Raise the minimum wage?

Francesca R said:
You are (yet again) saying something I have not written. If you do this, I disengage.

Please do not attribute positions to me that I have not said I hold.
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Your statement raised a question. Hence I asked the question. Please note that you did not answer the question. It was not rhetorical.
 
Francesca R said:
An alternative is not to raise the minimum wage and have a negative starting income tax rate. There is a likelihood that higher min wage eliminates some jobs at the lowest end of the pay spectrum which punishes (in however small numbers) the very poorest of the working poor. That is contrary to what you say you want to achieve. Negative income tax has no possibility of eliminating jobs in that way.

Some people imagine that the cost of minimum wage passes 100% to shareholders of employer firms, whereas that of welfare transfers passes 100% to middle class tax payers. But those beliefs are inaccurate.
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I didn't read that. That's a good idea. It would never pass in today's political climate, though. I think a subsidized increase to the minimum wage would have a better chance, but even that is a pipe-dream.
 
Francesca R said:
Minimum wage? Not really, it is an ethical justice issue.
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If we're fairly certain that a higher minimum wage would benefit society, then we would have a political and societal problem (not sure about the "empirical" part): the minimum wage is too low.
 
Fudbucker said:
If we're fairly certain that a higher minimum wage would benefit society, then we would have a political and societal problem (not sure about the "empirical" part): the minimum wage is too low.
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THAT is the *empirical problem. Can we make probabilistic assessments of the effects of the minimum wage? Accurate degrees of certainty are the result of empirical data and the analysis of that data as opposed to intuition or philosophical argument.

By "problem" I simply mean that we can arrive at a solution empirically not that empiricism is itself a problem.
 
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RandFan said:
THAT is the *empirical problem. Can we make probabilistic assessments of the effects of the minimum wage? Accurate degrees of certainty are the result of empirical data and the analysis of that data as opposed to intuition or philosophical argument.

By "problem" I simply mean that we can arrive at a solution empirically not that empiricism is itself a problem.
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It's a tough empirical problem. Too many economists land on both sides of the issue.

My gut reaction is that society benefits when an honest day's work lifts you out of poverty. I'm sure I can marshal a lot of economists to support raising the minimum wage, but then my opponent can do the same in opposing me.

I will say that the track record for austerity (which opponents of minimum wage tend to support) hasn't been too good while policies like QE and stimulus (which supporters of the minimum wage tend to support) seem to have helped us out immensely.
 
RandFan said:
Your statement raised a question. Hence I asked the question. Please note that you did not answer the question. It was not rhetorical.
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Your question attributed a position to me that I have not stated I hold. That is profoundly dishonest. That I hold the position is a figment of your imagination. I simply will not engage with you if you do this.
 
Francesca R said:
They wouldn't.
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They will if the minimum wage is simply increased, which is the likeliest thing to happen politically (even some GOP are on board with increasing it to $10 an hour).

If it is simply increased, labor costs will go up (and probably some people will be laid off). Will costs go up so much that it negates the benefits to workers who will have more cash on hand?

My hope would be that big companies would absorb the increased labor costs by lowering executive compensation, but I have no idea if that's realistic or not.
 
Fudbucker said:
If we're fairly certain that a higher minimum wage would benefit society, then we would have a political and societal problem (not sure about the "empirical" part): the minimum wage is too low.
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Who is "we"?

It is hard to be certain of such unspecific statements. Does benefit mean economically? (Probably). Benefit every member of society so that there are no losers / only winners? Benefit the winners by more than the losers in aggregate such that total output / income increases simply because of the policy?

Or benefit some and hurt others so that there are actually bigger losses than gains to society?
 
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Fudbucker said:
Will costs go up so much that it negates the benefits to workers who will have more cash on hand?
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I think it is highly plausible that actual beneficiaries of minimum wage increase come out net ahead. So no the increase in their compensation is not all negated. Probably hardly any of it is.

My hope would be that big companies would absorb the increased labor costs by lowering executive compensation, but I have no idea if that's realistic or not.
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Colour me sceptical that would happen.
 
Fudbucker said:
It's a tough empirical problem. Too many economists land on both sides of the issue.
My gut reaction is that society benefits when an honest day's work lifts you out of poverty. I'm sure I can marshal a lot of economists to support raising the minimum wage, but then my opponent can do the same in opposing me.

I will say that the track record for austerity (which opponents of minimum wage tend to support) hasn't been too good while policies like QE and stimulus (which supporters of the minimum wage tend to support) seem to have helped us out immensely.
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I will grant you the point. Socioeconomic systems are highly complex and are highly sensitive to initial conditions (see Chaos theory). That said, the evidence that minimum wage or other such poverty fighting measures will tend to result in worse outcomes is not evidenced in reality as you note in your second paragraph. Though to be sure I'm beating a dead horse with my examples of the Index of Economic Freedom and HDI.
 
