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Anonymous

Re: The young are becoming less liberal [Re: Xlea321]
    #2086358 - 11/09/03 10:59 AM (20 years, 7 months ago)

Nah, the government can affect the power of unions enormously. From personal experience I remember Thatcher passing a law preventing flying pickets during the 1984 strike and trying to seize their assets through the courts for example. That effectively crippled the union during the strike.

sounds like a law violating free speech... which would be a violation of capitalist ideas. flying pickets is just fine.


Without a strong government what's going to stop a corporation behaving exactly like they do in south east asia? Or how they did in the west 100 years ago? Sure "the law" might say it's against the law to beat a 12 year old half to death but who the fuck is going to bother taking the side of a 12 year old against a multi-billion dollar corporation? Go and complain and they're going to be laughed out of the cop station.

you can restate the same argument as many times as you wish, using different words, but it will still be invalid. i've already responded to this argument. refute what i've said, don't just keep repeating the same argument in different words.

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InvisibleXlea321
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Registered: 02/25/01
Posts: 9,134
Re: The young are becoming less liberal [Re: ]
    #2086366 - 11/09/03 11:02 AM (20 years, 7 months ago)

i've already responded to this argument. refute what i've said

You mean the one about we trust the police to protect us? I think i've refuted that one several times already.


--------------------
Don't worry, B. Caapi

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Anonymous

Re: The young are becoming less liberal [Re: GazzBut]
    #2086369 - 11/09/03 11:04 AM (20 years, 7 months ago)

If that is true, why do unions spends so much time lobbying governments? The fact that unions can go to a 3rd party who have considerable influence over the corporations gives the unions more scope for achieving their aims than if they only have one option which is to negotiate with a company directly.

i hadn't really thought about that. when i say the "power" of the unions, i'm not talking about power they might obtain by enlisting the government to unfairly force businesses to comply with offers they wouldn't voluntarily accept. unions are good because they represent a means for workers to have a unified voice in the process of negotiations with thier employers. when they enlist the government to force things upon their employers, and the government complies, both the unions and the government have completely stepped outside the pathways of voluntary negotiation. what if businusses all got together and got the government to enact a "maximum wage"? it'd be a load of shit, just like the minimum wage is.

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Anonymous

Re: The young are becoming less liberal [Re: Xlea321]
    #2086375 - 11/09/03 11:10 AM (20 years, 7 months ago)

You mean the one about we trust the police to protect us? I think i've refuted that one several times already

see this thread:

http://www.shroomery.org/forums/showflat.php?Cat=&Board=Forum14&Number=2083755&Forum=Forum14&Words=business%20pay%20for%20labor%20&Match=Entire%20Phrase&Searchpage=0&Limit=25&Old=1week&Main=2071362&Search=true#Post2083755

you addressed none of my arguments. you also seem to have ignored the peice in there about the economic realities of the minimum wage. so go back, read that post, and answer the questions i asked. while you're at it, read the article, and if you still think the minimum wage is a good thing when you're done, please come back and tell us what's wrong with the observations made in the article.

when there are issues of economics to be discussed in these debates, you really, really seem to be lacking any knowledge of the topic whatsoever. i suggest that until you've learned at least some of the basics of economics, stick to bush bashing and posting about WMD's. you're better at it.

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InvisibleXlea321
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Registered: 02/25/01
Posts: 9,134
Re: The young are becoming less liberal [Re: ]
    #2086377 - 11/09/03 11:10 AM (20 years, 7 months ago)

i'm not talking about power they might obtain by enlisting the government to unfairly force businesses to comply with offers they wouldn't voluntarily accept.

Has anyone in your family ever been on a strike mush? Do you know the suffering it entails? Do you know how incredibly difficult it is and what courage it takes?

If having government enforced rules prevents ordinary people having to come out on strike and go hungry it can only be a good thing. You talk as if there is an even balance of power between employer and employee here.


