Minimum Wage Vicious Cycle

[PRB]

We can get rid of the minimum wage once the Border is sealed and the rent seeking 14th amendment corporate person is abolished. Good idea also to eliminate rent seeking law/regulation in the professions- especially medicine and law.

in other words, we can have less government after we have more government?

 

[NorthCarolinaLiberty]

in other words, we can have less government after we have more government?

More like your words rather than other words, at least with the border (I don't know what he means elsewhere). The border guards are not actually on the border. They are at internal roadblocks up to 100 miles inside the border. I have documented on this forum how roadblocks are ineffective. I documented how Richard Stana of the DHS said the goal is to secure 30% of illegal activity at the border, leaving 70% unsecured.

So, your more government is actually people getting their head out of their ass and doing some real work. That would amount to less government.

I don't even care about this issue, but anyway, you're a fake libertarian on this site just trying to troll. Your love of big government is also well documented. If any new members want more detail, then just let me know. PRB's posting speaks for itself, but there are other gems he's posted.

 

[PRB]

More like your words rather than other words, at least with the border (I don't know what he means elsewhere). The border guards are not actually on the border. They are at internal roadblocks up to 100 miles inside the border. I have documented on this forum how roadblocks are ineffective. I documented how Richard Stana of the DHS said the goal is to secure 30% of illegal activity at the border, leaving 70% unsecured.

So, your more government is actually people getting their head out of their ass and doing some real work. That would amount to less government.

I don't even care about this issue, but anyway, you're a fake libertarian on this site just trying to troll. Your love of big government is also well documented. If any new members want more detail, then just let me know. PRB's posting speaks for itself, but there are other gems he's posted.

On what basis do you conclude i am a fake libertarian? Just because I won't tell you about muh gunz?

 

[NorthCarolinaLiberty]

If anybody is interested in PRB's misdeeds, then just let me know. He and I have discussed this at length, so I am only addressing other members here. Thanks.

 

[PRB]

If anybody is interested in PRB's misdeeds, then just let me know. He and I have discussed this at length, so I am only addressing other members here. Thanks.

In other words, you won't answer my questions, because you can't. You can only fool people (most likely in private) where I can't respond and hope that people will buy your lies.

I ask you time and time again to provide evidence, the best you can do is accuse me of lying because I didn't tell you about muh gunz. I asked you to prove I am a liberal, Democrat, Jew, paid shill, fake libertarian, and the best evidence you can cook up are

1. I didn't tell you about muh gunz
2. I said in a conversation that I belittle people (not always, not everybody)
3. I admit that sometimes I troll

I didn't ask you about my "misdeeds" I asked you what basis you have for calling me a fake libertarian and other names you are so fond of.

 

[NorthCarolinaLiberty]

You can only fool people (most likely in private) where I can't respond and hope that people will buy your lies.

If anyone is interested, then please feel welcome to post right on this forum. Thank you.

 

[Paul Or Nothing II]

If anyone is interested, then please feel welcome to post right on this forum. Thank you.

Ok, let me volunteer (since I do have an affinity for voluntaryism )

Libertarianism, like any label out there isn't always easy to pin down since there are even socialists like Chomsky who call themselves Libertarian(-socialist) but nonetheless, since I've seen PRB sneak in liberal agenda into the discussion on more than one occasion (although I'll also concede that I've seen him defend "libertarian" positions a couple of times as well), I'm curious to know what other generally "anti-freedom" ideas he espouses.

Honestly, I don't know if he's an anti-liberty troll or not but I think if a person has defended a view on one occasion & opposed the same view on another occasion, within a fairly short space of time, then I think it's highly likely that such an individual isn't genuine & could very likely be a troll.

 

[PRB]

Ok, let me volunteer (since I do have an affinity for voluntaryism )

Libertarianism, like any label out there isn't always easy to pin down since there are even socialists like Chomsky who call themselves Libertarian(-socialist) but nonetheless, since I've seen PRB sneak in liberal agenda into the discussion on more than one occasion

DO quote which occasion. Please, thanks.

(although I'll also concede that I've seen him defend "libertarian" positions a couple of times as well), I'm curious to know what other generally "anti-freedom" ideas he espouses.

Honestly, I don't know if he's an anti-liberty troll or not but I think if a person has defended a view on one occasion & opposed the same view on another occasion, within a fairly short space of time, then I think it's highly likely that such an individual isn't genuine & could very likely be a troll.

What's a good example, you're not a liar or child molester like NorthCarolinaLiberty, so I expect you to know the answer.

 

[Paul Or Nothing II]

DO quote which occasion. Please, thanks.

What's a good example, you're not a liar or child molester like NorthCarolinaLiberty, so I expect you to know the answer.

