Post: #26

(07-28-2015 10:24 AM)Phoenix Wrote:  WIA, if you raise the price of a service, does demand not decrease? If you make free self-interested action illegal, do you not make illegal action more common?

Goal post moved! Just as I predicted.

No longer is the argument about whether in fact businesses are closing because governmental interference in Seattle wages.

No one can argue that without data. Data that we don't have.

The papers about thid topics are mixed.

Some goods and services are price and demand inelastic. There are plenty of papers on the topic and various reasons to explain why reality doesn't fit the theory.

Why reality doesn't fit the theory. That's a key concept that is often missed in this site.

But you don't really want to talk about economics, you want to argue politics.

And politics are merely decisions in which set of axioms we want and appeal to us. There's little if any logic to all of this.

WIA

Post: #27

Raising the minimum wage is the lefts implicit admission that not everyone should go to college. This is of course impossible unless either the government subsidizes wages with welfare so people don't starve, or the minimum wage is raised. Ideally, raising the minimum wage would lead to LESS government, but accomplishing this would actually require both parties to work together, so unlikely it will happen.

Post: #28

Phoenix did not move the goal posts. One does not discern and cannot discern economic truth from data. Economics is not a physical science like physics. It is the science of human action which is much more like philosophy. This is how we know that raising the price of a good, ceteris parabis, leads to shortages. In this case, raising the price of labor will lead to unemployment. Business can raise prices in response, but doing so will lower demand for the goods and not necessarily offset the price increase. This is standard econonic reasoning that existed before we had aggregate data collection.
I highly recommend reading Hans Hoppe's Economic Science and the Austrian Method and Mises' Theory and History for a philosophical discussion of economic methodology.

Post: #29

Beware of the Austrian method. They are so dogmatically devoted to their method of "reasoning from axioms" that they will often totally ignore empirical evidence. I used to browse the old mises.org forums years ago pretty regularly, and you could often find people saying that data that went against their "axiom-based conclusions" MUST be wrong because there is no way their philosophy could have been wrong.

Of course economics is more complicated than "increase price, decrease demand." It's a good rule of thumb but there are a lot of things to consider. Whether increasing wages leads to fewer people being employed depends on how many people companies could afford to fire before their business suffers and how vital those people are to operations. If a company absolutely needs 10 people to run its operation and they currently pay them X, and at wage X employ 15 people to make things easier, perhaps forcing them to pay a higher wage Y will lead those 5 people to being laid off. But if another company only employs the 10 people it needs, it's just going to have to eat the additional cost.

There is much to consider. How many business employ "extraneous" labor they could afford to do without? Which businesses will shed excess labor and which businesses will keep the "extra" people on even at a higher wage in order to out-compete the companies that downsize by providing better service and being more efficient. Will the effect of the latter companies force the former to hire back on more people even at a hire price, to avoid being out-competed and losing customers?

Here is a fairly good summary on some minimum wage studies. There is contradicting evidence. What is clear is that the negative effects that have sometimes been shown to exist are *FAR* lesser than many doomsday predictors constantly shout about.
http://www.nytimes.com/2015/07/24/opinio...eft-region

Post: #30

Remove 20-30 million illegals from the labor pool and wages will naturally rise.

A tight labor pool requires no government intervention on wages.

The socialists are simply double dipping with their buy the vote plan. Adding voters in both the Hispanic and low wages demos.

Post: #31

Businesses that close aren't really becoming "unprofitable" like they say. That's just capitalist propaganda.

In actuality, they are reactionary agents, wreckers of the socialist cause that Chavez warned about.

Wreckers should not be tolerated. Employment should maybe be mandated by law. And business owners who don't remain open shall be put to work by the state for opposing the workers revolution.

This might be the only way to finally win against these capitalist pigs fixing cars and cooking food thinking their work will go towards the betterment of just THEIR families and not the whole community. Makes me sick.

Post: #32

(07-28-2015 04:55 PM)MarcJBrutus Wrote:  Phoenix did not move the goal posts. One does not discern and cannot discern economic truth from data. Economics is not a physical science like physics. It is the science of human action which is much more like philosophy. This is how we know that raising the price of a good, ceteris parabis, leads to shortages. In this case, raising the price of labor will lead to unemployment. Business can raise prices in response, but doing so will lower demand for the goods and not necessarily offset the price increase. This is standard econonic reasoning that existed before we had aggregate data collection.
I highly recommend reading Hans Hoppe's Economic Science and the Austrian Method and Mises' Theory and History for a philosophical discussion of economic methodology.

Of course he did.
The topic is Seattle. He didn't ask me about Seattle.That's clear from the text.

