Pseudo-demand, Pseudo-supply

[head of joaquin]

By "coercive bargaining power", do you mean "choices"?

Yeah, like the choice between eating and starving since a large portion of the population doesn't own capital.

 

[head of joaquin]

How does either number ($22/hr or $11/hr) relate in any way to the value of a particular service or product?

Wages are determined by negotiating power, not some inherent value. Weirdly that's a Marxist notion and something tells me you don't accept Marxist analysis of labor. Minimum wage laws give those with the least negotiating power a little bit more so at least they can't be totally coerced into working for a pittance.

Why does that bother you?

 

[FederalRepublic]

Wages are determined by negotiating power, not some inherent value. Weirdly that's a Marxist notion and something tells me you don't accept Marxist analysis of labor. Minimum wage laws give those with the least negotiating power a little bit more so at least they can't be totally coerced into working for a pittance.

Why does that bother you?

Wages aren't determined by negotiating power, and it doesn't strike me as odd that it would be a marxist analysis of labor to say such a thing. Minimum wage laws give those with the most competition (the poor) a smaller field of choices because the jobs that aren't worth what the minimum wage pays will either cease to exist or go to someone with more experience/better skills. Same thing happens when you outlaw unpaid internships, though I'm guessing you'd be for that as well.

 

[head of joaquin]

Wages aren't determined by negotiating power, and it doesn't strike me as odd that it would be a marxist analysis of labor to say such a thing. Minimum wage laws give those with the most competition (the poor) a smaller field of choices because the jobs that aren't worth what the minimum wage pays will either cease to exist or go to someone with more experience/better skills. Same thing happens when you outlaw unpaid internships, though I'm guessing you'd be for that as well.

Marx's labor theory of value has nothing to do with negotiating power. It wasn't an analysis he was interested in. It's a bit odd to hear you allude to it here as a basis for not imposing MW laws. I think you're a bit confused about the theory.

In any case, this post is nonresponsive to the issue. Wages are determined by negotiating power. Negotiating power is determined by the rules a society sets up (there is no "default" market). Our rules generally result in unskilled labor having the least negotiating power and large corporate employers like McDonalds having the most. That's not good for society or the economy for a lot of reasons. Therefore we passed a minor rule that gives unskilled labor a minor increase in negotiating power to avoid being totally coerced.

You still haven't explained why that bothers you. Frankly it's borderline absurd to be bothered by it.

 

[FederalRepublic]

Marx's labor theory of value has nothing to do with negotiating power. It wasn't an analysis he was interested in. It's a bit odd to hear you allude to it here as a basis for not imposing MW laws. I think you're a bit confused about the theory.

In any case, this post is nonresponsive to the issue. Wages are determined by negotiating power. Negotiating power is determined by the rules a society sets up (there is no "default" market). Our rules generally result in unskilled labor having the least negotiating power and large corporate employers like McDonalds having the most. That's not good for society or the economy for a lot of reasons. Therefore we passed a minor rule that gives unskilled labor a minor increase in negotiating power to avoid being totally coerced.

You still haven't explained why that bothers you. Frankly it's borderline absurd to be bothered by it.

I'm not sure how you think mandating a minimum wage expands anyone's negotiating power, and it bothers me because it disproportionately harms the poorest and lowest-skilled. I suppose it does give the still-employed an advantage over the unskilled by preventing the unskilled from competing for the job. Why you think that's a good thing is a mystery to me.

 

[Xerographica]

Generally, when market evangelists talk about efficient allocation of resources, they mean enriching the rich by letting them externalize costs to be paid by working people and the public. And that's what's happening here.

Did you ever read Calvin and Hobbes? In one strip Calvin is happily pounding nails into the coffee table..."WAP, WAP WAP". His mother walks into the room and screams "Calvin what are you doing to the coffee table?!?". He takes a second and replies, "Is this some sort of trick question or what?"

Clearly Calvin derived utility from how he was using society's limited resources...and clearly his mother did not.

