If employer-funded healthcare remained the norm, then yes, employers would continue to offer health-related benefits to employees. If desired, the value of these benefits could be counted as income for the purposes of NIT calculations.
It’s not intended to be a cure-all for society, but rather a narrow use of government power to achieve a minimum level of social stability for a libertarian society.
Does it follow that you feel that in the absence of both a minimum wage and an NIT, people would work at Wal-Mart for $1 a day? If not, why would they work for less under an NIT, when they need the income less?
That idea has some pretty scary implications, though. If your employer is responsible for your upkeep, to what degree should be allow them control over your personal life? When you decree that the employer is paying for the person, not their labor, that’s a two-way street, is it not?
Not so, they are different. A minimum wage (for jobs that would otherwise earn less than the minimum) is a small tax on labor, distributed directly to the worker. Income tax is a tax on net profit. If you tax profit and not labor, there’s no perverse incentive to eliminate workers’ positions. There are no distortive effects on market prices and international competitiveness.
That’s one, it can replace a dozen or more programs, and is simple enough for anyone to understand. Also, it avoids a “welfare trap”, where raising one’s wage income reduces their total income, through the loss of welfare benefits. Third, it doesn’t distort market prices.
Favoring work requirements for welfare doesn’t mean wanting welfare to cease altogether, though. Work is indeed the best solution for poverty. Getting people off government aid through making them productive workers is a laudable goal. These statements aren’t as anti-welfare as you make them out to be.
Thinking the current welfare system is badly flawed doesn’t necessarily mean you want the whole thing scrapped, as I myself exemplify.
In any case, in the absence of libertarians in the thread who advocate for the end to all welfare, it’s not something we can really discuss here, other than to note that it’s a position some (though we’ve no idea how many) hold.
But that would still reduce the game to dollar signs. Honestly, I’d rather all of my health care dollars came to me directly and I wasn’t required to pay for insurance and I’d seek out a job that gave me a dollar benefit instead of a health insurance benefit any day. (Thanks, Obama! )
I’m not trying to make it a cure-all, I’m trying to understand where it would fit within the larger framework of employer/employee relations. A change that can help employees over the long run I would consider desirable. I also hope to understand that in a general long term sense as well as a short term sense.
I feel that if we stayed with our current system and eliminated welfare, corporate giants such as WalMart would drive the cost of labor down with every effort they could muster. Competitors would have to follow suit to remain competitive, and a downward spiral would certainly commence. Under this system, people need any kind of money and getting unemployment and, in many cases welfare (trying to get people back to work), you can’t reject a job offer without losing benefits.
As I conceded, under an NIT I could see this dynamic being significantly altered. Assuming they wouldn’t be required to take a job offer that they didn’t like, if the payment amount dipped below a threshold, I could see many people rejecting it and going home to play XBox.
But snapping this into the larger framework, I also see this as a direct subsidy to business, which is something I simply don’t like. In my brain, it’s hard to reconcile these two outlooks (which is probably why I’m hammering you with nonstop questions. )
I disagree. Look at it like this: You go to Enterprise Rent-A-Car and get a vehicle for $50 a day. That cost includes the cost of wear and tear on the vehicle, plus a little profit. If you can negotiate a cheaper price, what usually gets sacrificed is the profit margin and not the hard costs of the car itself (purchase, upkeep, etc). You, as a customer, have no say in how that vehicle is maintained, only that it’s capable of meeting all regulations and performs the service you pay for. (e.g. having the fenders fall off after you get off the lot would be a violation of contract against Enterprise vs ramping a hay truck like your a duke of Hazzard would be a violation of contract against you)
Now let’s look at labor. The exact opposite is happening. People cheap out on medical care, quality food (vegetables, fruits, etc), and such maintenance items to take a lower wage. Minimum wage is paid as much as possible by business and it’s not enough to take care of a person. The excuse is “Well, we are just paying them for the labor.”
I disagree. The fewer workers you have, the more profit you can generate, even without taxes of any kind. Businesses constantly throw workers out the nearest window to increase their bottom lines.
To stop this would require a non-tax solution.
Doesn’t it, though? You are increasing the overall tax burden, which decreases profits, which will inevitably be passed onto the consumer.
