Oh I’ll brush up on the theory and correct any errors. But it’s common sense that people who buy Lamborghinis aren’t doing so to ‘maximize resources’ if they could buy Toyotas which provided the same benefits at a fraction of the cost.
Unless you’re just using some ambiguous definition of ‘resource’, in which even just a ‘warm fuzzy feeling of being a Lamborghini owner’ counts as a ‘resource’ even though it’s in no way economically measurable, rendering the theory meaningless, since then ‘resource’ could mean anything you want it to.
Now this here is productive. We are in complete agreement. I am pro-free market and I know that we don’t have a perfectly competitive market in anything really. It’s an abstraction. My objection to a previous posters example is that if it’s a spectrum with perfectly competitive at one end and complete monopoly at the other then labor, especially in a global market, is closer to competitive side than monopoly side. Thus, conclusions made as if labor were not at the other extreme were less helpful than treating labor as competitive. And evidence shows that labor is indeed relatively competitive.
Now, being well read and compassionate I can see the writing on the wall with regards to the future of pay for labor. We have ~6 billion people in the world who need currency to exchange for goods and services. A lot of those ~6 billion don’t have much market value. Therefore I’m for direct income. I like to consider it sharing in the positive externalities of human activity just as we all have to share the negative externalities of human activity.
You do raise an interesting point about selling the idea of basic income. That was raised in another thread and it is a conundrum. One reason I participate in these threads is if you have an idea on something controversial it helps to get differing viewpoints. It also helps to see how the message is received and how to advocate for it effectively. I know I don’t have a definitive answer in how to convince a critical mass to adopt this but one way to get an idea support is to support it. When these discussions come up, acknowledge people need resources to live and that in an advanced economy millions if not billions aren’t going to be as efficient as machines and AI. With this realization an argument can be advanced that distributing currency to facilitate demand makes everyone richer. We need to get over the idea that market value of a worker is strictly tied to morality or personal choice.
Note, when I get into these minimum wage debates I don’t just say scrap the minimum wage and scrap the safety net. I say get rid of unnecessary market and productivity distorting policy and put in place rational pro growth, pro poverty alleviating measures.
My employee’s labor is worth around twice what I pay them. Am I being a terrible boss, or am I allowed to take part of the worth of their labor to pay for rent and utilities and myself? (I pay well above MW.)
This is does. I have worked a few different manufacturing jobs, back in the 90’s when such tings were more competitive. Non-union jobs usually paid better than union jobs. One of the specific reasons for that was because they didn’t want to give the workers any reason to unionize. It is cheaper to treat your workers well, than to be forced to treat your workers the way a union tells you to.
I always like the idea that unions were a threat to the non-union shops to make sure that their employees were taken care of enough that they never even thought about starting a union.
I agree completely with the idea of some sort of basic income. If done right, everyone will be given enough to survive with dignity. Not with luxury or excessive comfort, but pretty much the basics that we as society determine are necessary to not be left behind. I call this sustenance, shelter, and clothing as the most basic of needs, but in order to not be left behind in this world, and allow yourself to become competitive, you also need healthcare, communication, education, and some basic level of entertainment to be provided.
Once those are in place, I would support abolishing MW. Then people can trade their labor for what they feel it is worth. They want some small luxury or comfort, then they need to spend some time creating productivity for someone else. But they are no longer a hostage to their workplace. Many people accept job conditions that are unacceptable, because their other choice is homelessness and starvation. If the only consequence of not working is boredom, then people can make a much more rational choice as to how to spend their time and labor.
If someone doesn’t have to spend 60 hours between 2 jobs trying to make ends meet, then they may do something else that is more productive to society. They may educate themselves, and join the workforce as a highly skilled individual. They may independently study, and discover some new math or physics proof. They may write a book, or a symphony, or create another form of art. They may just sit and ramble on and on on a message board, at least acting as a sounding board for others to ply their ideas.
But it does need to be done in the right order. Abolishing MW before creating a basic income is like pushing people out a plane, then starting to draw up designs for parachutes.
You’ve never heard of wasteful spending? Of course they could buy four Toyotas for the same amount as one Lambo. People do that. Did you actually imagine that people always maximize resources?
The pleasure they derive from having a Lambo is something they value more than the pleasure from having four Toyotas. People can be irrational that way.
That was my point, the premise of neoclassical economics hinges on people always operating as perfect little “Jews” who’d never spend a penny more on a piece of toilet paper than they’d have to, is that not correct?
