Living wage? We don't need no stinkin' living wage!

[Frylock]

While we're on the topic, a friend of mine is buying a house and says she has a packet of 85 fine-print pages full of technical terminology and legalese to go through. Is this typical? I did a little googling and couldn't find copies of mortgage documents, but it may be there's a specific name for these things which I don't know and which may help me find such documents to look at. Any idea what terms I should be using?

[Dangerosa]

While we're on the topic, a friend of mine is buying a house and says she has a packet of 85 fine-print pages full of technical terminology and legalese to go through. Is this typical? I did a little googling and couldn't find copies of mortgage documents, but it may be there's a specific name for these things which I don't know and which may help me find such documents to look at. Any idea what terms I should be using?

Yes, it's typical. It's why it's recommended you add $500 to the costs of closing and bring in a real estate attorney. Compared to how much you'll spend on a house, it's peanuts.

I didn't, but although I'm not an attorney, I do have a degree in accounting and read and negotiate contacts in my job. I did look over each page for the two closings we went though eighteen months ago.

[Frylock]

Yes, it's typical. It's why it's recommended you add $500 to the costs of closing and bring in a real estate attorney. Compared to how much you'll spend on a house, it's peanuts.

I didn't, but although I'm not an attorney, I do have a degree in accounting and read and negotiate contacts in my job. I did look over each page for the two closings we went though eighteen months ago.

Okay that makes sense, and I'll remember it when I buy a home--get an attorney.

I assume the role of the attorney will be largely interpretational--he'll go through the contract and explain it to me, correct? And if he gets something wrong and I am thereby misled, he's on the hook? (And his explanations, I assume, are in writing, for the record?)

Or is that not what a real estate attorney would be doing for me?

Reading over that it sure sounds like I'm trying to ask leading questions but I'm actually not. I'm actually very concerned about what's going to happen come house buying time.

[Chessic Sense]

You're ignoring a system designed to divert risk away from money lenders to tax payers.

Such a system is fictitious.

May I point out that many upper class people game the system to get unearned and undeserved wealth, or does that make me a commie? (That notion would amuse quite a few people around here.) Your basic claim seems to be that practically all wealthy people deserve their wealth, having done nothing morally or legally wrong, that almost all of the parasites are in the lower classes with virtually none in the upper classes,

That's basically what I'm saying, yes. The wealthy, like most people, are generally law-abiding and honest people. Their wealthy is both earned and deserved. Most (maybe not "almost all") of the parasites are in the lower classes, yes.

and that any body who doubts the wisdom and goodness of this insight must be a commie welfare queen. Last time I checked, I was still a him. I'm not on welfare, and I'm the wrong gender to be a queen. I come from a poor background, and I've done everything you've said to do. I got an education, I've worked hard, sought out opportunities, I've been a good boy. Still I've been working poor most of my life. That's why I seethe with contempt when some asshole liberal tells me I have "white privilege," or some asshole conservative tells me that I lack moral character and/or intelligence.

First of all, I didn't call you a welfare queen. I said that just like "welfare queens" don't really exist, neither do sound-minded, able-bodied unskilled workers that tried to get ahead and were just kept down by the man.

I never said you lacked moral character, either. It's not reprehensible to be poor. It's just objectionable to be poor and complain that it was the system's fault. If you're poor and happy, hey, more power to ya.

Last time I checked, I was still a him.

Sorry. I wasn't aware that men had "cat" in their usernames.

While we're on the topic, a friend of mine is buying a house and says she has a packet of 85 fine-print pages full of technical terminology and legalese to go through. Is this typical? I did a little googling and couldn't find copies of mortgage documents, but it may be there's a specific name for these things which I don't know and which may help me find such documents to look at. Any idea what terms I should be using?

I'd say "fine print" and "full of" are probably exaggerations, but 85 pages sounds about right. It's a lot to look over, sure, but it's certainly decode-able by the layperson, especially the math parts.

[Frylock]

Sorry. I wasn't aware that men had "cat" in their usernames.


A. This says a lot about you, fyi.
B. https://www.google.com/search?q=polecat&sourceid=ie7&rls=com.microsoft:en-us:IE-SearchBox&ie=&oe=&rlz=1I7RNRN_enUS413


I'd say "fine print" and "full of" are probably exaggerations, but 85 pages sounds about right. It's a lot to look over, sure, but it's certainly decode-able by the layperson, especially the math parts.

I know the reading abilitities of a lot of "laypeople" fairly intimately, due to the nature of my work. I'm going to have to take what you've said with a grain of salt til I've seen the docs for myself.

Today I tought a classroom of laypeople who couldn't understand how to figure out what the conclusion of the following passage is:

George is an atheist, and most atheists are liberals. So George is probably a liberal. So then, George most likely supports increased welfare benefits, since most liberals support increase welfare benefits.

Of the five "thoughts" in the passage, the correct answer was not one that even a single person in the room believed (at first) was the conclusion of the passage.

If there are a lot of laypeople like this, then there are a lot of laypeople who can't read 85 dense pages of legal or technical text and hope to understand it.

[rogerbox]

I've read that quoted passage a few times and I'm not sure what you are asking your students to say...what was the exact question you asked your students because all the information is listed, if you asked me "What is the conclusion of this passage" I would be confused as well because there is nothing to be inferred by the passage, just stated.

[Frylock]

I've read that quoted passage a few times and I'm not sure what you are asking your students to say...what was the exact question you asked your students because all the information is listed, if you asked me "What is the conclusion of this passage" I would be confused as well because there is nothing to be inferred by the passage, just stated.

The question I asked them was, "What's the conclusion of this pasage?"