That’s fine, I also support single-payer UHC. It’s only tangentially related to direct-payment welfare like TANF or a NIT, though. NIC + UHC would make an employer offering $1 a day or a 10% discount as compensation utterly impossible.
It would absolutely help employees. Work requirements for welfare are a noble idea, but they give employers tremendous power, since losing their job can cost a person both their wage income and their welfare income (depending on which programs they are in, their family situation, and so forth). An NIT removes that artificial advantage for employers, while retaining an incentive to work, in the form of a subsidy rate versus a flat universal payment.
I addressed most of this above, but allow me to reiterate that it’s tying welfare directly to work that’s the subsidy to business. Tying welfare to being alive and American is a subsidy to the recipients, and only the recipients. It doesn’t help Wal-Mart at all if their employees can stay home and get $20,000, it hurts Wal-Mart’s negotiating position.
I think I follow you. I suppose my challenge is this: what makes a higher minimum wage better than an NIT? The only thing that comes to mind for me is simpler bookkeeping. On the negative side, you have to enforce the minimum wage against employers (they have an incentive to underreport wages paid and pay out less than the minimum, which doesn’t exist under a NIT. Employees have an incentive to underreport their income under an NIT, but they do under our progressive tax system anyway), it doesn’t help the unemployed, and it distorts the market price for goods and services.
Not necessarily. Fewer workers only helps the bottom line if productivity stays the same or increases, for less cost. Replacing, say, a dozen field hands making $50 a day with a $1.5 million machine doesn’t do the company any good unless the machine outperforms the dozens workers to such a degree as to justify the additional expense.
Here’s where minimum wage kicks in, though. You can easily have workers who return less than $7.50 in value, but the business is unable to pay them less than that. The gap between what the labor is worth and what they must pay for it is a deadweight loss. If they can automate the workers’ jobs for less than the minimum wage costs, then they should do it. If they could instead hire workers for less than $7.50, that may well change the calculus. And it does, but the workers are Chinese instead of American.
To sum up: minimum wage can create a deadweight loss, which is a specific incentive to cut labor costs in specific ways, as opposed the general incentive to cut all costs and increase all revenues.
If it’s done right (though now we’re onto another tangent), the combination of cutting military spending and installing UHC instead of the incredibly wasteful and over-costed system we have now, which is a huge money suck, would cover the NIT or at the very least the bulk of it.
Late to the party, but I’ll give you my thinking about the proper role of taxes.
First, we need to determine what the minimum role of government should be. In order of decreasing agreement among libertarians:
Primary functions virtually all libertarians agree with:
Maintenance of a military
Maintenance of police forces
Maintenance of courts of law
From there, I’d go further:
Maintenance of public infrastructure - interstate highways, etc. I don’t think you can reasonably privatize it all.
A minimal amount of regulation designed to correct honest-to-god market failures.
A minimal social safety net required to maintain a civil society and allow markets to work.
We can debate the size of all of those items, but the key to me is ‘minimal’. Only ‘must-haves’ and not ‘nice to haves’.
Once we’ve determined that, we need to figure out how to fund it. While a flat tax would be wonderful if possible, I don’t think you could raise enough revenue with a flat tax that didn’t cost poor people too much money. If you can, great. But I doubt it. So we need some form of progressivity.
I think you can justify a progressive tax under libertarianism in three different ways:
A flat tax may not provide enough revenue unless the rate is high enough to be such a hardship to the poor that it will result in the breakdown of civil society, or at least be completely unfeasible politically.
You could argue for a progressive tax on the grounds that wealthier people consume more public resources. A road with larger houses on it has a higher per-house maintenance cost. A large business may make more use of the courts. This would be especially true in a libertarian world where the poor did not get as many government benefits.
You can argue for a progressive tax from the grounds of utility - a dollar is worth a lot more to a poor person than to a wealthy person. If instead you made the tax flat in terms of utility instead of absolute dollars, it would be progressive. This is probably the least defensible in terms of libertarian philosophy, but I could see accepting the argument if it could be shown that there was no other way to reasonably come up with the necessary funding.
I would also add that if we’re talking about moving to a libertarian government from where we’re at now (and not starting fresh), another requirement of government is to handle the commitments that it has already made. Hopefully some of them could be privatized, but there’s no way I would consider it ethical to tell someone about to retire who has structured his life around the promise of retirement and old age health benefits that he’s now on his own. We would have to grandfather people into a benefit system, indexed perhaps to years before retirement. But that would still leave a huge government liability for decades to come.
