Raising the minimum wage is part of the Democrats platform

[UpperDecker]

http://www.detroitnews.com/article/20120811/POLITICS03/208110367

Oh boy, how many of those crying about jobs do you think will be fooled into thinking that this is a good idea?

And if you really want to cry, read some of the comments, there is even one stating that mandating hiring like China would be a good idea. Wow. There are a lot of people there that, like most people I have come to find out, don't understand a thing about business. There are a few bright spots there though.

[tttppp]

Ill bet a lot of stupid people fall for that crap. They don't realize that makes it harder for them to get in the door and move up in a company. I would address that it also causes people to stay on unemployment and welfare longer, but democrats don't care about costs.

Let me guess the rest of their platform...more spending on schools and teachers we don't need, police we don't need and firefighters we don't need.

[luctor-et-emergo]

'OMG' do these people have brains ?
If you don't have 10$ then you can't buy a 11$ dollar pizza.
If you have the same 10$ you can certainly forget about a 12$ pizza.

However, if you are a democrat, it sounds perfectly reasonable to make pizza more affordable/available by increasing it's price.
The pizza consumer is the employer off-course, the pizza producer is the employee...
Really, it sounds like a pretty stupid idea when you look at it in this way.
If you make a loss hiring someone now, why would you hire someone for a higher wage ?

But then again, this is election season.

[Bman]

Maybe they should just increase the minimum wage to $100 an hour. Then anyone with a job will be rich!


I mean really why don't they? If the problem is minimum wages why not just set the bar really, really high?

This is nothing but pandering at it's finest.

[DamianTV]

The part they forget to tell you is that as soon as minimum wage goes up, the price of the products for EVERYTHING goes up by a minimum enough to cover the increase in the wage, and then some. Anyone remember the $6 Dollar Burger? I stopped in at Carl's Jr the other day and not only was it not on the menu, but every single burger was at least that price. Some of their "meal deals" were between $7 and $9 bucks. I didnt buy anything, and havent been to fast food since about 2008. When minimum wage goes up, I can pretty well guarantee you that you wont be able to find any fast food "meal deals" for under $10 bucks.

[Weston White]

The part they forget to tell you is that as soon as minimum wage goes up, the price of the products for EVERYTHING goes up by a minimum enough to cover the increase in the wage, and then some. Anyone remember the $6 Dollar Burger? I stopped in at Carl's Jr the other day and not only was it not on the menu, but every single burger was at least that price. Some of their "meal deals" were between $7 and $9 bucks. I didnt buy anything, and havent been to fast food since about 2008. When minimum wage goes up, I can pretty well guarantee you that you wont be able to find any fast food "meal deals" for under $10 bucks.

Oh, so that explains why nearly every time I drive by a McDonalds or Taco Bell the drive thru is entirely lined with cars, even though there is quite literally either one or the other (or both) located at every single intersection throughout my entire city.

The only fast-food I have been in since 2007 is Chipotles, so I am not up on the average costs of fast-food these days.

[DamianTV]

The food there is still probably cheaper than at other places. I referred to Carl's Jr because that is where I went. There was no dollar menu. Nothing on the menu, short of fries or drink was below $5 bucks. McDonalds tends to make much cheaper crappier food, and I think they still have a dollar menu, or somewhere close to it, but I havent been there since I lost my job. People are probably going to McDonalds because it is the cheapest fast food they can afford.

[kathy88]

Why can't I see the comments?

[angelatc]

http://www.detroitnews.com/article/20120811/POLITICS03/208110367

Oh boy, how many of those crying about jobs do you think will be fooled into thinking that this is a good idea?

And if you really want to cry, read some of the comments, there is even one stating that mandating hiring like China would be a good idea. Wow. There are a lot of people there that, like most people I have come to find out, don't understand a thing about business. There are a few bright spots there though.

I briefly engaged with a Democrat candidate on Twitter a few weeks back. She tweeted something about raising the minimum wage, and I tweeted back that it would raise unemployment. She tweeted back that if that were true, unemployment would be higher in states with higher minimum wages.

I tweeted back 3 links to studies from lib universities that proved just that.

She didn't tweet back again.

[Pauls' Revere]

Why raise the minimum wage when they want to raise taxes to steal it right back? Thier not giving them a dam thing, why dont they see this?

WTF!

[angelatc]

Oh, so that explains why nearly every time I drive by a McDonalds or Taco Bell the drive thru is entirely lined with cars, even though there is quite literally either one or the other (or both) located at every single intersection throughout my entire city.

The only fast-food I have been in since 2007 is Chipotles, so I am not up on the average costs of fast-food these days.

That's market saturation. Setting the minimum wage eliminates price competition.

[VanBummel]

I find that this:


'OMG' do these people have brains ?
If you don't have 10$ then you can't buy a 11$ dollar pizza.
If you have the same 10$ you can certainly forget about a 12$ pizza.

and this:

Maybe they should just increase the minimum wage to $100 an hour. Then anyone with a job will be rich!

work well on thinking people. Then again for every thinking person there are ten people who will claim you hate the poor. :rolleyes:

[tod evans]

Heck why not increase minimum wage.......print several trillion more and give out free housing along with food and medical...

Just tax the rich guys more...:rolleyes:

[angelatc]

("Raise the mimimun wage to $100 per hour" will)

work well on thinking people. Then again for every thinking person there are ten people who will claim you hate the poor. :rolleyes:

They absolutely insist that's hyperbole, and that corporate America can well afford to pay people that extra money. Which to you and I means that they hate small business and love corporate America.

[Working Poor]

bump

[Madison320]

It may not be part of their platform but republicans also vote to raise the minimum wage. Paul Ryan did for example.

[Liberty74]

Raising the minimum wage causes a one time shot to inflation basically wiping out any wage raise given. Tha market always adjusts to such even when the laws create an artificial growth. Many states already have higher minimum wage laws than the federal law, hence most working won't even be affected. Total shame to buy votes.

Raising the minimum wage also pushes lower skilled workers out the market.

[erowe1]

I find that this:



and this:


work well on thinking people. Then again for every thinking person there are ten people who will claim you hate the poor. :rolleyes:

I try to start with the more basic ethical argument.

There are people who would like to be able to offer to sell their labor at below whatever you set as the minimum wage. Why shouldn't they be allowed to do that?

[erowe1]

Raising minimum wage does not cause prices to go up overall. It causes some prices to go up, but then other prices have to go down (or not go up as much as they otherwise would have) to make up for it.

[Dr.3D]

If you own a business and the minimum wage is increased, you have to increase the price of your product in order to pay your workers and still make the same profit.

[erowe1]

If you own a business and the minimum wage is increased, you have to increase the price of your product in order to pay your workers and still make the same profit.

Either that or the employer spends less money on other things, causing the demand curve for them, and thus their price, to go down. In actuality, over the whole economy, both of those things would be happening.

Meanwhile, with those businesses that increase prices to pay for their higher minimum wages, it will not be the case that their customers will continue to buy as much of them at those higher prices. The only way they could would be if they had more dollars to spend, in other words, if the money supply increased. Inflation is a function of the money supply, not price controls.

Imagine a Monopoly game, where you keep the same total amount of money in the game the same, but you enact a rule that places a minimum selling price on some property that is higher than it would normally go for. The result would be a lowering of the average price of other properties to make up for the one that artificially increases. To make the total average price of all properties go up, you have to inject more money into the game.

ETA: There's another implicit fallacy in that argument, which is that businesses can increase their revenue by increasing prices. They can't. They set their prices at the ideal point for them to make maximum revenue. If they could increase their revenue by raising their prices, they'd have done it already. They wouldn't have to wait for a minimum wage increase.

[TheGrinch]

Either that or the employer spends less money on other things, causing the demand curve for them, and thus their price, to go down. In actuality, over the whole economy, both of those things would be happening.

Meanwhile, with those businesses that increase prices to pay for their higher minimum wages, it will not be the case that their customers will continue to buy as much of them at those higher prices. The only way they could would be if they had more dollars to spend, in other words, if the money supply increased. Inflation is a function of the money supply, not price controls.
Wages as a whole will tend to raise with minimum wage... I mean, you can't pay your lowest level employees the same as you pay your upper level employees, can you? I know some who work for companies that just do it 1.5X, 2X, 3X, etc. of minimum wage.

So yes, when you raise minimum wages, it will tend to raise costs and prices very much like inflation, all while hurting the underskilled workers you're claiming to help (if I'm going to pay more for an employee, I'm going to take the one who is more skilled. That same employee might not have done it for $5/hour like an underskilled one would, but certainly mgiht for $10. The jobs will go to those with more skills, while the underskilled/undereducated and often poor take even less of the scraps)

[erowe1]

you can't pay your lowest level employees the same as you pay your upper level employees, can you?

You can if the government makes you do it. But it's not so much about paying them the same. It could just be having to change that ratio from 3x to 2.5x. Lowering the wages of higher-paid workers (or increasing them at a lower rate than you otherwise would have) is one of the options available to employers who have to increase the wages of their lowest paid workers. It's inevitable that some would find that they had to do that.



So yes, when you raise minimum wages, it will tend to raise costs and prices very much like inflation

No it doesn't. Certainly it causes some prices to go up. But in order for that to happen, other prices will have to go down.

[jmdrake]

Been waiting for the right time to post this.


https://www.youtube.com/watch?v=IFbYM2EDz40

[TheGrinch]

You can if the government makes you do it. But it's not so much about paying them the same. It could just be having to change that ratio from 3x to 2.5x. Lowering the wages of higher-paid workers (or increasing them at a lower rate than you otherwise would have) is one of the options available to employers who have to increase the wages of their lowest paid workers. It's inevitable that some would find that they had to do that.



No it doesn't. Certainly it causes some prices to go up. But in order for that to happen, other prices will have to go down.
I don't follow how other prices have to go down for some prices to go up.

Look, if it costs companies more to produce a product, then they will either find ways to reduce costs, raise productivity or raise prices to a level that the consumer is still willing to pay, often all 3. When employees are paid more, then they will have more money to spend without necessarily being any richer.

I mean, no, when you have a global ecomony, wages/prices certainly don't exist in a vacuum, so you're right that it's not that simple, but I don't think it's so simple as you're making it either.

Anyways, the far better argument is that this only contributes to unemployment of the exact group that MW advocates are claiming to help, the underskilled poor.

[erowe1]

I don't follow how other prices have to go down for some prices to go up.
Because there's only so much money in the money supply. You can't make more of it appear just by raising something's price.


Look, if it costs companies more to produce a product, then they will either find ways to reduce costs, raise productivity or raise prices to a level that the consumer is still willing to pay, often all 3.
The correct answer, spread out over the economy, is all 3. Notice that the first option you give, "reduce costs," is one that drives prices of certain things down.



When employees are paid more, then they will have more money to spend without necessarily being any richer.
And when they have less, the will have less to spend. Raising the minimum wage causes some to have more and others to have less.

While this all goes on, the net change in overall prices of everything will be exactly whatever the change in the money supply causes it to be.

[Xhin]

The minimum wage is needed though because no one in the entire country works for higher than it!

[TheGrinch]

Because there's only so much money in the money supply. You can't make more of it appear just by raising something's price.


I wish I was fresher on economics to be able to rebut this better, but that is simply not the case.

For instance, the raise in price of gas makes pretty much everything more expensive at the store, because virtually everything has to be shipped. Similiarly, if you were to raise the minimum wage nationally, it would also probably raise prices across the board, because labor like gas would be more expensive for many. Raises in costs almost always get passed down to the consumer.