And of course it has a conclusion. It's a very clear example (albeit not the simplest one in the world.) Follow the indicator phrases like "so" "since" etc.

ETA: The example is admittedly pretty artificial--you don't typically see "so" and "so then" one after the other. But that shouldn't confuse anyone who has a grasp of the concepts involved. The artificiality is due to what I was illustrating with the example, and to the fact that I don't limit the examples to just academically perfect prose ("so" and "so then" occuring close together definitely happens in spoken contexts, frequently) and also to the fact that it was written up on the fly during class. But anyway... a but OT I guess. I was just trying to illustrate how little-prepared at least some lay people are for reading even simple texts and understanding their point, much less thick legal documents.

"Get a lawyer" is probably very good advice.

[Frylock]

I've read that quoted passage a few times and I'm not sure what you are asking your students to say...what was the exact question you asked your students because all the information is listed, if you asked me "What is the conclusion of this passage" I would be confused as well because there is nothing to be inferred by the passage, just stated.

I wanted to edit that last post but it was too late. Here's a new version:

The question I asked them was, "What's the conclusion of this pasage?"

And it does have a conclusion. It's a very clear example, actuall, albeit not the simplest one in the world. Follow the indicator phrases like "so" "since" etc. (Given the presence of such words, what is it that led you to say that everything in the passage is "just stated"?)

I am not 100% clear what you mean by the phrase "inferred by the passage." Can you explain that? My confusion stems from my belief that passages never infer anything--people are the things that do the inferring. So when you say "inferred by the passage" what exactly do you have in mind?

ETA: The example is admittedly pretty artificial--you don't typically see "so" and "so then" one after the other. But that shouldn't confuse anyone who has a grasp of the concepts involved. The artificiality is due to what I was illustrating with the example, and to the fact that I don't limit the examples to just academically perfect prose ("so" and "so then" occuring close together definitely happens in spoken contexts, frequently) and also to the fact that it was written up on the fly during class. But anyway... a bit OT I guess. I was just trying to illustrate with a concrete example how little-prepared at least some lay people are for reading even simple texts and understanding their point, much less thick legal documents.

"Get a lawyer" is probably very good advice.

[erislover]

George has a problem with base rates. :D

[Frylock]

George has a problem with base rates. :D

(I don't get it.)

ETA: never mind! (http://en.wikipedia.org/wiki/Base_rate)

[rogerbox]

Ok, you said "George is an atheist, and most atheists are liberals. So George is probably a liberal. So then, George most likely supports increased welfare benefits, since most liberals support increase welfare benefits."

The question I asked them was, "What's the conclusion of this pasage?"


I don't consider myself stupid so I think we are simply having a communication problem. I don't understand the question because nothing in your statement is hard to understand, there are no stated givens with which we can extrapolate more information. So when you ask me "what is the conclusion of this passage" I would just restate the passage, or abbreviate it to "George is likely to support increases for welfare benefits". If that isn't the answer you are looking for than I really don't understand the exercise.

[Frylock]

Ok, you said "George is an atheist, and most atheists are liberals. So George is probably a liberal. So then, George most likely supports increased welfare benefits, since most liberals support increase welfare benefits."



I don't consider myself stupid so I think we are simply having a communication problem. I don't understand the question because nothing in your statement is hard to understand, there are no stated givens with which we can extrapolate more information. So when you ask me "what is the conclusion of this passage" I would just restate the passage, or abbreviate it to "George is likely to support increases for welfare benefits". If that isn't the answer you are looking for than I really don't understand the exercise.

I am not sure whether this is a mere communication problem yet.

The passage is an example of reasoning--it has premises, and those premises are intended by the passage's (pretend, hypothetical) author to lead toward a conclusion. The conclusion is one of the thoughts contained in the text itself. (It's not one of the more confusing cases where the conclusion is left unstated.) When "abbreviating" the passage, you zeroed in on just one of those thoughts. What is it that led you to that thought as aparticularly appropriate way to express some kind of "abbreviation" of the passage?

If I'd given you the following passage instead, would you have been able to find the conclusion?

George is probably an atheist, since most liberals are atheists.

Or does that also seem to you like just a series of things which are simply stated, with no conclusion being offered?

Unfortunately, I won't be able to reply again for a couple of hours.

[Frylock]

(Based on what you've said, I think it's a kind of communication problem, in that I think you know what a conclusion is, but don't know what "conclusion" means. You're definitely not alone in this...)

[rogerbox]

I'm now just interested in what answer you are looking for that you think is so obvious. Without the context of even what class you are teaching it's quite possible I don't know what "conclusion" is supposed to mean.

[Evil Captor]

In any event, a living wage is a great idea, and George is probably down with it.

[Frylock]

I'm now just interested in what answer you are looking for that you think is so obvious. Without the context of even what class you are teaching it's quite possible I don't know what "conclusion" is supposed to mean.

The answer is George most likely favors increased welfare benefits. The class is critical thinking. i can explain more when im at something other than my kindle.

[Frylock]

The answer is George most likely favors increased welfare benefits. The class is critical thinking. i can explain more when im at something other than my kindle.

Okay, I started a new thread here (http://boards.straightdope.com/sdmb/showthread.php?p=14778567#post14778567). The much briefer answer, though, is that "George most likely supports increased welfare benefits" is the one claim in the passage which all the rest of the passage is intended to give supporting reasons for.

[Frylock]

(Rereading our conversation, it appears to me you were thinking I was asking what conclusion should be drawn from the passage, rather than which statement in the passage is the one which its author thinks should be drawn from all the other statements in the passage. Does that sound about right?)