Or even if you’re not arguing that this isn’t what people always do, but just what is “rational” for them to do, then it wouldn’t follow that ‘irrational’ is even ‘bad’ to begin with.
If a millionare could afford a Lambo and still live comfortably, then why would he be “wrong” to by the Lambo instead of the boring Toyota.
Hell, a person could ‘survive’ living out of their car, and plenty of homeless families do it. So using the same logic then any one who is a home owner is automatically ‘irrational’ if they could survive living in their car without a mortgage payment.
So even arguing this is irrational flies in the face of common sense, unless you’re going to go and tell all your neighbors that their idiots for owning a home when they could live under a bridge out of the back of a van and still make it to work, lol
Your ‘point’ is a straw man that is based on a complete lack of understanding of the modern economics.
The basis of the analysis in this specific area is not about ‘maximization of resources’ - that alone shows a complete lack of the understanding.
It is the maximization of the subjective relative utility (of a given consumption item). The consumption of the Lambourghini poses absolutely no problem from the point of view of the understanding of the ecomomic relationship. They are deriving extra ‘utility’ from their ostentatious consumption - the social status, or whatever it is they personally find attractive… Of course it is very possible to further develop the basis of the analysis in the modification of the strictness, but the basis of the analysis is the point of departure for the body of the modern economics including the interesting modifications in the behavioral school that bring in certain structural deviations from the general rationality (as meant in the economic jargon).
When one spends paragraphs getting a fundamental point completely utterly wrong, the only thing that can be concluded is the person has literally no understanding of what they are talking about.
It is indeed like the creationist people who go on about the Evolution ‘just’ being a “theory” …
The econometric evidence on the labor markets is mixed. There are indeed labor markets that are reasonably competitive taking into account the structure, there are others that do not seem to be.
It is also the case that the empirical econometric evidence on the minimum wages is mixed… obviously at some points it becomes absolutely negative. but it is not obviously as negative as the abstract analysis would suggest below certain thresholds. This is not to write as a fan of the idea of the minimum wage, I am not. But to be rational the evidence on it is unclear.
It is of course not the most efficient solution and in the current world of technological change towards more and more automoation … a (imperfect? bad?) solution that may be soon obsolete…
this is a rational approach and it is also to be added that to preserve support for the free markets, the social side payments are likely the best solution or we face a rise of the protectionism and anti marketism on both the Left and the Right.
it is the political economy of the de stimgatisation.
Something needs to be seen as having the broad benefits so it has the broad political support. How that happens…
Not correct. No economic theory ever proposed that everyone acts to maximize their own resources at all times. That’s staggeringly stupid.
“Irrational” is not always bad. I’m wasting my resources debating ethics with people on the SDMB. I could, instead, be washing cars for minimum wage. My choice is irrational, but not bad.
No one said he was “wrong.” He’s irrational, but a lot of things are. Why do people eat fancy (expensive) meals, or go to see movies, or buy golf clubs? All quite irrational, except that it gives them pleasure…and thus not quite as irrational as a dispassionate (Martian!) observer might think.
It’s about keeping and creating companies in America because it has the priority in economics. That’s why the income from these positions are designed to be subsidized for because we have to compete with extremely poverty stricken parts of the world that would super mega happy to work for a fraction because anyone that can function physically can do most of these kinds of jobs.
Poor workers in America typically eat and live far better than so many other parts of the world and big corporations would have no issue packing up and leave as plenty sure do anyway. It’s a delicate balance that politicians and economists have to deal with.
If it was that easy to pay a retail worker $20 hr to sort potato chips on a shelf then we would but investors like to maximize their returns (you would too and if you own stock you should know) and CEO’s are hired to do just that. Some businesses are so highly competitive that one could make 200 billion one year and lose 300 billion the next year…those are serious stakes not to be taken lightly by employees that have no stakes involved other than needing a job.
…but again under this definition, it could mean anything you want. Since a person could find more ‘utility’ in donating to a church (e.x. the utility being the ‘warm fuzzy feeling’ of donating to a good cause) than investing in stocks.
So in plan English rather than quasi-intellectual jargon… what does this even mean? That “people do things they enjoy… because they enjoy doing them”… uh yeah, seems like a no-brainer, lol
Okay then, so give me a day-to-day example in practice of what this means in plain English rather than Martian talk:
*It is the maximization of the subjective relative utility (of a given consumption item
*
Since you’re saying “utility” can mean anything, even if it’s not economically measurable (e.x. a feeling of social status from owning a Lamborghini).