What you fail to grasp and understand...is the importance of being able to give others feedback on how well they are using society's limited resources. But I'm sure that you appreciate that some people really should be in jail...right? You agree that it's a more efficient allocation of resources when murderers and arsonists are in jail. Why? Because we really do not value how they used society's limited resources.

So it's a given that some people are "better" at using society's limited resources than other people. And who defines "better"? Other people...consumers. If we want to maximize the value that we derive from society's limited resources...then it's essential that we allocate resources according to how effectively people are using them. This means giving people the freedom to give other people feedback on how well they are using society's limited resources.

Wages, given that they are the price of labor, are simply positive feedback. And there should absolutely not be a ceiling or a floor when it comes to positive feedback. Dictating how much positive feedback consumers should give will always reduce the amount of value that we, as a society, derive from our limited resources. Why? Because minimum wages are false values...they are lies. When you input lies into the equation which determines how society's resources are used...it's a given that the output will be garbage. Garbage in, garbage out. Pseudo-demand, pseudo-supply.

 

[head of joaquin]

I'm not sure how you think mandating a minimum wage expands anyone's negotiating power, and it bothers me because it disproportionately harms the poorest and lowest-skilled. I suppose it does give the still-employed an advantage over the unskilled by preventing the unskilled from competing for the job. Why you think that's a good thing is a mystery to me.

Frankly, I don't believe you when you claim your concern is that MW laws hurt unskilled labor. I think your concerned more about business interests and support their unwavering desire to squeeze profits out of workers by driving down wages.

In any case, low wage workers tend to support MW laws, so I'm going to support their wishes, not yours.

Finally, factually your claim is false. Research indicates the MW laws help workers. The lumpen analysis that it reduces job opportunities was debunked by Card and Krueger long ago

 

[head of joaquin]

Did you ever read Calvin and Hobbes? In one strip Calvin is happily pounding nails into the coffee table..."WAP, WAP WAP". His mother walks into the room and screams "Calvin what are you doing to the coffee table?!?". He takes a second and replies, "Is this some sort of trick question or what?"

Clearly Calvin derived utility from how he was using society's limited resources...and clearly his mother did not.

What you fail to grasp and understand...is the importance of being able to give others feedback on how well they are using society's limited resources. But I'm sure that you appreciate that some people really should be in jail...right? You agree that it's a more efficient allocation of resources when murderers and arsonists are in jail. Why? Because we really do not value how they used society's limited resources.

So it's a given that some people are "better" at using society's limited resources than other people. And who defines "better"? Other people...consumers. If we want to maximize the value that we derive from society's limited resources...then it's essential that we allocate resources according to how effectively people are using them. This means giving people the freedom to give other people feedback on how well they are using society's limited resources.

Wages, given that they are the price of labor, are simply positive feedback. And there should absolutely not be a ceiling or a floor when it comes to positive feedback. Dictating how much positive feedback consumers should give will always reduce the amount of value that we, as a society, derive from our limited resources. Why? Because minimum wages are false values...they are lies. When you input lies into the equation which determines how society's resources are used...it's a given that the output will be garbage. Garbage in, garbage out. Pseudo-demand, pseudo-supply.

Calvin and Hobbes is as passé as your economic theory.

Meanwhile, there is no "default" value for wages. Wages are determined by negotiating power and that is determined by the rules in place at any given time. You want rules that benefit owners of capital. I think that's pretty foolish, given they don't need further benefits.

 

[Xerographica]

Calvin and Hobbes is as passé as your economic theory.

Calvin and Hobbes, like Charlie Brown and Snoopy, could never be passe. They are eternally relevant and awesome...just like my economic "theory".

Meanwhile, there is no "default" value for wages. Wages are determined by negotiating power and that is determined by the rules in place at any given time. You want rules that benefit owners of capital. I think that's pretty foolish, given they don't need further benefits.

