Low Wages Cause Unemployment

Discussion in 'Economics & Trade' started by Anders Hoveland, Apr 21, 2012.

  1. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    The problem is the minimum wage stigma as to the business community. You raise minimum wage, and they raise prices. The corporations last, more mom and pops are driven under. I'm saying screw the state. The government is tits on a bull at this point. The state was designed to be the referee, not the power for sale to the highest bidder. I would rather do away with the government completely and go back to fist fights with scabs over wages. The owner class will always have power. Being labor and not an owner is a tax in its own right. A tax that will never go away. When you empower the state, all you are is empowering a 2nd tax on your labor. Hell, we fought the British over double taxation, and at this point, I think the state has figured out so many different ways to tax us there isn't even a word for it. Bring back tariffs. That is a natural tax that divides itself evenly and generates a revenue for the state. We need to get the state out of labor's pocket completely. Turning the nation back into an employees market, where there is simply not enough workers for the jobs wanted, will generate a natural increase in wages. The problem is we are in an employers market. That can't be remedied by increasing minimum wage, nor can be remedied so long as free trade exists. The only plausible way to bring jobs home, while free trade exists, is to up the price of fuel to 20 dollars a gallon. I promise, Americans would rather an increase in frivolous purchases than a dramatic increase in a necessity purchase such as fuel.
     
  2. Reiver

    Reiver Well-Known Member

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    This is a fallacy. The evidence shows that there is no significant link between minimum wages and price levels
     
  3. Archer0915

    Archer0915 New Member

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    Pretty much true but that has not always been the case. Today; however, a rise in the wage means a cut in employee benefits. Raising the wage means cuts that hurt all those who make more than the minimum.
     
  4. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    Every American has seen it 1st hand. Employers jump on any excuse to raise prices. Go bury your nose in another book on theories, British nerd.
     
  5. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    Yeah, another huge downside.
     
  6. Reiver

    Reiver Well-Known Member

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    You're merely spreading nonsense again. For a review of the empirical evidence see Lemos (2008, A Survey of the Effects of the Minimum Wage on Price, Journal of Economic Surveys, Vol 22 Issue 1, pp 187-212). This concludes price effects are small and that "policy makers can use the minimum wage to increase the wages of the poor".
     
  7. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    It only ups the wage level of those at the very bottom. Every level that was already above the new minimum wage stays the same. They are just now making less for their experience and/or skill.
     
  8. Reiver

    Reiver Well-Known Member

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    This makes no sense. We know that minimum wages can reduce wage differentials. However, we also know that the price effects are insignificant. There is therefore no impact on the real wage of those above the minimum.
     
  9. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    Please. I get the same wage now that dishies make 7 an hour as when they made 5. All the truly skilled positions above the entry level don't change a lick. I can't believe I have let you suck me into another worthless debate with my life experience vs your theories and charts you read somewhere.
     
  10. Reiver

    Reiver Well-Known Member

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    Tabloidism won't help you. The empirical evidence doesn't agree with your opinion. Get over it.
     
  11. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    Um...you do realize everyone reading from America can apply what I say to their own personal experience and know it is the truth right? Let this be a good lesson to all reading how valuable "empirical data" is.
     
  12. Reiver

    Reiver Well-Known Member

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    You're quite free to talk garbage and have opinions alien to economic reality. Indeed!
     
  13. Anders Hoveland

    Anders Hoveland Banned

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    I think it is many economists that are quite free to write garbage and have opinions detached from reality.

    When one tries to condense real economic operations to simplistic concepts, one is bound to ignore less conspicuous but essential phenomena.

    Problems I have with economists: stop conceptualising land/natural resources by bundling it with the rest of capital!
    Stop ignoring extraneous costs!
     
  14. Reiver

    Reiver Well-Known Member

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    This post has nothing going for it. Land and capital aren't bundled together. They don't ignore costs. They can't ignore economic reality (the clue is in the vocab). You've constructed a red herring to support a bogus opinion
     
  15. Hoosier8

    Hoosier8 Well-Known Member Past Donor

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    The key to understanding economists is that you will find an economist tied with almost every possible scenario. In other words, they are all over the place.
     
  16. Junkieturtle

    Junkieturtle Well-Known Member Donor

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    And without wage laws, we'd have an even bigger need for the entitlement programs because employers would pay next to nothing for unskilled work, making those jobs pointless to have since a person couldn't support themselves on them. You can barely support yourself on a minimum wage job at the current minimum wage, or not at all, depending on where you live. Imagine if it was even lower. Wage laws prevent exploitation, and like all things, are not perfect in their application, but the alternative is even worse.
     
  17. Anders Hoveland

    Anders Hoveland Banned

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    Do you take into account what a minimum-wage earner actually costs taxpayers and the problems it can create for the rest of society?