So… then a pyromaniac could decide to burn $1 million dollars in cash, if he got such a ‘high’ out of it that the ‘utility’ of him choosing to burn the cash outweighed whatever sense of satisfaction he’d have gotten in spending it.
So again, your definition sounds entirely meaningless, since there’s apparently no way to distinguish ‘utility’ from ‘non-utility’, which seem to be entirely subjective.
…but as I pointed out in another thread, from a natural selection perspective, ‘survival of the fittest’ merely refers to one’s ability to adapt to one’s environment with procreation as the end goal. So there is no such thing as an “inherantly” fitter trait, such as intelligence, productivity, strength - etc - they’re only as “fit” as they enable the end-game of survival and procreation.
…therefore a welfare recipient with 10 kids is more ‘fit’ than a full-time entrepreur with just 1 kid, since his lifestyle as a welfare recipient with 10 baby mommas made him more successful at procreation.
So there’s no way to argue that there’s anything ‘wrong’ with this, it’d be like arguing that it’s ‘wrong’ for a mosquito to drink another’s blood, but if the mosquito is able to survive and thrive by doing so, then I don’t think it cares much, lol
I’m going to venture that you think it’s wrong for a welfare recipient to take others’ resources without contributing their own to an economy. But since there’s nothing ‘wrong’ with this from a natural selective perspective, then where does your view that it’s wrong come from? God?
Plus no serious economists try to equate economics and social science with natural science such as the scientific method or the theory of evolution, since of course social sciences do not have the rigorous means and methods of testing and controlled experiments that sciences like physics do, and of course therefore aren’t ‘exact sciences’ such as the laws of physics.
So… what’s the difference between deriving the most subjective relative utility of a given Lamborghini, and not deriving it?
Honestly this ‘theory’ has way more in common with young earth creationism than the theory of evolution, since it’s unintelligible, and has no means of being tested or any practical application to day-to-day situations.
I’m not sure if he’s trying to relate this in some way to natural selection, but again that’s a total misunderstanding of the actual theory of natural selection and Darwin’s concept of ‘survival of the fittest’. Since in the actual theory of evolutionary natural selection for example, ‘utility’ and ‘resources’ are completely meaningless beyond how they enable the individual’s ability to go on to procreate.
Competition and ‘social status’ in chimpanzees or the animal kingdom for example simply serve to that end, since the ‘higher status’ males get the first pick of mates, and have no inherent ‘virtue’ or evolutionary purpose in themselves beyond their ability to acquire more mates.
Now this might be wrong to, but I think I’m onto part of what he’s saying.
I think he’s making the argument that no one does anything which is purely self-destructive, and that any thing anyone does or consumes has to provide some type of perceived benefit.
I won’t argue that because I’d say it’s more or less common sense. But again this is so vague it could still mean more or less anything that you want. A person who decides to commit suicide for example might ‘feel’ that life is so bad that there’s more benefit in death, even though most people would argue that killing yourself is generally a poor choice.
Likewise the problem with this argument is that it tries to lump all types of ‘self-interest’ into one broad category, a la Jeremy Bentham’s utilitarianism.
When in actuality I’d say there are different ‘tiers’ of self-interest which can just be interchanged with each other, some of course higher tiers of self interest than others.
A heroin addict, and a person deciding to quit heroin for example are both acting in a type of self-interest - the addict is trying to satisfy the heroin craving even if it leads to bad health in the long run, while the quitter is denying himself in the short term with the goal of better health in the long run.
But of course it would be pretty nonsensical to equate short-term, harmful interests, with interests that provide long-term well being.
Likewise while a person donating to a church and a person stealing from a convenience store are both pursuing self-interests, the thief is receiving the immediate small financial gain from the theft, while the churchgoer is receiving the ‘warm fuzzy feeling’ of helping out his community, obviously the latter is on a higher tier of self interests, while the former thief, a lower tier of self interest.
So much like the folly of Jeremy Bentham’s utilitarianism, this theory likewise seems to fail to distinguish between the different tiers of self-interests and pleasures, and rather just try to pretend that all are created equal.
Manufacturing jobs are vulnerable to foreign competition, most minimum wage jobs are not going anywhere. Cleaning offices, flipping burgers and locking up at night are not things that can be done in China.