It’s this last one that’s a real problem for the ‘no tax’ or ‘flat tax’ crowd. It represents a pretty large percentage of current government expenditure, so at some point a compromise has to be made.
Realistically, I don’t think it is possible to get the size of government rolled back much further than perhaps 25-35% of GDP, so we’d have to figure out the most even-handed, flattest tax structure that still allows us to raise the revenues required for a government of that size. I would definitely include consumption taxes in the mix, provided that they are uniformly applied and not riddled with exceptions lobbied for by rent-seekers.
I don’t see how. If UHC is provided, people are covered whether they work or not. They aren’t going to get HealthCare++ just because they are working. So the wage offered comes back to $$ vs NIC$$.
As I said, I can recognize that dynamic.
Here is where it breaks down for me: NIT is still tying welfare directly to work, it’s just a slight alteration.
If we were to repeal MW today and do nothing else, which I think would be a spiral downward, it would have a cut off point somewhere north of zero, below which I’d imagine a violent uprising when employees can’t afford a pack of gum on the 12cents a decade that the business is willing to pay.
Conversely, if you get an NIT and abolish minimum wages, businesses can offer whatever they wish. A lot of people will work for free just because. I know because when I posted jobs during the recession, I got a huge load of people writing on their application “Will take unpaid internship.” Once Target decides (for a change ) to only have 50 $5/hour full time workers per store, they will most likely have people who are working for free.
This is for multiple reasons. First, without the pressure of providing for oneself or family, people will naturally look for “stuff to do.” This will range from “psychotic gun-toting redneck” to “psychotic hippie tree f…uh… hugger” just depending on what’s in your head. The people in the middle of the extremes of psychoses would be looking for work to do. We’d have some people that do the volunteer thing, but then you’d have people who do actual work. Road repairs? Graffiti removal? Tree planters? burned out lightbulb replacers? (at least for the lamp styles that are within reasonable reach). Why would we have employees for these sorts of things if you can get a roving band of do-gooders to do the same thing for free?
Second, a lot of, shall we say “subcultures” will emerge. Variations that exist today that simply can’t thrive in the current milieu will flourish. A bad example is co-dependence. I have known people who’s SO come in every single day to have lunch with them. Typically, they are driven off outside of personal time. After this change percolates, these people will allowed to work with their SOs at zero cost to the company (outside of the additional incremental of insurance policies and whatnot for the business). This is a bad example, but there are others that if I gave some thought to I could come up with.
It’s already entrenched, today. Nudging it up is simpler and less disruptive than switching the entire workforce to a new methodology.
Honestly, I think the simpler bookkeeping is with the NIT method.
Not really. For each dollar you pay an employee, you pay taxes as a percentage along with it. If you under-report your employee pay, you don’t get as much tax-write off for the wage taxes you paid. It’s an interesting situation of dependencies, but it’s certainly almost always worse to not report payroll than to report it.
That being said, there IS a “shadow economy” as it’s phrased by the US Government that will pay people in cash and avoid those taxes altogether. This will continue under an NIT as it’s not “Taxes” that most people on an under-the-counter basis are avoiding. It’s stuff like INS, avoiding having to explain where the $4,000 you just spent on Coke and Baby Powder went and so forth.
You’ve said this, before. Can you elaborate on how a minimum wage distorts the markets for goods and services?
A dozen field hands would make at least $780 a day. Federal MW is 7.25, times 12 times 8 times 12% for basic overhead – no medical or other benefits beyond mandated ones. $50 a day is 6.25/hr without accounting for overhead.
And that $1.5 M machine won’t be paid for all at once. It’ll get financed, probably over a ten year span, which means you’ll pay $12,500 a month. Assuming you need one person to operate that machine, you’re up to $13,865 for a month (21 days on a five day schedule.) That means you reduced costs by 3.5 days a month (or 16.66%) just by buying that machine, and that’s without bothering to use a machine to it’s fullest potential: Operating near 24/7. That’s only 8 hours a day, 21 days a month. As you add shifts, the cost savings go up from there.
