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Liberty News ForumLNF Forums HereEconomics, Financial News › Is the minimum wage Constitutional?
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Very Hot Topic (More than 25 Replies) Is the minimum wage Constitutional? (Read 11,616 times)
TowardLiberty
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Re: Is the minimum wage Constitutional?
Reply #120 - Apr 2nd, 2016 at 11:04am
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EF wrote on Apr 2nd, 2016 at 10:35am:
Thanks for the dose of "sanity."

But you're absolutely right about one thing - businesses exist to create wealth for owners. And another thing, raising the minimum wage DOES have a ripple effect on jobs higher up in the job ladder, and it's true that does drive some price increases.

But what people fail to understand is that people are not totally rational.  They THINK they're doing better, and in most cases it can be demonstrated that they ARE, even if not as much as they thought and even if it's somewhat temporary (but how temporary is a matter of opinion rather than fact), but even if they just THINK they are, then they are.  One's perception of reality is pretty important.  That's why placebos sometimes "cure" symptoms.

Think of this:  if we live in a world where everything stays in balance, then every time wages go up costs of everything bought with those wages goes up by the same percent.  If wages go down, cost go down by the same percent.  So it does not matter, economically speaking, whether wages change or stay the same.  Economically speaking, everybody is in exactly the same position ALL the time.

But try explaining that to people whose pay just went down 10%.  They're still pissed.  Give them all a 10% raise and they're elated.  But their position, in economic terms, NEVER changes. 

Well I agree in some sense but disagree in others.

Minimum wage increases are as you say- after prices adjust the real wage is the same as it was before. But for those who are excluded from the labor market- their real wage is zero.

So we have an elusive benefit but a real cost.

  

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist." J M Keynes

"In the first place, the dichotomy between "theoretical" and "practical" is a false one. In economics, all arguments are theoretical. And, since economics discusses the real world, these theoretical arguments are by their nature "practical" ones as well." M Rothbard
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EF
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Re: Is the minimum wage Constitutional?
Reply #121 - Apr 2nd, 2016 at 11:27am
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TowardLiberty wrote on Apr 2nd, 2016 at 11:04am:
Well I agree in some sense but disagree in others.

Minimum wage increases are as you say- after prices adjust the real wage is the same as it was before. But for those who are excluded from the labor market- their real wage is zero.

So we have an elusive benefit but a real cost.



Well, I disagree that any are excluded by virtue of any increase to the minimum wage.  Very temporarily displaced, perhaps, but even that is subject to debate.  Temporary displacements occur all the time, and to link them to the minimum wage is a tad iffy, in my opinion and in the opinion of some economists.  But not all, I agree.  See post 11.

  

non sumus stulti
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Re: Is the minimum wage Constitutional?
Reply #122 - Apr 2nd, 2016 at 11:42am
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TowardLiberty wrote on Apr 2nd, 2016 at 11:04am:
Well I agree in some sense but disagree in others.

Minimum wage increases are as you say- after prices adjust the real wage is the same as it was before. But for those who are excluded from the labor market- their real wage is zero.

So we have an elusive benefit but a real cost.



And another point I would make is that price adjustments following a minimum wage increase do not always have the cause and effect relationship you seem to believe they do.

What a company can sell something for is not as much related to his costs as his costs are related to what he can sell for.  It is true if his costs go up there is pressure to increase his prices.  But competition might not allow that.  It might be that he has to eat some or all of it, and it may be that he's still very profitable - just not quite as much.

If it were that easy to increase one's prices, why wait for a cost to go up?  Most sellers are charging what they think the market will bear, and their profit is derived from keeping their costs below that.  If it's just a matter of passing cost increases on to consumers, then heck, raise prices until competition forces you to stop.  (That is, in fact, what occurs.)