It has very little to do the money supply (unless of course the money supply is the thing being changed). It has to do with the economics of the businesses and consumers on a micro level, not a macro level.

[erowe1]

I wish I was fresher on economics to be able to rebut this better, but that is simply not the case.

For instance, the raise in price of gas makes pretty much everything more expensive at the store, because virtually everything has to be shipped. Similiarly, if you were to raise the minimum wage nationally, it would also probably raise prices across the board.

It has very little to do the money supply (unless of course the money supply is the thing being changed). It has to do with the economics of the businesses and consumers on a micro level, not a macro level.

It's not something all economists agree on. In school you might have learned about cost-push and demand-pull inflation, which is I think what you're describing. I don't buy it, neither in the case of minimum wage, nor gas, nor anything else. If you have to spend more on gas, then you have less to spend on video games, so the demand for video games goes down, and with it their prices. It is all about the money supply. In order for the price of everything to go up, the money supply has to go up. And if the money supply does go up, at the same time that some price control causes the price of one item to go up artificially fast, then other items' prices will have to go up less fast than they otherwise would have given the monetary change.

[erowe1]

All that said, there could definitely be a correlation between minimum wage and inflation of the money supply. Since inflation relieves the burden of the minimum wage, a government could raise the minimum wage along with inflation at a pace that keeps its net burden on the economy constant. And that way politicians could keep re-using their pro-minimum wage arguments each election, and as long as they don't go overboard, they'll be able to do it without making a noticeable change in unemployment. To pull this off, they need to keep inflating the money supply. So the two things work together.

[TheGrinch]

All that said, there could definitely be a correlation between minimum wage and inflation of the money supply. Since inflation relieves the burden of the minimum wage, a government could raise the minimum wage along with inflation at a pace that keeps its net burden on the economy constant. And that way politicians could keep re-using their pro-minimum wage arguments each election, and as long as they don't go overboard, they'll be able to do it without making a noticeable change in unemployment. To pull this off, they need to keep inflating the money supply. So the two things work together.
Again, I think you're speaking of a macroeconomic issue that happens when consumers are tapped out and demand falls (a significant problem when you've based your economy around consumption more than production). But that does not necessarily correlate to changes in wages/prices, which are a reflection of many things, not just the amount of discretionary spending one has.

Your view doesn't take into account that many people don't spend every dollar they make. Thus, if I really want the new Madden, and I have enough discretionary income to afford it, then it's going to take far more than a $5 change in price to change my demand for it, even if I'm paying more everywhere else. It would only change my demand for it if I didn't have much discretionary income, but again, I think that's more of a macro-economic matter.

So back to the topic at hand, if consumers have more money in their pockets to spend, companies are paying more for labor, then how does it not follow that prices will raise along with costs and wages?

As I said earlier, they will still only rise to a level to where enough consumers will still purchase it, and to a level that the company is still making their desired level of profit (this can still even happen with higher prices and lower demand, as they can make more per unit. I can assure you that Ferrari doesn't make their money from volume. Just because your average consumer may not be able to afford it, doesn't make it any less in-demand for those who can, and might make it more in demand).

So no, I do not see how the monetary supply is the end-all-be-all here... Of course monetary supply changes can affect everything, but prices and wages can also be very independent of the monetary supply. There simply many more factors in play when it comes to prices than jut the monetary supply.

To put it simply, the monetary supply can continue to change hands and still end up right back where it started, without any prices necessarily needing to fall.

[TheGrinch]

All that said, there could definitely be a correlation between minimum wage and inflation of the money supply. Since inflation relieves the burden of the minimum wage, a government could raise the minimum wage along with inflation at a pace that keeps its net burden on the economy constant. And that way politicians could keep re-using their pro-minimum wage arguments each election, and as long as they don't go overboard, they'll be able to do it without making a noticeable change in unemployment. To pull this off, they need to keep inflating the money supply. So the two things work together.
Agreed on this. Just because the two don't have to be exlcusive, doesn't mean the Keynesians won't use both artificial manipulations side by side (triple negative aside).

[erowe1]

So back to the topic at hand, if consumers have more money in their pockets to spend, companies are paying more for labor, then how does it not follow that prices will raise along with costs and wages?

If consumers have more money to spend, and companies are paying more for labor, then yes, prices overall will rise. But the only way consumers can have more money to spend while companies are paying more for labor, is if the money supply increases. You can't just write a law that forces people to have more money to spend without providing the money.

[TheGrinch]

If consumers have more money to spend, and companies are paying more for labor, then yes, prices overall will rise. But the only way consumers can have more money to spend while companies are paying more for labor, is if the money supply increases. You can't just write a law that forces people to have more money to spend without providing the money.
Sure you can, that's exactly what raising the minimum wage does, and part of why it's a problem.

You do not need more money for this to happen. This money you're trying to compensate for is still there, it's just changing mre hands before it returns to whence it came.

Here's a flow chart - Employers pay employees more > Employees buy goods from companies at higher prices > Money goes back to the employers. No additional money is needed in the equation to compensate for higher prices. It's already there, it just has to change a few hands before it goes back to those employers' personal money supply.

[Pauls' Revere]

If you own a business and the minimum wage is increased, you have to increase the price of your product in order to pay your workers and still make the same profit.

Spot on! the same holds true when taxes are increased. Business (be it large or small) raises prices to meet or exceed expenses (be they operational or taxes). Thus, the minimum wage then loses it's purchasing power, and the cycle repeats. They start to complain they dont make enough to meet higher prices.

[thehungarian]

What could go wrong?

[Pauls' Revere]

Just what is the "minimum wage" that someone should make exactly?

It's like saying there needs to be a "maximum wage", what is that exactly?

someone please give me an exact number.

[CaptUSA]

Here's a flow chart - Employer pays employee more > Employees buy goods from companies at higher prices > Money goes back to the employers. No additional money is needed in the equation to compensate for higher prices. It's already there, it just has to change a few hands before it goes back to those employers' money supply.Did you see the error in your flow chart? You went from employee in the singular to employees in the plural. If you have fewer employees, your equation doesn't work.

[erowe1]

Sure you can, that's exactly what raising the minimum wage does, and part of why it's a problem.
No you can't. And that's how we know that raising the minimum wage doesn't do that.



Here's a flow chart - Employer pays employee more > Employees buy goods from companies at higher prices > Money goes back to the employers. No additional money is needed in the equation to compensate for higher prices. It's already there, it just has to change a few hands before it goes back to those employers' money supply.

But the government can't make that flow chart happen to all people at the same time without increasing the money supply. If they keep the money supply constant, and they try to make that flow chart apply to one group of people, then while that happens, there will be another flow chart happening to another group of people that involves them getting paid less, spending less, and driving prices down. The only way everybody can pay more at the same time is if there's more money to spend.

[erowe1]

Did you see the error in your flow chart? You went from employee in the singular to employees in the plural. If you have fewer employees, your equation doesn't work.

Good point.

[The Free Hornet]

Import, outsource, automate.

The minimum wage is a signal to not hire, lay off, and fire.

Minimum wage = fuck the people.

It is extremely inflationary. If your $5 can't buy an hour's labor, then your $5 is worth less. More so, if you can't just hand somebody $5 but one or both parties have to do eligibility checks, tax forms, business licenses, et cetera, then it is less likely to be worthwhile. Either spend more with an established player or go without or do for yourself.

The minimum wage increase is a signal to all workers that they should disregard their own competitive advantages and instead spend their time packing a lunch (since basic food prep is now that much more expensive). This re-allocation of resources harms the "have nots" more than the "haves".

Edit: I used to spend $3 for lunch going to Wendy's. Now I spend $3 by bringing a frozen meal bought at Wal*Mart.

[Elwar]

I hope they raise the minimum wage to a million dollars so that we can all be millionaires!

[TheGrinch]

Did you see the error in your flow chart? You went from employee in the singular to employees in the plural. If you have fewer employees, your equation doesn't work.
I actually already changed that to plural if that makes you feel better, because what we're talknig about is something like a national minimum wage raise, where many companies are forced to pay more for labor, not just one.

Thus, you as an employer are not the only one in this equation. If all fast-food restaurants have to pay more, then fast food will be more expensive in many cases to compensate for higher costs and higher wages across the board.

Of course prices could lower if competition or other factors make it more desirable to, but no, prices do not have to lower somewhere to raise somewhere else. I cannot even believe I have to argue against the idea that price is correlated simply to price and monetary supply. That's simply not the case.

[TheGrinch]

//

[Brian4Liberty]

Simple supply and demand. Increase demand or reduce supply, and wages will rise (and along with them, essential liberty).

The Democrat solution is to increase the supply of labor via immigration, and to introduce price controls. It's like there is a bumper crop which is causing prices to drop, and their solution is to plant more, and to fix prices.

Let's face facts. Both Democrats and Republicans are part of the Military-Industrial-Financial-Corporate-Media-Government Complex. What they want is excess labor so that the price of labor will fall. They also understand that essential liberty declines when the worth of each individual declines. This scenario naturally results in power and money concentrating at the top, in their hands. They can take away liberty, grant themselves more power, and shift more and more wealth into their pockets. And unemployed and under-employed people are far easier to control, to co-opt and to put under the yoke of government dependence. Price controls on wages are just another example of making the masses believe that government is "working for them", while in reality, they are doing the exact opposite.

[CaptUSA]

I actually already changed that to plural if that makes you feel better, because what we're talknig about is something like a national minimum wage raise, where many companies are forced to pay more for labor, not just one.

I would argue that a national minimum wage does not make employers spend more on labor. Actually, I would say they spend the same but on fewer employees. So if you have the same amount of money going to a fewer numbers of employees, your equation still doesn't work. I understand what you are trying to say, but you are off a bit.

[oyarde]

http://www.detroitnews.com/article/20120811/POLITICS03/208110367

Oh boy, how many of those crying about jobs do you think will be fooled into thinking that this is a good idea?

And if you really want to cry, read some of the comments, there is even one stating that mandating hiring like China would be a good idea. Wow. There are a lot of people there that, like most people I have come to find out, don't understand a thing about business. There are a few bright spots there though. You have to give credit where credit is due , these people are experts in job killing.

[TheGrinch]

I would argue that a national minimum wage does not make employers spend more on labor. Actually, I would say they spend the same but on fewer employees. So if you have the same amount of money going to a fewer numbers of employees, your equation still doesn't work. I understand what you are trying to say, but you are off a bit.
I am off, because I'm having to grossly oversimplify it to counter his gross oversimplification. There are of course many other factors involved, but when you artificially manipulate the market, it can artificially change it without necessarily needing to compensate elsewhere for it. The employer/employee/consumer relationship can (and will) compensate for it without the market as a whole having to compensate in the opposite way.

As I said earlier, that is an alternate possibility that the employer will instead look to lower costs or increase prodcutivity with better employees for the wage, but the point is that they don't have to. It could just easily easily be more desirable to simply raise prices, especially if everyone else is and the consumers have cash to support it. The market will dictate that part, but nonetheless can still be influenced by market manipulation without need for an opposite and equal reaction, as has been proposed.

[Brian4Liberty]

All that said, there could definitely be a correlation between minimum wage and inflation of the money supply. Since inflation relieves the burden of the minimum wage, a government could raise the minimum wage along with inflation at a pace that keeps its net burden on the economy constant. And that way politicians could keep re-using their pro-minimum wage arguments each election, and as long as they don't go overboard, they'll be able to do it without making a noticeable change in unemployment. To pull this off, they need to keep inflating the money supply. So the two things work together.