I didn't even call you a troll & you're getting all wound up......Nonetheless, I'm not inclined towards petty fights.

 

[NorthCarolinaLiberty]

(although I'll also concede that I've seen him defend "libertarian" positions a couple of times as well)...,

I've never seen him defend a liberty position. Never.

 

[PRB]

I didn't even call you a troll & you're getting all wound up......Nonetheless, I'm not inclined towards petty fights.

I apologize, I read that to say you were accusing me of "if a person has defended a view on one occasion & opposed the same view on another occasion, within a fairly short space of time, then I think it's highly likely that such an individual isn't genuine & could very likely be a troll."

 

[PRB]

I've never seen him defend a liberty position. Never.

That must explain why you keep calling me a "pretender" or "faker" since I never appeared to defend a liberty position???

 

[NorthCarolinaLiberty]

The Nobel Prize liberal economist Paul Krugman recently argued that we need more government because people tend to make poor education/career decisions. Shortly after reading Krugman's case for bigger government, I read an article in the LA Times about how some people in the Philippines were lured to America with the false promise of high wages.

Somewhat inspired by this very popular blog entry... A Week of Shorter Rod Drehers... I patched together some relevant snippets from Paul Krugman...

Krugman: The world economy is a system -- a complex web of feedback relationships -- not a simple chain of one-way effects
Krugman: Wages, prices, trade, and investment flows are outcomes, not givens
Krugman: Wages are a market price--determined by supply and demand
Krugman: Money still talks — indeed, thanks in part to the Roberts court, it talks louder than ever
Krugman: Raise minimum wages by a substantial amount
Krugman: The price of labor--unlike that of gasoline, or Manhattan apartments--can be set based on considerations of justice, not supply and demand, without unpleasant side effects
Krugman: Your decision to stay in school or go out and work will shape your lifetime career
Krugman: Now, the fact is that people make decisions like these badly
Krugman: Bad choices in education are the norm where choice is free
Krugman: He and his unwary readers imagine that his conclusions simply emerge from the facts, unaware that they are driven by implicit assumptions that could not survive the light of day

If you'd like the context, just click the links. As you can see... Krugman used to be an opponent of minimum wages... but now he's a proponent.

From my perspective, a minimum wage is a problem because it doesn't accurately communicate the demand for unskilled labor in any given area. This increases the chances that people will make really bad career/education decisions. Here's how I've illustrated this...

And here's another attempt...

My drawing skills aren't that great... but hopefully you should get the idea that, in this drawing, the US has more than enough people pushing brooms (unskilled labor). In economics... "more than enough" means that there's a surplus. Usually when there's a surplus of something the price will accurately communicate this information to the entire world. A low price says "hey, we have more than enough!". This important information helps people make informed decisions. When this important information changes, people's decisions will change accordingly. So in order for the US to have ended up with such a massive surplus of unskilled labor... something must have gone wrong with the price system. And that something is the minimum wage. A minimum wage says, "hey, we don't have enough unskilled labor!".

A minimum wage creates a vicious cycle. When wages falsely signal that the US has a shortage of unskilled labor... this increases the chances that people will make big mistakes. Students are more likely to make the big mistake of dropping out of school and unskilled immigrants are more likely to make the big mistake of risking their lives to move here. The logical consequence of so many people making big mistakes is an increase in poverty... which is then used to justify an increase in the minimum wage.

So what would happen if we eliminated minimum wages? I'm guessing that wages for unskilled labor will decrease. And I'm sure that proponents of a minimum wage would guess the same thing. Right? Because if we eliminated the minimum wage... and wages didn't decrease... then there wouldn't be a need for a minimum wage.

If proponents of a minimum wage want to guess that eliminating the minimum wage would result in a huge decrease in wages... then, assuming that they are correct, this huge decrease would reveal that there is indeed a huge surplus of unskilled labor in the US. This would conclusively confirm the problem with lying to people about the demand for unskilled labor (aka "a minimum wage").

Would chaos ensue if we learned that there actually was a huge surplus of unskilled labor in the US? Well... no. Take China for example. They used to have a huge surplus of cheap labor... but now they don't...


Wages in China really didn't skyrocket because of a minimum wage... they skyrocketed because of the massive demand for cheap labor...


In case you didn't actually dig through all those Krugman articles that I shared earlier, I'll point out that he vociferously argued against the idea that the massive increase in the global supply of cheap labor had anything to do with wages stagnating in the US. Eventually he acknowledged that perhaps there were some issues with his "implicit assumptions".

Let's review! Here are two possibilities of eliminating the minimum wage here in the US...

1. Wages don't plummet. Then there's really no point in having a minimum wage.
2. Wages do plummet. Then the US "will soon be overwhelmed by the inflow of capital from the United States, Europe, Japan, and now China".