Francesca R said:
Who is "we"?
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Members of society.

It is hard to be certain of such unspecific statements. Does benefit mean economically? (Probably). Benefit every member of society so that there are no losers / only winners? Benefit the winners by more than the losers in aggregate such that total output / income increases simply because of the policy?

Or benefit some and hurt others so that there are actually bigger losses than gains to society?
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"Benefit" in the utilitarian sense- when more good than harm comes as a result (i.e., the positives outweigh the negatives). That's about as specific as I'll get, otherwise we could spend pages specifying exactly what "good" means, what the "positives" are, who benefits, who loses, etc.

Basically, if you were consulted by the president, and the only political move available to him is to raise the minimum wage or not (no chance of stimulus, no chance of negative tax rate, etc.), what would you advise?
 
Fudbucker said:
"Benefit" in the utilitarian sense- when more good than harm comes as a result (i.e., the positives outweigh the negatives).
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I believe that under a fixed minimum wage, compared to no minimum, there are bigger system-wide economic losses than there are gains. Thus, boosting the economy is not a valid justification for minimum wage or minimum wage rises.

There are valid justifications for minimum wage. Invalid ones should be recognised as such and debunked.
 
Francesca R said:
I believe that under a fixed minimum wage, compared to no minimum, there are bigger system-wide economic losses than there are gains. Thus, boosting the economy is not a valid justification for minimum wage or minimum wage rises.

There are valid justifications for minimum wage. Invalid ones should be recognised as such and debunked.
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What is the overall goal? To improve society as a whole or to improve the economy? And if for this discussions purposes they are one in the same(that improving the economy is the best way to improve society) then wouldn't the evidence RandFan has repeatedly provided contradict your assertion?

Also what evidence gives you this belief?
 
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The_Animus said:
What is the overall goal? To improve society as a whole or to improve the economy?
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Different people have different goals. There are many answers to that.

And if for this discussions purposes they are one in the same(that improving the economy is the best way to improve society)
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They are not one and the same, of course.

And asserting that the best way to "improve society" is to improve economic growth / output is the stuff of free market worshippers, who rarely approve of minimum wage increases. Indeed almost every moral argument for redistribution of income (which is what minimum wage legislation actually is) argues that increasing output growth is not the best way to improve society

wouldn't the evidence RandFan has repeatedly provided contradict your assertion?
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No evidence has been advanced that increasing minimum wages increases economic output.

Also what evidence gives you this belief?
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None in particular, it is merely a much more plausible deduction than the reverse IMO
 
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Francesca R said:
Different people have different goals. There are many answers to that.

They are not one and the same, of course.

And asserting that the best way to "improve society" is to improve economic growth / output is the stuff of free market worshippers, who rarely approve of minimum wage increases. Indeed almost every moral argument for redistribution of income (which is what minimum wage legislation actually is) argues that increasing output growth is not the best way to improve society

No evidence has been advanced that increasing minimum wages increases economic output.

None in particular, it is merely a much more plausible deduction than the reverse IMO
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To begin with, we have a scientific model with both explanatory and predictive power. Reciprocal altruism has at its core the following proposition. Societies (social species) in which successful members give up some of their fitness to help unsuccessful or less successful members results in increased fitness of the group.

The model of reciprocal altruism is supported by field research of non-human animals and it can be stated mathematically and further explained via game theory.

Real world data aligns with the model. Flourishing human societies are negatively correlated to austerity.
 
Francesca R said:
Different people have different goals. There are many answers to that.

They are not one and the same, of course.

And asserting that the best way to "improve society" is to improve economic growth / output is the stuff of free market worshippers, who rarely approve of minimum wage increases. Indeed almost every moral argument for redistribution of income (which is what minimum wage legislation actually is) argues that increasing output growth is not the best way to improve society

No evidence has been advanced that increasing minimum wages increases economic output.
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I think I understand your position a little better thanks.

I'd say that just about everyone wants to live a happy and fulfilling life. What they need to achieve that varies but generally when a person doesn't have food, shelter, safety, education, health, and a few other things it becomes exceedingly harder. Having enough of that is largely dependent upon production output and access to it. There is certainly more to it as far improving society and quality of life, but those things are highly coorelated to a strong and equitable economy.

None in particular, it is merely a much more plausible deduction than the reverse IMO
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more plausible how?
 
The_Animus said:
I'd say that just about everyone wants to live a happy and fulfilling life. What they need to achieve that varies but generally when a person doesn't have food, shelter, safety, education, health, and a few other things it becomes exceedingly harder.
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Agreed. But redistributing income so that more people can access these does not require, and is not about, increasing total economic output. It is about redistributing it. And that moves towards achieving that objective.