--------------------
Don't worry, B. Caapi

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InvisibleXlea321
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Posts: 9,134
Re: The young are becoming less liberal [Re: ]
    #2086382 - 11/09/03 11:15 AM (20 years, 7 months ago)

you also seem to have ignored the peice in there about the economic realities of the minimum wage

I havn't ignored it, i simply consider it to be right wing bullshit. You seem to have ignored the article I've posted many times below. This time I suggest you read it.

i suggest that until you've learned at least some of the basics of economics

I've lived through a strike mush, have you? I know the reality of union-employer negotiations. I know your fanciful libertarian textbook fantasies for the bullshit they are. One day you'll learn that textbook fantasy isn't the real world. The sooner you learn it the better. Your "knowledge" is the knowledge of a child with little understanding of the real world. I find it impossible to take you seriously.

HOW WELFARE HELPS "THE REST OF US"
-- Nathan Newman, newman@socrates.berkeley.edu

The current debate on welfare is stale, tired and, ultimately,
missing the economic point.

Let's be clear what welfare is and is not. Welfare is not charity.
Welfare is a system of payments made to the poor not to take any job if
its pay is so low that it underbids wages for those who have jobs. When
linked to other policies like the minimum wage, welfare is (and should be
seen as) an economic tool by society to keep wages high.

Progressives need to stop appealing just to the compassion of the
public in defending welfare and start playing on their self-interest. The
economic reality is that decent wages for "the rest of us" depend on
having a decent welfare system. Without that welfare system, all wages go
down under a flood of workers desperate to take jobs at any wage in order
to keep their families from starving.

Conservatives try to argue that even if kicking people off welfare
causes some erosion in wages, it's cheaper than increasing the taxes
needed to pay people on welfare. The obvious response is to point out how
small a portion of the federal budget is taken up by programs like AFDC
and other payments to the non-working poor. Out of a $1.6 trillion
federal budget, only $19 billion goes to AFDC, just over 1% of every
federal dollar spent.

But that's a defensive argument and progressives have to get off the
defense and on the offense. We have to sketch exactly how supporting the
welfare system, even expanding it, can be used to reverse the wage erosion
workers have faced in the last two decades.

Let's start with the minimum wage. Conservatives use the fear of
unemployment to oppose it. In the recent debate on the minimum wage,
opponents of raising the minimum wage from $4.25 to $5.15 per hour have
argued that employers would lay off hundreds of thousands of workers
(roughly 1-2% of minimum wage workers in their estimates) if forced to
raise wages for the rest. Now, a number of solid economic studies, most
recently by economists David Card and Alan Krueger, have shown that modest
raises in the minimum wage actually have no effect on employment.

But, for the sake of argument, let's ignore those economic studies
and target our economic program at those who might buy conservative
arguments that 1-2% of minimum wage jobs will be lost if the minimum wage
is raised. Even with that assumption, if we create a strong welfare
system, everyone, including the taxpayer, gains from the increase in the
minimum wage. Follow the math on this and you'll have the strongest
argument in countering conservatives attacks on both welfare and the
minimum wage.

Buying the conservatives' assumptions of 2% unemployment, it means
that for every 100 minimum wage workers initially making $4.25 per hour,
we will end up with 98 workers making the new minimum wage of $5.15 per
hour and 2 workers unemployed.

Breaking that down by hour, week and year, for every 100 workers
who initially make $4.25 per hour ($170 per 40-hr week, $8840 per year),
the total combined wages of all 98 workers who stay employed initially
equals: $866,320 per year ($8840 per year x 98 workers).

After the raise in the minimum wage to $5.15 per hour ($206 per
week, $10,712 per year), total wages will increase to $1,049,776 per year
($10,712 per year x 98 workers). Those 98 workers will see an individual
gain of $1872 per year in wages and an com bined gain of $165,776 in
wages.

If the two newly unemployed people are supported with welfare
payments equal to their previous yearly wage of $8840 (much more generous
than present welfare systems), the total cost will be $17,680--far less
than the $165,776 net gain in wages for the other 98 workers. In fact,
that $17,680 is far less than what the federal government would receive in
increased income and payroll taxes on those increased wages.

So even using the conservatives' own estimates of job loss, the
minimum wage with a strong welfare system can be used to increase wages
while protecting the incomes of those left unemployed.

To translate this into the slightly messier real numbers of the
overall US economy, there are 12.3 million workers who make less than the
proposed new minimum wage of $5.15 per hour. They make an average of
$4.67 per hour, so if 98% of those workers have their wages increased to
the new minimum wage, the aggregate increase in wages will be $12 billion
yearly. This is far more than any welfare costs that might be needed for
income and training funds if any workers are left unemployed.