Exactly!

(I believe that minimum wage actually lags behind inflation, which further goes to show that their minimum wage laws are nothing but a lie to placate and control the masses, while in reality, they are doing the exact opposite.)

[Dr.3D]

All that said, there could definitely be a correlation between minimum wage and inflation of the money supply. Since inflation relieves the burden of the minimum wage, a government could raise the minimum wage along with inflation at a pace that keeps its net burden on the economy constant. And that way politicians could keep re-using their pro-minimum wage arguments each election, and as long as they don't go overboard, they'll be able to do it without making a noticeable change in unemployment. To pull this off, they need to keep inflating the money supply. So the two things work together.
And all the while they are doing this, they make it nearly impossible to save money in savings accounts. The money in those accounts becomes worth less and less as they steal it right out of them using the inflation tax.

Someone putting money away to buy an automobile or house ends up with much less value in their savings than they put there. Essentially, they are stealing labor.

[erowe1]

Edit: I used to spend $3 for lunch going to Wendy's. Now I spend $3 by bringing a frozen meal bought at Wal*Mart.

In between then and now, the money supply has increased. That is the cause, not the minimum wage.

[angelatc]

OMG - the stupidest thing I am going to read all day was right there in those comments.


Steven P. Schonfeld Top Commenter · Wayne State University

I have seen free market choice destroy this city. From the 40's to the '90's, people left for one reason, and one reason only: black people started moving in, and racist whites weren't having it. If government got involved and stopped them from leaving, Detroit would still be on the level with New York and Chicago.

[tod evans]

OMG - the stupidest thing I am going to read all day was right there in those comments.

Fucking amazing!

[Acala]

OMG - the stupidest thing I am going to read all day was right there in those comments.

Surely he must be joking. Please tell me he's joking.

[The Free Hornet]

In between then and now, the money supply has increased. That is the cause, not the minimum wage.

I didn't give a timeframe to support your "In between then and now". It is an anecdote and it would apply to direct monetary inflation as well as increases in the minimum wage (wheter motivated by inflation or vote buying/pandering).

Often, people neglect to mention that "Government regulation and taxation also reduce supplies (http://useconomy.about.com/od/inflationfaq/f/Causes-Of-Inflation.htm)" and thus cause inflation.

Consider pain medication. It could be cheap and easily available without the regulations that outlaw natural solutions. Instead, supply is constricted and heavily controlled so that it takes great expense to obtain some forms of pain relief either legally or illegally.

Again, a situation where your $5 doesn't go as far not due to the money supply but to the government protecting vested interest. "Big labor" is one of the original and most influential vested interests.

[TheGrinch]

In between then and now, the money supply has increased. That is the cause, not the minimum wage.
While this is true in many cases ("keeping up with inflation" is frequently used to justify minimum wage increases) does not make the minimum wage change any less signicant. In fact, its the wage increases that help the prices higher, or else consumers would get tapped out easier and demand would fall.

So although the two are often used in conjunction with one another does not make either manipulation Amy less significant

[erowe1]

I didn't give a timeframe to support your "In between then and now". It is an anecdote and it would apply to direct monetary inflation as well as increases in the minimum wage (wheter motivated by inflation or vote buying/pandering).

Often, people neglect to mention that "Government regulation and taxation also reduce supplies (http://useconomy.about.com/od/inflationfaq/f/Causes-Of-Inflation.htm)" and thus cause inflation.

Consider pain medication. It could be cheap and easily available without the regulations that outlaw natural solutions. Instead, supply is constricted and heavily controlled so that it takes great expense to obtain some forms of pain relief either legally or illegally.

Again, a situation where your $5 doesn't go as far not due to the money supply but to the government protecting vested interest. "Big labor" is one of the original and most influential vested interests.

Whatever the time frame was, my claim about the money supply is correct.

What you're saying about prices being affected by regulations and taxes isn't the same as inflation. It's prices of particular things. Yes, of course, even while keeping a constant money supply, the government could institute laws that affect the prices of specific things like medicine or unskilled labor. But then the economy would adjust to those changes by reducing the prices of other things, like skilled labor and video games.

[erowe1]

While this is true in many cases ("keeping up with inflation" is frequently used to justify minimum wage increases) does not make the minimum wage change any less signicant. In fact, its the wage increases that help the prices higher, or else consumers would get tapped out easier and demand would fall.

But if the price of something goes up, and all the consumers in the economy overall still have the same total amount of money to spend, then on account of paying more for that thing, they WILL get tapped out faster and end up buying either less of that thing or less of something else. That will happen precisely because of a minimum wage increase. The only way around it is by increasing the money supply.

[VanBummel]

OMG - the stupidest thing I am going to read all day was right there in those comments.

BRB, brain aneurysm.

[TheGrinch]

But if the price of something goes up, and all the consumers in the economy overall still have the same total amount of money to spend, then on account of paying more for that thing, they WILL get tapped out faster and end up buying either less of that thing or less of something else. That will happen precisely because of a minimum wage increase. The only way around it is by increasing the money supply.
Seriously, dude, how can you not understand that the amount that people spend in the economy is not synonymous with the money supply. It can be affected by it, but it's not the same thing.

The total amount of money does not have to increase for consumers to have more money to spend. It really can be as simple as just consumers having more money to spend because of higher wages, but things costing more. The compensation for higher wages can really be that simple.

Just because Keynesians do in fact inflate the money supply and then wages, does not mean that it's only the money supply that has effect. This can all occur without the need for more money supply, when there is already plenty of money that is not currently active, that can be circulated and gotten back through higher prices.

[alucard13mmfmj]

lol.. raising minimum wage because the dollar is being devalued. lol.

[erowe1]

The total amount of money does not have to increase for consumers to have more money to spend. It really can be as simple as just consumers having more money to spend because of higher wages, but things costing more. The compensation for higher wages can really be that simple.


Government can make some subset of the population's wages go up relative to everyone else's with legislation. But they can't make the whole population's wages go up simultaneously unless they increase the money supply. Your repeated assertion that they can doesn't change the laws of economics.

[TheGrinch]

Government can make some subset of the population's wages go up relative to everyone else's with legislation. But they can't make the whole population's wages go up simultaneously unless they increase the money supply. Your repeated assertion that they can doesn't change the laws of economics.
Wages aren't the same thing as worth. If you hand out more cash from your own supply, but take more back in, then this absolutely can be achieved without necessarily increasing the overall money supply. Your assertion only holds water if the poorer are keeping more of their money. Especially when you consider that necessary cost of living increases will inevitably lower their ability to save and accumulate worth, then wages do not have to be tied to the monetary supply if price evens it out or even makes for more profits.

This can of course be aided and influenced by inflation, but your continued assertion that inflation is the only thing that has large effect here is flat-out wrong (if I'm understanding you correctly, because I'm starting to get really confused about what we're even arguing anymore).

Here is a video from Milton Friedman. Most of it is about how MW raises disproportionately effect the minorities it claims to help, but listen to from about 3:13 in particular about who this policy really helps:


http://www.youtube.com/watch?v=ca8Z__o52sk

This is something I'd forgotten about (there are so many flaws in minimum wage laws its tough to keep track), but MW raises only make it tougher for smaller competitors to compete with what they have streamlined... And since competition is another one of those pesky factors that have little to do with money supply, I'd again say your assertion that inflation is the only important factor is flat out false. It is but one way that the privileged manage to manipulate the economy in their favor.

[erowe1]

Wages aren't the same thing as worth. If you hand out more cash from your own supply, but take more back in, then this absolutely can be achieved without necessarily increasing the overall money supply. Your assertion only holds water if the poorer are keeping more of their money. Especially when you consider that necessary cost of living increases will inevitably lower their ability to save and accumulate worth, then wages do not have to be tied to the monetary supply if price evens it out or even makes for more profits.

This can of course be aided and influenced by inflation, but your continued assertion that inflation is the only thing that has large effect here is flat-out wrong (if I'm understanding you correctly, because I'm starting to get really confused about what we're even arguing anymore).

Here is a video from Milton Friedman. Most of it is about how MW raises disproportionately effect the minorities it claims to help, but listen to from about 3:13 in particular about who this policy really helps:


http://www.youtube.com/watch?v=ca8Z__o52sk

This is something I'd forgotten about (there are so many flaws in minimum wage laws its tough to keep track), but MW raises only make it tougher for smaller competitors to compete with what they have streamlined... And since competition is another one of those pesky factors that have little to do with money supply, I'd again say your assertion that inflation is the only important factor is flat out false. It is but one way that the privileged manage to manipulate the economy in their favor.

Don't misunderstand me. I'm not defending the minimum wage. I agree that it hurts people. I'm just saying that the argument that it causes inflation is not a valid argument. I'd be shocked if Friedman said it was. After all, it was he who said, "Inflation is always and everywhere a monetary phenomenon." (http://en.wikiquote.org/wiki/Milton_Friedman)

When you keep saying things like "If you hand out more cash from your own supply, but take more back in..." you're doing what the previous poster pointed out, which is expanding from what happens to one subset of the economy (in this case your "you") to the whole economy. Without increasing the money supply, then for every "you" this happens to, there is another "they" where the opposite happens.

[TheGrinch]

Don't misunderstand me. I'm not defending the minimum wage. I agree that it hurts people. I'm just saying that the argument that it causes inflation is not a valid argument. I'd be shocked if Friedman said it was. After all, it was he who said, "Inflation is always and everywhere a monetary phenomenon." (http://en.wikiquote.org/wiki/Milton_Friedman)

When you keep saying things like "If you hand out more cash from your own supply, but take more back in..." you're doing what the previous poster pointed out, which is expanding from what happens to one subset of the economy (in this case your "you") to the whole economy. Without increasing the money supply, then for every "you" this happens to, there is another "they" where the opposite happens.
The "they" is the consumers who pay it back to you after you raise wages across the board.

If we're talking on individual levels, then what you call "inflation" is wealth accumulation, and thus not inlflation at all. It is just silly that you'd compare a normal employee/employer/consumer relationship where the owner of the business has created the relationship with his own capital, and apply that to what the Feds do, which is print money out of thin air. The marked difference is that the former is putting up their wealth without expanding the overall supply. You ever heard the saying, it takes money to make money? That's what's going on here, not inflation.

Monetary inflation is not synonymous with price changes, even though it does contribute to them. I mean, you see prices go up or down across the board for many reasons. If gold costs more, then gold watches are going to cost more. If gas prices go up, well, just go to the store right now. Everything is way expensive. If there are less competent doctors, then their wages will go up, and the prices will go up. We see this all the time. Everything does not just exist in an inflationary vaccum.

Thus, minimum wage can still be used to manipulate the market in their favor without necessarily having to have inflation. These people have already accumulated a large enough supply of capital (which again is accumulation, not inflation), to get by just fine putting up more of their money for a market with less competition to get more back.

[erowe1]

The "they" is the consumers who pay it back to you. If we're talking on individual levels, then what you call "inflation" is wealth accumulation, and thus not inlflation at all.
What I am calling inflation is an increase in the money supply.

ETA: After I typed this, it looks like you edited your answer to include "after you raise wages across the board." Raising the minimum wage does not raise wages across the board. It raises some wages relative to others. You can raise nominal wages across the board (but not real wages) by increasing the money supply. Or you can raise some peoples' real wages at the expense of other peoples' real wages. But you can't raise real wages across the board.