Problem: How do you tell deadweight loss when trying to hire someone? You either have to hire them starting out at near zero and only give them meritory raises until they are “at the level where they aren’t deadweight.” You can’t tell deadweight in advance, and the only way to be proactive in remove deadweight is to have an engaged management. If management doesn’t care, it won’t matter what price point you bring them in at, management won’t get rid of them and you’ll continue to fund deadweight loss.
Plus, Simply speaking: your deadweight problem is rarely at the bottom. Paying someone $5 an hour versus even $12 an hour isn’t that big of a variance. (or $7.25 to the 10.10 that’s being proposed, now). The real deadweights are brought into real positions that retard the company progress from on-high, causing a workforce’s loss of engagement while soaking up the resources that could hire 2-10 more people into the bottom of workforce.
I mean, look at it from a manager/owner’s point of view: I’ve hired people who were great on paper but were terrible at their job. How could I have known ahead of time to set their salary appropriately? And this was for positions no where near minimum wage. If I was a poor manager, I would have never admitted my mistakes in hiring these sorts of people and would have let them continue coasting. That’s where your true “deadweight loss” comes from, which is no where near the bottom rungs.
Do you have any evidence there would be a downward spiral of wages without minimum wage that would cause near violent uprising? This seems to be a boogeyman.
You don’t see how, really? Without employer-paid healthcare, there’s nothing to lure people to work other than the wages. So, $1/day is literally the only thing the employer is offering. That’s it. Maybe they have a kickass breakroom, or the store smells like cookies, but you aren’t getting someone to work at Wal-Mart for $1 a day unless they are hyper-desperate (and/or planning on robbing the place blind), and no one’s hyper-desperate with an NIT.
It doesn’t tie welfare to work at all, save for a dollar of wage income offsetting 50 cents of NIT. Which is an incentive to get higher wages, not lower.
I can’t disprove this until a country (possibly Switzerland, soon) starts offering a guaranteed minimum income, nor can you prove it, so all I’ll say is I highly doubt that millions of Americans will work for for-profit firms for free or for token amounts with an NIT in place. I’m sure more people will work for non-profits and charities and such, or work on their art or whatever, but for the vast majority, the basic equation of work = more money won’t change at all.
It’s not much of a disruption. It doesn’t operate on a time lag like Social Security. It’s arguably less disruptive than the ACA, and it’s being implemented.
I’ll add that to the reasons-for pile then.
Call that aspect a wash, then.
Sure. Say I make widgets. I need widget stampers. I can find ones that can do the job well for $4 per hour. I’m forbidden from offering less than $7.50, so that’s what I pay. My widgets cost $5.50 instead of $5.00. This is a deadweight loss.
Say Jim is looking for a job. He’s not particularly skilled, but he could provide about $4 of value doing a given job. The boss can’t pay less than $7.50, so he doesn’t hire Jim. Jim not contributes nothing to the economy instead of $4 per hour of labor, and whatever job Jim was going to do goes undone. These are deadweight losses.
All numbers hypothetical. Point is, sometimes it makes sense to automate, and sometimes it doesn’t. It’s possible to come out behind by automating.
I’d say you hit on it: a starting wage appropriate to the expected contribution, which can slide up or down (including to zero, i.e. termination) based on how the actual contribution compares to the expected contribution.
My original statement was more for the current/historical systems. Somehow I don’t think the government will give me my UHC money back.
Er. Wrong way with your thought process. I was attempting to detail that there would be an “upward pressure” to stop short of zero and used hyperbole to avoid stepping into what those would be. (And just because only 2 million people are currently at MW doesn’t mean those 2 million people wouldn’t riot when they can’t rub two pennies together. )
Also, “under 29” is a very poor age delineation. After you are on your own at 18, you need to make enough to support yourself.
For thirteen positions I personally posted for 2007-20012, I received 4,973 unique applications. 1,254 of them had “Willing to Intern” marked. So, “a lot of people” here is defined as 25.22%. (“unique applications” because my company’s HR system doesn’t count the same person multiple times even if they apply for multiple jobs)
Apples and oranges, though. (Also, government is not considered “for profit” but I would still lump them with business.) Today, most people intern only because they can afford to live without income. If you have an NIT, more people will be willing to work for free because their needs are met.