These numbers have all assumed the rather miserly increase in the
minimum wage proposed by Clinton. If instead of $5.15 per hour, we
increased the minimum wage another dollar to $6.15 per hour (about the
inflation-adjusted level back in 1969), we can see even more dramatic
effects.

There are 20.8 million Americans making less than $6.15 per hour. If
all of these workers (with an average wage of $5.10 per hour) had their
wages increased to a $6.15 per hour minimum wage, the net increase in
wages would be $45.6 billion annually. Even if we assumed a worst-case
assumption of 10% of those workers were left unemployed, this would still
leave a potential $40 billion for welfare and retraining funds--an amount
DOUBLE the entire present AFDC budget.

In fact, all these numbers understate the overall gains in wages,
since it ignores the effect of the minimum wage on higher wage workers.
But the reality is that the mass of workers making a bit more than any new
minimum wage are able to demand a wage increase to maintain a "spread"
between them and less skilled workers now making what they used to make.

So where are these increased wages coming from? Some of it comes
from increased growth due to higher consumer demand, some from increased
costs passed onto consumers, but in the end, in highly competitive markets
employing minimum wage workers, the largest chunk come out of the profits
and executive compensation of corporate stockholders. And there's the
reason why both welfare payments and the minimum wage are opposed so
vociferously by corporations and their legislative allies.

It's no coincidence that conservatives support both eliminating
welfare payments and lowering the minimum wage. Moving people from
welfare into the workplace drives down wages, and the last thing
conservatives (supported massively by low-wage employers) want is to have
the government prevent wages from falling. And by keeping welfare payments
low or non-existent, they can create fear of unemployment from raising the
minimum wage or supporting other policies to raise wages.

Of course, there are ways to improve welfare, including providing
work instead of income payments, but that work has to be at a living wage
that, instead of driving down wages, helps to bolster wages in society
while delivering services that the market fails to provide.

Look at the debate over Wisconsin's proposed welfare plan, a plan to
end welfare for everyone in the state and replace it with work
requirements. Where is the headline-grabbing debate over the fact that
this flood of new additions to the workforce will be making less than
minimum wage and even replacing workers who previously made much higher
wages?

The enthusiasm for welfare "reform" would chill significantly if
people recognized that shredding the safety net also meant shredding their
own wages. If the Wisconsin-style plan was extended nationally, the
effects would trash wages across the coun try. Even as welfare payments
have declined in the last two decades, average hourly wages have dropped
by over 10% and wages for less-skilled job have fallen even more. Imagine
all four million plus adult recipients of AFDC being dumped in the labor
market tomorrow on top of present unemployment, or even gradually over a
year or two.

The key thing for progressives to argue is that unless the policy
is to spend MORE to provide real jobs for all, it's cheaper for working
families to pay people not to work than to force them to work at wages
that drive down pay for all of us.



--------------------
Don't worry, B. Caapi

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OfflineGazzBut
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Loc: London UK
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Re: The young are becoming less liberal [Re: ]
    #2086446 - 11/09/03 11:56 AM (20 years, 7 months ago)

Although you dont agree with the fact that unions and governments can get together to force laws upon companies, do you agree that by removing that option you are limiting the influence that unions hold over companies? I cant really see how you can deny this...So how do you propose the balance is restored? How can unions remain as influential without government?


--------------------
Always Smi2le

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OfflineDoctorJ
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Registered: 06/30/03
Posts: 8,846
Loc: space
Last seen: 1 year, 7 months
Re: The young are becoming less liberal [Re: ]
    #2086598 - 11/09/03 01:25 PM (20 years, 7 months ago)

Quote:

Alex123: From personal experience I remember Thatcher passing a law preventing flying pickets during the 1984 strike and trying to seize their assets through the courts for example. That effectively crippled the union during the strike.

Mushmaster: sounds like a law violating free speech... which would be a violation of capitalist ideas. flying pickets is just fine.





And why, mushmaster, do you think Thatcher passed the law? Could it be that she had nothing to personally gain from that act, and she did it because she thought it was the right thing to do? I find that hard to accept.