[Dangerosa]

And the answer to the attorney question is that an attorney will read over the documents and give you advice or warnings - like "this mortgage has a prepay penalty" or "this mortgage doesn't have a cap on its balloon." They may also make sure title is clear, although the closing company usually has a title company for that that is insured.

You can do that yourself with some patience and a little understanding of legalese. But as you pointed out, not everyone has the comprehension skills to deal with plain English, much less contractual information.

Most people who got screwed on mortgages however, didn't get screwed by gotcha clauses in their mortgage. A balloon isn't a gotcha clause, that's something to have your mortgage rep explain to you. Having someone foreclose on secured property when you don't pay your mortgage isn't a gotcha either - that's why its a mortgage. The only thing that keeps that from happening is to only take out half as much mortgage as you can afford, save like anything for a rainy day, when it starts to drizzle- take some immediate action, and have the good luck never to get caught in a downpour.

When I was younger and stupider, I bought a house with my first husband, when he left, I was in quite a fix because I didn't have a mortgage I could afford. So I got a roommate. And I had the heat set in the house at 62 degrees and wore my coat indoors. And I sold my car and bought a bus pass. And I ate a lot of eggs, rice, beans, frozen vegetables and jiffy cornbread mix. And eventually, things started to free up (because I paid off outstanding bills, not because anyone handed me more money) and I started to eat better and set the heat up a bit. Two years after that, I got a decent raise.

[aaaa]

You can't just increase minimum wage because you feel you need to. That would only make the situation worse.

If you went from say $8/hour to $10/hour businesses will simply get rid of people and stop hiring.

The only real answer to problems like this is economic growth.

[aaaa]

My Inner Economist says: If the company really isn't paying enough that people like him can afford to work there, then they're going to have trouble finding employees who will work there, and the problem should correct itself. Is my Inner Economist wrong?


Sorry to double post.

No, you are correct. If a company is not paying enough then no one would take that job. There aren't chemical engineers and corporate lawyers working for only $10 per hour because no one with the credentials would take those job. Companies would happily pay that little but there is absolutely no demand for it.

Hunger also is self-correcting. When you starve too much, you aren't hungry anymore because you're dead. Is nature wrong?

I don't want to live in a world where I guy who wants to work for his family is considered an idiot for having a family. People who want to work and want to make more people are exactly the kind of people I want to support. What kind of society is this?

It's not about wanting to make this guys life difficult it's just simple economics. If the minimum wage is increased then employers demand less workers and people making minimum wage will then be laid off. If all four people in a family are making $8/hour then the minimum wage is increased to $10 and 2 of them a laid off that does not put them in any better of a situation. That is why the minimum wage is not $15+/hour, it just doesn't work and would make it worse for everyone.

Economics is a science and has laws that should (and really need to) be followed. People do not try to counter the law of gravity but they (politicians mostly) often try to go against the rules of economics. It's not about not wanting to help people, I think most people agree it would be great to give everything to everyone who wants it but that is just not possible.

[robinson]

He said himself that his company calls people like him "unskilled labor."I guess I've forgotten how to read, because I can't find that in the OP. I agree that its too late for this guy. We need to figure out how to stop making more like him. In general, we have failed a generation of workers. A high-school education used to mean something, and a graduate could compete in the workforce. No more. If you don't have some kind of certificate beyond HS, you can't even flip burgers (because the certificate shows that you can read). I don't know the solution. I don't think No Child Left Behind helped all that much. We need Head Start, we need to keep the kids engaged in learning until they are competent in the 3 Rs and we need enough entry-level jobs. Whats your solution?

[robinson]

And that's what we've come to. No house and picket fence, just a place to sleep between shifts. Devil take the hindmost, I say.

[jayjay]

Economics is a science

Well, there's your perceptual problem. If economics were actually a science, you wouldn't be able to get 12 different answers to the same question if you ask 10 economists.

[erislover]

It's not about wanting to make this guys life difficult it's just simple economics.I believe you should try to make your economics less simple, because this is not an established matter.

[RickJay]

Well, there's your perceptual problem. If economics were actually a science, you wouldn't be able to get 12 different answers to the same question if you ask 10 economists.
So the fact that physicists disagree about string theory means physics isn't a science?

Of course economics is a science. Where aaaa may be wrong is in oversimplification; it is of course absolutely true that raising the price of a good (in this case labour) decreases demand. But that's a general truism, not a prescription for social policy. To use the physics equivalent, I know that gravity causes objects to be pulled towards the Earth, but that does not mean I know how to design an airplane, or that simply removing mass from an airplane will make it fly better. If I reduce the mass by taking the wings off that's not going to work out very well.

See, it's equally true that while raising the price of labour reduces demand, labour prices aren't necessarily all that elastic. It's also true that for a given employer raising prices might not reduce demand at all, to a point, because they may still maximize their marginal return with the same number of employees. It's also true that even if raising the minimum wage increases unemployment a little bit, the total cost to society is less than if we had no minimum wage at all. You can't just pull out something you heard in the first three weeks of Econ 101 and declare that you have the answer just as you can't pull out something you learned in high school biology and declare that you have the answer to all health problems.

But just because someone does one of the other doesn't make economics or biology NOT a science.

[Ludovic]

So the fact that physicists disagree about string theory means physics isn't a science?Sort of, yes. Somewho? don't consider string theory to be science.

[Evil Captor]

No, you are correct. If a company is not paying enough then no one would take that job. There aren't chemical engineers and corporate lawyers working for only $10 per hour because no one with the credentials would take those job. Companies would happily pay that little but there is absolutely no demand for it.