You don’t understand my position, then. This changes the very dynamic by which we currently govern our lives. Most of America is dependent upon their next paycheck to come in. CNN Money says 76%.Time says 44%. Take your pick.
With NIT this huge piece of what our society is about just up and disappears. This will change the very social fabric of the American culture. THAT is why “more work = more money” may stay true, but most people, once basics are met, will just do whatever. Some good, some bad, some hermitize within their house playing WoW. But how we act now will be a poor gauge of how we will act 10+ years after an NIT is enacted.
So? You’re making a big deal out of nothing. First, you are making widgets at a rate of 7 per hour. Second, why would that small cost not be offset by your markup? Assuming a 50% margin for easy math, is $10/widget going to destroy your market whereas $9/widget isn’t? It’s not a “deadweight loss” because most large businesses would gleefully pay a guy $4/hour and pocket that extra 50c in cost and still charge the $10.
Labor is a small part of the overall cost in most applications. Notable exceptions are artistic/creative/design work. Even that study last year that falsely treated McDonalds like a company and not a franchising arrangement shows that every single person in the McDonalds family in the US getting the same minimum wage hike of $2.85 per hour would raise the price of all burgers by 68 cents. In reality, only those people at the bottom would be so lucky – and in many cases they are already paying more than straight minimum wage. Either by local minimum wage law or to compete with other companies for labor.
Jim wouldn’t contribute to the economy, anyway. At $4/hr (or $8,320/year) he’s barely paying for his half of the rent and utilities plus some food. What he’s “contributing” to the economy will be the redistributed tax dollars he’s getting with
either welfare or NIT.
Actually, those numbers are real for my company. The only arguable difference from reality, here, is the base wage. And it is certainly possible to come out behind by automating. But it’s hard to come out behind by applying force multipliers. Bad example: Pay 12 guys to dig a ditch for 8 hours a day for two weeks or rent a backhoe with one operator to dig out the same ditch in two days?
We don’t currently allow the wage to fall, in most cases. And “expected contribution” is “what this job normally pays” like it is right now. The only reason it would lower is because people want to think that they’ll save oodles of money.
There is no way to deal with this problem. It’s a problem with human nature: People lie (or “leave out details”). Other people believe them. Other people don’t believe them but don’t care because it doesn’t affect them.
I don’t think we’ve mastered genetic engineering to the degree that will let us fix that particular issue, yet. The point was that dead weight is rarely in the “minimum wage” payment class.
When I called myself an economic libertarian (with a very small l by today’s standard) the idea that government could and should raise much or most of its funds with incentive/disincentive taxes seemed a beautiful exploitation of market principles. Everyone knows about “commons” costs like pollution. Taxes or fungible credits are a way to monetize such costs which would otherwise be ignored and lead to misallocation of resources.
I think all serious economists would agree with the foregoing in principle. Yet many in the thread insist that taxes be neutral – no steering allowed. Does this derive from an assumption that government will always be incompetent or corrupt, and therefore incapable of useful steering? WillFarnaby is the only libertarian to acknowledge that taxes cannot be purely “neutral” (if that term has any meaning), but of course he then follows to the conclusion that there should be no taxes at all! :rolleyes:
Another good idea, which Milton Friedman supports IIRC, is a base level of support to all citizens – without means-testing – perhaps low-cost housing, food stamps, health care. (When this idea is proposed in this forum, someone always mentions that this can’t be funded today without increasing taxes or the deficit :smack: – a comment which seems to me to be an over-enthusiastic celebration of simple arithmetic.)
Someone suggested that taxes be reduced by charitable contributions, dollar for dollar; was that modest proposal just a spoof?
The reason that I dislike “steering taxes” as an incentive or disincentive is that it’s the opposite of what our government should be doing, from a philosophical perspective. The elected officials should be there to enact the will of the populace, but in a way that doesn’t violate principles of liberty or equality for the populace.
And now, bringing reality into that perspective, it assumes that politicians actually know what’s better for the populace than the populace at large and that they aren’t being bribed or otherwise coerced by people or groups with money. Except we all know that isn’t the case. Special interest lobbies rule Washington. And, as we can see in each “incentivizing piece of legislation,” we have an automatic question: “Was this paid for by special interests?”
For instance:
-was the conventional light bulb ban due to concern for the environment or due to lobbying efforts by GE, Sylvania, and such?