I think Thatcher was doing a little return back scratching. So here, we see an instance of Big Business influencing the process of government in order to deprive people of their basic liberties.

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Anonymous

Re: The young are becoming less liberal [Re: DoctorJ]
    #2086881 - 11/09/03 04:45 PM (20 years, 7 months ago)

And why, mushmaster, do you think Thatcher passed the law? Could it be that she had nothing to personally gain from that act, and she did it because she thought it was the right thing to do? I find that hard to accept.

me too. it wasn't the right thing to do. it's not right when government sides with businesses and restricts peaceful, voluntary action such as holding up signs... it's wrong, and it is a violation of what capitalism means...

just as it is wrong when government sides with the workers (though we have seen that the workers really are not helped) and restricts peaceful action such as employing people for $4 an hour.

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Anonymous

Re: The young are becoming less liberal [Re: GazzBut]
    #2087490 - 11/09/03 08:41 PM (20 years, 7 months ago)

Although you dont agree with the fact that unions and governments can get together to force laws upon companies, do you agree that by removing that option you are limiting the influence that unions hold over companies? I cant really see how you can deny this...So how do you propose the balance is restored? How can unions remain as influential without government?

for a minimum wage law to have any effect on wages above that which a union could peacefully negotiate for, the minimum wage must be set above the market price... it must be set above what employers would voluntarily pay.

the result is unemployment and decreased production.

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Anonymous

Re: The young are becoming less liberal [Re: Xlea321]
    #2087568 - 11/09/03 09:09 PM (20 years, 7 months ago)

I havn't ignored it, i simply consider it to be right wing bullshit. .

so... you aren't going to tell us why you think it's wrong, just that its "right wing bullshit"?

i didn't think you would. moving on...

You seem to have ignored the article I've posted many times below. This time I suggest you read it

it's strange that you say that alex. out of the 5 times you've posted that article, twice i've read it and refuted it. both times, you even responded to my posts. strange that you do not remember.

here

and

here

this article is indeed genuine bullshit. instead of just leaving at that however, i'll tell you why (again):

the premise of the article is that by taking money away from some and giving it to others, the government limits the labor pool and supports wages, to the benefit of all.

now, to most thinking people, this whole idea will immediately seem intuitively flawed. how is it that some people will benefit by having their money forcefully taken from them and given to others? the author goes on to explain. his case is pretty well stated, and some people will probably come away from it thinking "damn... this guy's right"... he certainly sounds right...

but he isn't. if simply making each person be paid more money was all it took to make everyone richer, then we could solve poverty tomorrow by cranking up the presses and rolling out stacks and stacks of cash for everyone. it doesn't work that way. the amount of goods and services you can actually buy with your money is what's important here, and that is dependent on the actual amount of goods and services produced and available for consumption... not how many dollars, pounds, or whatever each person is getting paid. there is a difference between wealth and money, a difference that both you and mr. newman seem to overlook.

for real wages to increase for everyone, there must be an increase in the total amount of actual goods and services produced. perhaps his policy will allow everyone to be paid more, but that is rather deceptive. they get paid more, but real wages are not increased. worse, because the idea rests on the premise of limiting the number of laborers available to work, it will in fact only result in a reduction of goods and services produced, and a corresponding reduction of real wages across the board.

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InvisibleXlea321
Stranger
Registered: 02/25/01
Posts: 9,134
Re: The young are becoming less liberal [Re: ]
    #2088326 - 11/10/03 01:02 AM (20 years, 7 months ago)

the result is unemployment and decreased production.

No it isn't. Open your eyes and read the article above.


--------------------
Don't worry, B. Caapi

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InvisibleXlea321
Stranger
Registered: 02/25/01
Posts: 9,134
Re: The young are becoming less liberal [Re: ]
    #2088336 - 11/10/03 01:05 AM (20 years, 7 months ago)

it will in fact only result in a reduction of goods and services produced, and a corresponding reduction of real wages across the board.

But do you have any solid evidence for any of this? The guy explains in painstaking mathmatical detail why you are wrong. All you offer is opinion, he offers reasoned fact. I'm afraid I find his argument far more convincing than yours.