Furthermore the theory that increases in the minimum wage result in businesses closing is a myth bandied about by people who don't care about data.

http://www.dol.gov/minwage/mythbuster.htm

" review of 64 studies on minimum wage increases found no discernable effect on employment. Additionally, more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in support of raising the minimum wage to $10.10 by 2016."

In a real science, when the real life data does not fit the theory, the theory changes.

Not so for economics, because economics is about politics. Both politics and econ seek to answer the question of how to distribute scarce goods.

That's not a question that can be answered by reason.

The fact that the there is so much countervailing data, actual financial results, is not something you can just wave away. But people against these things engage in thought experiments where the logic is inescapable. Because winning is more important than truth.

Same set of people advocated trickle down and starve the beast. They tried the most extreme version of that in Kansas this past election cycle and it failed miserably.

But verifiable facts mean nothing in this debate, because it's not about actual outcomes. It's politics.

WIA

Post: #33

(07-28-2015 03:07 PM)TigerMandingo Wrote:  I don't believe in this thing called "unskilled labor". That's terminology elites use to keep fucking anybody that works a job they deem exploitable. And I always find it funny that "burger flippers" are always brought up as the sole example of this type of work, as if the guys at McDonalds are the only ones making shit wages. I worked in high-end restaurant kitchens where highly skilled line cooks made no more than $15/hr. These guys would do 300-400 covers per night and work 12 hour shifts.

You don't believe there are jobs which take minimal explanation or training in order to perform? I worked a job refilling food at a buffet and the manager explained the job for 10 minutes and after that I was qualified to perform the job. That would be considered unskilled labor. Does it make me an elitist for noticing some jobs require extended education and training while others don't?

As for the example of highly skilled line cooks being paid less than they are worth, they should ask for a raise. If the boss says no, that person should quit and the company will clearly suffer a loss if in fact he is highly skilled. A less skilled replacement should cause a drop in either productivity or quality that will affect customer satisfaction.

Post: #34

(07-28-2015 05:46 PM)WestIndianArchie Wrote:  

(07-28-2015 04:55 PM)MarcJBrutus Wrote:  Phoenix did not move the goal posts. One does not discern and cannot discern economic truth from data. Economics is not a physical science like physics. It is the science of human action which is much more like philosophy. This is how we know that raising the price of a good, ceteris parabis, leads to shortages. In this case, raising the price of labor will lead to unemployment. Business can raise prices in response, but doing so will lower demand for the goods and not necessarily offset the price increase. This is standard econonic reasoning that existed before we had aggregate data collection.
I highly recommend reading Hans Hoppe's Economic Science and the Austrian Method and Mises' Theory and History for a philosophical discussion of economic methodology.

Of course he did.
The topic is Seattle. He didn't ask me about Seattle.That's clear from the text.

Furthermore the theory that increases in the minimum wage result in businesses closing is a myth bandied about by people who don't care about data.

http://www.dol.gov/minwage/mythbuster.htm

" review of 64 studies on minimum wage increases found no discernable effect on employment. Additionally, more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in support of raising the minimum wage to $10.10 by 2016."

In a real science, when the real life data does not fit the theory, the theory changes.

Not so for economics, because economics is about politics. Both politics and econ seek to answer the question of how to distribute scarce goods.

That's not a question that can be answered by reason.

The fact that the there is so much countervailing data, actual financial results, is not something you can just wave away. But people against these things engage in thought experiments where the logic is inescapable. Because winning is more important than truth.

Same set of people advocated trickle down and starve the beast. They tried the most extreme version of that in Kansas this past election cycle and it failed miserably.

But verifiable facts mean nothing in this debate, because it's not about actual outcomes. It's politics.

WIA

I don't know your economics background, but I will share mine. I have a BS and MA in economics. I spent years 4.5 years learning Keyensian and Monetarist theories and an insane amount of mathematics that were pretty useless in predicting economics growth. A few years ago I learned about Mises from Ron Paul and then spent time reading him, Rothbard, Hoppe, Bastiat, Hayek and others. I am well versed in these schools of thought. I became convinced through their arguments that their approach to economics was the correct one. I realize that this unacceptable to most people who still wish to cling to the idea that economic science is the same as physical science. I find their arguments unconvincing. Given human action, one cannot separate all variables to determine the affect of a policy; therefore, one cannot have any certainty of any theory if you use data to guide your thinking. Thus, working in economics becomes fruitless as one cannot predict anything.

I've given you references that address your claim that we need data to create economics theory. I can suggest more if you want. You can read them on your own if you wish, you'll either be convinced or you won't. But those are the best arguments that I'm aware of written by people much smarter than I. So if they don't convince you, nothing I can think of will convince you either.