About the only MW jobs that can be outsourced are call centre jobs (but as we found in Britain, there’s considerable local advantage even with this kind of work and after a wave of outsourcing many call centre jobs are returning).
Plus of course there’s the big question of whether trying to keep jobs artificially (by government subsidy) is a good idea in the long run. As mentioned already, US unemployment is not high, and part of the reason for the high living standards you allude to is access to cheap stuff. If the government used that money for, say, infrastructure that might create more jobs and get more bang for their buck economically. But that’s a big topic in itself and best parked for now.
Sure. I’m dubious however that the critical factor would be the pay of that company’s lowest-paid employees, but I’d love to see an example.
No it isn’t. If you can find the labor at that price or a substitute good/service at that price than that is what that labor is worth. Just because you are making a profit with the combined utilization of your knowledge, operations, labor, and capital doesn’t mean that any one portion of that synergistic combination is worth what you are paying for it plus the profit. As a matter of fact you can lose money even if you pay market value for some labor due to the final product/service or business model having a flaw in another area.
The flaw can be as simple as owning a McDonalds and having a Chik-Fil-A pop up next door. There goes a good chunk of profit and the value of labor could actually increase as competition for labor increases. Even though profits at the McDonalds dropped precipitously. The value of labor is the market value of the labor.
Job security and other benefits have a real value that may actually outweigh some marginal increase in hourly wage. For example, for my wife to leave her current job to give up some of the job security and take on more risk the annual dollar value would have to be an increase of approximately + $60,000. And that’s assuming purchasing power parity. Tenure (and other risk mitigating benefits) have that value to us.
I wouldn’t abolish MW before creating basic income because I think it’s politically impossible and without some form of need based social safety net in a society as productive as ours I don’t think it’s moral. My thinking is motivated strictly by what works as an incentive to maximize production. Then how do we redistribute the wealth that is created follows.
So what’s the purpose of trade? It’s to get something you want for something you want. What you want and what the other person wants are valued subjectively and differently. Just because an absolute and precise value can’t be determined for a particular object or service doesn’t mean relative value can’t be determined. This allows trade to exist. The aggregate of trillions of trade transactions begins to establish pricing for things.
That’s just how it is. Prices are actualized by the act of trading. But accuracy is impossible and is constantly in flux.
Now if you are talking about biological survival of the fittest, you are correct in that exploiting the welfare state to procreate more efficiently and at others’ expense is a winning strategy at least in the short term.
No, it means that as the first approximation the human beings tend to have preference orders of desire/enjoyment and within their own preference orders they tend to rank and select ‘rationally’, and this means not contrary to their own internal ordering of selection preference.
It is simply an organizing principle for the modelling of the selection behavior, and as a general principle is a reasonable generalizable basis.
Ah already the plain language appeal of the anti learner.
The technical language has the specific meaning, that you have this anti learning reaction only tells us about your personal hostility.
The jargon of the economics, like the jargon of the biological sciences has a specific basis. This sort of response is not different than those anti-evolution characters who rage on against the specific language of the biologists or who clumsily and deliberately misuse it.
The failure to be able to understand the economics is not the failure of the discipline it seems clear, but a hostility in you.
This is irrelevant to the economic subject, and confuses moral questions for economic issues. The economic analysis looks at the incentives, if there are the strong incentives for something that has what are held to be the negative outcomes, then it seeks to the paths to changing the incentives.
No, you are 100% wrong again and demonstrate again zero understanding.
It is 100% wrong again as you do no understand the concepts and it is clear you are coming at trying to understand the concepts from some a priori political point of view, or some kind of the vague moralizing.
There is no statement in the pure modeling economic analysis about any moralistic outcome - self destructive to an individual or not.
It is unsurprising you have been unable to understand and are reduced to many paragraphs of not very coherent non-sequiturs.
There is no further point to this hijack, it is clear enough there is no understanding of the economics, no ability to comment on the actual content of the economic theory, and only there is a desire to rant in a anti educated fashion from a political point of view…
Well, if we raise the minimum wage to $15 per hour and Walmart chooses to continue to employ that person, then I guess that will prove their work was worth more than $15 per hour to Walmart.
I suspect most large companies have a pretty good idea how much their employees are worth to them, and that they aren’t drastically overpaying out of the goodness of their heart. On the other hand, workers who fear unemployment might be willing to accept substantially less pay than their work is actually worth to the company. It seems to me that a benefit of minimum wage is that it sets a floor on how far workers can bid down the value of their own labor.