--------------------
Don't worry, B. Caapi

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OfflineTao
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Registered: 09/19/03
Posts: 7,935
Loc: San Diego
Last seen: 9 years, 16 days
Re: The young are becoming less liberal [Re: Xlea321]
    #2088363 - 11/10/03 01:17 AM (20 years, 7 months ago)

what i don't buy about the "minimum wage causing unemployment/less jobs" is that if you have a profiting company that has to raise its very lowest wages by a dollar an hour, the hit to the company is going to come out of the places where its expendable--from the ceo's, the profits of the various owners, top management and perhaps stockholders (though i doubt in most cases it would really make that much of a hit, i mean paying someone 6 dollars an hour instead of 5 compared to what a lot of these top guys make...). i don't see how the hit would come from the necessary inputs at the bottom level. as an analogy, lets say you have a car that suddenly needs a new tire. meanwhile your leather seats are splitting slightly. you can only repair one, which is it going to be? it would seem to me that firing slews of people would hurt the company more ususally than cutting profit margins slightly.

the other contradictory part of libetarianism i believe is how they claim that in a free market an employer will pay a worker what they are 'worth'. in reality, this means they will pay the worker as little as they can get away with while still getting someone to take the job that is at least trainable. libertarians will argue this is the same thing (i.e. what is someone worth other than what the employer is willing to pay for them). but i say that these are different things, the amount of money someone contributes to a company versus what they are compensated for doing so. in the same sense there is an enormous difference between what an employer is willing to pay for an employee and what an employer thinks he/she can get away with paying an employee.


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Magash's Grain Tek  + Tub-in-Tub Incubator + Magash's PMP + SBP Tek + Dunking = Practically all a newbie grower needs :thumbup:

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OfflineGazzBut
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Registered: 10/15/02
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Loc: London UK
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Re: The young are becoming less liberal [Re: ]
    #2088516 - 11/10/03 03:09 AM (20 years, 7 months ago)

Set aside the minimum wage issue for a moment. There are other issues that a union can lobby government to try and change. Do you concede that without government intervention a unions potential to influence companies etc is considerably reduced?
What is to stop large companies deciding to simply not employ anyone who belongs to a union thus denying people any chance to negotiate better working terms?
What happens if a company lets somebody go because they are trying to unionize the workforce with just cause? What happens to these people once they have been fired. Am I correct in assuming under your system people wont contribute to welfare, social security etc. How are the unemployed supposed to support themselves?


--------------------
Always Smi2le

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InvisibleXlea321
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Registered: 02/25/01
Posts: 9,134
Re: The young are becoming less liberal [Re: GazzBut]
    #2089080 - 11/10/03 10:42 AM (20 years, 7 months ago)

What is to stop large companies deciding to simply not employ anyone who belongs to a union thus denying people any chance to negotiate better working terms?

This is what went on all the time before unions gained some semblance of protection from the government. If you went on strike the corporation simply sacked you all or starved you back to work.


--------------------
Don't worry, B. Caapi

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Anonymous

Re: The young are becoming less liberal [Re: Xlea321]
    #2089385 - 11/10/03 12:46 PM (20 years, 7 months ago)

No it isn't.

yes it is alex. we have now reached the point where you are refuting positive economic facts. it is a fact that effective price floors create surplusses. this is a corollary of the laws of supply and demand. this is exactly what i mean when i say your grasp of economics is deficient.

in the article, the only mention of a minimum wage's effect on unemployment is this:

"Now, a number of solid economic studies, most recently by economists David Card and Alan Krueger, have shown that modest raises in the minimum wage actually have no effect on employment."

note the word "modest". now, it is correct that in some circumstances a minimum wage can be beneficial. this occurs when because of whatever reason, wages paid to workers in certain geographic areas or industries happen to be below the market clearing price. in these cases, a minimum wage will help them, and will not hurt employment. this however, is the exception rather than the rule, and mr. newman overstates the idea enormously, which leaves a reader ignorant of economics (such as youself) with the impression that minimum wages are just fine for employment. the fact is that they're not.

fortunately for us he doesn't just leave us with that, but continues with the "assumption" that minimum wages don't create unemployment. this is where he breaks out the welfare-supports-wages argument. his argument here is true. welfare and the minimum wage do indeed work together to increase wages. what he does not consider is that the actual numerical amount currency you are paid (look at all those dollar signs in the article) is not really what's important. what's important is the real goods and services you can buy with that money. this is known as real wages.

this is something of terrific importance that mr. newman doesn't even mention in the article. he has shown that his system increases wages. that much he is right about. however, for an increase in wages to actually mean that people can buy more things (i.e. for it to actually matter) there must be a corresponding increase in the amount of goods and services produced and available for consumption. otherwise, people will have more money, but it will not allow them to buy anything more than they could have before.