It is just silly that you'd compare a normal employee/employer/consumer relationship where the owner of the business has created the relationship with his own capital, and apply that to what the Feds do, which is print money out of thin air. The marked difference is that the former is putting up their wealth without expanding the overall supply. You ever heard the saying, it takes money to make money? That's what's going on here, not inflation.
What I'm saying is that the former is NOT inflation. Only the latter is.


If gold costs more, then gold watches are going to cost more.
That's not inflation. That's a change in prices in one subset of the economy. People will decide to spend less getting their nails done so that they can afford the more expensive gold watch, and then the price of getting one's nails done will go down. They won't just keep buying the same amount of gold, while they have to pay higher prices for it, and still buy the same amount of everything else at the same time, without paying lower prices for something. Net inflation is zero.


If gas prices go up, well, just go to the store right now. Everything is way expensive.
Not everything. At least not just because of gas prices. If inflation goes up, it's a monetary phenomenon, like Friedman said.

[TheGrinch]

Not everything. At least not just because of gas prices. If inflation goes up, it's a monetary phenomenon, like Friedman said.
OK sorry, pretty much everything is affected by gas prices. However, this simply does not mean that prices have to go down somewhere else. Understand? Because I really am done trying to explain how prices do not necessarily have to negatively correlate with one another. Costs and prices are correlated, and there can be a positive correlation between prices (what I'm arguing) but the price of one thing does not negatively correlate with the price of something else. That is simply false.

It also doesn't mean that the overall amount of money in circulation has to be expanded, when there is plenty of unused capital in plenty of bank accounts already. They can all rise along with all wages rising, because there is unused capital to accommodate it, and with these laws, less competition for them to risk it.

Thus, market manipulation can occur even without inflation, and doesn't need it to balance anything out. Inflation simply aids in the manipulation of the market.

Prices are a reflection of supply and demand on both the labor and consumer side, and any manipulation of that is going to have an effect. However, this does not mean that the market has to be inflated to accomodate rising labor costs and prices, when there is already plenty enough monetary supply to accomodate that. Again, if the government forces EVERYONE to pay more, then everyone is going to charge more, and don't need inflation to support this. They jsut need to put up more of their capital to get it back.

Again, inflatino only helps to accomodate this. It doesn't make this any less relevant or less sustainable without it.

[erowe1]

OK sorry, pretty much everything is affected by gas prices. However, this simply does not mean that prices have to go down somewhere else.
Correct. It only means that if the money supply stays constant.


That is simply false.
RoyL?


It also doesn't mean that the overall amount of money in circulation has to be expanded, when there is plenty of unused capital in plenty of bank accounts already.
You keep bringing this up. I don't see how it fits in. Are you saying that raising the minimum wage causes the rate of savings to go down? If you are, I'd like to know why you make that connection. And more importantly, supposing that does happen, is the reduction in the savings rate permanent, such that people just keep depleting their bank accounts without ever adding to them again and going into debt without ever paying it down? Or will the savings rate get back to normal again, in which case, its affect on the money in circulation will only have been temporary, and the long-term marriage between the money supply and inflation will remain in tact?


Prices are a reflection of supply and demand on both the labor and consumer side, and any manipulation of that is going to have an effect.
Of course it's going to have an effect. It's going to have countless effects, as I have said all along. In some parts of the economy these effects will involve prices going up relative to other prices. In other parts they will involve prices going down relative to other prices.


Again, if the government forces EVERYONE to pay more, then everyone is going to charge more, and don't need inflation to support this.
Raising the minimum wage does not force everyone to pay more for everything. It forces some people to pay more for some things.

Keep listening to Friedman, though. He'll bring you around eventually.

[TheGrinch]

You keep bringing this up. I don't see how it fits in. Are you saying that raising the minimum wage causes the rate of savings to go down? If you are, I'd like to know why you make that connection. And more importantly, supposing that does happen, is the reduction in the savings rate permanent, such that people just keep depleting their bank accounts without ever adding to them again and going into debt without ever paying it down? Or will the savings rate get back to normal again, in which case, its affect on the money in circulation will only have been temporary, and the long-term marriage between the money supply and inflation will remain in tact?
How do you not understand this?

No, they're not permanently depleting their savings. It's called investment, where you expect to eventually get back more than you put in. It's a rather simple concept. Many millionaires and billionaires have a significant portion of their wealth tied up in investments and assets.

Thus, you invest more in your employee's wages, you charge more, you make as much if not more than the profit level you made. That simple and basic business. And again, when this is government-mandated across the board, it hurts the smaller competition (jsut as Friedman said) and so you're also investing that money with less risk of failing to more competition.

Also, do you know what competition does? It drives prices down. What then would you suppose that restriciting competition with barriers or entry will do? You got it. It will raise prices

[erowe1]

Thus, you invest more in your employee's wages, you charge more, you make as much if not more than the profit level you made.

If you can do that, then why not do it already? Why wait for the government to increase the minimum wage?



Also, do you know what competition does? It drives prices down. What then would you suppose that lowering competition will do? You got it. It will raise prices.
If at any point in this thread you thought I said that minimum wage would not increase some prices, you misread what I said. But inflation isn't just some prices increasing while others decrease.

[TheGrinch]

If you can do that, then why not do it already? Why wait for the government to increase the minimum wage?
Companies do do that already. Why do you think they don't just pay everyone minimum wage? Because they have competition for skilled labor.

So, no they don't wait for the government to raise minimum wage to decide if they want to pay more for more skilled employees, but the big boys sure are ready to get the government to give them an opportunity to restrict competition, even if it means higher minimum wages (and thus higher prices or volume of customers they can get with less competition).

[erowe1]

Companies do do that already.
If they're already charging the price that maximizes their profits (which I agree they are), then how could they raise their price and still make even more profits?


Why do you think they don't just pay everyone minimum wage? Because they have competition for skilled labor.
But you said they could raise their employees' wages, raise the prices they charge their customers, and raise their own profits all at the same time. If that's the case, then they shouldn't pay anyone at all minimum wage. They should pay everyone as much as they want, while they charge whatever price they have to to earn the revenue they need to pay them, and all their customers will just keep buying as much as they ever did, and their profits will go up. It's the magical world of TheGrinchWhoStoleDC, where there really is such a thing as a free lunch.

[TheGrinch]

If they're already charging the price that maximizes their profits (which I agree they are), then how could they raise their price and still make even more profits?

Because it's another way it restricts competition. The make more profits through these types of regulations that only serve as more barriers for entry for others. The big boys have ways to ease the burden of higher wages that can otherwise cripple smaller businesses who cannot afford to pay or charge what they're forced to. Friedman and Dr. Paul back me up on how the regulatory environment works.

The former is how they maximize profits in a truly free market. The latter is how they maximize mroe profits in a manipulated market. Understand?

Your question is kind of akin to asking why someone would steal if they can earn something the legimiate way? Answer is that it's much easier to do the former, even though it's not right.



But you said they could raise their employees' wages, raise the prices they charge their customers, and raise their own profits all at the same time. If that's the case, then they shouldn't pay anyone at all minimum wage. They should pay everyone as much as they want, while they charge whatever price they have to to earn the revenue they need to pay them, and all their customers will just keep buying as much as they ever did, and their profits will go up. It's the magical world of TheGrinchWhoStoleDC, where there really is such a thing as a free lunch.
I honestly have no clue what this whole paragraph means.

(ETA: ok, I think I see what you're getting at. They don't just pay everyone whatever they want, because they have to compete with other companies both for price and labor. However, when you manipulate the minimum price of labor, the ones lobbying for this come out ahead of others, and is far from a free-market situation where the rules are different).

[Anti Federalist]

I hope they raise the minimum wage to a million dollars so that we can all be millionaires!

Why not a billion dollars an hour?

"Then we'll all be rich, rich as Nazis".

http://upload.wikimedia.org/wikipedia/commons/3/3e/Zimbabwe_%24100_trillion_2009_Obverse.jpg

[erowe1]

Because it's another way it restricts competition. The make more profits through these types of regulations that only serve as more barriers for entry for others. The big boys have ways to ease the burden of higher wages that can otherwise cripple smaller businesses who cannot afford to pay or charge what they're forced to. Friedman and Dr. Paul back me up on how the regulatory environment works.

The former is how they maximize profits in a truly free market. The latter is how they maximize mroe profits in a manipulated market? Understand?


Then what happens to all the people who work for those smaller competitors who have to go out of business?

[TheGrinch]

Then what happens to all the people who work for those smaller competitors who have to go out of business?
Well, of course the skilled ones will find a home at your growing company!

But no, massive unemployment isn't good for most of us. That's yet another reason the Keynesians are always manipulating the system in all of these different ways that favor them.

You won't find me arguing against the idea that we'd all be better off with a truly free market, but that's not what the lobbyists are interested in.

[erowe1]

Well, of course the skilled ones will find a home at your growing company!

But no, massive unemployment isn't good for anyone. That's yet another reason the Keynesians are always manipulating the system in all of these different ways that favor them.

So raising the minimum wage increases unemployment?

[TheGrinch]

So raising the minimum wage increases unemployment?
Yes, most definitely, which is part of why it's such a flawed model that only benefits a select few (again, Freidman and Dr. Paul know better than me about this and back this up).

As was mentioned earlier, there are 3 responses to wage increases. You either cut costs, raise productivity with less or better employees, raise prices, or risk going out of business if you can't. Not everyone has an infrastructure like Walmart to deal in volume and streamlined methods to be able to offset any wage increases.

[erowe1]

Yes, most definitely.

Doesn't that mean that the people who lose their jobs because of a minimum wage increase will make less money?

[Anti Federalist]

OMG - the stupidest thing I am going to read all day was right there in those comments.


Steven P. Schonfeld Top Commenter · Wayne State University

I have seen free market choice destroy this city. From the 40's to the '90's, people left for one reason, and one reason only: black people started moving in, and racist whites weren't having it. If government got involved and stopped them from leaving, Detroit would still be on the level with New York and Chicago.



I think that may be the dumbest thing you will read all year.

What's scary?

He believes that, and that government should restrict people's movement, or even worse, re-locate people according to the whim of government.

We will then all join the zvenyas while De-kulakization is undertaken.

You savvy, comrade?


Dekulakization

Telegrams are pouring in from numerous parts of the Soviet Union with the news that deeds of arson and murders of active Communists are being perpetrated by the Kulaks… Soviet farms, village libraries and Soviet bureaus have been burned down by the Kulaks in their fierce opposition against all measures undertaken by our Communist Party and our Soviet Government… Murderous attacks have been perpetrated against Communist village school teachers and social workers, women as well as men… Seven murders and four attempted murders took place in public assemblies or in Soviet bureaus. The roll of our Communist dead contains the names of four Chairmen of local Soviets and one Secretary… A destructive blow at the Kulaks must be delivered immediately!
—Izvestia, November 1928[7]

In 1928 there was a food shortage in the cities and in the army. In response the Soviet government encouraged the formation of collective farms and, in 1929, introduced a policy of mandatory collectivization. Many peasants were attracted to collectivization by the idea that they would be able to afford tractors to generate increased production.

In July 1929 it remained official Soviet policy that the kulak should not be terrorised and should be enlisted into the collective farms. Joseph Stalin disagreed with this, saying, "Now we have the opportunity to carry out a resolute offensive against the kulaks, break their resistance, eliminate them as a class and replace their production with the production of kolkhozes and sovkhozes."[8]

On 30 January 1930 the Politburo approved of the extermination of kulaks as a class. Three separate categories for the kulaks were designated. The first consisted of kulaks to be sent to the Gulags, the second was for kulaks to be relocated to distant parts of the USSR (such as the north Urals and Kazahkstan), and the third to other parts of their province.[9]

[TheGrinch]

Doesn't that mean that the people who lose their jobs because of a minimum wage increase will make less money?
I can already see where you're going with tihs, so I'll stop you there....