Post: #35

(07-28-2015 03:28 PM)WestIndianArchie Wrote:  

(07-28-2015 10:24 AM)Phoenix Wrote:  WIA, if you raise the price of a service, does demand not decrease? If you make free self-interested action illegal, do you not make illegal action more common?

Goal post moved! Just as I predicted.
No longer is the argument about whether in fact businesses are closing because governmental interference in Seattle wages.
No one can argue that without data. Data that we don't have.
The papers about thid topics are mixed.
Some goods and services are price and demand inelastic. There are plenty of papers on the topic and various reasons to explain why reality doesn't fit the theory.
Why reality doesn't fit the theory. That's a key concept that is often missed in this site.
But you don't really want to talk about economics, you want to argue politics.
And politics are merely decisions in which set of axioms we want and appeal to us. There's little if any logic to all of this.

WIA

We rarely have a problem at this forum moving the topic to the broader implications than the specific, narrow subject matter of the thread OP. Why make an exception here?

The actual economics is an objective issue, and determined by a priori reasoning from current knowledge of the world, the accuracy of which is then confirmed or disconfirmed by the data. The politics however is factional: and often involves deliberate attempts to manipulate and obfuscate the truth, pursuant to the desire of individuals and groups to gain over others. So the two are separable, but with difficulty.

The left think that when you raise the minimum wage, you help the worker. The fact of the matter is that that is not the faction who wins in the end. That is not the way you boost the standard of living of the lower class. If you actually looked deep into the lobbying system in the democratic machine, you'd probably be shocked to see who is actually benefiting. I guarantee there are certain special interest groups and established businesses who financially benefit from the new restrictions this puts on their competitors.

(07-28-2015 05:19 PM)chagataev Wrote:  Here is a fairly good summary on some minimum wage studies. There is contradicting evidence. What is clear is that the negative effects that have sometimes been shown to exist are *FAR* lesser than many doomsday predictors constantly shout about.

The primary reason that minimum wages don't cause as much economic damage as they should, is because they are evadable. Same as drugs - they're simultaneously banned and widely used. For instance, I always hear people from America talking about millions of illegal workers from Mexico etc. This is just outright disobedience and refusal to comply with minimum wage laws. In fact it evades more than just that - it gets around a multitude of regulation and welfare laws that apply to legal workers. Even legally there are multitudes of ways to evade it. For example firing everyone and rehiring them as contractors - if you're an independent businessman the government naturally never demands you get a minimum income .

Post: #36

(07-28-2015 06:19 AM)Enigma Wrote:  

Quote:"Some workers across the city are left telling bosses to give them fewer hours at the higher wage because a full week’s earnings now puts them past the threshold for some welfare payments such as food stamps and assistance with rent."

Quote:"But now some workers in Seattle are finding that the higher wage is forcing them off the welfare programs they would rather stay enrolled in and, instead of celebrating their higher income, they are imposing fewer work hours on themselves in order to stay on assistance."

Some workers? How many is "some"? 100? 1,000? 1,000,000?

There is no source either. The first paragraph links to a Fox site in Orlando, which links to the exact same story on Fox News.

Quote:"By March of this year, for instance, restaurant closings increased at a much higher than average rate in Seattle."

But there's no numbers on this either. It just links to Forbes article that mentions "Restaurants are closing at higher than normal rates" randomly halfway through the piece.

What are the rates? If you know them, why don't you just post them in the article?

I'm not on either side of this issue, but I was interested to see some actual numbers.

Kind of strange to see complex economic issues boiled down to "some" and "higher than normal rates" and guys buy it hook, line, and sinker because it supports their previously held opinion.

Good catches. I should have been more assiduous and careful. Thank you.

But it's still going to fall apart, this living wage scheme I am sure. Especially once others hear about it from elsewhere and start moving in.

Post: #37

(07-28-2015 05:19 PM)chagataev Wrote:  Beware of the Austrian method. They are so dogmatically devoted to their method of "reasoning from axioms" that they will often totally ignore empirical evidence. I used to browse the old mises.org forums years ago pretty regularly, and you could often find people saying that data that went against their "axiom-based conclusions" MUST be wrong because there is no way their philosophy could have been wrong.

Of course economics is more complicated than "increase price, decrease demand." It's a good rule of thumb but there are a lot of things to consider. Whether increasing wages leads to fewer people being employed depends on how many people companies could afford to fire before their business suffers and how vital those people are to operations. If a company absolutely needs 10 people to run its operation and they currently pay them X, and at wage X employ 15 people to make things easier, perhaps forcing them to pay a higher wage Y will lead those 5 people to being laid off. But if another company only employs the 10 people it needs, it's just going to have to eat the additional cost.