No, I want rules that allow consumers to give people feedback on how well they are using society's limited resources. Why? Because that's how we can ensure that your influence over how society's limited resources are used does not exceed the amount of benefit you provide for other people.

Wrong: your influence > your benefit to others
Right: your influence <= your benefit to others

Your benefit to others can only be determined by how much positive feedback other people are willing to give to you.

 

[head of joaquin]

Calvin and Hobbes, like Charlie Brown and Snoopy, could never be passe. They are eternally relevant and awesome...just like my economic "theory".



No, I want rules that allow consumers to give people feedback on how well they are using society's limited resources. Why? Because that's how we can ensure that your influence over how society's limited resources are used does not exceed the amount of benefit you provide for other people.

Wrong: your influence > your benefit to others
Right: your influence <= your benefit to others

Your benefit to others can only be determined by how much positive feedback other people are willing to give to you.

Your rules benefit owners of capital rather than labor. We've had much too much of that already. Owners of capital are doing just fine.

 

[Xerographica]

Your rules benefit owners of capital rather than labor. We've had much too much of that already. Owners of capital are doing just fine.

Are you an owner of capital?

 

[head of joaquin]

Are you an owner of capital?

Yes, I'm a millionaire with vast industrial operations around the world.

Now, do you want to discuss the topic or me, fascinating though I am?

One of the sure signs of conservative cant, is the attempt to personalize a discussion about policy because rightwingers can't win on the merits of policy.

 

[Xerographica]

Yes, I'm a millionaire with vast industrial operations around the world.

Now, do you want to discuss the topic or me, fascinating though I am?

One of the sure signs of conservative cant, is the attempt to personalize a discussion about policy because rightwingers can't win on the merits of policy.

So if somebody has less than a million dollars...then according to you they aren't an owner of capital?

 

[head of joaquin]

So if somebody has less than a million dollars...then according to you they aren't an owner of capital?

According to you, if somebody makes minimum wage and owns the shoes he goes to work in, he's an owner of capital.

See, anybody can play this game.

Fact is most people in the US economy make their living through their labor. A small number make their living through ownership of capital. Making rules that benefit that latter is stupid, since owners of capital are doing quite nicely. I'm quite happy to give tax breaks to small businesses and to make it easier for workers to accumulate capital and start businesses. But that doesn't mean the local mom and pop is the same as IBM. So stop the Hannity routine.

 

[Xerographica]

According to you, if somebody makes minimum wage and owns the shoes he goes to work in, he's an owner of capital.

See, anybody can play this game.

Fact is most people in the US economy make their living through their labor. A small number make their living through ownership of capital. Making rules that benefit that latter is stupid, since owners of capital are doing quite nicely. I'm quite happy to give tax breaks to small businesses and to make it easier for workers to accumulate capital and start businesses. But that doesn't mean the local mom and pop is the same as IBM. So stop the Hannity routine.

Are you delirious? Can you quote me where I said that IBM shouldn't have to pay minimum wages but mom and pop stores should have to?

Given that you're delirious...you probably also fantasized that I said I'm against progressive taxation. Stop projecting your Hannity fantasies on to me and try and address my actual arguments.

Here's the basic argument for progressive taxation...

Economics can establish that a man’s marginal utility of money diminishes as his money-income increases. Therefore, they concluded, the marginal utility of a dollar is less to a rich man than to a poor man. Other things being equal, social utility is maximized by a progressive income tax which takes from the rich and gives to the poor. This was the favorite demonstration of the “old welfare economics,” grounded on Benthamite utilitarian ethics, and brought to fruition by Edgeworth and Pigou. - Murray Rothbard

I have absolutely no problem with a progressive income tax...

that the State should leave exports to the exporters, to industry, and to the merchants, and should not identify itself with the interests of the exporting class... If industry... values the protection afforded by warships, let them go and shell out a part of the surplus profit they have captured in this way and build the cruisers for themselves. - Eckart Kehr

What I care about is allowing taxpayers to choose where their taxes go. In other words, I want taxpayers to have more influence over how society's limited resources are used because that's what consumers want. How do I know that's what consumers want? Because consumers give their positive feedback to taxpayers. If they didn't, then taxpayers wouldn't make any money...and no money means no taxes.