Do you really think that those who aren't skilled enough to be worthy of minimum wage are a desired marketing demographic? Any marketing major will tell you that they absolutely are not for most companies...

So yes, unemployment hurts the economy, but it doesn't necessarily hurt the ones who see less competition and more control.

[erowe1]

I can already see where you're going with tihs, so I'll stop you there....

Do you really think that those who aren't skilled enough to be worthy of minimum wage are a desired marketing demographic? Any marketing major will tell you that they absolutely are not for most companies...

So yes, unemployment hurts the economy, but it doesn't necessarily hurt the ones who see less competition and more control.

This answer looks suspiciously like that of a person trying to avoid saying, "Yes, people who lose their jobs because of a raise in the minimum wage make less money than when they had jobs."

Your last sentence sounds a lot like what I've been saying all along. Raising the minimum wage doesn't affect everyone the same way. It helps some and hurts others. Some see their wages go up. Others see their wages go down. Some prices go up. Others go down.

But when some prices go up and others go down, that's not inflation.

[TheGrinch]

This answer looks suspiciously like that of a person trying to avoid saying, "Yes, people who lose their jobs because of a raise in the minimum wage make less money than when they had jobs."
Your answers look suspiciously like someone who refuses to acknwoledge that mroe than jsut inflation is used to manipulate the economy in the financial elite's favor...

Seriously, I'm starting to wonder at this point if you're actually pro-minimum-wage, because you seem to have a gigantic aversion to seeing how it's detrimental to all but a select few.

Again, Friedman and Dr. Paul agree that minimum wage helps no one besides a few privileged folks, and I strongly suspect that they know far more about this than you do.

[erowe1]

Your answers look suspiciously like someone who refuses to acknwoledge that mroe than jsut inflation is used to manipulate the economy in the financial elite's favor...

Seriously, I'm starting to wonder at this point if you're actually pro-minimum-wage, because you seem to have a gigantic aversion to seeing how it's detrimental to all but a select few.

Again, Friedman and Dr. Paul agree that minimum wage helps no one besides a few privileged folks, and I strongly suspect that they know far more about this than you do.

I'm not debating whether or not minimum wage is good. I have no aversion at all to seeing how it is detrimental to the economy. I'm debating whether or not it causes inflation. I say it doesn't. Friedman agrees. I assume Paul does too. It looks like you're no longer interested in arguing that it does, but wish to discuss some other aspect of it. Does that mean you've conceded the point?

[TheGrinch]

I'm not debating whether or not minimum wage is good. I have no aversion at all to seeing how it is detrimental to the economy. I'm debating whether or not it causes inflation. I say it doesn't. Friedman agrees. I assume Paul does too. It looks like you're no longer interested in arguing that it does, but wish to discuss some other aspect of it. Does that mean you've conceded the point?
Ummm, no...

I'm not debating whether MW laws cause inflation either, and in fact I agreed with you earlier that inflation is often cited as a justification by politicians for minimum wage increases, kind of a chicken and the egg scenario really...

And no, what you're calling inflation here is price changes. By definition the only thing that can cause inflation is putting more money into circulation. However, that is but one component to whether prices within a company, industry or even majority of an economy have to go up to support artificially risen minimum wages.

I never said it was "price inflation" (I use the term loosely so you won't confuse this with actual monetary inflation), nor whether this was the only outcome. It is just as possible that a company looks to lower costs and/or hire more productive and less employees, but it is not the only outcome. When employees/consumers have more money to spend, the prices can just as easily go up when coupled with all of the other important factors. My point is that this isn't just in a vacuum. Your ever-evolving point, however, I'm not even sure what you're arguing anymore.

Basically I've spent half this thread with you nitpicking about the effects of MW, whilst you claim that changes in some prices must necessarily correlate negatively to other prices (false), among all of the other wild assumptions you've made about inflation being the only important factor in price hikes.

Seriously, feel free to have the last word, but I really am done wasting my day here to contribute to an increasingly unreadable thread.

[erowe1]

I'm not debating whether MW laws cause inflation either

OK. Well, that's all I've been talking about this whole time.

Raising the MW does not cause inflation even if you define inflation as rising prices (which would mean all prices rising, not just some rising while others fall).

For those who are interested in understanding this, here's Henry Hazlitt's, "Inflation in One Page."
http://www.thefreemanonline.org/columns/inflation-in-one-page/

Note especially:

3. The causes of inflation are not, as so often said, “multiple and complex,” but simply the result of printing too much money. There is no such thing as “cost-push” inflation. If, without an increase in the stock of money, wage or other costs are forced up, and producers try to pass these costs along by raising their selling prices, most of them will merely sell fewer goods. The result will be reduced output and loss of jobs. Higher costs can only be passed along in higher selling prices when consumers have more money to pay the higher prices.

[John F Kennedy III]

I briefly engaged with a Democrat candidate on Twitter a few weeks back. She tweeted something about raising the minimum wage, and I tweeted back that it would raise unemployment. She tweeted back that if that were true, unemployment would be higher in states with higher minimum wages.

I tweeted back 3 links to studies from lib universities that proved just that.

She didn't tweet back again.

Lol nice.

[TheGrinch]

OK. Well, that's all I've been talking about this whole time.

Raising the MW does not cause inflation.
No it doesn't. Again, inflation means to print more money. However, price hikes (not necessarily inflation, but can have a similar effect on the consumer) can happen without you printing money.

However that doesn't mean that by raising prices, they necessarily have to be lower anywhere else, like was your original assertion here:


Raising minimum wage does not cause prices to go up overall. It causes some prices to go up, but then other prices have to go down (or not go up as much as they otherwise would have) to make up for it.

That's what I was disagreeing with you about, because it's simply not true that prices correlate negatively with other prices. It's far more likely for there to be positive correlations between price increase in certain areas, especially when coupled with an artificial wage hike to allow for higher prices that the consumer can afford.

Other than that, you seem to think that I'm talking about inflation, when I'm not. I'm referring to the plethora of other factors that can lead to price increases, perhaps even across the board if you manipulate it all enough.

Inflation (printing money) is not the only means to price inflation.

[erowe1]

No it doesn't. Again, inflation means to print more money. However, price hikes (not necessarily inflation, but can have a similar effect on the consumer) can happen without you printing money.

However that doesn't mean that by raising prices, they necessarily have to be lower anywhere else, like was your original assertion here:

Correct. It only means that if the money supply stays constant. But if the money supply increases, then all wages and all prices can go up.




That's what I was disagreeing with you about, because it's simply not true that prices correlate negatively with other prices.
Yes it is.

Let's take money out of it and imagine a barter scenario where two parties are trading apples for oranges. If at one point in time the exchange rate is 2 apples for every orange, and then something happens that changes the supply or the demand for one or the other, such that the exchange rate becomes 3 apples for every orange, then another way of saying that is that the price of the apples went down commensurately with the price of the oranges going up. If you add in money as a medium of exchange, that basic result would be the same. If you increase the amount of money, then the prices of apples and oranges would both go up together, but the ratio of the price of one to the price of the other would stay the same. If you enact some price control that increases the price of one relative to the price of the other, then the one will go up in price while the other will go down. If you want to increase the price of the one without the price of the other going down, you have to increase the money supply.



Inflation (printing money) is not the only means to price inflation.
If you're talking about increasing all prices, and not just some, then yes it is. But at no time have I suggested that raising the MW doesn't raise some prices. It certainly at the very least raises the price of unskilled labor. But it raises that price relative to the price of other things. Therefore, if the price of those other things is to stay the same or go up, while the price of unskilled labor goes up relative to them, then there would have to be an increase in the money supply.

[The Free Hornet]

OK. Well, that's all I've been talking about this whole time.

Raising the MW does not cause inflation even if you define inflation as rising prices (which would mean all prices rising, not just some rising while others fall).

For those who are interested in understanding this, here's Henry Hazlitt's, "Inflation in One Page."
http://www.thefreemanonline.org/columns/inflation-in-one-page/

Note espectially:

You have moved the goal posts from...


Raising minimum wage does not cause prices to go up overall. It causes some prices to go up, but then other prices have to go down (or not go up as much as they otherwise would have) to make up for it.

And...


Either that or the employer spends less money on other things, causing the demand curve for them, and thus their price, to go down. In actuality, over the whole economy, both of those things would be happening.

And...


No it doesn't. Certainly it causes some prices to go up. But in order for that to happen, other prices will have to go down.

Hazlitt says ...


4. Price controls cannot stop or slow down inflation. They always do harm. Price controls simply squeeze or wipe out profit margins, disrupt production, and lead to bottlenecks and shortages. All government price and wage control, or even “monitoring,” is merely an attempt by the politicians to shift the blame for inflation on to producers and sellers instead of their own monetary policies.

www.thefreemanonline.org/columns/inflation-in-one-page/ (http://www.thefreemanonline.org/columns/inflation-in-one-page/)

The price control is described as an unequivocal harm ("They always do harm."). There is no evening out of 'some goes up/some goes down'.

I think the sticking point here is you have co-opted the wider economic perspective to support this up/down theory you invented. The reason that inflation remains, on average and in most cases, a monetary phenomenon is the ability to substitute goods, to import, outsource, et cetera. The economy adapts to minimum wage increases just as certainly as cemetaries adapt to an increase in corpses.

On some scales, minimum wages increase prices which is sufficient to say they cause inflation. It may not be the type of inflation you mean (e.g., price of gold or oil or food in dollars). On larger scales, there is enough CPI distoration that I doubt all but a few know what the hell is going on. Some economists will see deflation even as the monetary supply increases (!). From their limited perspective they are correct. In the long wrong, Keynes already admitted that they are wrong.

Regardless, I think you have retreated into a safe position that is seperate from where you started. There is no need for some prices to go down to balance the minimum wage going up. If some prices go down - blank time/punch cards go down in demand and price due to unemployment - it is temporary whereas the minimum wage remains long term.

[erowe1]

You have moved the goal posts from...

I haven't moved the goalposts. At no time have I suggested that price controls ever fail to do harm. None of the things you bolded say that.

The things you bolded are saying the same thing Hazlitt says when he says, "1. Inflation is an increase in the quantity of money and credit. Its chief consequence is soaring prices. Therefore inflation—if we misuse the term to mean the rising prices themselves—is caused solely by printing more money. For this the government’s monetary policies are entirely responsible." and "3. The causes of inflation are not, as so often said, 'multiple and complex,' but simply the result of printing too much money. There is no such thing as 'cost-push' inflation. If, without an increase in the stock of money, wage or other costs are forced up, and producers try to pass these costs along by raising their selling prices, most of them will merely sell fewer goods. The result will be reduced output and loss of jobs. Higher costs can only be passed along in higher selling prices when consumers have more money to pay the higher prices."

Absent an increase in the money supply, there cannot be an increase in all prices. There can be an increase in some prices relative to others. But in order for that to happen without inflation, it must be the case that some prices go down while some go up. The only way for all to go up is, like Hazlitt says, by increasing the money supply.



I think the sticking point here is you have co-opted the wider economic perspective to support this up/down theory you invented.

You are too kind. I didn't invent this. I'm just repeating the standard free market economics explanation. I learned it from Sowell, or Friedman, or Williams, or Hazlitt, or someone else like that, who knows when.

