uk economics and why it fails - Page 2

On July 01 2010 05:32 SoManyDeadLings wrote:
However, minimum wage IS necessary, at least in the industrialized world.

On July 01 2010 05:07 motbob wrote:

Your hypothesis seems to be that a rise in the minimum wage adversely affects the real wages of people who make more than the minimum wage. However, from the available data, it doesn't look like that's the case:

During the minimum wage hikes in the early 90's and the late 90's, it doesn't appear that the rise in the hourly wage of the lower 10% of wage-earners corresponds with any drop in the hourly wage of the higher percentiles.

I would imagine that the explanation of higher price of goods such as french bread pizzas has more to do with the sharp increase of oil prices recently. Agriculture and transportation costs are closely tied to the price of petroleum, and making french bread pizzas takes a lot of transporting.

On July 01 2010 04:45 mahnini wrote:
government sheds jobs ... [OK]
minimum wage exists ... [OK]
government shreds jobs + minimum wage = unemployment ... [Error]

On July 01 2010 10:24 QibingZero wrote:
The true effect of a minimum wage on the economy is really difficult to determine, honestly. Thanks to the prominence and power of multinational corporations, it actually doesn't affect things quite as much as you might like to think. If you can hire labor at half , a fourth, a tenth, etc. of the cost elsewhere in the world, it completely undermines a national minimum wage. As a result you can't really say that it controls the price of goods at a significant level.

Now, if you want to gauge the results of the minimum wage on working conditions in specific countries, you can certainly do that. The initial reasoning for the minimum wage was to prevent sweatshop-like conditions and overall exploitation of workers, and I don't think too many people will actually argue that those aren't noble goals.

By the way, the article pasted in a post on the first page of this thread is seriously reaching. Are jobs like ushers in movie theatres and gas pump attendants no longer in existence because of minimum wage, or is it just a result of changing times? Do people really believe those are necessary jobs in the 21st century? Come on.

But minimum wage is an externality that can be offset by another externality such as spending on training programs and cuts in business taxes and programs to support hiring. Decision making on this level isn't as black and white as "minimum wage is bad."

On July 01 2010 05:29 koreasilver wrote:

Funny, because the disparity of wealth has increased ever since you guys started implementing neo-liberal policies.

The true effect of a minimum wage on the economy is really difficult to determine, honestly. Thanks to the prominence and power of multinational corporations, it actually doesn't affect things quite as much as you might like to think. If you can hire labor at half , a fourth, a tenth, etc. of the cost elsewhere in the world, it completely undermines a national minimum wage. As a result you can't really say that it controls the price of goods at a significant level.

The initial reasoning for the minimum wage was to prevent sweatshop-like conditions and overall exploitation of workers, and I don't think too many people will actually argue that those aren't noble goals.

Usually they're in a powerless or exploitative position, and have no bargaining power or ability to even find out what their wages are relative toward how the company is profiting off their work.

Maybe if we were in a vacuum where everyone received the same education and no one was subject to any forms of discrimination, you could then 'blame' everyone who decided their skills were worth almost nothing compared to others. I'd like to think that in the real world we at least have failsafes set up to protect people from their own ignorance (not stupidity as is often claimed) and perhaps educate them in the process.

On July 01 2010 06:29 Excalibur_Z wrote:


I think you misunderstood. I'm not saying that minimum wage hikes result in lower high-end wages, I'm saying they indirectly raise the price of commodities. The minimum wage will continue to increase along with inflation but salaries may not (mine didn't). So say the minimum wage is $8/hr and I make $15/hr spending $1 per day on lunch, then the minimum wage gets increased to $9/hr and I'm still making $15/hr but spending $1.80 per day on lunch. It's a wash for the minimum wage earner who's spending what I am on lunch in a bid to save up money, but I need to make additional sacrifices to maintain my standard of living.

Maybe it is tied more closely to petroleum, but I'd say it's equally as likely that companies need to raise the prices of their products in order to pay their minimum wage employees.

On July 01 2010 11:19 Milkis wrote:


Which is why people outsource. Isn't it funny how so many politicians talk about outsourcing like it's a bad thing, after they promote it by creating minimum wage, and propose restrictions to make the situation actually worse? Oh the hilarity. It'd be even more amusing if they actually put the restrictions in place and watch the populace complain about the high prices.

Roughly two-thirds of all low-wage workers in 2002 were in service-type occupations, mostly in food service jobs.

The basic effect of minimum wage is there. The basic economic model does a fine job (and a few people already talked about it so no need for me to talk about it again!). The problem now is that there are many other factors that affect it, as you had said. But honestly it doesn't stop minimum wage from being a terrible policy move. Let me elaborate. The goals of "minimum wage", in your words, are,



The best way to prevent sweatshop-like conditions is to promote competition. Google provides enormous employee benefits and they're not bound by anything like minimum wages. The reason why Google provides enormous benefits is simply because they want to attract the best workers possible.

Of course, when we go down to flipping burgers, this doesn't happen. Anyone can flip burgers, after all -- in fact, most minimum wage jobs are exactly that -- jobs that take very little training.

