The Law of Unintended Consequences, or...

[Inquartata]

Stupidity mechanism, you mean.

Like I said, politically it appeals to the naive and the socialist-minded. Which comprises, yes, a "large segment of the voting populace". Alas.

As for exporting jobs, it's the minimum wage law which exacerbates that, not its absence. Companies which have their products assembled in Honduras or Cambodia do not have to pay minimum wages, and so the higher the domestic MW goes the greater the differential between the cost of labor there and here and the greater their incentive to move jobs abroad...

[jBirch]

As for exporting jobs, it's the minimum wage law which exacerbates that, not its absence. Companies which have their products assembled in Honduras or Cambodia do not have to pay minimum wages, and so the higher the domestic MW goes the greater the differential between the cost of labor there and here and the greater their incentive to move jobs abroad...

"Jobs" yes, "people" no.

The incentive is for the lower paying jobs to move to the places where the cost of living (and generally, the standard of living too) is low enough to support the wage. And the wage needs to STAY low for jobs to stay. This leads to a persistent indentured servitude, which morally, is unacceptable (even if it is a correct working of the market).

And don't forget that capital is WAY more mobile then people. What do you do when you aren't paid enough to live and can't afford to move to a place that you ARE able to live in? The value of a resource is proportionate to the cost to sustain it and the benefit derived from it, right? So what do the people in New York, say, who are not paid enough to live on 'cause they aren't profitable enough for a business to hire do? I'm sure you're aware that crime is a rational solution to low wages, right? And that it is inevitable that when the cost of living is higher then wages, crime increases to equilibrium.

The non-criminal solution is to move to a third world country and enter poverty, a relatively non-rational choice (remember, even failing enterprises will exist in a market until they've used up their resources). Yet the cost of relocating is often significantly greater then the cost of staying put. I don't suppose you're proposing that we ship anyone below a certain wage point to Honduras or Cambodia, are you? *grin*

With wage floors, there is incentive for the lowest actors in a market to participate, even at their meagre level. Homeless people, still buy food, booze and cigarettes, right? Their aggregate effect is huge and not to be discounted. Set correctly, the artificially lower wage levels act as an anchor on inflation, and as an incentive for distributed production, curbing the tendency of every actor to participate only in markets where return is maximised. Without them, all low-skill manufacturing would be done in areas where labour is abundant and exploitable. All design and high-skill work would be done in areas where that labour is abundant and exploitable. When the market cycle changes and boom enters bust, neither are able to cope efficiently.

Yes, socialist tendencies are anti-capitalist (and even, anti-meritocracy), yet they are a fundamental value to attracting the most efficient economic actors. One reason why I never get mugged at Tim Hortons is because the people working there are paid well enough not to mug me.

The current system is at (or close to) equilibrium with the wage controls, tariffs and other market distorting effects. I think that if you reject them out of hand, one of the unintended consequences will be a net emigration of resources as the market rebalances. The interconnectedness and complexity of the market almost demand it. The only good way we have now of explaining complex systems is via natural selection and not local isolation.

*grin* Think of minimum wage as a market mutation. It may be counter-intuitive, but it certainly seems associated with positive market performance so maybe it's not as negative as it may theoretically appear. Kinda like male nipples that way.

James.

[Inquartata]

I'll try to get to your whimsica---er, interesting post anon, James. The day shift is too busy to permit me to frame any sort of coherent argument. Stupid work.

In the meantime---it begins:

http://www.azcentral.com/arizonarepu...abled1229.html

And from the end of that article, here is exactly what I've been saying:

Sarah Bruner, a Tempe nurse whose 39-year-old sister, Beth Bruner, is a TCH employee.

Sarah said the TCH job gives Beth, who has cerebral palsy, a sense of independence and intellectual stimulus. Losing the job would be "devastating."

Sarah also worries about what will happen if the law remains as is and her sister is paid $6.75 an hour.

That, Sarah said, would bring Beth to an income level that could jeopardize the family's access to care, travel assistance, health care and even prescription drug coverage.

"Would I have to quit my position as a nurse so I know she's taken care of?" Sarah said.

"Talk about unintended consequences. This has implications like I couldn't even imagine when I checked that 'yes' box when I voted."

Pointing out some of the other problems this stuff causes:

http://www.azcentral.com/arizonarepu...e1229main.html

[PeterGustafsson]

Hi!

But seriously, what happens if there is ever deflation? Would we reduce the minimum wage commensurately? Not bloody likely---too many vested interests.

Well, Japan has had deflation for several years, and accoding to wikipedia it has a MW of 630 to 710 yen/hour, translating to 11436 to 13399 USD/year. No mention on how it has changed of the years, but consider that an assignment since you brought it up.


Have a nice time!

Peter Gustafsson

[scrapinpeg]

I would hazard a guess that the political and cultural realities of Japan and the US, plus the variety in costs and standards of living, do not make for a useful comparison here. Also, Japan doesn't really have one minimum wage, any more than the US does. Minimum wages in Japan are set by each prefecture, based on what the Central Council on Minimum Wages recommends for that prefecture. In the US, more than half of the states have various minimum wages that are higher than the federal minimum.

Discounting the 29 states with higher minimum-wage limits than the federal law, an unskilled entry-level U.S. person making the federal $5.15 an hour, working 40 hours per week, with 2 week's vacation each year, makes $10,300 per year. Not bad for an unskilled entry-level position. These aren't the wages earned by people with any experience or skills, who are supporting families -- these are the wages of teenagers in their first jobs, or retirees supplementing their pension. A quick glance at my local paper shows that even unskilled non-union laborers on construction sites are making significantly more than that. So a little perspective on how much a "living wage" this needs to be might be in order.