[The Free Hornet]

You are too kind. I didn't invent this. I'm just repeating the standard free market economics explanation. I learned it from Sowell, or Friedman, or Williams, or Hazlitt, or someone else like that, who knows when.

No, you cannot source this bullshit (in bold) to any of those names:


Raising minimum wage does not cause prices to go up overall. It causes some prices to go up, but then other prices have to go down (or not go up as much as they otherwise would have) to make up for it.

It does unequivocal harm that may not be nearly as bad as monetary inflation (e.g., in magnitude). It does not have zero affect on prices (you claim and insist that some prices go up and some prices go down in equal measure to compensate). Prove that prices go down and source it to one of those names.

As you have stated and agreed repeated that the prices go up, the burden is on you to prove that prices go down in equal measure despite the unequivocal harm done (and both Hazlitt and Friedman were anti-minimum wage, especially to the extent in influences behavior as opposed to describing a prevailing wage for unskilled, inexperienced, entry-level work).

[erowe1]

No, you cannot source this bullshit (in bold) to any of those names:

I already did Hazlitt and Friedman in this thread.

Here's Williams.
http://townhall.com/columnists/walterewilliams/2005/11/16/whats_inflation/page/full/

[TheGrinch]

Yes it is.

Let's take money out of it and imagine a barter scenario where two parties are trading apples for oranges. If at one point in time the exchange rate is 2 apples for every orange, and then something happens that changes the supply or the demand for one or the other, such that the exchange rate becomes 3 apples for every orange, then another way of saying that is that the price of the apples went down commensurately with the price of the oranges going up. If you add in money as a medium of exchange, that basic result would be the same. If you increase the amount of money, then the prices of apples and oranges would both go up together, but the ratio of the price of one to the price of the other would stay the same. If you enact some price control that increases the price of one relative to the price of the other, then the one will go up in price while the other will go down. If you want to increase the price of the one without the price of the other going down, you have to increase the money supply.

This is not an issue of supply and demand, other than potentially more demand. If you raised the national minimum wage, then companies would almost immediately band together and charge more collectively, because they know that their products have all of the sudden become cheap relative to what the consumer can afford. Thus, there will be potential to raise prices to where they can still maximize profits without sacrificing demand, rahter than have high demand at too cheap of a price.

Wages will also trickle upward as prices do if they haven't already, and so yes that is where it can eventually lead to the Fed manipulating it with inflation, but it doesn't have to as long as higher prices can be maintained.

What does it matter if I now have to pay $1 instead of 0.50, if people are still able and willing to pay $3 instead of $2 for it?

That's where I think you're grossly oversimplifying some other prices needing to go down to compensate, when it's the higher wages that compensate for the higher prices, perhaps even across the board. There is no negative correlation unless the products are direct or indirect competitors, and as explained by Friedman, it is the priveledged who will be favored over the competitors in that situation.

Thus, you reduce competition, raise wages, raise prices and it matters little if you have to pay a little more to make it happen. If this happened in a free market, you'd call this savvy business, but in a manipulative market, it's just another sickening way the ones on top break the rules to stay there.

[The Free Hornet]

I already did Hazlitt and Friedman in this thread.

Here's Williams.
http://townhall.com/columnists/walterewilliams/2005/11/16/whats_inflation/page/full/

No. You have not shown where they claim: some prices go up/some prices go down due to minimum wage.

The closest you could come to sourcing anything is that there is no affect. Of course, those guys would be too smart to make such a claim as they understood the local and economy-wide affects.

Welcome to the bucket. It is long overdue.

[DamianTV]

...

What does it matter if I now have to pay $1 instead of 0.50, if people are still able and willing to pay $3 instead of $2 for it?

...

I cant afford it. But then again, I dont even count as a statistic either. And Im not the only one in this situation.

When costs go up, something has to get cut, somewhere. Maybe it is the quality of the product. Maybe it is someones job. Maybe the prices go up. One thing is for sure, prices dont come back down once they go up. Has anyone ever seen a DECREASE in Minimum Wage?

[erowe1]

This is not an issue of supply and demand, other than potentially more demand. If you raised the national minimum wage, then companies would almost immediately band together and charge more collectively, because they know that their products have all of the sudden become cheap relative to what the consumer can afford. Thus, there will be potential to raise prices to where they can still maximize profits without sacrificing demand, rahter than have high demand at too cheap of a price.

Wages will also trickle upward as prices do if they haven't already, and so yes that is where it can eventually lead to the Fed manipulating it with inflation, but it doesn't have to as long as higher prices can be maintained.

What does it matter if I now have to pay $1 instead of 0.50, if people are still able and willing to pay $3 instead of $2 for it?

That's where I think you're grossly oversimplifying some other prices needing to go down to compensate, when it's the higher wages that compensate for the higher prices, perhaps even across the board. There is no negative correlation unless the products are direct or indirect competitors, and as explained by Friedman, it is the priveledged who will be favored over the competitors in that situation.

Thus, you reduce competition, raise wages, raise prices and it matters little if you have to pay a little more to make it happen. If this happened in a free market, you'd call this savvy business, but in a manipulative market, it's just another sickening way the ones on top break the rules to stay there.

You keep talking about raising just some prices and some wages. Again, that's not what I'm talking about.

[TheGrinch]

I cant afford it. But then again, I dont even count as a statistic either. And Im not the only one in this situation.

When costs go up, something has to get cut, somewhere. Maybe it is the quality of the product. Maybe it is someones job. Maybe the prices go up. One thing is for sure, prices dont come back down once they go up. Has anyone ever seen a DECREASE in Minimum Wage?
Precisely. I never tried to claim that price increase was the only possibility, just that it can happen, along with all of the other shit from that damn policy that claims to help poor people.

[TheGrinch]

You keep talking about raising just some prices and some wages. Again, that's not what I'm talking about.
Yes, you're talking about how if some prices go up, some others have to go down. That's not necessarily true at all, especially when wages increase.

And in the cases of direct or indirect competition for consumers where this can happen regardless of policy, the policy favors the more privileged competition, so that is far more to relevant to a company losing its market share than where prices are at.

The point is that it stacks the deck even more in favor of some, and disproportionately to the detriment of the poor, not unlike inflation.

[mport1]

Raising the minimum wage? They must really hate poor people.

[erowe1]

No. You have not shown where they claim: some prices go up/some prices go down due to minimum wage.

In everything I've said I've been presupposing a certain facility with the laws of logic and mathematics on the part of my readers.

Please try to follow this.

Either an increase in all prices across the board is always caused by an increase in the money supply or it is not. Williams, Hazlitt, and Friedman all say it is in the links I provided.

If an increase in all prices across the board is always caused by an increase in the money supply, then it is never caused by something that does not increase the money supply, such as price controls. Hazlitt says this explicitly in his third point in the link I provided.

Price floors, such as the minimum wage, do cause an increase in the prices of some things by definition. On this we all agree.

Since price floors cause the prices of some things to increase, while they do not cause the prices of all things across the board to increase (which would be the case if all other prices either stayed the same or increased), then it follows that while those prices increase at least some others must decrease.

If all other prices either stay the same or increase while the minimum wage increases, then that would mean an across-the-board increase in prices, which cannot happen without an increase in the money supply.

[erowe1]

Yes, you're talking about how if some prices go up, some others have to go down.

Only if the money supply stays constant.

If the money supply increases, then prices can and will increase across the board.

As I've said, raising the minimum wage increases some prices. But it does not increase prices across the board. You repeatedly try to refute this by claiming that raising the minimum wage raises some prices, which doesn't refute me, since that's exactly what I'm saying. It just doesn't raise all prices, and you've really provided no arguments this whole time that it does.

[The Free Hornet]

If all other prices either stay the same or increase while the minimum wage increases, then that would mean an across-the-board increase in prices, which cannot happen without an increase in the money supply.

Prices can go up because consumption goes down. There is no corresponding decrease in prices that follows (especially long term). If long-term inflation is unaffected it is because the people dropped from the economy cease to matter in these regards.

The damage of the misregulation is routed around and the affected cease to matter.

Your pay goes from $10/hr to ZERO! But don't confuse that with a price decrease even if the person who hired your now worthless ass is saving money.

If there were a price decrease it would be on the black market. So the cost of hand jobs might decrease as the number of available hands increases.

[TheGrinch]

Only if the money supply stays constant.

If the money supply increases, then prices can and will increase across the board.

As I've said, raising the minimum wage increases some prices. But it does not increase prices across the board. You repeatedly try to refute this by claiming that raising the minimum wage raises some prices, which doesn't refute me, since that's exactly what I'm saying. It just doesn't raise all prices, and you've really provided no arguments this whole time that it does.
That's because I'm not arguing that it will necessarily raise all prices, there are 3 possibilities there. But no, again, the raising of some prices does not necessarily have to lead to lower prices elsewhere. That's jsut not true, especially when you artificially raise wages.

Anyways, I really am done this time. You do a nice job of playing devil's advocate, but your argument is flawed and ever-evolving towards us arguing the same thing, so I'll save us some time.

[erowe1]

Prices can go up because consumption goes down. There is no corresponding decrease in prices that follows (especially long term). If long-term inflation is unaffected it is because the people dropped from the economy cease to matter in these regards.

How does a person "drop from the economy"? You mean they die?

And when you say "prices can go up" are you talking about some prices or all prices? If you mean some prices, then that's no different than anything I've said. If you mean all prices, then you're going directly against the economists I referred to, which is the point I was making by referring to them.

[erowe1]

That's because I'm not arguing that it will necessarily raise all prices, there are 3 possibilities there. But no, again, the raising of some prices does not necessarily have to lead to lower prices elsewhere.

Raising some prices does not necessarily have to lead to lower prices elsewhere. It only has to lead to that if the money supply is kept constant. If the money supply increases, then prices overall across the board can increase. But if it does not, then they cannot.

Let's say there are 3 products: A, B, and C. Their prices are as follows: A=$1, B=$2, C=$3. The price of a basket of A+B+C=$6.

If the price of A goes up to $2, and the prices of B and C stay the same, then the price of that basket will be $7. In other words, overall prices across the board will have gone up. In order for this to happen, there must be inflation, i.e. an increase in the money supply.

If there is no inflation, and the price of A goes up to $2, then that means that overall prices across the board stay the same, and the basket of A+B+C must remain at $6. Thus the prices of B and/or C must go down.

If this is not the case, then neither is it the case that inflation is always and everywhere a monetary phenomenon.

[The Free Hornet]

How does a person "drop from the economy"? You mean they die?

Yes... eventually.
www.worldlifeexpectancy.com/unemployment-reduces-life-expectancy (http://www.worldlifeexpectancy.com/unemployment-reduces-life-expectancy)

This isn't a game of "some goes up/some goes down". It isn't zero-sum either. It is harm to the most vulnerable segments of the economy ("They always do harm." -Hazlitt). People also migrate away or become dependents on their family/friends. It would be little added marginal cost for someone to live with me especially if I have no responsibility for their health or education. Eventually, it is likely that dependency will be harmful to their life.


And when you say "prices can go up" are you talking about some prices or all prices? If you mean some prices, then that's no different than anything I've said. If you mean all prices, then you're going directly against the economists I referred to, which is the point I was making by referring to them.

Inflation is not about "all" prices. It is the overall trend. (http://www.investorwords.com/2452/inflation.html) Even with inflation, all prices will NOT go up because of bumper crops or an unforeseen drop in the demand of beanie babies. Consider even hyperinflation. Will you buy wallpaper at any price when you are trying feed your family? Will the wallpaper guy sell a truck of wallpaper for a loaf of bread? Money isn't the only that can become worth less/worthless. Some prices will always go down regardless of whatever the fuck happens anywhere.

