Yes I understand that. Keynesian stimulus doesn’t really work that well when you already have full employment and utilization of capital. You see the part where I say:
“you would increase economic activity by paying half your unemployed to dig holes and the other half to fill them up”
I understand that stimulus is to smooth out the effects of a recession.
I also understand that you can’t keep doing it forever. What you seem to have trouble admitting is that Keynes did in fact say you could pay the unemployed to do useless things and this would have a stimulative effect. Do you havea counter cite saying that Keynes didn’t actually write those things in the book that he wrote?
If stimulative spending alone could overcome every other obstacle to economic growth, no one would ever have a recession. Do you think that Japan’s recovery would have been dramatically better if they spent the money building an airport with a positive ROI? It wouldn’t MATTER how much ROI the project has, the payoff is too far down the line. This is literally a case of “Do something, anything. Doing anything is better than nothing”
Well, you’re the only poster I know that uses a “sign off” so I frequently forget or don’t bother to erase it. But if it bothers you I will try to remember to erase it.
Well, to be fair, we were discussing how to increase wages, not create more jobs. What I have read from the CBO seems to indicate that an increase in MW would increase incomes for MW earners. If they were still working - I think the estimate is that an increase to $10.10 would cost half a million jobs, or thereabouts.
And it is possible that the increase in automation will increase wages - for the people who build and program and install and maintain the automation, but those people don’t make MW.
If they raise MW to $15 an hour, that is good news for the companies that produce robotic checkout stations that will run at an average cost of $14.99 an hour.
And my mom still has the glassware they used to give out after you filled up the tank a set number of times.
Most of those very low wage jobs are going away anyway and have been for years–the self-serve gas pump or the self-check at the market doesn’t ask for anything even approaching minimum wage. It’s much cheaper for the storeowner to have 4 or 6 self-checks and one worker, even well above minimum wage, than 4 or 6 minimum-wage workers; if you get people to wash their own windows, you don’t have to pay even ten cents/hour for an attendant to do it for them. Arguing that “oh, if we don’t raise the minimum wage then all of these other people will have jobs and the stores won’t automate” is ignoring decades of real-world economic experience.
Isn’t this exactly what you want, though? Walmart is able to keep prices really low, in part, because they keep costs low. Low prices help the poor and since rich people pay more taxes it’s mostly their money that goes to the assistance programs. So: low prices help the poor, the rich pay for the assistance programs.
I don’t disagree. However, the question was why some US jobs haven’t seen as much income growth as others. I see it as a boon and I hope US policymakers take it into account.
Why in the world would I want to tie my job interests with people who have a completely different job set and possibly completely different priorities.
I am not disputing that he said it. I am pointing out that he said other things that apply to the notion that we should borrow and spend a shit ton on useless infrastructure. Because you can’t keep doing it forever, because ROI does matter.
Spending money for work that does not return anything means the work ends when the spending ends, and then you have nothing except debt, and no new ways to pay back the debt. Or you raised taxes, and spent the money on something that nobody wants instead of letting the tax earners spend the money to pay people to produce something somebody wants.
There is a good deal of the problem. It is not always the case that doing anything is better than doing nothing.
I have a million bucks. I want to spend it on bourbon and porn. Instead the government takes it away and pays people to dig holes and fill them up. How does that help anything? If I had spent the money, Miss January would have money to spend to go to law school, the bourbon industry would be able to pay their distillers, and I wind up with a hangover, calluses, and happy memories.
If the government spends it on hole-digging, the hole-diggers have the calluses and happy memories but nobody else benefits.
But the hole-diggers will spend the money that they earn. If they use it for rent and frozen pizzas, then the landlord has more money to repair that flooded unit, and the pizzeria gets more orders, etc.
Not saying that this always works, just that there is some benefit, even if the work isn’t needed.
I’m not arguing that, however…I’m merely saying that it will accelerate a trend that’s already happening and will continue to happen. Those store will continue to automate because it makes economic sense for them to do so. Pushing MW to $15 a hour in a short time span will simply have more stores or businesses jump on the bandwagon or accelerate programs they are already undertaking. I suppose you COULD get rid of MW to slow the trend, but I actually don’t think you could attract many US workers for wages very far below the current MW anyway, so it probably would do nothing…it’s certainly not going to stop the automation trend.
It was being discussed earlier in the thread that the way to raise wages would be to have more unions or stronger union representation. Since that’s obviously not the trend the only way you could do that would be to force companies to have them.
Well, the effect of wages at even that price point have been more automation, but I agree that at $10/hour you get a more minimal effect than at $15/hour.