Minimum wages diminish the influence of taxpayers...and as such, they diminish the amount of benefit that we, as a society, derive from our limited resources.

Imagine we're flying in a plane. Would it be a good idea to replace the pilots with random passengers? Nope. Why not? It would give too much influence to the wrong people. In other words, it would be an inefficient allocation of resources. Society never benefits from resources being inefficiently allocated. Minimum wages, by virtue of giving more influence to those who shouldn't have more influence, result in the inefficient allocation of resources.

Just like it would be a more efficient allocation of resources to allow pilots to fly planes...it would be a more efficient allocation of resources to allow employers to determine how much to pay their employees. Will they always pay their employees the optimal amount? Well no, just like Mr. Baker might not always add the optimal amount of sugar to a recipe. But markets allocate resources infinitely more efficiently than planned economies do because it's up to the masses to decide how well Mr. Baker is using society's limited resource. In other words, his success depends on our benefit.

 

[head of joaquin]

Are you delirious? Can you quote me where I said that IBM shouldn't have to pay minimum wages but mom and pop stores should have to?

Given that you're delirious...you probably also fantasized that I said I'm against progressive taxation. Stop projecting your Hannity fantasies on to me and try and address my actual arguments.

Here's the basic argument for progressive taxation...



I have absolutely no problem with a progressive income tax...



What I care about is allowing taxpayers to choose where their taxes go. In other words, I want taxpayers to have more influence over how society's limited resources are used because that's what consumers want. How do I know that's what consumers want? Because consumers give their positive feedback to taxpayers. If they didn't, then taxpayers wouldn't make any money...and no money means no taxes.

Minimum wages diminish the influence of taxpayers...and as such, they diminish the amount of benefit that we, as a society, derive from our limited resources.

Imagine we're flying in a plane. Would it be a good idea to replace the pilots with random passengers? Nope. Why not? It would give too much influence to the wrong people. In other words, it would be an inefficient allocation of resources. Society never benefits from resources being inefficiently allocated. Minimum wages, by virtue of giving more influence to those who shouldn't have more influence, result in the inefficient allocation of resources.

Just like it would be a more efficient allocation of resources to allow pilots to fly planes...it would be a more efficient allocation of resources to allow employers to determine how much to pay their employees. Will they always pay their employees the optimal amount? Well no, just like Mr. Baker might not always add the optimal amount of sugar to a recipe. But markets allocate resources infinitely more efficiently than planned economies do because it's up to the masses to decide how well Mr. Baker is using society's limited resource. In other words, his success depends on our benefit.

I know your crank theory. I was just hoping you'd transcend it.

 

[JP Hochbaum]

Yet, coercion could be inflated to basically result in the claim that since the universe operates based on cause-effect, every action is coerced. You appear to be doing that.
If you want to expand the definition to include absurdities of your own choosing, be aware of the near infinite truckload of absurdities your argument gets to bring along with it.

If someone offers you a job, and you can accept or reject it, and they personally do not have any illegal hold over you, it's unlikely you are being serious when you claim they are "coerced". For your entire argument to hinge on that....really why bother?

Anyone being forced to take a wage below the level of being able to feed themselves is being coerced.

 

[JP Hochbaum]

You have yet to explain how offering to pay someone to do a job for you is coercion.

Are you really unaware that one has to work in order to survive?

 

[FederalRepublic]

Frankly, I don't believe you when you claim your concern is that MW laws hurt unskilled labor. I think your concerned more about business interests and support their unwavering desire to squeeze profits out of workers by driving down wages.

In any case, low wage workers tend to support MW laws, so I'm going to support their wishes, not yours.