You jumped from "It causes some prices to go up, but then other prices have to go down" to a general discussion of inflation and monetary supply. It was a mistake and I don't think Friedman or anybody else can correct it.

[QueenB4Liberty]

It's unfortunate when a good many jobs out there now are minimum wage jobs, even for people that have many skills. You can barely afford a one bedroom apartment working a minimum wage job 40 hours a week, and a lot of minimum wage jobs are not full time. The last time it was raised was in 2009, and that was only by 75 cents. I mean, I think prices are rising without the minimum wage rising, but many people right now are forced to work minimum wage jobs, so they aren't able to afford the things they need. I just don't see why it hasn't been at least rising with inflation so people can at least attempt to make a living off of it. I realize it isn't supposed to be the type of job a grown adult supporting a family is supposed to have long term, but these are bad economic times and some people have no other choice right now.

[angelatc]

It's unfortunate when a good many jobs out there now are minimum wage jobs, even for people that have many skills. You can barely afford a one bedroom apartment working a minimum wage job 40 hours a week, and a lot of minimum wage jobs are not full time. The last time it was raised was in 2009, and that was only by 75 cents. I mean, I think prices are rising without the minimum wage rising, but many people right now are forced to work minimum wage jobs, so they aren't able to afford the things they need. I just don't see why it hasn't been at least rising with inflation so people can at least attempt to make a living off of it. I realize it isn't supposed to be the type of job a grown adult supporting a family is supposed to have long term, but these are bad economic times and some people have no other choice right now.

Pfffft. Nobody owes you an apartment you can afford, or a living, for that matter. If the minimum wage were abolished, unemployment would much lower. More people could start businesses, and as the demand for labor increased, wages would rise.

Economics 101: Price floors create surpluses. Minimum wage is a price floor, which is why we have a labor surplus.

[QueenB4Liberty]

If minimum wage were abolished, then you'd have employers try to get away with paying people as little as possible. I realize if no one wants to work for that price, the wages will rise, but some people would rather take anything and that would seem to keep labor down. I would rather people earn their money any day than get a check from the government. But most people if they had to choose would rather collect a welfare check than struggle trying to live off minimum wage. Raising the minimum wage isn't going to hurt me, I make 3x's that amount. Prices are going to keep going up whether or not minimum wage is raised.

[angelatc]

If minimum wage were abolished, then you'd have employers try to get away with paying people as little as possible. I realize if no one wants to work for that price, the wages will rise, but some people would rather take anything and that would seem to keep labor down. I would rather people earn their money any day than get a check from the government. But most people if they had to choose would rather collect a welfare check than struggle trying to live off minimum wage. Raising the minimum wage isn't going to hurt me, I make 3x's that amount. Prices are going to keep going up whether or not minimum wage is raised.

Of course business is going to do everything possible to keep costs low. Competition and specialized skill sets command higher wages. Merely breathing shouldn't.

Like you said, some people would rather take anything. Why shouldn't they be allowed to sell their labor at the true market rate?

The answer is to phase out federal assistance programs, not raise minimum wage.

If it were not for the minimum wag laws, I'd hire someone to work with me. But I can't afford to pay someone $7.25 an hour, plus the taxes the government tacks on. So instead of being able to hire a cheap high school kid with no bills, looking for gas money, or a retiree looking to get out of the house, I have a huge backlog of work and no legal way to hire an assistant.

[TheGrinch]

If minimum wage were abolished, then you'd have employers try to get away with paying people as little as possible. I realize if no one wants to work for that price, the wages will rise, but some people would rather take anything and that would seem to keep labor down. I would rather people earn their money any day than get a check from the government. But most people if they had to choose would rather collect a welfare check than struggle trying to live off minimum wage. Raising the minimum wage isn't going to hurt me, I make 3x's that amount. Prices are going to keep going up whether or not minimum wage is raised.
If the bolded were the case, then most everyone would only be making minimum wage now. The reason it is not the case is because companies have to compete for more skilled labor which can make them more money than lesser skilled/productive/reliable/credible, etc. from their labor.

Sure you can decide to only pay someone $5 an hour, but you'll probably only get crackheads and teenagers who will work for that wage given the current inflation. You're neglecting the fact that supply and demand also exists on the employment side, where the employee can dictate what wage they're willing to work for, to a certain extent. By raising the minimum wage, you are only ensuring that more skilled workers will enter the employment market at that wage, while those you're claiming to help, the underskilled/undereducated poor are disproportionate affected, finding themselves more often unemployed at that wage where it's simply not worth a company to take a chance and risk turnover, effeciency and other costs to take a chance on them.

I've taken two seperate internships where I didn't take a dime to work for companies, so that I could gain skills and employment down the road.... I think you're greatly overestimating the number of minimum wage jobs, as it is a very low percentage of entry level jobs. However, by taking that entry-level job, then much like my internship, you will gain marketable skills to gain better employment down the road... However, if you're underskilled and no one will employ you for a higher wage, then you are never going to gain the skills needed to gain meaningful employment down the road.

Also, MW is usually in response to inflation, but it certainly doesn't do anything to make the prices go down, and only to stay high and go higher in many cases.

[BSU kid]

Isn't raising the minimum wage essentially inflation? The cost of goods and services will go up along with the minimum wage, and negate any positive effects...clearly this is all propaganda meant to brainwash people hungry for their government intervention and welfare.

[TheGrinch]

Isn't raising the minimum wage essentially inflation? The cost of goods and services will go up along with the minimum wage, and negate any positive effects...clearly this is all propaganda meant to brainwash people hungry for their government intervention and welfare.

Oh lord, please don't start erowe again. I finally had him calmed down for his nap :D

;)

[TheGrinch]

If minimum wage were abolished, then you'd have employers try to get away with paying people as little as possible. I realize if no one wants to work for that price, the wages will rise, but some people would rather take anything and that would seem to keep labor down. I would rather people earn their money any day than get a check from the government. But most people if they had to choose would rather collect a welfare check than struggle trying to live off minimum wage. Raising the minimum wage isn't going to hurt me, I make 3x's that amount. Prices are going to keep going up whether or not minimum wage is raised.

One more thing that should be noted, is that something is always better than nothing, or they wouldn't work for that wage.

People seem to assume that companies can just set whatever low wage they want. If they do that, then there will always be competition willing to pay more for better employees, which is exactly how a free market should work.

[twomp]

So I have a question because I sort of agree with both you guys and I am no where as knowledgeable.

Let's give my scenario. I am the Federal Reserve and I currently have 100 dollars in circulation. The minimum wage was just raised from 1 dollar to 2 dollars. How will it be possible to increase the pay of everyone in my country AND have an increase in prices WITHOUT prices dropping down somewhere AND WITHOUT printing more money?

[QueenB4Liberty]

Of course business is going to do everything possible to keep costs low. Competition and specialized skill sets command higher wages. Merely breathing shouldn't.

Like you said, some people would rather take anything. Why shouldn't they be allowed to sell their labor at the true market rate?

The answer is to phase out federal assistance programs, not raise minimum wage.

If it were not for the minimum wag laws, I'd hire someone to work with me. But I can't afford to pay someone $7.25 an hour, plus the taxes the government tacks on. So instead of being able to hire a cheap high school kid with no bills, looking for gas money, or a retiree looking to get out of the house, I have a huge backlog of work and no legal way to hire an assistant.


Yes I realize that we should phase out federal assistance programs, but they aren't going anywhere any time soon. Prices are going to keep rising anyhow, I make 3x the minimum wage, I don't care if they want to raise the minimum wage. I think if you want to work you should be able to afford to live on your own, I'm not talking about a nice apartment or anything, but I don't see a problem with wanting working people to be able to make it on their own. I just don't see why wanting the minimum wage to at least keep up with inflation is a bad thing, especially if it isn't going to cause prices to raise anymore than they already are rising.

[tttppp]

In my personal experience with the minimum wage, I was once looking for part time work in San Francisco which had a higher minimum wage. I was glad the minimum pay was a little more, but then I thought back at how hard it was for me to even get a minimum wage job. I had to apply to dozens andd dozens of places just to get minimum pay, even though I had a really good resume. It shouldn't be that difficult to get a low paying job.

[erowe1]

So I have a question because I sort of agree with both you guys and I am no where as knowledgeable.

Let's give my scenario. I am the Federal Reserve and I currently have 100 dollars in circulation. The minimum wage was just raised from 1 dollar to 2 dollars. How will it be possible to increase the pay of everyone in my country AND have an increase in prices WITHOUT prices dropping down somewhere AND WITHOUT printing more money?

It's not. Welcome to Austrian economics.

[QueenB4Liberty]

It's not. Welcome to Austrian economics.

k well what should we do when the rest of the world doesn't operate according to Austrian economics. I'm not disagreeing that Austrian economics is the way to go, I'm just being a realist.

[erowe1]

Inflation is not about "all" prices. It is the overall trend. (http://www.investorwords.com/2452/inflation.html)

It's the overall trend of all prices, not just some of them. But there can't be an overall trend of all prices unless there's an increase in the money supply. Therefore, if there's no increase in the money supply, then when some prices go up, while the overall trend of all prices does not go up, it follows that there must be some prices somewhere else that go down.

ETA: Note that the source you're citing says that inflation is "often" caused by an increase in the money supply. This is a standard mainstream economist line. I'm going with the free market ones I cited earlier who say that it's not merely often caused by an increase in the money supply, but that it always is.

[erowe1]

It's unfortunate when a good many jobs out there now are minimum wage jobs, even for people that have many skills. You can barely afford a one bedroom apartment working a minimum wage job 40 hours a week, and a lot of minimum wage jobs are not full time. The last time it was raised was in 2009, and that was only by 75 cents. I mean, I think prices are rising without the minimum wage rising, but many people right now are forced to work minimum wage jobs, so they aren't able to afford the things they need. I just don't see why it hasn't been at least rising with inflation so people can at least attempt to make a living off of it. I realize it isn't supposed to be the type of job a grown adult supporting a family is supposed to have long term, but these are bad economic times and some people have no other choice right now.

Why should the government force everyone to earn enough money to pay for a one bedroom apartment?

There are people who would like to be able to offer their labor at prices below that amount. Shouldn't they be allowed to do that?

[TheGrinch]

So I have a question because I sort of agree with both you guys and I am no where as knowledgeable.

Let's give my scenario. I am the Federal Reserve and I currently have 100 dollars in circulation. The minimum wage was just raised from 1 dollar to 2 dollars. How will it be possible to increase the pay of everyone in my country AND have an increase in prices WITHOUT prices dropping down somewhere AND WITHOUT printing more money?
The amount of dollars available greatly surpasses the amount spent on production costs, including labor. Thus, if a policy helps restrict competition, then why would I not be comfortable having to pay a little more for more skilled labor, while my competition suffers, and prices only tend to go higher as wages go higher and competition is reduced. Then you just have to price it where you still have demand.

Bill Gates is a good example. For one thing, a great portion of his net worth is his majority share in Microsoft. He might not have all that much cash on hand, any more than he needs. But through Microsoft he has all of the capital in the world, and what is good for Microsoft is for them to lobby for as many barriers of entry as possible, minimum wage raises being just one of those regulations, as they and Apple can set the prices and gain all of the market share. (BTW, this is a loose example of how it works. I'm not really up to date in how Microsoft has exploited it's monopoly, but they surely have, along with the rest of the privileged who set policy).

