About Socialism

but why does the government get to set the wage? how do they know what is that perfect level?

Why do so many companies produce goods oversees? cheaper labor, if what you say is true, why aren't all US companies thrilled to employ in U.S? Why not pay half the price for a sharper Indian worker who is twice as productive as the american who demands twice the price? That American has no shot.. he is worthless to a company.. and too expensive for what he can produce relative to someone in China or India.

 

I hope your friend doesn't hire workers.

 

In a mixed economy with room for different models working together, why not?

 

Sounds more like democracy. A majority assesses value and imposes it on the minority.

 

Because your friend would be stealing from his workers. Stealing their value, as I'm told.

 

Not if he offered fair value for labour or offered some kind of profit sharing.

He already has wwoofers living on his land. You could try googling if you've never heard the term.

 

Does he offer fair value of labor offered? How does one calculate "fair value"?

 

In classical economics it would be gross profit per worker less expenses.

But I don't think he has thought that far ahead. It's actually more a mom and pop operation with wwoofers working. much of the farm as I said.

Can you give a good reason why workers getting paid the value of their labour is a bad thing.

 

No. They should sell their labor directly, cutting out the evil capitalist, and make much more money. Win-win, right?

 

One of the factors that allowed for the Industrial Revolution was legal private ownership of the means of production. That's because legal systems provide stability to economies; otherwise, property owners will have to arm and defend themselves against anyone who seeks to take their property by force, as there would be no police, military, and courts to help them. That legalization started with enclosures during the late middle ages, leading to land titles that all residents of the land recognized through state power.

Other requirements, such as patent laws, charters, limited liability, fiat currencies, by-laws, and more appeared before, during, and after this event.

Thus, governments did act in cases of theft, but as economies became increasingly complex due to industrialization, had to do more, and often because businesses and customers asked for that for various reasons: shared standards, arbitration, more efficient means of trade and exchange, and so on.

 

Government bureaucracy grows as businesses and citizens operate in more complex economies.

 

Not just Weimar, Germany, but most economies for the past few centuries.

 

I believe small business is disingenuous when complaining about the Cost of Labor, which they get to Expense. The more Labor Costs, the more they get to Expense.

And, by solving for simple poverty, we can ensure that higher paid Labor, pays more in taxes and creates more in demand.

 

special pleading leads to fallacies of false Cause. Government is socialism.

 

Fiat money? Fail.

 

But probably eighty percent of that isn't necessary and much of that is counter productive and often wasteful.

 

I think the worker cooperative model is a good start. There are only about 300 in the US but much more common in Europe, especially Spain.

Many of the larger ones have been able to compete well in the current system even having traditional capitalist partners in the supply chain.

And they survived 2008 better than many corporations.

Yes, I think workers should have a stake in realizing gains of their own production.

 

If only the minimum wage had anything to do with how much labor gets paid. It doesn't. Labor's wage rate is determined by supply and demand, experience and talent. When labor gets too expensive here, business shifts its operations overseas.

 

This is a good point. The federally mandated minimum wage isn't even necessary in places like Boston where labor is in short supply and is well paid, while it is counterproductive in places like Mississippi where labor is abundant, jobs are scarce, and wage rates are low. (Try saying "wage rates" ten times fast.) Raising the cost of employing a new worker in Mississippi is precisely where it shouldn't be raised. But the federal minimum wage applies across the country without regard to local conditions.

 

There isn't a perfect level. That's the point. Perfect competition does not exist, making the standard disemployment analysis redundant.

Consider the economic history of two countries: UK and Germany. The UK eliminated its minimum wages under Thatcherism. It still became a net importer of manufactured goods in its history. It created a low skilled equilibrium that has maintained weak export performance. And Germany? It maintained its trade performance despite use of collective bargaining in determining minimum rates. A longer term perspective has prevailed, with less focus on short term profiteering. Labour market flexibility is a race to the bottom.

 

This amused me. You're essentially referring to the importance of wage equation analysis. That analysis is naturally included in econometric research that disagrees with your opinion. It was not included in the weak examples of pressure group bias that you pretended was credible evidence.

 

Minimum wages are a minor part of the overall economy, so it's not really fair to blame them or credit them with anything. However, economic growth in the UK has outperformed Germany's since 1980. So eliminating minimum wages didn't really hurt anything. As for exports/imports, that's 18th century thinking. You don't need to export a lot of goods in order to prosper. Milton Friedman said the richest you could get would be if you produced nothing but paper money and imported everything else, as long as those other countries still accepted your paper money as payment.

Perfect competition doesn't need to exist in order for supply and demand to work. Sugar from beets is slightly inferior to sugar from sugar cane, but if the price of sugar from sugar cane rose to ridiculous levels for some reason, people would switch to beet sugar without much of a complaint.

 

Thatcher, eliminating the wages council system, was following her beloved Friedman and Hayek. It was a vital part of her policy. Eliminating minimum wages (and of course also crucifying the unions) was seen as the mechanism to reduce the natural rate of unemployment. It failed spectacularly. One of the reasons, for example, that she was forced to repeatedly change how unemployment was defined. Massaging the figures was a lot easier than sorting out the long term disaster engineered by free market economics stupidity.

That you're referring to sugar illustrates how little you have, theoretically or empirically, on this subject. Perfect competition is certainly vital for the disemployment claim. Any binding minimum wages would then be problematic. As we shift to economic reality, we naturally shift to monopsonistic power. That, which you've repeatedly ignored, leads to the conclusion that minimum wages can increase wage and employment.

 

Okay, I looked up your monopsony. Turns out it's so much bullshit.

"Empirical evidence of monopsony power has been relatively limited. In line with the considerations discussed above, but perhaps counter to common intuition, there is no observable monopsony power in low-skilled labor markets in the US.[7]"

https://en.wikipedia.org/wiki/Monopsony

"The simple monopsony model provides an alternative explanation to the standard competitive model of how wages are determined. It predicts that employers will hold wages down below the value of the last worker’s contribution to output (“exploitation”) by limiting the number of workers they hire. But it is too simple to fit real American labor markets, so elaborations such as oligopsony or differentiation of employers are needed.

Estimates of monopsony exploitation to date in American labor markets have yielded surprising results (see Table 1 for a rough summary). Monopsony does not appear to have been important in company mining towns, a standard textbook example, or in markets for teachers and nurses, early suspects. In fact, the largest plausible estimates of monopsony exploitation to date are not for blue-collar workers but rather for professional athletes and possibly college professors."

http://eh.net/encyclopedia/monopsony-in-american-labor-markets/

 

Unfortunately that's, and I'm being kind, a rather low brow response. First, you use a crummy source. Try an economic publication: https://www.aeaweb.org/articles?id=10.1257/0895330027300

We know that monopsony is the norm. Its delivered, for example, through job search frictions. We also know that the empirical evidence confirms its relevance. For example, control for human capital and compensating differentials, we still find wage differentials.