At the moment, there is not. If conditions were dire enough, they would take those wages.

It's not about wanting to make this guys life difficult it's just simple economics.

Often, it is about wanting to feel superior to "that guy" and being indifferent to his welfare. Many people who cite the 'iron laws of economics' are just looking for an argument to authority to hang their prejudices on.

If the minimum wage is increased then employers demand less workers and people making minimum wage will then be laid off.

Really? Is that how every wage increase is responded to? Why do wages ever rise, then? Why wouldn't employers just groan and think of it as another cost of doing business that has risen, along with those very, very high executive salaries? Don't hear much complaining about that from conservatives ...

Economics is a science

Only in the sense that "intelligent design" is scientific. It's more Lysenkoism. Economics follow conservative ideology far too closely to be considered a science.

and has laws that should (and really need to) be followed.

Case in point. Nobody has a CHOICE about following the law of gravity. It works whether you follow it or not. Economics is about people making deals. There are no constraints on how those deals are made.

People do not try to counter the law of gravity but they (politicians mostly) often try to go against the rules of economics. It's not about not wanting to help people, I think most people agree it would be great to give everything to everyone who wants it but that is just not possible.

"Giving everthing to everyone who wants it" is being advocated by whom? What social system that ever existed tried to do that?

[Voyager]

.
Economics is a science and has laws that should (and really need to) be followed. People do not try to counter the law of gravity but they (politicians mostly) often try to go against the rules of economics. It's not about not wanting to help people, I think most people agree it would be great to give everything to everyone who wants it but that is just not possible.

Many of the "laws" of economics - like people always acting in their own best interest - have turned out to be wrong.

Now, to expand on what RickJay said.
If for the most part people making the minimum wage produce slightly above the minimum wage's worth of value per hour (neglecting overhead for the moment) then it is true, raising the minimum wage could lead to higher unemployment. However, it might also lead to greater degrees of automation, which might lead to unemployment but would also lead to increased productivity.

Now, say that high unemployment has depressed wages and that productivity per worker is significantly higher than the minimum wage. This is almost certainly the case in the US today, since productivity increased much faster than wages in the last decade or so. Also, the minimum wage hadn't been raised in a long time, and so lost value due to inflation - while output did not. In this case an employer could handle an increase in the minimum wage while still seeing worker productivity be higher than wages. Of course no employer would do that on his own since it would put him at a competitive disadvantage, but state mandated minimum wages treat everyone equally.
You might say this is a terrible thing, since it will depress profits and thus investment. Maybe not. Since our problem is lack of demand, not lack of investment money, an increase in the minimum wage will increase demand, and thanks to economy of scale probably improve the profitability of many industries. This could lead to more employment in the long run.

I don't have an opinion on whether economics is a science. I just know my daughter had to study a lot of math along with economics at Chicago.

[Chessic Sense]

another cost of doing business that has risen, along with those very, very high executive salaries? Don't hear much complaining about that from conservatives...

You would if there were a law dictating executive salary minimums (or maximums).

[John Mace]

Many of the "laws" of economics - like people always acting in their own best interest - have turned out to be wrong.
Not really. It was always an approximation. A model. All sciences create models that get overthrown when a better model is found.

Now, to expand on what RickJay said.
If for the most part people making the minimum wage produce slightly above the minimum wage's worth of value per hour (neglecting overhead for the moment)
OK, let's stop right there, because how are you going to determine the "value" of something, except by what the market decides?


then it is true, raising the minimum wage could lead to higher unemployment. However, it might also lead to greater degrees of automation, which might lead to unemployment but would also lead to increased productivity.

Now, say that high unemployment has depressed wages and that productivity per worker is significantly higher than the minimum wage. This is almost certainly the case in the US today, since productivity increased much faster than wages in the last decade or so.
Productivity and wages have little, if anything, to do with each other. Wages are determined by the market (ie, the value someone else puts on your labor), while productivity is largely a product of investment. If I design a robot that an idiot can operate, that doesn't increase the value of the idiot, even if his productivity skyrockets.

[erislover]

Tangential comments:
OK, let's stop right there, because how are you going to determine the "value" of something, except by what the market decides? Markets don't determine value, they determine prices. Value is subjective. One metric for value may be willingness to pay. Generally, it is an exceptional case where price corresponds to willingness to pay. (Usually someone has done something to severely segment the market.)
Wages are determined by the market (ie, the value someone else puts on your labor)These are not equivalent. My boss may value me at $70,000 a year, even if my total compensation (including all his costs) were $60,000. That is, it may be the case that he is indifferent to my employment at $70,000 a year, while he finds it quite preferable at $65,000, and a real bargain at $60,000. Consumers benefit from this when they pay less for a good than they would otherwise, but employers have the same thing going for them.

[Dangerosa]

And that's what we've come to. No house and picket fence, just a place to sleep between shifts. Devil take the hindmost, I say.

Has there been a time where the American worker got a house and picket fence on one income in a non-skilled job? There have been pockets of it (unionized autoworkers in the 1950s and 1960s), but I'm not convinced that it was ever the norm.

[Voyager]

Not really. It was always an approximation. A model. All sciences create models that get overthrown when a better model is found.

Yes really. Some very basic assumptions of classical economics have been experimentally disproven. To be sure this affects micro more than macro.

OK, let's stop right there, because how are you going to determine the "value" of something, except by what the market decides?

Value here is goods or services produced, not the "value" of the employee as measured by wages. Basically, as I said, it is productivity. Of course if the goods produced don't sell, their value is 0, the wages of an employee exceed the value produced, and they lose their jobs. But we're not talking about that case.


