A Replacement for Minimum Wage and Unemployment Benefits

By providing everyone with a minimum wage government job, you basically recreate the minimum wage because businesses need to pay higher then the government job to attract workers. If they pay lower, virtually no workers will take that job.

 

You're just trading one problem for another. Here you're talking about 'crowding-out' private sector activity. There is no way that your plan can be adapted to make it practical. You need to start with a basic labour economic understanding and go from there. That will undoubtedly lead to a much more complex view over labour policy

 

You're not crowding out the private sector, if they want workers they can pay higher then minimum wage.

 

You're referring to resources skewed towards the public sector. There is crowding-out by definition.

 

And if they can't do so and still profit, they will cut the worker. If they need the worker, they will raise prices to maintain profit margin. This will lead to the other kind of inflation.

 

Higher wages doesn't necessarily translate into higher prices. We have to factor in productivity and unit labour costs can be unaffected

 

By buying basic capital for the government jobs the government steals enough resources to destroy the private sector? Kinda a big claim that needs to be backed up.

 

Amusing reply, given your whole argument is a 'big claim that cannot be backed up'. Its not a difficult point. The minimum wage is a vital aspect in capitalism. Talking about eliminating it isn't cunning. Then suggesting that you can provide "everyone with a minimum wage government job" is government inefficiency run amok. The best you can go for is the notion of an 'incomes policy'. Note that rarely is a success, particularly when confronted with volatile labour markets.

 

You got a point, if we gave everyone minimum wage jobs private sector would have to pay more, then the minimum wage would be effectively higher, but wages and prices adjusting to a small minimum wage increase is very little inflation. We could also give the boot to government workers when there is are jobs for the same amount of pay in the private sector to solve this problem, what do you think of that?

 

A bloated public sector will harm private sector job creation. You're going around in circles!

 

How is it government inefficiency run amok? you seriously need to back up your claims.

 

Are you even sure what you're typing? What on earth do you think providing "everyone with a minimum wage government job" means?

 

If too many people will take a government job over a private sector job, then yeah it will harm the private sector, but we can just give those clinging to government jobs the boot when there is plenty of demand for private jobs.

 

You need to specify what government inefficiency run amok means for the economy and why it does so before I can make an argument against it.

 

You're just repeating crass error. Once you allow the public sector to get bloated you will, ex post, harm private sector job creation. Resources become increasingly skewed towards non (or less) productive public provision and the economy shrinks

 

You specified it yourself (thus my comment over your own confusion). You're not referring to a public sector based on, for example, public good provision. You're referring to providing "everyone with a minimum wage government job". You're therefore referring to a substantial rise in public sector employment, ensuring greater inefficiency that will undoubtedly harm the private sector. You need to think things through before making claims!

 

But government jobs can produce resources for the economy to offset this. hell, you could even make government jobs that make capital for other government jobs.

 

How are government jobs inefficient? sucking up resources? government jobs can make resources.

 

Nonsense! Government can stabilise the economy (thus the problems generated through austerity and the fiscal stabilisers provided by unemployment benefit). However, given crowding-out effects, the overall effect in terms of "producing resources for the economy" will tend to negative. Your claims are not based on any sound economic footing

 

You have this ludicrous idea that you can just simply find productive jobs and fill them with government officials without any consequences for the economy. That makes Stalinism look relatively rational in the economics stakes!

 

Stalinism tries to fully replace the private market with government-provided goods.. This requires a complete understanding of everyone's wants/needs which is impossible to achieve. Government can however do so on a small scale because there are clear wants/needs to be able to fill in our society currently, like basic housing and the funding of health care. but when government tries to take on industries like fashion, entertainment, home decoration, food, they just can't predict what people want in these industries so it fails.

 

Alright, I don't completely get the "crowding our effect", please fully explain it.

 

Stalinism at least introduced a method designed to facilitate economic planning (i.e. a system of material balances, with quantity used instead of the price mechanism to achieve production goals). You don't have that here. You just havean automatic inflation of the public sector, shifting resources into non (or less) productive activities. Its therefore a backward step, making early socialist planning models look decidedly advanced.

 

You're shifting resources into a bloated government sector. That obviously has repercussions for the private sector. Take something as simple as the shirking model in efficiency wages. Here, involuntary unemployment is natural in capitalism as that reserve army provides a discipline device on workers (allowing capitalist profits then to go unchallenged). By generating your bloated government sector you're taking that device away. The private sector will therefore encounter negative repercussions (either increasing further the inefficient hierarchical mechanisms that they employ to keep the workers compliant or to shed more labour, creating a need to further bloat the government sector). THis is just one example! The neo-classical analysis into crowding-out will be more straight-forward. The skewing of resources will simply reduce the vibrancy of the private sector and ensure exchange opportunities are restricted.

 

The only resources going into government would be capital and the materials to make goods like metal. And government jobs can produce resources to compensate. You wouldn't claim that a business would be taking resources away from the market by using them to create other more popular goods, like if people suddenly spent more in one market then in others, so why complain here? They could be paid to make things like food, create military equipment, do services like pick up garbage off the street, and manage parks. These things are a good trade for the mostly temporary cost of other economic goods and services getting inflated, like when people shift where they spend money. Our total GDP will go up because we are having everyone who are willing and able to work producing something.

Buying the capital needed to produce things in government jobs won't hurt the economy, it will just change what is produced. taxes will hurt every industry, but the government spending will boost businesses that provide capital, and note this is temporary. This won't cost jobs or lower peoples wages either because it's just a shift in what's produced.

Your going to argue unemployment is a good thing in our economy...? Alright then... People won't suddenly be lazy just because they get a job easily. Just because we are providing jobs to these people doesn't mean we can't take it away if they're inefficient. If someone stops working on their government job we can just give them the boot. If someones being lazy in the private sector we can just give that person the boot as well and transfer another worker to the private sector. This is more favorable because you are keeping those who won't work unemployed, not those who get layed off or can't find a job.