Finally, factually your claim is false. Research indicates the MW laws help workers. The lumpen analysis that it reduces job opportunities was debunked by Card and Krueger long ago

Yeah, I'm much more concerned about protecting the profits of big businesses. You got me. Minimum wage laws do help some workers. They just don't help the ones who need it the most, which I'm sure you don't have a problem with because that's what we have food stamps for, right?

 

[FederalRepublic]

Are you really unaware that one has to work in order to survive?

Yes. I'm well aware of that. Are you unaware that one does not have to work for one person, or any person for that matter, in particular, or at one type of task in particular? Coercion implies that a company forces an employee to work for them. Nature forces us to work because it makes us hungry, cold, thirsty, etc. An employer offers to pay us for a service. That's not coercion by any definition.

 

[JP Hochbaum]

Yes. I'm well aware of that. Are you unaware that one does not have to work for one person, or any person for that matter, in particular, or at one type of task in particular? Coercion implies that a company forces an employee to work for them. Nature forces us to work because it makes us hungry, cold, thirsty, etc. An employer offers to pay us for a service. That's not coercion by any definition.

You are lacking basic understanding here. They use that hunger cold and thirst to drive your wage lower.....

 

[FederalRepublic]

You are lacking basic understanding here. They use that hunger cold and thirst to drive your wage lower.....

What is this? The Hunger Games come to life? Where do you live?

 

[RGacky3]

In a recent post ... I touched on the problem of minimum wages. Thought I'd take the opportunity to explore the problem in more depth.

Basically, minimum wages are false values. They do not accurately reflect society's true preferences. As I've said before, in economics "preferences" are the same as "demand". So false values/preferences are the same thing as a false demand. Pseudo-demand will always result in pseudo-supply. Minimum wages (psuedo-demand) prevent us from maximizing the value we derive from our limited resources.

Anybody a fan of Monty Python? Here's a fun clip to illustrate the concept of false values...



If somebody asks you what your favorite color is...why lie? Why risk being cast into the gorge of eternal peril? In other words, why risk having to wear an orange sweater when orange is your least favorite color? If your favorite color is green, then clearly there's going to be a value disparity between wearing a green sweater and wearing an orange sweater.

When we input false values into the impossibly complex equation which determines how society's limited resources are allocated...it's a given that the output will not be accurate. It will be less valuable than the output would have been if true values had been inputted. The size of the value disparity will depend on how false the inputted values were.

In computing, this is known as garbage in, garbage out. It's equally relevant to economics...pseudo-demand, pseudo-supply.

Just like it would be detrimental to lie about how much you value something...it would also be detrimental to have your true values ignored. Here's a funny story from the bible that perfectly illustrates the problem with command economies (our public sector)...