Productivity and wages have little, if anything, to do with each other. Wages are determined by the market (ie, the value someone else puts on your labor), while productivity is largely a product of investment. If I design a robot that an idiot can operate, that doesn't increase the value of the idiot, even if his productivity skyrockets.

Really they have nothing to do with each other? Then it would be perfectly practical for people to be paid more than they produce, right?
Now, if you really could design a robot that an idiot could operate, before too long you'd get rid of the idiot. Practically speaking automation creates fewer but higher value jobs. Very low labor rates eliminates the requirement for automation. I heard a talk about manufacturing engineering projects in the Far East, and how automation projects that make sense here make no sense if the labor rate is low enough.
If you have a situation where labor rates are very low through slavery or through an excess of people, like in China, you can have a situation where there is no incentive to increase productivity very much. You may not care about paying your people if you export everything. What do you think would happen in China if we were to suddenly stop importing stuff, and they would have to buy domestic production? Major disaster, right?
The point is not that it is impossible to pay workers little when there are external pressures - it obviously happens. The point is that minimum wage increases can be paid for out of productivity improvements, and are good things when they increase demand. I'm perfectly happy with requiring that the productivity improvements happen first, since here anyhow there is pressure to do them anyway. What causes a problem is when the benefits of productivity improvements flow up and none stay with the people at least partially responsible for them. And the problem is either a demand shortage or a build up of debt to fuel unsustainable consumption.
I know the dream of the past 20 years is to sell all our stuff to China, but it isn't happening, is it?

[Voyager]

Has there been a time where the American worker got a house and picket fence on one income in a non-skilled job? There have been pockets of it (unionized autoworkers in the 1950s and 1960s), but I'm not convinced that it was ever the norm.

I don't know. In 1951 my father bought a nice house in a good neighborhood on his UN wages. He had no college, and I think he was involved in keeping track of the flags at the time. He had started with the UN as a security guard right after getting out of the Army. On one side of us was a baker in a big bread factory, on the other was a car mechanic. Some of my friends had professional fathers, but not all of them by any means. The fathers were absent in two cases, showing that single motherhood is not a recent invention.

[John Mace]

Yes really. Some very basic assumptions of classical economics have been experimentally disproven. To be sure this affects micro more than macro.
Can you name a science where this has not been true? Like I said, you use the model until you find a better one.

Value here is goods or services produced, not the "value" of the employee as measured by wages. Basically, as I said, it is productivity. Of course if the goods produced don't sell, their value is 0, the wages of an employee exceed the value produced, and they lose their jobs. But we're not talking about that case.
OK.



Really they have nothing to do with each other? Then it would be perfectly practical for people to be paid more than they produce, right?
No, and I don't know why you would come to that conclusion. People get paid according to how valuable their skills are and how many other people are competing for those jobs with the same skill level. Just because people paid "x" to produce "100x" worth of goods doesn't mean they can easily be paid more.


Now, if you really could design a robot that an idiot could operate, before too long you'd get rid of the idiot. Practically speaking automation creates fewer but higher value jobs.
Sometimes, yes. But sometimes no. It took more skill to work in a gas station long ago, and now all you have to do is punch a key on smart register.

Very low labor rates eliminates the requirement for automation. I heard a talk about manufacturing engineering projects in the Far East, and how automation projects that make sense here make no sense if the labor rate is low enough.
If you have a situation where labor rates are very low through slavery or through an excess of people, like in China, you can have a situation where there is no incentive to increase productivity very much. You may not care about paying your people if you export everything. What do you think would happen in China if we were to suddenly stop importing stuff, and they would have to buy domestic production? Major disaster, right?
The point is not that it is impossible to pay workers little when there are external pressures - it obviously happens. The point is that minimum wage increases can be paid for out of productivity improvements, and are good things when they increase demand. I'm perfectly happy with requiring that the productivity improvements happen first, since here anyhow there is pressure to do them anyway. What causes a problem is when the benefits of productivity improvements flow up and none stay with the people at least partially responsible for them. And the problem is either a demand shortage or a build up of debt to fuel unsustainable consumption.
I know the dream of the past 20 years is to sell all our stuff to China, but it isn't happening, is it?
Emphasis added, because I think (and I could be wrong) that that is the key thing you're trying to get at in that long paragraph. So, where are you getting that from? How have you determined that to be true? Because it looks like one of those perpetual motion ideas that forgets one or more key aspects of how the actual world works. In this case, I suspect it's the idea that companies in the US don't have to compete with companies in other countries. But I'd like to see your argument fleshed out more before going any further.

erislover: Price and value are the same thing. The price you are will to pay for something is the value you put on it.

[aaaa]

At the moment, there is not. If conditions were dire enough, they would take those wages.



Often, it is about wanting to feel superior to "that guy" and being indifferent to his welfare. Many people who cite the 'iron laws of economics' are just looking for an argument to authority to hang their prejudices on.



Really? Is that how every wage increase is responded to? Why do wages ever rise, then? Why wouldn't employers just groan and think of it as another cost of doing business that has risen, along with those very, very high executive salaries? Don't hear much complaining about that from conservatives ...



Only in the sense that "intelligent design" is scientific. It's more Lysenkoism. Economics follow conservative ideology far too closely to be considered a science.



Case in point. Nobody has a CHOICE about following the law of gravity. It works whether you follow it or not. Economics is about people making deals. There are no constraints on how those deals are made.



"Giving everthing to everyone who wants it" is being advocated by whom? What social system that ever existed tried to do that?


Of course conditions right now provide no supply at those wages. There are many factors influencing that reason but I don't see how it is relevant to the discussion.