But do you have any solid evidence for any of this? The guy explains in painstaking mathmatical detail why you are wrong. All you offer is opinion, he offers reasoned fact. I'm afraid I find his argument far more convincing than yours.

and i'm not disputing his mathematical details. what i am disputing is his assumption that an increase in wages automatically means an increase in buying power. the fact is that it doesn't. there must be additional goods and services produced. in his model, there is not. there is actually less.

mr. newman has shown us how paying people not to work can increase the amount of money each person is paid. i now welcome you to show us how paying people not to work can increase the amount of actual goods and services produced and available for consumption. if you can do that, you've got a case... however, this is not something mr. newman has argued for, and i doubt that it's soemthing you'll be able to argue for.

i don't know how much more clear i can be about this... but i sure have wasted alot of my time stating and restating the same rebuttals to your repeated arguments... perhaps you could just do me a small favor and take some of your own time and tell why you think the article i posted above is "right wing bullshit"...

Edited by mushmaster (11/10/03 01:03 PM)

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InvisibleXlea321
Stranger
Registered: 02/25/01
Posts: 9,134
Re: The young are becoming less liberal [Re: ]
    #2089413 - 11/10/03 01:00 PM (20 years, 7 months ago)

So you believe paying people as little as you can get away with does them good? You believe paying 10 cents an hour to a child in a factory in south east asia does him more good than paying a dollar an hour? Seriously?

I'm sorry but I favour Newmans argument. I'd try and widen your knowledge of economics from the strict right-wing libertarian view.

fortunately for us he doesn't just leave us with that, but continues with the "assumption" that minimum wages do create unemployment

He says the complete opposite actually. Have you read the article?

How Minimum Wage Increases Employment

Here's the problem with the simplistic argument that minimum wage laws automatically cut jobs. It's based on Economics 101 for commodity markets that says if prices rise, demand falls. But labor markets are not like commodity markets for a number of reasons:

1) When demand falls for one item, the demand shifts to other items, which in commodity markets inevitably hurts the item where demand falls. Not necessarily so for labor markets. If apples get too expensive, you can't convert them into more appealing oranges. Workers can shift into different jobs, so a fall in demand for one kind of work can still lead to the workers getting jobs in a new venue.

2) More importantly, labor is not a static commodity-- it's human beings whose skills on the job improve over time, so substituting new workers for old has far more serious costs. There is a real tension betweeen looking for the cheapest labor and paying a premium price to reduce turnover and maintain skills.

3) Since the minimum wage applies across the labor market, there is by definition no alternative low-wage labor to substitute for the now more expensive labor. To assume lost employment, you have to assume an overall drop in consumption across the whole population or the substitution of capital for labor costs in that particular industry -- which in turn drives new employment in other sectors to produce the needed capital goods.

4) Crucially in thinking about the minimum wage, work is not done in a single system of production, even when producing the same goods, so raising the price of labor may cut production in a low-wage version of production but increase it in a higher skill, higher-wage version of production for that same commodity.

5) Labor is the one commodity that in turn consumes itself-- ie. workers go home and buy other goods which in turns drives demand for more labor. So raising the minimum wage puts money in the pockets of consumers living in low-wage communities, thereby driving employment through worker consumption, a kind of localized Keynesian expansion of jobs in the low-wage sector.


The Debate: The empirical case for the minimum wage is best argued in David Card and Alan Krueger's Myth and Measurement: The New Economics of the Minimum Wage. The classic response is by Neumark and Wascher who argue for the more classic effects of decreased employment. Folks should wade through the literature to be convinced one way or the other on the empirical results, but the key is to understand why the Econ 101 simplistic model does not necessarily hold or why other factors partly or fully counterbalance the effects of classical models.