There is much to consider. How many business employ "extraneous" labor they could afford to do without? Which businesses will shed excess labor and which businesses will keep the "extra" people on even at a higher wage in order to out-compete the companies that downsize by providing better service and being more efficient. Will the effect of the latter companies force the former to hire back on more people even at a hire price, to avoid being out-competed and losing customers?

Here is a fairly good summary on some minimum wage studies. There is contradicting evidence. What is clear is that the negative effects that have sometimes been shown to exist are *FAR* lesser than many doomsday predictors constantly shout about.
http://www.nytimes.com/2015/07/24/opinio...eft-region

Dogma here is simply a agreement with the premises and the logical conclusions. It is precisely that methodology that informs us that study which argued that an increase in the minimum wage caused increased employment is incorrect. I'm not saying that we cannot find data that show a correlation between a higher minimum wage and higher employment. It's possible that data show this. I'm arguing that a minimum wage can never cause an increase in employment. This is where methodological difference between Austrians and non-Austrians becomes apparent. Even Milton Friedman, who was not an Austrian, would agree that an increase in the minimum wage leads to unemployment. And in the example that you gave above, I still see no reason why there will not be unemployment, especially in the long-term. Businesses can raise their prices, but that does not mean they will make enough money to offset the wage increase; people may reduce their consumption. Businesses might reduce hours for workers as well. Some businesses might have to close which clearly increases unemployment. Some will invest in ways to automate human labor which will eventually cause unemployment. We're seeing that now with some restaurants using tablets to take orders, thus reducing the need for labor. And these consequences may take years to be realized.

But as I explained to WIA, this is a philosophical debate. I have yet to read an opponent of Austrian methodology make a convincing argument that human action is just like the physical sciences and that we can apply mathematics and statistics to build economic theory. I find their premises faulty. And because of that I have no reason to accept their interpretations of the data. It could simply be that enough time has not passed to see the effects of a policy. That's one reason why minimum wage studies show conflicting results.

I would recommend anyone who wants to become familiar with the Austrian method not just browse Mises.org, but read books written by Austrians. Read Mises' Human Action or The Theory of Money and Credit or Theory and History or The Ultimate Foundation of Economic Science. Read Rothbard's The Mystery of Banking or What Has Government Done to Our Money or Man, Economy and State. Read Hazlitt's Economics in One Lesson. Take the time to read the books, not just articles. At least that way, if you still don't agree with the Austrian method, you'll know exactly what you don't like about it. And you can write a book to refuting the methodology. I'm still waiting to read a page-by-page refutation of Human Action. On the other hand, Hazlitt wrote The Failure of the New Economics, which is a page-by-page refutation of Keynes' The General Theory of Employment, Interest, and Money.

Post: #38

Interesting responses from both "sides" in this thread. One general point I'd make is that even with a high minimum wage most of the money will still make it's way to the super rich. In fact a high minimum wage will probably INCREASE wealth disparity, while only very marginally decreasing income disparity.

One reason for this is observing the economic behavior of low wage earners. By far the majority get themselves into trouble with debt, and debt is pretty much the ultimate tool to shift money from the poor to the rich. Many of these extra couple of $'s per hour will find their way into interest payments to banks, or more likely pay day lenders. This is the debt trap that ensnares the majority of the poor. Hell, the majority of the "non-rich" even.

In some cases in certain jurisdictions you see the situation get so out of hand that there is an actual revolution and economic collapse. Here in South Africa there is an imminent move to suspend the garnishee system, where payments for unpaid debts are deducted from a persons paycheck after a quick trip to a Magistrate for a rubber stamp . The system here is so corrupt, with lawyers and debt collectors adding extortionate fees and interest, that the government has pretty much decided to disobey it's own laws (constitution) and suspend the process that allows garnishee orders to be processed. At least until some lawyer gets the Constitutional Court to reverse the action.

The reason they are doing this highlights why I am saying that most of the above market value wage money ultimately makes its way waaaay up the economic ladder in the form of interest and fees on predatory loans. The "poor" get an above market wage, perhaps due to unionisation or government edict, but little of this money ultimately gets spent on the person earning it. This person is suckered into various predatory loans and is subsequently bled for all the extra market value wages...and more, by various finance companies.

So to members worried that this wage will harm the super rich, there is no need to be. They will ultimately score more back in interest and penalties than this is costing. There is a possible loss to be suffered by those in the middle, such as a those who owns a few fast food franchises, but there is actually gain at the very top.