Having enough of that is largely dependent upon production output and access to it. There is certainly more to it as far improving society and quality of life, but those things are highly coorelated to a strong and equitable economy.
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You will be aware this sounds somewhat like "trickle-down economics" which is a flaky theory advanced by some whereby if we just max out on economic growth, soon enough everybody will be rich enough to easily afford all the things you mention, and more.

more plausible how
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Minimum wage likely restricts at least some transactions from happening. I don't see how it enables any new transactions to happen.
 
Some points about the behavior of social species.

It's fair to note that there are two main divisions of social species. Tournament species and pair bonding species. Tournament species represnt the closest valid scientific model to what is commonly known as Social Darwinism (a pseudoscience). Tournament species are differentiated from pair bonding species in that the group is dominated by alpha males who compete for reproduction. A pair bonding species is one in which there is less competition between males and greater cooperation between individuals (male and female).

That said, tournament species have higher levels of homicide, infanticide, in-group and out-group aggression, stress and higher mortality rates.

Humans fall in between the two. Humans have the ability to progress closer to the pair bonding, cooperation of pair bonding species.
 
Francesca R said:
Agreed. But redistributing income so that more people can access these does not require, and is not about, increasing total economic output. It is about redistributing it.
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Redistributing income increases the fitness (productivity) of the less fortunate thus improving the success of the group.

Minimum wage likely restricts at least some transactions from happening. I don't see how it enables any new transactions to happen.
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  1. The richest 1% cannot expend all of their resources simply through consumption.
  2. Redistributing income increases the resources that people with demand but otherwise lack resources to fulfill that demand will increase consumption if given the resources.
 
RandFan said:
GDP is negatively correlated to decreased social spending (social spending that reduces poverty rates).

List of countries by GDP
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That is not evidence that increasing minimum wages boosts total economic output.

Correlation is not causation. You were asked for evidence of causation. Minimum wage increases are not social (government) spending.
 
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Francesca R said:
That is not evidence that increasing minimum wages boosts total economic output.

Correlation is not causation. You were asked for evidence of causation. Minimum wage increases are not social (government) spending.
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  1. Correlation is required for causation.
  2. Negative correlation tends to falsify a proposition. If you argue that cigarette smoking promotes healthy lungs then the negative correlation would tend to argue against you.
  3. There isn't simply a correlation or negative correlation. There is also a scientific model that predicts and explains the correlation.
  4. There is no scientific model that predicts and explains the inverse.
 
Francesca R said:
That is not evidence that increasing minimum wages boosts total economic output.

Correlation is not causation. You were asked for evidence of causation. Minimum wage increases are not social (government) spending.
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BTW: I've not claimed that increasing minimum wage boosts total economic output. My contention is that some reduction of fitness of successful individuals to assist less successful individuals results in better outcomes overall. The fact that nations highest in Economic Freedom and Human Development (including wealth) tends to support that claim than falsify it.
 
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Francesca R said:
Agreed. But redistributing income so that more people can access these does not require, and is not about, increasing total economic output. It is about redistributing it. And that moves towards achieving that objective.
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Agreed for most of the list such as food and shelter. Though I would argue the US does not currently have enough quality education, healthcare, and certain infrastructure for everyone and in that area output would need to be increased to achieve the objective.

You will be aware this sounds somewhat like "trickle-down economics" which is a flaky theory advanced by some whereby if we just max out on economic growth, soon enough everybody will be rich enough to easily afford all the things you mention, and more.

Minimum wage likely restricts at least some transactions from happening. I don't see how it enables any new transactions to happen.
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Trickle-down is total garbage. Increasing output and equity in the economy is not the same as providing tax incentives and other economic benefits to those at the top or those who control production in the hopes that it will somehow help the poor. Raising the minimum wage is pretty much the exact opposite.

Total output is the supply. What is supply affected by? Available resources, demand, and transaction speed. I would argue that in most cases available resources isn't the issue. It is weak demand and transaction speed spurred by the fact that so many people don't have enough disposable income to purchase those products. Minimum wage as you say is largely wealth redistribution. 1000 people tend to buy more of a product, and more often, than a single person, provided they have the $$. Isn't it plausible that raising the minimum wage would also increase production output because demand and transaction speed would increase?


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RandFan said:
Redistributing income increases the fitness (productivity) of the less fortunate thus improving the success of the group.
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Didn't even think of this, but I believe this is also supported by evidence
 
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Taking 10% of the income from someone who makes $20 million a year probably won't decrease their productivity. Giving that $2 million to lower income workers so they can afford to send their kids (or themselves) to college, could (and probably would) dramatically increase their productivity, thus increasing the productivity (economic output) of the society as a whole.