The key here is to understand that the minimum wage very well may at times decrease employment IN PARTICULAR FIRMS using PARTICULAR SKILL MODELS-- but don't mistake the loss of jobs in particular firms for loss across the economy. Further, because of incomplete information, search costs and other imperfections in the labor market, even individual firms won't always follow classic responses to rise in costs of labor.

Card & Krueger model: Card & Krueger illustrate a more complex understanding of labor markets that I can only roughly describe here (read the last chapter of their book), but the key is based on the heterogenity of labor in the market indicated above. Rather than decreasing employment, a rise in the minimum wage encourages the substitution of higher-skilled labor for lower-skilled labor.

Further, even many particular firms have large "sunk costs" of capital that will be wasted if employment is reduced. For such firms, it is irrational to cut employment since they would lose more profits by cutting production than they lose from increasing the wages.

Card & Krueger also discuss the problem of turnover in low-wage labor markets, which prevents employers from being assured of being able to buy labor in the marketplace on demand in the same way as other commodities. The implication of this, counterintuitively, is that a modest increase in the minimum wage will INCREASE overall employment because employers will be able to fill vacancies that had been left open due to the churn of turnover.

Other models: Other models look at workers' willingness to take jobs from a bargaining viewpoint which implied that most workers are more productive than their initial wage, so an increase in the minimum wage will not lead to cuts in employment but in fact will often lead to some increase in employment because of better matching of employee productivity to wage, thereby reducing turnover.

All of these alternative models imply a better job situation for moderate minimum wage increases, although the employment losses do start to occur with large increases in the minimum wage.

So the point is not that some debate on the proper level of the minimum wage is not warranted. However, the simple equation that raising the minimum wage inevitably leads to some loss in employment is disputed both empirically and theoretically.

Increases in demand: It's also worth noting that these models look at particular industries, so the overall effects of the minimum wage on the larger economy may be even more positive. While particular low-wage industries might lose out from a rise in the minimum wage, the boost in worker income may drive expansion of other low-wage sectors. If wages increase more than any wages lost to unemployment, then this will often feed expansion of jobs that service those low-wage workers, often themselves staffed by low-wage employees. So again, the effects of the minimum wage need to account for more than the classic microeconomic models but recognize that employees are not typical commodities but integral parts of a more complex set of economic relationships.

And my bottom-line is this-- as long as the evidence is ambiguous, I go with raising the minimum wage, since the obvious empirical benefits for the workers effected are clear while the supposed downside is unproven and disputed theoretically.

http://www.nathannewman.org/log/archives/001104.shtml


--------------------
Don't worry, B. Caapi

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Anonymous

Re: The young are becoming less liberal [Re: Xlea321]
    #2089419 - 11/10/03 01:02 PM (20 years, 7 months ago)

"fortunately for us he doesn't just leave us with that, but continues with the "assumption" that minimum wages do create unemployment

He says the complete opposite actually. Have you read the article? "

typo. i've edited my post.

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Anonymous

Re: The young are becoming less liberal [Re: Xlea321]
    #2089551 - 11/10/03 01:48 PM (20 years, 7 months ago)

So you believe paying people as little as you can get away with does them good? You believe paying 10 cents an hour to a child in a factory in south east asia does him more good than paying a dollar an hour? Seriously?

no alex. what i've been refuting here is mr. newman's assertion that everyone benefits from minimum wages and price floors on labor. i would never be so foolish as to say that no one does. certainly, some people will benefit, but at a cost to everyone else. overall, the effect is negative. it is negative for the people for whom the resulting increase in prices of goods and services isn't offset by the increase in wages. it is negative for all the workers who will be laid off because their labor is just not worth as much as you'd legislate it to be... but certainly, there are some people who will indeed see an increase in real wages as a result of the minimum wage. any workers who were previously getting paid very little and managed to keep their jobs after the law went into effect would of course benefit. that's not something i'm refuting. what i am refuting is newman's false notion that such a policy benefits everyone.

I'm sorry but I favour Newmans argument.

that's fine, but newman's argument is flawed.