-Was the ACA’s passing due to lobbying efforts by the insurance industry, or out of an actual care for the health and well being of the populace at large?
Additionally, a lot of “pork” is done to specifically cater to an elected official’s electorate. To “buy votes” as it were which needs money. This makes it seem like other regulations and decisions also are put into place to increase revenue.
-Was the soda ban in NY for the health of it’s citizens or to drive purchasing more quantities of soda to increase taxes?
-Are street lights timed poorly to increase gas consumption and thereby taxes?
-Are red light cameras there for safety or for revenue?
These leads to all sorts of issues related to the governance we’d expect. This is why I, personally, am against taxes that incentivize behaviors. You get into situations where things like red light cameras are opposed, but you can’t get the legislature controlling those cameras to give them up. In all of these cases, the desires of the majority should win out. The only time the desires of the populace shouldn’t win out is when it creates a situation that violates liberty or equality.
Anyway, you’re talking about “Pigouvian Taxes” - And in fact there’s nothing in libertarian theory to disallow this.
What many libertarians fail to acknowledge is that a ‘free market’ has some requirements. For an exchange to truly be free, the transaction cannot harm third parties, and both sides of the transaction must have equal access to information. If I make a deal with you to sell you a product, but making the product requires me to pollute my neighbor’s yard without his permission, I am in violation of libertarian principles. If I lie to you about the quality or safety or efficacy of my product, I’m also violating libertarian principles.
As a matter of practicality, it’s not always possible for the people engaging in the transaction to be able to identify the people who may be directly harmed by it, and so even if they wanted to they might not be able to compensate them. And even if they could identify them, the burden of having to include the approval of everyone marginally harmed (say, by pollution) in every transaction would clearly cause the market to fail. So I believe there is a role here for government to correct for this type of market failure.
So… in theory a tax on the transaction which accurately captures the cost I’m imposing on third parties and transfers that money to those third parties who are harmed (or mitigates the harm) is perfectly valid. Not only that, if it causes the transaction to be priced in a way that accurately reflects all of the costs, it actually makes the market more efficient.
That’s in theory. In practice, the government is more likely to simply use this as a justification for increasing taxes on everyone. And instead of using the revenue to mitigate the damage from the failure, it’s likely to spend the money on whatever it sees fit to spend it on. Also, pricing externalities can be extremely difficult, as can identifying those harmed by them.
We also have to remember that private transactions can create positive externalities, but we don’t consider paying the people in those transactions for benefiting everyone else. So we have to be careful not to be imbalanced in our selective application of taxes.
Milton Friedman only supported this as an alternative to the existing welfare state of the time, as a better way to achieve the same goal. He never said that doing this was better than doing nothing at all, although he may have believed so.
The reason he proposed this at all was because the welfare system as it existed then had a major flaw - if you went to work you lost your benefits. So there was a huge disincentive for working baked into system. Friedman said it would be better to find a system where even if you received government aid you would always improve your income by working. If instead finding a low-paying job just substituted your welfare check for a job check of the same size, there was no incentive for people to work at all if they were only qualified for low income work.
But if you give everyone a minimum income without means-testing, then every hour they work improves their lives. However, you’re still creating a disincentive for work, unless the minimum income is at a low enough level to cause real hardship. The problem becomes a political one - people will always lobby for more aid, and if it reaches the level that satisfies some people’s standard of living, those people have no incentive to work at all.
On the one hand, we want to encourage private charity over the government doing it. On the other hand, that just lets the government choose what qualifies as a charity. It also presupposes ‘charity’ is somehow different than any other market transaction. If helping poor people in Africa is your goal, are you doing more for them by giving money to some NGO or large charity organization, or by investing your money in pharmaceutical research? Why should the tax system favor one over the other? And who gets to decide?
If charities offset taxes dollar for dollar; the government will get revenue only from those who consider government the best available charity. A Defense Department charity will spring up, etc. The idea is too silly for words.
No. But it looks like I gleaned the intent anyway.
I never said the government is always incompetent, or that such taxes should never be imposed. Rather, when considering such taxes we have to consider the nature of government as an imperfect mechanism, just as the market is sometimes an imperfect mechanism.