It is an incredibly simplistic view of human nature and real world business that takes the view there is never a real wage increase from increases to the minimum wage, and I would submit it is rather narrow minded and unrealistic to believe there is anything more than a temporary displacement of workers from minimum wage increases as a result of those increases (remember, they can and do occur for many other reasons) and that those displacements are not "cured" within a very short time following such increases.
  

non sumus stulti
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EF
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Re: Is the minimum wage Constitutional?
Reply #123 - Apr 2nd, 2016 at 11:47am
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TowardLiberty wrote on Apr 2nd, 2016 at 11:04am:
Well I agree in some sense but disagree in others.

Minimum wage increases are as you say- after prices adjust the real wage is the same as it was before. But for those who are excluded from the labor market- their real wage is zero.

So we have an elusive benefit but a real cost.



I would submit that if the benefit is elusive, then so is the cost.  I know everything is not a zero sum game, but if this were a zero sum game, there  has to benefit equal to cost.  I suppose it could be a lose lose as well as a win win, or somewhere in the middle, but given the fact that humans are not completely rational, I would say it's more likely that, in the overall scheme of things, what we end up with is more of a win win than a lose lose.

That does, of course, depend on reason.  Brother Goose posited the impact of a proposed $50 increase to the minimum wage.  Nice hypothetical, but not realistic.  That would probably be a case where the cure was worse than the disease.  But reasonable increases are not and I think the actual historical record of what  has occurred (versus sterile predictions based on economic models) supports that view.
  

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TowardLiberty
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Re: Is the minimum wage Constitutional?
Reply #124 - Apr 2nd, 2016 at 12:00pm
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EF wrote on Apr 2nd, 2016 at 11:47am:
I would submit that if the benefit is elusive, then so is the cost.


That doesn't follow from what we know about the situation.

Do we need to walk through all of the costs again?

The substitution of capital for labor that results in using scarce resources for less than their most urgent use?

The idled labor and forgone production associate with them.

The loss of experience and shunted life course that impacts at least some of those idled by the mw..

These are real costs that we know follow from a mw.

Quote:
  I know everything is not a zero sum game, but if this were a zero sum game, there  has to benefit equal to cost.  I suppose it could be a lose lose as well as a win win, or somewhere in the middle, but given the fact that humans are not completely rational, I would say it's more likely that, in the overall scheme of things, what we end up with is more of a win win than a lose lose.


Without an argument based in logic or data to make this case it's all just a presumption on your part and one weakend by the considerations I have repeatedly pointed to.
Quote:
That does, of course, depend on reason.  Brother Goose posited the impact of a proposed $50 increase to the minimum wage.  Nice hypothetical, but not realistic.  That would probably be a case where the cure was worse than the disease.  But reasonable increases are not and I think the actual historical record of what  has occurred (versus sterile predictions based on economic models) supports that view.


I have bolded the part that is simply absurdly wrong.

You continually characterize the studies that go against your view as some sterile prediction based on economic models when they are really historical studies of what has occurred.

You ignore the overwhelming negative conclusions the vast majority of the studies reach and write them off as sterile predictions. They are nothing of the sort.

They are regression analyses based on empirical data from the past.

I have pointed this out three times now.
  

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist." J M Keynes

"In the first place, the dichotomy between "theoretical" and "practical" is a false one. In economics, all arguments are theoretical. And, since economics discusses the real world, these theoretical arguments are by their nature "practical" ones as well." M Rothbard
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Re: Is the minimum wage Constitutional?
Reply #125 - Apr 2nd, 2016 at 2:22pm
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TowardLiberty wrote on Apr 2nd, 2016 at 12:00pm:
That doesn't follow from what we know about the situation.

Do we need to walk through all of the costs again?

The substitution of capital for labor that results in using scarce resources for less than their most urgent use?

The idled labor and forgone production associate with them.

The loss of experience and shunted life course that impacts at least some of those idled by the mw..

These are real costs that we know follow from a mw.


Without an argument based in logic or data to make this case it's all just a presumption on your part and one weakend by the considerations I have repeatedly pointed to.