Wages rise with economic growth. Wages should not increase just because someone feels they should, they should increase as the economy grows. Countries have to produce more (increase in real GDP). People are only laid off when wages are artificially increased, such as if a politician decided the minimum wage should be $10 more than employers are willing to pay workers.

Merriam-Webster defines economics as the following:


1 a : a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services

b : economic theory, principles, or practices <sound economics>

There may be no constraints on what you can do in an economy but that does not mean everything you do is correct. There is a reason economies fail and that is because they are not doing things correctly and the people in control are not following the principles of economics.

http://en.wikipedia.org/wiki/An_Essay_on_the_Nature_and_Significance_of_Economic_Science

"Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."

http://en.wikipedia.org/wiki/Principles_of_Economics_%28Marshall%29

Economics is a study of man in the ordinary business of life. It enquires how he gets his income and how he uses it. Thus, it is on the one side, the study of wealth and on the other and more important side, a part of the study of man.

http://books.google.com/books?id=5tO7upIK2pIC&lpg=PR20&ots=Ui9Iiv7FsF&dq=The%20science%20which%20traces%20the%20laws%20of%20such%20of%20the%20phenomena%20of%20society%20a s%20arise%20from%20the%20combined%20operations%20of%20mankind%20for%20the%20production%20of%20wealth %2C%20in%20so%20far%20as%20those%20phenomena%20are%20not%20modified%20by%20the%20pursuit%20of%20any% 20other%20object&pg=PR20#v=onepage&q&f=false

Upon these considerations he furnishes the following definition of Political Economy: "The science which treats of the production and distribution of wealth so far as they depend upon the laws of human nature," "Or thus The science relating to the moral or psychological laws of the production and distribution of wealth." The Essay continues to illustrate the relations of mental science with Political Economy and then proceeds.

[robinson]

Has there been a time where the American worker got a house and picket fence on one income in a non-skilled job? There have been pockets of it (unionized autoworkers in the 1950s and 1960s), but I'm not convinced that it was ever the norm.
I know it is hard to believe nowadays, but that was the norm in the industrial heartland circa 1945-1960. True, some of the unionized workers became princes of the working class, but there was a culture of relative abundance. Service industries had to compete for labor with industries that required large workforces. Large developments (e.g. Levittown) of modest homes served the needs of growing families without long commutes (pre-interstate). BTW, those union jobs were unskilled only at the entry level. Most involved a 4-year on-the-job apprentice program. If you want to see unskilled labor, go to today's right-to-work states.

[erislover]

The price you are will to pay for something is the value you put on it.But what I am willing to pay is not necessarily the same thing as what I do pay. What I do pay is the price. When I value what I acquire more than the price, I have benefited from the trade. If price and value are the same thing, how do people benefit from trade?

[Una Persson]

I know the reading abilitities of a lot of "laypeople" fairly intimately, due to the nature of my work. I'm going to have to take what you've said with a grain of salt til I've seen the docs for myself.

...

If there are a lot of laypeople like this, then there are a lot of laypeople who can't read 85 dense pages of legal or technical text and hope to understand it.
What are you taking with a "grain of salt?" The number of pages, or their content?

I recently came within final signing day of buying a house, and I archived every single thing. The total length of the documents I had to read and sign associated with the loan and the transfer of property is as follows:

*Borrowers' Certification and Authorization: 1 page

*Credit Score Disclosure: 2 pages

*General Disclosure Notices (inc. affidavit of occupancy): 4 pages

*Equal Credit Opportunity Act page: 1 page

*Driver's License submittal form: 1 page (per borrower)

*Fixed Rate Loan Disclosure: 1 page

*Flood Disaster Protection Act: 1 page

*State Borrower Acknowledgement: 1 page

*Loan Origination Agreement: 1 page

*Patriot Act Form: 1 page

*Privacy Policy: 2 pages

*IRS form 4506-T (request for Transcript of Tax Return): 2 pages

*Required Provider's Disclosure: 2 pages

*Right to Receive Appraisal Report: 1 page (this is what I had to threaten to sue over)

*Loan Servicing Disclosure Statement: 1 page

*Mortgage Broker Certification: 2 pages

*Uniform Residential Loan Application: 8 pages (with 4 pages of required amendments later)

*"FBI" Mortgage Occupancy Statement (I think that's the title; it's not really titled): 1 page

*Truth in Lending Disclosure Statement: 1 page

*Affidavits saying why you are getting a loan when you could pay cash for the house: 6 pages (seriously, this was really fucking stupid - most people won't have these, so I won't count them in the totals)

Total: 36 pages

If you include the home inspector's report (something any non-dumbass homeowner should read) then it's about 80+. When I bought my last house there were innumerable documents which had to be signed at close, so extending that 36 to twice that seems fairly reasonable. I didn't make it that far so I don't know.

And the text of the documents is not arcane legalese. Nor is it dense. If you don't believe me then do your own damn legwork - I've given you the document names up above. Or if it is considered such, then once again I week for the stupidity and illiteracy of the average person. The documents are all clear, not in fine text, and clearly communicate what they are telling you.
Seriously, this isn't hard stuff. When I was in high school I could have understood this shit.

[Frylock]

What are you taking with a "grain of salt?" The number of pages, or their content?

Obviously, what I'm taking with salt is the claim that lay people typically can be expected to read and comprehend the entire set of documents. I would need to see a set of documents myself, or have them described to me in more detail than has happened in the thread, before I could judge that claim.

[/quote]

I recently came within final signing day of buying a house, and I archived every single thing. The total length of the documents I had to read and sign associated with the loan and the transfer of property is as follows:...