So instead of me spending the money on whatever, the hole-diggers spent it on whatever. Or we borrow it, and my children have even less to spend. Or the government simply printed up the money, and the currency is inflated so that everybody has less money to spend on whatever.
You are simply robbing Peter to pay Paul, AKA TANSTAAFL.
Possibly, though if Peter wasn’t spending that money, then Paul’s spending might help the economy more than having it sit under Peter’s mattress.
I was just pointing out that you were incorrect when you said “nobody else benefits” from this kind of transfer, but you seem to have accepted that, so we’re all fine here.
If someone takes a lower wage than they need to support themselves through their life, that’s stupid. That we don’t register the stupid until we hit the living day-to-day subsistence level doesn’t mean that isn’t stupid, it just means that this sort of stupidity is built into us and unavoidable.
And it’s effectively the equivalent to having a higher wage.
I didn’t argue that there was. I think you misread. I didn’t mention productivity at all.
The question the OP asked wasn’t whether it is a good idea to increase wage distribution, just what the mechanisms were whereby it could be achieved. I was pointing out that government services can be considered a form of wage redistribution. It’s just one where the government gets to decide how you spend your money, instead of you doing so.
From a mathematical standpoint, it’s the same thing. From a human, emotional level, it may not be. We like the option to blow our money in Vegas even if it means that we’ll end up starving to death in our twilight years (which society won’t allow, thus causing social security programs to be initiated, which then means that taxes have to be imposed on those who are making greater-than-necessary to self-support, to finance the venture, and all the money which went to the poor beyond subsistence was basically just pointless.)
As to whether there are genuine moral hazards and disincentives, there was a news article about some town giving people a living wage. Personally, I’d rather see how that turns out, than making a blanket denouncement without any data to back it. I’d, similarly, be concerned about the issue. But I’d rather have data than concern.
Well for starters, setting the national minimum wage at $15 should be a good start.
This illustrates a classic problem with how far the brainwashing has gone in terms of prejudicing easily-controlled people against laborers. In what way is $7.25 or $9.25 or $5 or $0 the “proper” minimum wage? Is it a universal constant? Is it tied to the speed of light?
Minimum wage is what we say it is. There is no “earned” about it, everyone should have it, full stop, the end. It is wrong to ask if workers have earned it. Instead ask how much a living wage is and make that the standard.
Wal-Mart keeps prices really low, in part, by exerting downward pressure on retail wages/benefits and, through their cost pressure on their suppliers, on manufacturing wages. In fact, Wal-Mart’s pressure (“if you want to keep us stocking your products, you will reduce your prices every year”) has forced more companies to outsource production to overseas destinations. That means the poor get low prices, but they also get lower wages and fewer job options.
Meanwhile, the rich pay for the assistance programs, but they are also far more likely to benefit from Wal-Mart stock, and they get lower prices too (more than 80% of American households shop at Wal-Mart at least occasionally).
I’m not trying to be a smart ass (really) but isn’t all of that mostly good? Jobs are exported, reducing world poverty; keeping the price of products low helps America’s low-income earners. Rich people pay the taxes but get some back from the stock dividends.
If you can come up with a solution that keeps all of that and increases low-income jobs and wages then I’ll be all for it (assuming I agree). Philosophically I’m not against MW (compared to the size of the entire economy it is minuscule) but I think it hurts more than it helps.
Well, it does illustrate the classic problem, no doubt. But note that I never said there was some sort of “‘proper’ minimum wage”…it’s pretty obviously an artificial construct. The ‘proper’ wage for anyone is what the market is willing to pay for their services. It’s not ‘wrong to ask if workers have earned it’, since that’s the metric by which their labor has value…if their work has less value than what they are being paid then why should companies pay them? And that’s the thing…more and more, companies are striking back at those artificial and arbitrary (and every increasing) minimum wage levels that are ‘what we say it is’ by automating processes or writing expert systems or streamlining their processes to require fewer and fewer workers who also either need less skills and are thus more interchangeable or who are very vertically skilled and cost more but who do more through the use of those tools. Try and force through a ‘living wage’ and you will see an explosion in more and more automation, meaning you will have even fewer of those kinds of jobs (though more in, say, my own field…thanks for that btw!). Of course, eventually that labor will get used for something…it will be an untapped resource that someone will find a way to take advantage of it, but in the short and medium term it’s not going to be good for those low skill minimum wage types to try and just set the bar where-ever ‘we’ want it to be. But I know it’s the battle cry of the liberal left that this is what we should do, so I say go for it and lets see what happens. Personally, I think you guys would be better off pushing for something like that basic living stipend I mentioned earlier, since I think in the gap between today and the near future (next 5 years or so) and where ever the new balance is for labor (the low skill labor in the US will eventually be doing something) is not going to be bridged effectively through minimum wage, since those jobs are being automated into extinction. IMHO of course, and YMMV and all that.