Genesis 29

1 Then Jacob went on his journey, and came into the land of the people of the east.
2 And he looked, and behold a well in the field, and, lo, there were three flocks of sheep lying by it; for out of that well they watered the flocks: and a great stone was upon the well's mouth.
3 And thither were all the flocks gathered: and they rolled the stone from the well's mouth, and watered the sheep, and put the stone again upon the well's mouth in his place.
4 And Jacob said unto them, My brethren, whence be ye? And they said, Of Haran are we.
5 And he said unto them, Know ye Laban the son of Nahor? And they said, We know him.
6 And he said unto them, Is he well? And they said, He is well: and, behold, Rachel his daughter cometh with the sheep.
7 And he said, Lo, it is yet high day, neither is it time that the cattle should be gathered together: water ye the sheep, and go and feed them.
8 And they said, We cannot, until all the flocks be gathered together, and till they roll the stone from the well's mouth; then we water the sheep.
9 And while he yet spake with them, Rachel came with her father's sheep; for she kept them.
10 And it came to pass, when Jacob saw Rachel the daughter of Laban his mother's brother, and the sheep of Laban his mother's brother, that Jacob went near, and rolled the stone from the well's mouth, and watered the flock of Laban his mother's brother.
11 And Jacob kissed Rachel, and lifted up his voice, and wept.
12 And Jacob told Rachel that he was her father's brother, and that he was Rebekah's son: and she ran and told her father.
13 And it came to pass, when Laban heard the tidings of Jacob his sister's son, that he ran to meet him, and embraced him, and kissed him, and brought him to his house. And he told Laban all these things.
14 And Laban said to him, Surely thou art my bone and my flesh. And he abode with him the space of a month.
15 And Laban said unto Jacob, Because thou art my brother, shouldest thou therefore serve me for nought? tell me, what shall thy wages be?
16 And Laban had two daughters: the name of the elder was Leah, and the name of the younger was Rachel.
17 Leah was tender eyed; but Rachel was beautiful and well favoured.
18 And Jacob loved Rachel; and said, I will serve thee seven years for Rachel thy younger daughter.
19 And Laban said, It is better that I give her to thee, than that I should give her to another man: abide with me.
20 And Jacob served seven years for Rachel; and they seemed unto him but a few days, for the love he had to her.
21 And Jacob said unto Laban, Give me my wife, for my days are fulfilled, that I may go in unto her.
22 And Laban gathered together all the men of the place, and made a feast.
23 And it came to pass in the evening, that he took Leah his daughter, and brought her to him; and he went in unto her.
24 And Laban gave unto his daughter Leah Zilpah his maid for an handmaid.
25 And it came to pass, that in the morning, behold, it was Leah: and he said to Laban, What is this thou hast done unto me? did not I serve with thee for Rachel? wherefore then hast thou beguiled me?

LOL...that's a really funny, but messed up story. It's interesting that Jacob only realized the trickery the morning after. Do you think that you would have realized that you were sleeping with the wrong sister? Maybe it was really dark...and/or Jacob must have been really drunk...and Leah didn't say anything before, during or after sex.

Imagine Jacob went to a drive through restaurant. Except, the menu consisted of women (Rachel, Leah, Zilpah, etc.) rather than food. Jacob ordered Rachel, drove up to the cashier and paid 7 years of his life. Unfortunately, it was only after he consumed his "meal" that he realized he had been given the wrong woman.

Command economies are non-sequitur economies. The conclusion (Leah) did not follow from the premise (Jacob's preferences). As a result, value was destroyed. Pseudo-demand, pseudo-supply.

How much does our society truly value unskilled labor? We really don't know. And that's a problem. If students don't know how much society truly values unskilled labor...then how can they possibly make an informed decision regarding how much effort/time/money to invest in acquiring skills? Why would you lie to your son or daughter? Why would you want to incentivize them to drop out of school? If we say that we value unskilled labor more than we really do...then we're increasing the incentive for unskilled people to immigrate to America. Why lie to poor people in foreign countries? If wages don't truly reflect the demand, then the supply won't truly reflect our preferences.

The immediate consequences of living/minimum wages might be beneficial...but the subsequent consequences are always detrimental.

False values prevent resources from being efficiently allocated. If you really don't believe me...then the next time you're at a bar/club...lie about your sexual preferences. Let me know how it goes.

It isn't false value, because we as a society voted to make sure that people don't get paid below a certain amount, we collectively decide that having people make living wages is valuable to society.

Also the consumer doesn't decide the wage, the Capitalist does.

A capitalist doesn't pay wages based on how much he "values" someone, he pays his the lowest possible wage to keep him working and producing ...

A buss driver in Sweden isn't producing more value than one in India ... nor is it the case that Swedish buss riders "value" him more than Indian buss riders "value" the indian buss driver ... It's that the Swedish buss driver has a union ... and the consumers in india have a whole lot less money.

 

[Mach]

Anyone being forced to take a wage below the level of being able to feed themselves is being coerced.

Anyone who claims someone making in wage cannot feed themselves is joking, has a mental disability, or is lying.

 

[JP Hochbaum]

Anyone who claims someone making in wage cannot feed themselves is joking, has a mental disability, or is lying.

So food stamps don't exist eh?