I'd try and widen your knowledge of economics from the strict right-wing libertarian view.

what i've said is factual. it is observable reality. it is not normative economics, there are no value statements here... the things i'm saying can be found in any elementary economics textbook. the things you're saying are only found on this left-wing website of nathan newman, who is a staunch leftist and is a sociologist/lawyer, not an economist... but then it is nothing new for you to latch onto the testimony of one "expert" even when they are contradicted by scores of better qualified authorities, and in certain cases (like this one), even observable objective reality.

But labor markets are not like commodity markets for a number of reasons:

let's have a look at this...

1) When demand falls for one item, the demand shifts to other items, which in commodity markets inevitably hurts the item where demand falls. Not necessarily so for labor markets. If apples get too expensive, you can't convert them into more appealing oranges. Workers can shift into different jobs, so a fall in demand for one kind of work can still lead to the workers getting jobs in a new venue.

ridiculous... here he actually seems to acknowledge that a minimum wage in a particular trade causes a reduction in jobs in that trade. his assertion seems to be that because workers can be trained for different things, those who lose their jobs to the minimum wage can just transfer to a new "venue".

ignoring for a moment the practical issues here, i'll just be blunt and remind you that a minimum wage does not only affect one industry. we're not talking about a minimum wage on only grocery store clerks... if that was the case, yes, those laid off from their grocery store job could become carwashers or something... but wait... the carwash too just laid off a quarter of its staff in response to the minimum wage... i guess they're not a good place to look for work either... and so on.

so the surplus of laborers created by the laying-off of workers in one unskilled laborer 'venue' can't just be absorbed by another venue... they'll be cutting back as well.

2) More importantly, labor is not a static commodity-- it's human beings whose skills on the job improve over time, so substituting new workers for old has far more serious costs. There is a real tension betweeen looking for the cheapest labor and paying a premium price to reduce turnover and maintain skills.

correct. this does nothing for his case though. if there is a $5 an hour minimum wage enacted, any workers who are not worth $5 an hour will be fired. true, maybe some workers are not yet worth that much, but with training and skills aquisition they will be... companies will do a little cost\benefit analysis and decide if it's worth holding onto such people... and maybe for some people, it will be. this is something the businesses are already considering.

however, one should not neglect the fact that some workers, no matter how good they get at what they do, will never be worth that much. don't forget that we are talking about menial labor here. those ones will lose their jobs.

3) Since the minimum wage applies across the labor market, there is by definition no alternative low-wage labor to substitute for the now more expensive labor. To assume lost employment, you have to assume an overall drop in consumption across the whole population or the substitution of capital for labor costs in that particular industry -- which in turn drives new employment in other sectors to produce the needed capital goods.

here newman is saying that those laid off by the minimum wage will be able to find employment in the newly bolstered industry of providing capital to replace workers. if that's not presumptous and short-sighted, i don't know what is.

4) Crucially in thinking about the minimum wage, work is not done in a single system of production, even when producing the same goods, so raising the price of labor may cut production in a low-wage version of production but increase it in a higher skill, higher-wage version of production for that same commodity.

this may be true for a very few goods and services, but not most, especially not the ones created by unskilled, low-paid labor. in cashiering, fast food, mopping floors, bussing tables, etc., there is but a single "system of production".

5) Labor is the one commodity that in turn consumes itself-- ie. workers go home and buy other goods which in turns drives demand for more labor. So raising the minimum wage puts money in the pockets of consumers living in low-wage communities, thereby driving employment through worker consumption, a kind of localized Keynesian expansion of jobs in the low-wage sector.

but if you FORCE person A to pay person B more than his work is actually worth, person B will not be producing as much as he will be able to consume.

mr. newman has cited examples of how pricing on labor is different for pricing on labor for other things. what he doesn't seem to understand is that these things are not ignored when prices on labor are considered. they are all considered and accounted for when a company determines the value of its laborers. they are already a part of the equation, and the equation is quite clear in its conclusion that effective price floors on labor, like on anything else, create a surplus.

And my bottom-line is this-- as long as the evidence is ambiguous, I go with raising the minimum wage, since the obvious empirical benefits for the workers effected are clear while the supposed downside is unproven and disputed theoretically.

pbtbhtbhtbbbbbtthh... please.

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