I have bolded the part that is simply absurdly wrong.

You continually characterize the studies that go against your view as some sterile prediction based on economic models when they are really historical studies of what has occurred.

You ignore the overwhelming negative conclusions the vast majority of the studies reach and write them off as sterile predictions. They are nothing of the sort.

They are regression analyses based on empirical data from the past.

I have pointed this out three times now.


I don't agree that it's wrong, but if it is, I don't agree that it's absurdly wrong.  Regression analyses based on empirical data from the past frequently, or at least occasionally, impute a cause and effect relationship that may not exist.  As a wise man once said, correlation does not prove causation.

But if you're tired of pointing it out, quit.  It's a free country.
  

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TowardLiberty
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Re: Is the minimum wage Constitutional?
Reply #126 - Apr 3rd, 2016 at 10:15am
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EF wrote on Apr 2nd, 2016 at 2:22pm:
I don't agree that it's wrong, but if it is, I don't agree that it's absurdly wrong.  Regression analyses based on empirical data from the past frequently, or at least occasionally, impute a cause and effect relationship that may not exist.  As a wise man once said, correlation does not prove causation.

But if you're tired of pointing it out, quit.  It's a free country.

I'm not so tired of pointing it out as I am tired of you knowingly mischaracterizing what the nature of these studies are.

I seriously have to question your ability to follow this conversation if you do not understand that the studies I am citing are historical and not prognostications or predictions. This is not a debate about causation.

We're disagreeing on the project that is being undertaken in the studies. You see them as a prognostication rather than backward looking- which is wrong. No debate. It's wrong.

Correlation is not causation. If you want to disregard empirical economics altogether, I will join you.

That would just leave us with theory.

And therein the case against the MW is air tight. It is a price floor and the results follow with certainty. All price floors result in shortages.

In this case, it is a shortage of demand. The empirical studies have answered quantitatively. The elasticity of demand for unskilled labor is between -.01 and -.02.

What that means is that for a 10% increase in the minimum wage there is a 1-2% reduction in the demand for unskilled labor. If the elasticity were -1 it would be 100%.

There have been increases in the minimum wage in various places as high as 40%.
« Last Edit: Apr 3rd, 2016 at 11:10am by TowardLiberty »  

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist." J M Keynes

"In the first place, the dichotomy between "theoretical" and "practical" is a false one. In economics, all arguments are theoretical. And, since economics discusses the real world, these theoretical arguments are by their nature "practical" ones as well." M Rothbard
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Re: Is the minimum wage Constitutional?
Reply #127 - Apr 3rd, 2016 at 3:51pm
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TowardLiberty wrote on Apr 3rd, 2016 at 10:15am:
I'm not so tired of pointing it out as I am tired of you knowingly mischaracterizing what the nature of these studies are.

I seriously have to question your ability to follow this conversation if you do not understand that the studies I am citing are historical and not prognostications or predictions. This is not a debate about causation.

We're disagreeing on the project that is being undertaken in the studies. You see them as a prognostication rather than backward looking- which is wrong. No debate. It's wrong.

Correlation is not causation. If you want to disregard empirical economics altogether, I will join you.

That would just leave us with theory.

And therein the case against the MW is air tight. It is a price floor and the results follow with certainty. All price floors result in shortages.

In this case, it is a shortage of demand. The empirical studies have answered quantitatively. The elasticity of demand for unskilled labor is between -.01 and -.02.

What that means is that for a 10% increase in the minimum wage there is a 1-2% reduction in the demand for unskilled labor. If the elasticity were -1 it would be 100%.

There have been increases in the minimum wage in various places as high as 40%.


Except when they don't, as is the case with all absolutes.  But even when they do, the shortages would seem to be very, very temporary in the case of the MW.
  