And the text of the documents is not arcane legalese. Nor is it dense. If you don't believe me then do your own damn legwork

wtf with the hostility?

You're describing the content of the documents, for which I thank you. You even gave me some document names to use in searches. I asked for that above! My thanks to you for that as well!

You're being extremely helpful! And cursing at me at the same time?! I don't get it.

[Una Persson]

wtf with the hostility?

You're describing the content of the documents, for which I thank you. You even gave me some document names to use in searches. I asked for that above! My thanks to you for that as well!

You're being extremely helpful! And cursing at me at the same time?! I don't get it.
Well, you're the one telling a fellow poster that you'll take what they post "with a grain of salt" which is essentially saying "I don't believe you, but I guess I'll let it stand for now." However, my "do your own damn legwork" was meant to be only mildly finger-wagging chiding, not hostile. I apologize to you for not communicating that mild chiding better and instead sounding hostile.

[John Mace]

But what I am willing to pay is not necessarily the same thing as what I do pay. What I do pay is the price. When I value what I acquire more than the price, I have benefited from the trade. If price and value are the same thing, how do people benefit from trade?

Yes, you're right, and I was sloppy in my characterization. The price of something is what "the market" values it at. That is, the collective actions of all the buyers and sellers-- not just "you". Now, the market isn't perfect. It almost never is, but it's the best mechanism we know for getting it as close to right as possible. Sometimes too high, sometimes too low. But on average, just about right.

For example, if "the market" prices something below it's value, people will start gobbling it up and there will be a shortage, which will cause the price to rise until there is too much, at which point the price will fall. Lather, rinse and repeat, as the saying goes.

[Dangerosa]

I know it is hard to believe nowadays, but that was the norm in the industrial heartland circa 1945-1960. True, some of the unionized workers became princes of the working class, but there was a culture of relative abundance. Service industries had to compete for labor with industries that required large workforces. Large developments (e.g. Levittown) of modest homes served the needs of growing families without long commutes (pre-interstate). BTW, those union jobs were unskilled only at the entry level. Most involved a 4-year on-the-job apprentice program. If you want to see unskilled labor, go to today's right-to-work states.

It wasn't the case for mt grandparents. My father's parents had two incomes. My mother's bought their house with the proceeds of the farm.

[sleestak]

I know it is hard to believe nowadays, but that was the norm in the industrial heartland circa 1945-1960. True, some of the unionized workers became princes of the working class, but there was a culture of relative abundance. Service industries had to compete for labor with industries that required large workforces. Large developments (e.g. Levittown) of modest homes served the needs of growing families without long commutes (pre-interstate). BTW, those union jobs were unskilled only at the entry level. Most involved a 4-year on-the-job apprentice program. If you want to see unskilled labor, go to today's right-to-work states.

But the period you are talking about is not the norm. The U.S. just got out of fighting a war, had built up a huge manufacturing base to support the war and the rest of the western world was blown to hell and had to rebuild. So when the war ended we had all kinds of manufacturing capabilities and markets that needed to buy lots of stuff.

For example, if you watch home ownership rates in the U.S., they ran at about 45% from 1900 to 1940. From 1940 to 1960 home ownership increased from 43.6% to 61.9%. I am willing to be that if you hunt down the data you'd find that the biggest increase in home ownership is between 1945 and ~1955.

Slee

[Evil Captor]

But the period you are talking about is not the norm. The U.S. just got out of fighting a war, had built up a huge manufacturing base to support the war and the rest of the western world was blown to hell and had to rebuild. So when the war ended we had all kinds of manufacturing capabilities and markets that needed to buy lots of stuff.

For example, if you watch home ownership rates in the U.S., they ran at about 45% from 1900 to 1940. From 1940 to 1960 home ownership increased from 43.6% to 61.9%. I am willing to be that if you hunt down the data you'd find that the biggest increase in home ownership is between 1945 and ~1955.

Slee

IIRC, it was the US middle class that was by far the hugest market for US goods at that time. It was BECAUSE the middle class was so strong economically that the economy rolled right along. So actually you are making our point for us. Thanks!

[Voyager]

Can you name a science where this has not been true? Like I said, you use the model until you find a better one.


I said that the "laws" were proven wrong, and you said not really. So you do agree that the laws were proven wrong? I was not saying economics is pseudo-science or anything like that. But we still do hear from people assuming that the laws work - for instance saying that we don't need regulations because everyone will make rational choices.


No, and I don't know why you would come to that conclusion. People get paid according to how valuable their skills are and how many other people are competing for those jobs with the same skill level. Just because people paid "x" to produce "100x" worth of goods doesn't mean they can easily be paid more.

Circular reasoning. You are saying that people are paid by how valuable their skills are, and you measure how valuable their skills are based on how much they get paid.
In the recession many people took pay cuts. Did their skills become inherently less valuable?
Pay is based on lots of variables, and is not very precise. I know there is lots of flexibility in starting salaries, and we know the irrational way the salaries of execs are computed, and we know about the winner's curse, mentioned by Thaler, which says that almost any winner of an auction has paid too much - and lots of salaries are based on auctions.


Sometimes, yes. But sometimes no. It took more skill to work in a gas station long ago, and now all you have to do is punch a key on smart register.

First, I don't know what the relative pay is today when compared to then. Second, the attendant today is more a retail clerk than what a gas station attendant used to be. I guess there were some gas station attendants who were mechanics in training, but as I remember it they mostly stuck the nozzle in, cleaned the windshield, and checked the oil, not of which was rocket science, or as hard as refilling a Slurpy machine or selling lottery tickets. I suspect the guy behind the counter is more productive than the old attendance, but I doubt he is getting paid any more adjusted for inflation.