    It is impossible for a minimum-wage earner to make a net economic contribution to society, they simply do not earn enough. Yet many economists ignore the extraneous costs. When such a large portion of the people in the UK and USA earn such low wages, something is dysfunctionally wrong.
     
  18. Reiver

    Reiver Well-Known Member

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    You've created a false argument, nothing more. The "its impossible for a minimum-wage earner to make a net economic contribution to society" is just drivel. You won't be able to support it with anything but a "in my skewed opinion" approach
     
  19. stevenswld

    stevenswld Banned

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    Sorry, but low wages result from low employment and low employment is the result of the economic suicide of allowing jobs to be shipped off shore. The government has abandoned protective tools in order to enrich their fellows. Marching in the streets alone will bring little notice from the elite government politicians because it is a hollow display of resentment. But, marching in the streets with a rifle over your shoulder will scare the hell of of them. They will see their very lives are at risk and will abandon their self interests to do the will of the people. They will suddenly reject their belief in globalism (that makes money for their friends) and embrace protectionism by implementing long overdue tariifs on Chinese goods. This will of course force their rich friends to come home and embrace the American worker.
     
  20. Reiver

    Reiver Well-Known Member

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    Utter rubbish. Low wages reflects two main aspects. First, a low skilled equlibrium reflecting too many jobs with, for example, a low income elasticity of demand. Second, underpayment reflecting an inability to compensate productivity. You won't find the most open nations, in terms of trade relations, with the lowest wages. Bit bleedin obvious really
     
  21. Anders Hoveland

    Anders Hoveland Banned

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    What you continuously refuse to consider is that wages are NOT the same thing as productivity. Wages are determined by supply and demand. If there is an excess supply of labor, wages will go down. This, of course, has nothing to do with the workers becoming less productive. Furthermore, when wages go down, demand for labor tends to also go down.

    In light of this, your continuous arguments about "the benefits of free trade" and comparative advantage are insufficient. True, they directly benefit those actually involved in the trading. But what about the extraneous effects? This improved efficiency will not necessarily be enough to compensate for job losses, or the increase in inequality caused by lower wages.
     
  22. Reiver

    Reiver Well-Known Member

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    Again you show your innocence! If you believe that wages reflect supply and demand you will necessarily have to refer to productivity. The labour demand curve is given by the marginal revenue productivity of labour after all. Try teaching yourself some supply & demand!

    All 'developed' countries benefit from trade. The winners can compensate the losers. In Anglo-Saxon countries that compensation may not occur, but that has nothing to do with trade. That reflects a class ridden structure that feeds off on underpayment, underemployment and a lack of opportunity
     
  23. Anders Hoveland

    Anders Hoveland Banned

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    This is not necessarily true. The theory of comparative advantage does NOT actually assert this. While trade certainly has a direct effect on improving "efficiency", this is not necessarily a "good" thing. If you think in terms of game theory, I will also mention The Prisoners Dilemma. Although the trade might seem mutually beneficial to both parties, it could actually have a net detrimental effect through less direct means.

    But more commonly, the trade will be beneficial to one country, while hurting another country. And also remember that each country is heterogenous. Free trade helps some, takes away opportunities from others. Free trade does not necessarily create more wealth in both countries. Think about this, it should be fairly obvious. It might make sense for the business owner to outsource, but the small ammount of money he saves might be only a fraction of the wages that are lost in his country, and so ultimately it could drive him out of business because his customers do not have jobs.

    Or importing from another country may be slightly cheaper, but most of the costs go to paying for fuel (to transport it) rather than to wages. So it could hurt both countries involved in the trade. (just an example)

    theoretically, but this typically does not happen. And even if it did, there are incentive reasons that this compensation could result in lower efficiencies.

    I am just trying to say that your Free Trade and Keynesian ideologies are only isolated elements of a wider economic understanding. In the same way that Georgism is only one element. If you do not look outside of your ideology, it will not be possible for you to see how Free Trade can be harmful.

    Free Trade takes away jobs, drives wages downwards. Keynesianism has potential economic disincentives, typically is wasteful of money. And if money has to be borrowed, it tends to transfer wealth from the middle class into the hands of the wealthy. You should seriously examine these effects to determine whether the benefits of your ideologiy is worth the cost.
     
  24. Reiver

    Reiver Well-Known Member

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    Yes it does. And it would be ignorant to suggest otherwise.

    Again you only show that you don't know what you're talking about. In terms of trade, the prisoners dilemma is used to show how 'beggar thy neighbour' optimal tariffs (based on the premise of a 'terms of trade' gain from reducing trade volumes, essentially reflecting market power) will fail and therefore should be avoided through multilateralism.

    Utter garbage! That view is reliant on long rejected mercantilism. Your views are not based on any sound economics, demonstrating only that your nationalism hinders valid conclusion
     
  25. stevenswld

    stevenswld Banned

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    I see no substance to your fumbling effort to recall economic terms. Do you work at Burger King? Your response is utter rubbish and your English is terrible.
     

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