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Re: Is the minimum wage Constitutional?
Reply #128 - Apr 4th, 2016 at 1:47pm
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EF wrote on Apr 3rd, 2016 at 3:51pm:
Except when they don't, as is the case with all absolutes.  But even when they do, the shortages would seem to be very, very temporary in the case of the MW.

Ah but there are long run implications associated with these shortages. We have traced a number of them already.

And we have not seen anything to say that the shortage in the demand for unskilled labor is temporary. It's permanent as long as we have a mw.

  

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist." J M Keynes

"In the first place, the dichotomy between "theoretical" and "practical" is a false one. In economics, all arguments are theoretical. And, since economics discusses the real world, these theoretical arguments are by their nature "practical" ones as well." M Rothbard
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Re: Is the minimum wage Constitutional?
Reply #129 - Apr 4th, 2016 at 2:31pm
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Another dose of reality.

I run a business that provides an extremely realistic six figure income to pretty much ANYONE that wants to do the work.  Since I have been doing this I have found out a few things about people.

1.  Most people think that my business is some kind of get rich quick deal where they can work less and earn more.  They are shocked to learn that owning you own business (which they do) is really a medium to work more than the masses and therefore earn more than the masses.

2.  Most people either are afraid or just plain don't want to do the things that would distinguish them from the average person.  They are very creative about formulating excuses for what they did not do instead of formulating reasons to do what they need to do.

3. Most people seem to think that you have to love everything about what your job entails.  In reality you only have to love one thing.  The results.  Trust me, if I were to win a mega lottery I would shut down my business in a heart beat because I would not need the results any more.  I do dozens of tasks every day.  Some I like to do, some I don't like to do, some I just to care one way or another.  However I am mature enough to realize that they all must be done in order for me to obtain the results I am seeking. 

4. Most people can't get this simple truism through their collective brain housing units....If your life sucks and your situation sucks, then YOU suck and in order to change YOUR situation YOU have to stop sucking.

5. Most people can't find the time to change their lives, yet they tell me they don't have time while they are sitting on their couches.  This is not an exaggeration.  People who are literally doing NOTHING will tell me they are too busy to do ANYTHING.  It's sad but true.

I do not run an MLM.  I run a very old fashioned direct sales organization.  The great thing about my business is that I end up paying every one exactly what they are worth.  I am looking at the checks that I am getting ready to deliver tonight.

Person A was worth $5353.14 last WEEK
Person B was worth $2186.79 last WEEK
Person C was worth $3214.25 last WEEK
Person D was worth $239.92 last WEEK
Persons E thru H were worth NOTHING

Here is the cool thing.  As the business owner I made a TON of money by providing A-C their opportunities.  Two of them are only working Part Time!
.
Now some of the folks A-H made some obvious sacrifices last week.  Some of the folks did some things they don't like to do like make phone calls, schedule appointments, generate leads etc.  Some of the folks did not go through the pain of sacrifice and never faced having to do something they did not like to do.  I wonder who will be happy with the results tonight?

I beat my head on the wall every day watching people fritter away what was laid in front of them.  I almost puked when I asked one of my people what they thought the answer to their families money problems where and they replied "if only my husband would come to work where I do so he can make $14.00 an hour also..."

So you see, the REALITY is not that there are people who are being kept down by the man.  The REALITY is that there are people who don't care enough to change their own lives.  They allow others to convince them that their is a boogey man out there that is going to get them.  They allow fear to overcome them.  The REALITY is that as long as we allow and empower that type of thinking, like any disease, it will only get worse. 
So at the end of the day here is another truism that we all need to live by...

Some will...Some won't...So What?...

PS...don't mistake any of this to mean we should not take care of those who CANNOT take care of themselves.  However CANNOT and WILL NOT are very different.  Think of what we could do for those who CANNOT if the WILL NOT's were not leaching resources from them.
  


I have never seen a wild thing feel sorry for itself. A little bird will fall dead, frozen from a bough, without ever having felt sorry for itself.--D.H. Lawrence
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