We really don't help anybody by giving people bad directions. If you truly want to help poor people... then start a business. Give poor people a better option (builderism). Especially if you have a strong theory that some existing business is making a stupid mistake. Put your strong theory to the test by starting a business that doesn't make the same stupid mistake. Maybe you want to argue that starting a business is too difficult? Well there you go. You've successfully identified a huge problem. It's a huge problem when it's too difficult to give poor people better options. Please figure out how to make it easier for somebody as intelligent as yourself to start a business. And if you can't figure it out... then please have some respect for anybody who does manage to successfully start and run a business that employs/serves any amount of people.

So anyway, back to the thread and the people who are here to legitimately discuss it. Plus rep to the OP. I like the simplicity of the circular drawing and other diagrams.

If there are any other legit or non-lying people who'd like to discuss, then I'd like to hear. I even welcome opposing viewpoints, as long as they're genuine.

 

[Slutter McGee]

Did you make your career decision based on what the minimum wage was? Did you decide not to go to school so you could have a minimum wage job? Do you know of others who have?

(note that about two percent of all workers receive the Federal Minimum wage)

This is actually been a proven fact. I can point you to several well known academic studies that demonstrate this. Granted the effect is on the margins for a just binding minimum wage (small increase) rather than a strictly binding in which these effects become more pronounced.

Still the results have been statistically significant.

Slutter McGee

 

[Slutter McGee]

If just two percent of all jobs pay the Federal Minimum Wage, changing that minimum (unless it was raised significantly) will not have much impact on the total number of jobs available.

You are right. Change in Employment = Change in Hiring Rate - Change in Separation Rate. With increases in the MW the separation rate drops along with the hiring rate, so on the aggregate there is usually only a small decrease in employment...some studies say not at all. But there are still negative effects. Job creation rate does drop, Businesses substitute away from teenage labor, but not to adult labor...rather to teenage labor with a lower marginal utility of a dollar and a higher marginal product. In other words they substitute away from poor kids to middle class kids who are better educated.

It also hurts small businesses with lower turnover far more. High turnover business can decrease the marginal expense of hiring new workers as turnover slows and actually increase employment.

I realize that all these effects are on the margins. On the aggregate you are right about a small increase. But you still can't ignore that they are real effects.

Slutter McGee

 

[Slutter McGee]

What if we paid everybody more, $7 guy gets $15, $15 guy gets $23. How would that NOT affect employment?

I agree with what you said before about increases in MW affecting others above MW. But this situation might actually not affect employment. Across the board increase in wages is going to affect prices the same way. You are talking about a situation where Keynesian theory would probably hold true.

Sorry, to keep posting one after another. I am late to this, and just going down the thread responding to what I see. Far easier than trying to combine a bunch of posts.

Slutter McGee

 

[Slutter McGee]

You are perhaps ignoring the unemployed in the equation?

Price ceilings create shortages, and price floors create surpluses. A minimum wage creates a surplus of unskilled labor.
.

Pretty much what everyone thought until the mid 90's. Even after factoring in the fact that Employment is relatively inelastic. Most estimates are around .125 but I have seen them go as high as .3. So you are looking at a 1 to 3% decrease in employment for every 10% increase if that holds true. The classical model doesn't really show this when modeled.

Basically you are completely correct for large increase in the MW, but it simply doesn't hold true for small increases.

Slutter McGee

 

[Slutter McGee]

Sure.

There has never been an instance where raising the minimum wage didn't result in job losses compared to what the employment level would have been if the minimum wage weren't raised.

Sorry Erowe, I hate to agree with Zippy, but he is right on this. That classical model hasn't held true when actual research is shown....but only for small increases. There are still negative effects though.

Slutter McGee

 

[PRB]

I agree with what you said before about increases in MW affecting others above MW. But this situation might actually not affect employment.

Everybody being paid more won't affect employment??

Across the board increase in wages is going to affect prices the same way. You are talking about a situation where Keynesian theory would probably hold true.

Keynesian or not, across the board increases WILL affect prices AND employment, I don't know what you're disagreeing about.

 

[Slutter McGee]

Everybody being paid more won't affect employment??



Keynesian or not, across the board increases WILL affect prices AND employment, I don't know what you're disagreeing about.

Prices sure, but you are talking about a 1 time increase in the money supply dolled out to EVERYONE equally. Not going to really effect employment. Inflation and wages adjust in the long run.

Of course there is going to be negative effects, but in your scenario Prices are not going to be sticky. You are not looking at a huge decrease in employment. Now just increasing the Minimum Wage way up...sure. absolutely you are right. But not with accross the board increases in wages.

Slutter McGee