You can tell everyone with minimum wage "it's okay", and raise their wages so that they can be better off. But the easiest thing to realize about this is that minimum wages gives a huge disincentive towards training. Oh, I can skip school, I can just flip burgers and make minimum wage. Government will take care of me, right? But suppose there is no minimum wage, and let's say, the lack of minimum wage really does create sweatshop conditions (at the very least, you'll have a lot lower wages). Consider that. What do many of the drop-outs look at? They look at others that drop out, and they realize that they can "get by" with minimum wage, or be comfortable at least (you know, afford rent, cable TV, all that). Perhaps not too comfortable, but hey, I can get by! Without minimum wages and supposing that it does create sweatshop conditions, it creates a situation where I look at others and see them suffer. "Do I want to be like that"? Nope. I sure don't -- hence, no reason to drop out of school. Essentially, minimum wage gives disincentives towards education. But....



Except, in a competitive setting, wages go to marginal productivity. The only reason why they don't have bargaining power is because they're worthless outside society due to their lack of skill (ie, their marginal productivity is very low) This is what policy should be concentrating on - teaching people so that they have bargaining power, not make some policy that lets all of them wallow in that cesspool we all look at and pity. That's what minimum wage does. Do we have people who used minimum wage as a basis to get out and succeed? Sure. But the big majority, I guarantee, are people who stayed in their place because of minimum wage.



And minimum wage does nothing to meet this goal.

On July 01 2010 11:26 Excalibur_Z wrote:
No no. It's extremely uncommon for people to actually receive pay cuts (which would be lower high-end wages), and more likely that people will just not get raises, have co-pays for benefits go up, be made redundant, or have to take on additional responsibilities that would ordinarily be covered by someone else's position that can no longer be afforded.

I don't understand how the phenomenon of outsourcing is a good argument against the minimum wage. Unless I'm wrong, the majority of outsourced jobs are jobs which already pay well above the min wage level anyway (I'm thinking about manufacturing, specifically car manufacturing here). I don't think factories would be able to get away with paying $5 an hour to workers in a non-min-wage society. In my experience, minimum wage jobs are service jobs, which have to be here in the U.S., so any connection made between those jobs and outsourcing simply doesn't make any sense. Here's some data from the Current Population Survey, as interpreted by the Bureau of Labor Statistics:

You really need to provide some sort of empirical evidence that high school students drop out because "it's OK to make minimum wage." Maybe I've been going to the wrong type of high school, but there's an enormous social stigma against making a career out of fast food, which is the industry most closely tied with minimum wage.

I'd like to see some survey data that says that high school students drop out of high school to go work at taco bell. That concept just seems detached from reality to me.

On July 01 2010 11:49 motbob wrote:It doesn't matter. There's no evidence that real wages have gone down during the min wage hikes of the early 1990's and late 1990's. There's no evidence that purchasing power has gone down in higher percentiles of the economy in relation to the lowest percentile.

You keep tossing out theory but this seems like it would be one of the easiest things in the world to test empirically. Go get some CPS data and prove me wrong, or find a study that someone's already done.

On July 01 2010 11:19 Milkis wrote:
The best way to prevent sweatshop-like conditions is to promote competition. Google provides enormous employee benefits and they're not bound by anything like minimum wages. The reason why Google provides enormous benefits is simply because they want to attract the best workers possible.

Of course, when we go down to flipping burgers, this doesn't happen. Anyone can flip burgers, after all -- in fact, most minimum wage jobs are exactly that -- jobs that take very little training.

You can tell everyone with minimum wage "it's okay", and raise their wages so that they can be better off. But the easiest thing to realize about this is that minimum wages gives a huge disincentive towards training. Oh, I can skip school, I can just flip burgers and make minimum wage. Government will take care of me, right? But suppose there is no minimum wage, and let's say, the lack of minimum wage really does create sweatshop conditions (at the very least, you'll have a lot lower wages). Consider that. What do many of the drop-outs look at? They look at others that drop out, and they realize that they can "get by" with minimum wage, or be comfortable at least (you know, afford rent, cable TV, all that). Perhaps not too comfortable, but hey, I can get by! Without minimum wages and supposing that it does create sweatshop conditions, it creates a situation where I look at others and see them suffer. "Do I want to be like that"? Nope. I sure don't -- hence, no reason to drop out of school. Essentially, minimum wage gives disincentives towards education. But....

Except, in a competitive setting, wages go to marginal productivity. The only reason why they don't have bargaining power is because they're worthless outside society due to their lack of skill (ie, their marginal productivity is very low) This is what policy should be concentrating on - teaching people so that they have bargaining power, not make some policy that lets all of them wallow in that cesspool we all look at and pity. That's what minimum wage does. Do we have people who used minimum wage as a basis to get out and succeed? Sure. But the big majority, I guarantee, are people who stayed in their place because of minimum wage.



And minimum wage does nothing to meet this goal.

On July 01 2010 10:55 kzn wrote:



There's really no such thing as a "necessary" (or more relevantly, unneccesary) job. Anything that can be done that could, in some circumstance, benefit someone else has a worth. If you could pay someone less than that worth (or technically even precisely that worth), that job is worth paying for.

So no, its not really "necessary" to have an usher in a movie theater - but they do create some utility for some viewers, and thus they are worth paying something.

On July 01 2010 11:14 KurtistheTurtle wrote:

I kinda want to get into this debate but I have no clue in hell what I'm talking about if I did. so I'll point you to an article:

from http://en.wikipedia.org/wiki/Neoliberalism#Embedded_liberalism

ctrl+f united kingdom