100% while they are on their couch.

Your point on mispricing labor is often overlooked. It is important that society knows the real value of a specific skill/labor. This is important information that will drive innovation/efficiency as well as giving young people or those going through transitions in employment more guidance in decision making.

Re: What harm do minimum wages do?

#738

Post by CraigJPerry »

Discombulator wrote: post #733
CraigJPerry wrote: post #700

Earlier quoted context omitted.

>> still worth doing This is really the point I’m wrestling with. For example, I’m persuaded by Taleb’s criticism of Value At Risk models, VAR. Plenty of people still value the use of VAR although it’s common to concede Taleb’s point that VAR claims to do the impossible - characterise rare events. The justification is simply, well what else would we do? There is sufficiently advanced use of VAR that people are willin…

From my understanding, Taleb criticizes the native use of synthetic quantitative models with strong assumptions like VaR because they give a wrong picture of the real risks. But I don’t think that his point is that risk management is worthless.

VAR isn't the sum total of risk management strategy. It's just a faulty one that's still heavily relied upon today despite this knowledge.

Re: What harm do minimum wages do?

#739

Post by mcv »

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…

I think we might be able to do without a minimum wage if we had a livable basic income. If people can afford to say no to a job, I think the negotiation balance will be much improved, and the labour market might become a lot more free.

How high a basic income would have to be for this to happen, I don't know. But I think with sufficient BI, crappy jobs will have to pay a lot more to attract people, whereas fun, interesting jobs might have more employees competing for them. That would be the sign of a healthy free market at work, I think.

Re: What harm do minimum wages do?

#740

Post by deegles »

missedthecue wrote: post #34
deegles wrote: post #32

Earlier quoted context omitted.

> people respond to that price signal by learning the relevant skills and working in that field and getting greater salaries Many people stay in jobs they don't like or that don't pay enough because they need the healthcare or don't have the resources (including time) to learn new skills and move to a higher paying job. So the fact that people can't freely respond to price signals means that it is not a free market.

Again, a free market doesn't mean that everyone can easily buy or sell any good or service. Plenty of things prohibit this, including geographical challenges, language barriers, import tariffs, and other natural and contrived barriers to trade. A free market means that the distribution and production of goods and services do not rely on centralized planning, but on price signals.

Ok, maybe labor is technically a "free market" because the price signals exist and there is no centralized planning, but the issue still is that there are too many barriers for labor to move around.
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