[jBirch]

Here's the same argument from the Environmental angle...

http://alternet.org/envirohealth/46318/

James.

[scrapinpeg]

Sorry, I couldn't get far with that article. Right or wrong, as soon as someone starts talking about "the rapture" in a political piece, they lose all credibility with me. They're either religious nuts or ant-religious nuts, whose zeaolous fixation on something nobody I've ever known has ever talked about or taken seriously makes their worldview pretty darn far from reality as I know it. I tend to dismiss all their arguments from that point forward, as their base presumptions don't mesh with my experience.

[introspective]

I sort of agree with you, but people will include their perspectives in politics.It is a common thread if you will,many people expected the end of the world during the turn of the Century/Millilium. It's really Millilium talkspeak and they can't help it because the Christian religious right had a very strong hold on people's minds from 1980-1990's. It weakened after 1995 or so with Tammy Faye Baker and Jimmy Baker, Oral Roberts, Jerry Farwell, and Jimmy Swaggert - all aging and being slowly replaced with younger, newer televangelists.

Pre-war talk, as in pre-fight talk, included terms from our side like: rapture, endtimes, while the 'other' side replied with their words. Each expected someone to back down at some pont but no-one did. When Bush said he heard God, I thought we were all going to decend into the netherworld. But I think he was trying to give some of the Fundemental Christians and Fendemental Muslims some leeway inunderstanding that he 'thought about something, and came up with an I- dea, and since he's a religious man, it was God's answer". That's the standard feedback re: prayer.

Some demoninations really believe that we will all literally ascend together toward the heavens. Who knows.

[TrainingDummy]

Sorry, I couldn't get far with that article. Right or wrong, as soon as someone starts talking about "the rapture" in a political piece, they lose all credibility with me. They're either religious nuts or ant-religious nuts, whose zeaolous fixation on something nobody I've ever known has ever talked about or taken seriously makes their worldview pretty darn far from reality as I know it. I tend to dismiss all their arguments from that point forward, as their base presumptions don't mesh with my experience.

You haven't? Where do you live? I try not to associate with such people, but here in ol' Texas they're selling their bull**** everywhere. I have multiple friends with parents who believe in such nonsense; one has attended an exorcism! A common bumper sticker here reads "WARNING: In case of Rapture, this vehicle will be unmanned." I've seen people with so many Jesus fish on their SUVs (big fish for mom and dad, little ones for the kiddies) that they look like fighter planes who've flown a few sorties! Man, I hate Texas

[scrapinpeg]

I have to admit I haven't spent much time in Texas. Maybe there's something about living there that makes people crave a certain kind of religious experience.

In the various places I've lived, people certainly have been religious -- very much so, in fact -- but not the end-of-days born-again fundamentalist evangelical kind of religious. Or maybe those folks were around, and just had the decency not to "share" their views with the rest of the community.

[scrapinpeg]

Back on the subject of minimum wage...

Ever notice how the minimum wage debate tends to leave out the government half of the equation? People on both sides tend to argue only about a compelled artificial price floor for unskilled entry-level labor. That's just the private sector economic stimulus/inhibition, though.

What about tax credits for low-income people? That's the public sector economic stimulus for the same population, but it never comes up in the arguments.

People who want to raise the minimum wage want to improve the chances of people who are earning little, and who need to live on what little they earn. The earned-income tax credit is targeted specifically at heads of households with low incomes.

The minimum wage is just as likely (if not more so) to benefit a teenager earning spare cash than a low-income head of a household. What an inefficient way to improve the lot of the needy. If they're not making minimum wage (and a great many don't), they don't benefit one whit from raising it.

So why not spend the political capital on increasing the scope of the EITC, which delivers a targeted focused benefit precisely to the low-income workers we're all trying to help out, rather than spending it on a contentious program that is both overbroad (reaching people who don't need it) and underinclusive (failing to reach people who do need it).

For whatever reason, minimum wage is the politically popular cause, while the EITC gets little attention. Any clues as to what the reason is?

[jBirch]

Back on the subject of minimum wage...

Ever notice how the minimum wage debate tends to leave out the government half of the equation? People on both sides tend to argue only about a compelled artificial price floor for unskilled entry-level labor. That's just the private sector economic stimulus/inhibition, though.

What about tax credits for low-income people? That's the public sector economic stimulus for the same population, but it never comes up in the arguments.

People who want to raise the minimum wage want to improve the chances of people who are earning little, and who need to live on what little they earn. The earned-income tax credit is targeted specifically at heads of households with low incomes.

The minimum wage is just as likely (if not more so) to benefit a teenager earning spare cash than a low-income head of a household. What an inefficient way to improve the lot of the needy. If they're not making minimum wage (and a great many don't), they don't benefit one whit from raising it.

So why not spend the political capital on increasing the scope of the EITC, which delivers a targeted focused benefit precisely to the low-income workers we're all trying to help out, rather than spending it on a contentious program that is both overbroad (reaching people who don't need it) and underinclusive (failing to reach people who do need it).

For whatever reason, minimum wage is the politically popular cause, while the EITC gets little attention. Any clues as to what the reason is?

Well, there is disagreement about whether a minimum wage effects ANYTHING. It only really makes it more expensive to operate a marginal business in a marginal location and then, that simply translates into inflation. Whereas the EITC actually costs money.

James.

[Inquartata]

It's not a very serious disagreement, though, at least amongst economists. I'd liken it to the disagreement on whether human activity causes global warming. Now, how much respect do dissenters to THAT consensus get?

As to tax credits, I think it's just easier for Democratic politicians to vote to force private industry ( those easily-vilified "rich" ) to do something than to vote for a tax cut. The latter would make them sound too much like Republicans.