Its wrong because you are thinking of the purpose of minimum wage incorrectly. Minimum wage is most definitely not the lowest price labor is worth. It is simply the lowest amount a laborer may sell his labor at. There’s a slight semantic difference but it makes a huge difference. You and I both agree that there exist labor that is worth less than $15 an hour, or $7.25, or whatever. But minimum wage inflates the cost of the labor to employers up to that number. It doesn’t matter if picking up gum in the streets is only worth $1 an hour, the purpose of minimum wage, as created in the US, is:
If the market is only willing to pay $5 per hour for making widgets, well too bad, you have to pay them $7.25 or $9 or $15. Otherwise, you have the government subsidizing, like they currently do with WalMart, low wage employees that cannot survive without assistance. The public subsidizing the private is exactly what we don’t want happen. It creates undue burden on the taxpayers and wrongly enriches companies that have the power and money to exploit this loophole. Therefore, it most definitely IS wrong, and should not be allowed. I personally think it should be tied to a living wage because that makes the most sense to me. If nobody is working full time and still taking public assistance, then the taxpayers won’t be burdened, the economy will have plenty of higher earning consumers, and businesses will see demand rise. For too long have we tried the trickle down theory. Guess what? It doesn’t work! So I tend to see claims of full automation and exiting jobs as overblown fearmongering. People should be paid enough so that if they work full time, they can support themselves and have a little left over. More consumers, higher purchasing power will create the demand that businesses need to grow. A nation of poor people is not going to buy much
If their labor is worth $5 per hour, and the MW is $15, then I don’t pay them anything. I wouldn’t hire someone if I lose $10 an hour by doing so.
Neither does a nation of umemployed people.
There are no Peters in the US that hide enough of their money under the mattress to make this a reasonable analogy.
Invested money does not leave the economy. If the government taxes it away and spends it to hire people to do things that nobody wants or needs, it is simply forcing someone to invest in something that has no ROI vs. investing it in something that has one.
I wouldn’t advocate for wasteful projects. From my reading, there are numerous potential infrastructure repairs and upgrades in the US that would be very useful to communities and increase community wealth – do you disagree?
What jobs will they be doing if you force companies to pay a higher salary than the value they get out of the labor and they resort to more and more automation and fewer and fewer jobs at minimum wage? Yeah, the government can certainly force companies to pay whatever minimum wage we collectively decide to arbitrarily set, even if it’s above the value that those companies get. But we can’t force them to hire all of them at that wage, and we can’t force them to stop automating or using more and more expert systems, or offshoring and outsourcing. You might THINK it’s ‘fearmongering’ and ‘overblown’, but if so then you’ve had your head buried in the sand for the last 20 years, as this trend has been accelerating and I see no indications it’s going to stop or even slow down. At some point in the next 20 years most of those minimum wage service type jobs will be gone…as will more and more of the old style manufacturing jobs, at least here in the US. What jobs do you suppose won’t be subject to automation, expert systems and outsourcing and will be paid your $15/hour as minimum wage?
Yes, I do. I don’t think there are large numbers of “shovel-ready” projects that aren’tgoing to be done anyway, that would require large numbers of people with no experience, and that would be done based on a strict cost-benefit analysis rather than a desire to hire the unemployed. The current unemployment rate is 4.9% - how much do we want to raise taxes and/or borrow money to reduce that below what it would be under some other, more laissez-faire policy?
I am aware of the Society of Construction Engineers estimate, or whatever the organization’s name is, who say “the US is in desperate need of giving us billions more money”, or the high-speed rail folks who say “give us billions more in subsidies and I am pretty sure that in ten or twenty years we will be breaking even” or the solar industry that says “we are really cost-effective if you don’t count subsidies from the taxpayers” and so forth. No doubt each has some projects that would actually make sense. A general approach of “let’s throw money around and see what happens” leaves me unconvinced.
The subsidy is going in the other direction.
Assume that people need the equivalent of 15$ per hour to live. Walmart pays them 10$ and the government provides 5 in benefits. If Walmart fires the person then the government will provide 15 in benefits. If the there was a law denying benefits to Walmart worker Walmart would have to raise the wages to 15$. However, since Walmart does not have an unlimited supply of money they would have to higher fewer people and the unemployed then would need the entire 15$ provided by the government.