So you don't need more money printed necessarily, when all it takes to make more money is to circulate more of it as you increase your market share. It all ends up coming back to you in the end if you're one of the priveleged on the inside of the barriers.

(ETA: this is not to say that inflation still isn't beneficial to this process, it is yet another way they rob us of our earnings, but is certainly far from the only means).

[erowe1]

If minimum wage were abolished, then you'd have employers try to get away with paying people as little as possible.

That's what they're supposed to do.

[QueenB4Liberty]

I'm not saying the government should make sure everyone can afford a one bedroom apartment. I'm saying if you work, you should be able to make it on your own without government assistance.

I think you should be able to hire people for whatever wage you choose, but you should also be considerate and realize that people are trying to make a living. I just feel bad for people that are genuinely hard workers but just have bad luck and are struggling to make it.

[erowe1]

The amount of dollars available greatly surpasses the amount spent on production costs, including labor. Thus, if a policy helps restrict competition, then why would I not be comfortable having to pay a little more for more skilled labor, while my competition suffers, and prices only tend to go higher as wages go higher and competition is reduced. Then you just have to price it where you still have demand.

Bill Gates is a good example. For one thing, a great portion of his net worth is his majority share in Microsoft. He might not have all that much cash on hand, any more than he needs. But through Microsoft he has all of the capital in the world, and what is good for Microsoft is for them to lobby for as many barriers of entry as possible, minimum wage raises being just one of those regulations, as they and Apple can set the prices and gain all of the market share. (BTW, this is a loose example of how it works. I'm not really up to date in how Microsoft has exploited it's monopoly, but they surely have, along with the rest of the privileged who set policy).

So you don't need more money printed necessarily, when all it takes to make more money is to circulate more of it as you increase your market share. It all ends up coming back to you in the end if you're one of the priveleged on the inside of the barriers.

Again, you have explained how raising the minimum wage causes some prices to go up, which is not a disputed point. What you have not explained is how this causes an overall trend in the increase in prices across the board. Nor have you answered twomp's question.

[erowe1]

I'm not saying the government should make sure everyone can afford a one bedroom apartment. I'm saying if you work, you should be able to make it on your own without government assistance.



So a person who wants to offer their labor at a rate lower than what a person can live on without government assistance shouldn't be allowed to do that?

I have a developmentally disabled sister who lives with our mom and barely manages to keep a job working maybe 6 hours a week for minimum wage. She doesn't need to earn enough to live on by herself. But she'd love to be able to offer her labor at a lower rate, so that she could work more. The government won't let her. Explain how that is right.

[TheBlackPeterSchiff]

Doesn't matter if it doesn't make economic sense. It wins votes and works. Case closed.

[TheGrinch]

Again, you have explained how raising the minimum wage causes some prices to go up, which is not a disputed point. What you have not explained is how this causes an overall trend in the increase in prices across the board. Nor have you answered twomp's question.


(ETA: this is not to say that inflation still isn't beneficial to this process, it is yet another way they rob us of our earnings, but is certainly far from the only means).
..

[twomp]

I appreciate the quick replies from both you guys, still a little confused but I look forward to reading more about this from both of you.

[TheGrinch]

I appreciate the quick replies from both you guys, still a little confused but I look forward to reading more about this from both of you.
Feel free to ask any more questions you have, but I've debated this way too much already, when I think both me and erowe are essentailly arguing similar things, but with minor differences about whether inflation is inevitable in an interventionlaist economy or if price hikes happen just as much by other reasons like MW, but either way we can all agree that minimum wage rises suck, inflation sucks, and the way they use them together with all of the other regulations really sucks!

[erowe1]

I appreciate the quick replies from both you guys, still a little confused but I look forward to reading more about this from both of you.

I don't know how much more there is I can say. Just read about inflation at mises.org, freeman online, fee, and places like that, to see where I'm coming from.

[erowe1]

Feel free to ask any more questions you have, but I've debated this way too much already, when I think both me and erowe are essentailly arguing similar things, but with minor differences about whether inflation is necessary in Keynesian economy, but either way we can all agree that minimum wage rises suck, inflation sucks, and the way they use them together really sucks!

I think that's the difference. I'm explicitly rejecting the Keynesian perspective.

[QueenB4Liberty]

So a person who wants to offer their labor at a rate lower than what a person can live on without government assistance shouldn't be allowed to do that?

I have a developmentally disabled sister who lives with our mom and barely manages to keep a job working maybe 6 hours a week for minimum wage. She doesn't need to earn enough to live on by herself. But she'd love to be able to offer her labor at a lower rate, so that she could work more. The government won't let her. Explain how that is right.

It's not right.

I just find it odd that some people dislike government assistance so much but then again making it so people will actually be able to live working off their own money is apparently a bad thing too. It's like, lose lose if you are low skilled or fall down on hard times. How is that right?

[TheGrinch]

I think that's the difference. I'm explicitly rejecting the Keynesian perspective.
I am too. You keep reading my posts before I edit them, because that's not what I meant. I am also of course against the Keynesian perspective or I wouldn't be arguing against minimum wage increases and inflation.

We agree much more than you think here, you just keep getting us stuck on argumentative assumptions, instead of realizing that.... Perhaps I'm a bit guilty of that as well though, keeping on coming back for more ;)

[TheGrinch]

It's not right.

I just find it odd that some people dislike government assistance so much but then again making it so people will actually be able to live working off their own money is apparently a bad thing too. It's like, lose lose if you are low skilled or fall down on hard times. How is that right?
If you are low-skilled, there isn't a government assistance in the world that's gonna help you get off of it, and into a better job.

On-the-job skills and credible experience are extremely important. Why do you think they ask for your resume or experience at virtually every job in the world? Because especially if they're paying you a higher wage, then they want a little assurance that they're not just training you so that you can cost them rather than make them more money, through things like ineffeciency, turnover, who knows, maybe theft if no one can vouch for you.

[erowe1]

It's not right.

I just find it odd that some people dislike government assistance so much but then again making it so people will actually be able to live working off their own money is apparently a bad thing too. It's like, lose lose if you are low skilled or fall down on hard times. How is that right?

That point goes both ways.

I would say that the existence of welfare undermines the argument that anyone would need the minimum wage to go up, since those who aren't making enough to live on can already get government assistance.

[erowe1]

Here's a helpful article at mises.org called, "Will An Oil Price Fall Push Inflation Down?", where the author answers, no. I couldn't find one that makes the same points about minimum wage. But the arguments parallel one another.
http://mises.org/daily/2331

[TheGrinch]

That point goes both ways.

I would say that the existence of welfare undermines the argument that anyone would need the minimum wage to go up, since those who aren't making enough to live on can already get government assistance.
We most certainly agree on that note. If the Dems want welfare, then they shouldn't demand minimum wages. As long as the safety net exists for those who earn below a certain wage, then it helps them even less to demand higher wages without earning it. Companies simply will not do that, taking on high-risk employees for higher wages unless there aren't any better choices to fill the position (which there will tend to be as wages rise).

If you give a business a choice between acceptable profits and having to pay essentially welfare to unqualified employees, I think you'll find that it simply won't be worth it to many small businesses.

The unfortunate thing is that the Republicans outside of us are all too quiet about it, treating it like a PR issue rather than an issue to be addressed.

[QueenB4Liberty]

If you are low-skilled, there isn't a government assistance in the world that's gonna help you get off of it, and into a better job.

On-the-job skills and credible experience are extremely important. Why do you think they ask for your resume or experience at virtually every job in the world? Because especially if they're paying you a higher wage, then they want a little assurance that they're not just training you so that you can cost them rather than make them more money, through things like ineffeciency, turnover, who knows, maybe theft if no one can vouch for you.


But if you live paycheck to paycheck then you aren't going to have enough money to save to invest in any type of job training. It just seems like a vicious cycle. I don't believe everyone working minimum wage wants to stay there the rest of their lives but some of them have no choice.

[TheGrinch]

But if you live paycheck to paycheck then you aren't going to have enough money to save to invest in any type of job training. It just seems like a vicious cycle. I don't believe everyone working minimum wage wants to stay there the rest of their lives but some of them have no choice.
Then why are you here if you don't beleive what Dr. Paul preaches?

The key to a vibrant economy is a free market, not Keynesian economics. All that has served to is make more people dependent on welfare as they devalue what some have saved their whole lives.

[erowe1]

But if you live paycheck to paycheck then you aren't going to have enough money to save to invest in any type of job training. It just seems like a vicious cycle. I don't believe everyone working minimum wage wants to stay there the rest of their lives but some of them have no choice.

But it would be even worse if we took those jobs away from them by raising the minimum wage.

[QueenB4Liberty]

We most certainly agree on that note. If the Dems want welfare, then they shouldn't demand minimum wages. As long as the safety net exists for those who earn below a certain wage, then it helps them even less to demand higher wages without earning it. Companies simply will not do that, taking on high-risk employees for higher wages unless there aren't any better choices to fill the position (which there will tend to be as wages rise).

If you give a business a choice between acceptable profits and having to pay essentially welfare to unqualified employees, I think you'll find that it simply won't be worth it to many small businesses.

The unfortunate thing is that the Republicans outside of us are all too quiet about it, treating it like a PR issue rather than an issue to be addressed.


You act as if it's so easy to get government assistance. Granted it is easier than it was a few years ago.

[QueenB4Liberty]

Then why are you here if you don't beleive what Dr. Paul preaches?

The key to a vibrant economy is a free market, not Keynesian economics. All that has served to is make more people dependent on welfare as they devalue what some have saved their whole lives.

I do believe what Dr. Paul preaches, thanks. I believe in an Austrian free market economy, but that isn't what we are living in and there's a very slim chance there will ever be a true free market economy the way we want. I'm a realist.

[TheGrinch]

You act as if it's so easy to get government assistance. Granted it is easier than it was a few years ago.
Actually there is tons of government assistance and charities that are willing to help someone when they've hit rock bottom. It's not just our unsustainable government spending that makes our people have the highest standard of living in the world, it's our compassion (that unfortunately leads to misguided emotional policy like you're advocating).

Another form of charity would be to give someone a job that isn't worth paying minimum wage for (which you would if it was, because the more you pay, the more you're expecting out of that employee). Then they can gain some marketable skills and a good recommendation to work at a better opportunity.

But the key to good jobs is also a good free market economy. In a robust economy, the demand for more skilled labor will always be there... Not so much in an interventionalist economy where you're devaluing people's currency to the point that they have to go on welfare, while making it tougher for the underskilled poor to lift themselves up out of the vicious cycle.

[angelatc]

Yes I realize that we should phase out federal assistance programs, but they aren't going anywhere any time soon. Prices are going to keep rising anyhow, I make 3x the minimum wage, I don't care if they want to raise the minimum wage. I think if you want to work you should be able to afford to live on your own, I'm not talking about a nice apartment or anything, but I don't see a problem with wanting working people to be able to make it on their own. I just don't see why wanting the minimum wage to at least keep up with inflation is a bad thing, especially if it isn't going to cause prices to raise anymore than they already are rising.

Because higher minimum wages take jobs out of the economy. Look it up - states that have higher minimum wages also have higher unemployment rates. So is it better to work at a job that pays $5 an hour, and have a couple of roommates our of necessity, or lose a job when the minimum wage goes from $7.25 to $10.00?

[angelatc]

You act as if it's so easy to get government assistance. Granted it is easier than it was a few years ago.

It's not that tough. Convert your retirement accounts into a house, and you qualify.