Emphasis added, because I think (and I could be wrong) that that is the key thing you're trying to get at in that long paragraph. So, where are you getting that from? How have you determined that to be true? Because it looks like one of those perpetual motion ideas that forgets one or more key aspects of how the actual world works. In this case, I suspect it's the idea that companies in the US don't have to compete with companies in other countries. But I'd like to see your argument fleshed out more before going any further.

Are you questioning whether paying people at low income levels more increases demand?

[Voyager]

Wages rise with economic growth. Wages should not increase just because someone feels they should, they should increase as the economy grows. Countries have to produce more (increase in real GDP). People are only laid off when wages are artificially increased, such as if a politician decided the minimum wage should be $10 more than employers are willing to pay workers.

The point is that in the past decade the economy grew and wages did not. No one is asking for something for nothing, we are asking for a share in what is produced. The response seems to be "productivity rose but workers had nothing to do with it, so screw them. "


There may be no constraints on what you can do in an economy but that does not mean everything you do is correct. There is a reason economies fail and that is because they are not doing things correctly and the people in control are not following the principles of economics.

You are confused. Economics is basically descriptive. The principles of economics attempt to explain the reaction of an economy to economic actions, and also to predict the impact of actions - usually badly. When people do things that classical economics say they shouldn't do they aren't wrong - classical economics is wrong.And if you create policy based on what people should do, not what they actually do, you are going to cause a big problem - like Greenspan not getting that Wall Street is greedy

[Dangerosa]

IIRC, it was the US middle class that was by far the hugest market for US goods at that time. It was BECAUSE the middle class was so strong economically that the economy rolled right along. So actually you are making our point for us. Thanks!

For some goods, like washing machines. we were definitely our best market. But we were sending tons of material to Europe to rebuild. Due to the multiplier effect, its unlikely that we'd have been able to afford that many washing machines without the construction material, food, clothing, etc. being sent to Europe.

There were also substantial differences in the workforce in the 1950s - for instance, in much of the U.S. you didn't have to pay a black man or a woman the same wage you paid a white male. So we were able to keep some of our costs low by paying a decent wage to a certain class, while paying entire other classes of people something that today would be laughable as a living wage.

My two income grandparents, my grandfather made ok money as a bottler for Hamms brewery. My grandmother took in sewing for most of her life - she was still doing some of it when she died at 83. There was, in the 1950s, a large hidden economy in women's work among the labor classes.

[Una Persson]

I have to comment on this because it's shameful.
...then once again I week for the stupidity and illiteracy of the average person.
OK, sure I had a fever of 102 from this goddamn flu, and yes my fingers don't work very well from repetitive injury, and I make a lot of typos, but still, what I typed is so ironically stupid it shames me. :smack:

[jayjay]

I have to comment on this because it's shameful.

OK, sure I had a fever of 102 from this goddamn flu, and yes my fingers don't work very well from repetitive injury, and I make a lot of typos, but still, what I typed is so ironically stupid it shames me. :smack:

'Sokay. We just figured you were weeking so hard you couldn't see the monitor...

*runs*

[sleestak]

IIRC, it was the US middle class that was by far the hugest market for US goods at that time. It was BECAUSE the middle class was so strong economically that the economy rolled right along. So actually you are making our point for us. Thanks!

No, I am not. Do you have a cite for your claim or are you just making it up?

In 1940 the U.S. exports, as a percentage of GDP, were 1.4 points higher than imports. In 1943, the height of U.S. exports during the war, they were 4.6 points higher. In 1946 it is 2.1.

The rest of the 40's and 50's we were exporting more than importing. From 1960 on we start losing ground and by 1970 the U.S. is importing more than it is exporting.

Link (http://www.econdataus.com/trade05.html)to data.

So in the 40's and 50's the U.S. was selling stuff to everyone. It was a boom for the U.S. because a large part of the world was rubble and the U.S. had tons of manufacturing capabilities leftover from the war. We didn't need to rebuild and could produce a lot of stuff that other countries needed to rebuild.

The situation is unlikely to repeat itself, unless we go blow the crap out of Europe to increase our exports.

Slee

[sleestak]

Oh, I forgot to mention something in my last post. The savings rate during the war also had an impact on the late 40's and early 50's. From 1940 to 1944 personal savings in the U.S increased 10 fold.

Link (https://mises.org/journals/rae/pdf/rae2_1_14.pdf)to data. Warning, PDF.

The savings rate for disposable personal income went from 3.7% in 1939 to a high of 25.5% in late 1944. Individual consumption was down during the war because most of the stuff produced was going to the war.

So when the war ended, the U.S. had tons of manufacturing ability in place, a huge export market and a ton of money in individual savings sitting there.

Slee

[Lynn Bodoni]

A lot of stuff was rationed during the war, too. I know that gas and certain kinds of food were rationed, and I THINK that clothing and shoes were rationed, too. People weren't spending money during the war because there were darned few consumer goods to buy! Sure, most people viewed this restriction of buying ability to be a way of supporting the troops, but after the war, it was "let the good times roll!" and people went into a buying frenzy. They had been dutifully refraining from buying nylon stockings and gas and such during the war, and banking the savings as noted above, and it's like the alcoholic who falls off the wagon.

My grandmother used to tell me how she had to learn to drink coffee without sugar or milk, because of wartime shortages. Similar stories abound.

[Dangerosa]

The situation is unlikely to repeat itself, unless we go blow the crap out of Europe to increase our exports.

Slee

Asia...if we blow the crap out of Europe, Asia will benefit. Need to blow up the factories in Asia. :)