If libertarians have a failing in that they see the market as being infallible, leftists have a failing in that they think that the government can always be relied on to correct market failures or social imbalances. You rarely hear a leftist say, “The market isn’t working, and therefore people are being harmed. However, there aren’t any really great solutions here because this is the kind of problem government isn’t very good at solving. So maybe leaving the market alone is the best of two poor options.”
Congress has a 10% approval rating. Many big government initiatives and attempts to fix large problems have ended in failure or disaster. Regulations attempting to ‘fix’ the market get co-opted and turned to the benefit of special interests. Congress has institutionalized corruption, exempting itself from things like insider trading rules. Despite the promises of every new administration in recent memory, the power of lobbyists continues to grow. There is an obvious and pernicious revolving door between Washington and the large economic entities it claims to be regulating.
So aside from any theoretical objections to regulations and taxes on purely libertarian grounds, there is another argument to be had about whether government is competent or trustworthy enough to be the agent assigned to fixing the perceived flaws in the market. Sometimes the answer might be yes, and other times the answer would be no. But a healthy distrust of government action is a good thing and well warranted, and should always temper our desire to run to the government and give it more power to ‘fix’ society.
Even with the current minimum wage, there is no downward spiral towards it, and many companies pay more than minimum wage for a variety of reasons. The minimum wage isn’t the only thing keeping wages going to some absurdly low amount - the reality of supply and demand, and other market forces are doing that.
I think this was only to the extent that other transfer payment programs would be curtailed. He envisioned the EITC as a way to reduce transfer payments. Unfortunately that’s not how it worked out and I doubt he be supportive of how it’s been executed.
Because you are talking about making a fundamental shift to how our job market is structured. I expect businesses to continue being businesses and exploit every advantage they can to come out on top. With MW being the “absolute bottom” you get companies offering more than MW to compete for labor. Once the “Absolute bottom” becomes zero, I can absolutely see the entire wage structure shifting by at least -$5 per hour.
In a perfect world, no business goes “We don’t have to pay people less. We’re fine where we are.” But I’m far too cynical to think that’ll happen.
Can you explain the thinking behind this line of thought? Do you imagine that businesses will charitably seek out those adversely affected by the business’s operations and, even if the victims were blissfully unaware they were being harmed, seek to compensate them? Supposing that a business’ actions cause general pollution 30 years down the road, do you imagine that business should create trust funds for unborn children throughout the world?
If you deign to answer, focus on how such compensation could occur in a purely libertarian world.
Your entire system seems to be based on the idea that governments are almost always incompetent and corrupt, whereas capitalists are honest and even charitable and that a Free Market™ will auto-magically find best solutions.
One needn’t even introduce “external costs” to see that the Free Market does not always optimize. I posted previously about Braess’s paradox in which an entrepreneur builds a toll bridge; and everyone rationally uses that bridge despite that they’d all be better off were the bridge to disappear! (Many free-market fanatics assume that since Microsoft’s market cap is $250 billion, it has provided $250 billion of value. I think, instead, that much of this “value” is akin to the value of the toll-bridge from Ableton to Bakersville in my Braess’s paradox example.)
The upward pressure would be the same thing that keeps 97.7% of Americans above minimum wage: market forces.
I meant nationwide, what would constitute a lot, but thanks for the numbers.
There are basically two reasons to work for free: to gain experience with the hope of it paying off with more money later, or because you’re ideologically motivated. Neither leads people to intern at Wal-Mart. And, under the law, interns are distinct from employees, and can’t do all the same things.
Sure, there will be changes. I just can’t fathom how they’d be in the direction of working for giant corporations for no benefit. If anything, it’d be in the opposite direction, fewer people willing to work those sorts of jobs for even $7.50, let alone less than that.
It’s a textbook deadweight loss, which is bad for everybody: producer, employee, and consumer. As for “So?”, I never said it’d bring the economy to its knees, obviously it hasn’t under the present system, but it’s still a bad thing that makes us collectively poorer.
That is a contribution. Compare to a situation in which he does no labor, and collects more than $8,320 in welfare. Which is better?
Again, it all depends on the specific case at hand.
If it’s unthinkable to lower wages to match performance (as opposed to just terminating the employee), that’s a flaw with the way we’re doing business.
Well, let’s work on the problems that we can deal with, then.
)
) to only have 50 $5/hour full time workers per store, they will most likely have people who are working for free.