Of course, the person you're taxing might be more efficient at allocating resources (e.g., he would invest the $2 million in a highly successful venture, or use the $2 million for scholarships for certain students whose education would increase productivity more than a random sampling of lower-income college students).

But I don't think most rich people are super-efficient allocators of resources, so I think Randfan has the right of it.
 
Fudbucker said:
Taking 10% of the income from someone who makes $20 million a year probably won't decrease their productivity. Giving that $2 million to lower income workers so they can afford to send their kids (or themselves) to college, could (and probably would) dramatically increase their productivity, thus increasing the productivity (economic output) of the society as a whole.

Of course, the person you're taxing might be more efficient at allocating resources (e.g., he would invest the $2 million in a highly successful venture, or use the $2 million for scholarships for certain students whose education would increase productivity more than a random sampling of lower-income college students).

But I don't think most rich people are super-efficient allocators of resources, so I think Randfan has the right of it.
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There are a number of fallacies here, not least of which is the fact that the government is already taking 40% of the income (not counting state income taxes which can take another 10%), so that an additional 10% tax amounts to taking 17-20% of the current net income.

The one I'll focus on is the idea that giving a person money to spend increases his productivity. Why is that? Even your example of forcing the person to spend the "free" money on college is a pretty bad one. Why does college increase your productivity. Seems to me that for most people it's a waste of four years. We probably already send too many people to college, thanks to government subsidies and the inherent redistribution embedded in the tuition and financial aid structure. What is even the point of college anymore, now that there are so many learning tools (including free college courses) online?
 
Fudbucker said:
It's a tough empirical problem. Too many economists land on both sides of the issue.
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Fudbucker said:
But I don't think most rich people are super-efficient allocators of resources, so I think Randfan has the right of it.
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Good point, however, I do think you have touched on a larger point. There is an intrinsic value in allowing the rich (anyone actually) to have say so over the fruits of their earnings. They have a self interest to maximize their potential and therefore we ought not assume that government would be more efficient or make better decisions when it comes to investing of funds. We as citizens should be wary of govt intervention and taxation. Every citizen is entitled to representation when it comes to taxation.

I'd like to go back to your earlier point. It would be dishonest of me to claim that we have discovered some ultimate truth about human nature and economics. The reason why there are brilliant economists on all different sides of the issues is that economics and human behavior are not an exact science. Chaos prevents us from precisely modeling any economic system.

I will admit that I often oversell my point as well as over generalize and that my appeals to scientific models and real world data make it appear that I'm saying that there is some absolute right and wrong when it comes to taxation and social spending. I hold no such position.
 
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sunmaster14 said:
The one I'll focus on is the idea that giving a person money to spend increases his productivity.
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If they do not have sufficient resources for their needs then it increases their fitness. In his landmark study, the neuroendocrinologist Robert Sapolsky demonstrated that lower ranking primates in tournament species had higher cortisol levels and suffered more stress had higher mortality and thus were less productive.

When a troupe of baboons lost all of the alpha males due to eating meat tainted with tuberculosis it resulted in the troupe moving away from tournament behavior and closer to pair bonding behavior the levels of cortisol and mortality decreased overall.
 
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Boooring! ;)

Here's another angle:

Meet "Smart Restaurant": The Minimum-Wage-Crushing, Burger-Flipping Robot

http://www.zerohedge.com/news/2014-...t-minimum-wage-crushing-burger-flipping-robot

"With our technology, a restaurant can offer gourmet quality burgers at fast food prices. Our alpha machine replaces all of the hamburger line cooks in a restaurant. It does everything employees can do except better."

.....


  • It slices toppings like tomatoes and pickles only immediately before it places the slice onto your burger, giving you the freshest burger possible.
  • …custom meat grinds for every single customer. Want a patty with 1/3 pork and 2/3 bison ground after you place your order? No problem.
  • It’s more consistent, more sanitary, and can produce ~360 hamburgers per hour.
...the “labor savings allow a restaurant to spend approximately twice as much on high quality ingredients and the gourmet cooking techniques make the ingredients taste that much better".
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It also wraps the burger and the food is never touched by human hands.

http://www.gizmag.com/hamburger-machine/25159/

The company plans to open its first restaurant in the near future and to market the machines to third parties, arguing that one can pay pay for itself inside of a year.
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To McDonald's employees: be careful what you wish for. Self-ordering kiosks already exist. Soon McDonald's may be nothing more than a complex vending machine, with better food.
 
mgidm86 said:
Soon McDonald's may be nothing more than a complex vending machine, with better food.
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Perfectly legitimate point. Of course, getting rid of most employees in society will have an adverse affect on consumption. Perhaps rich people should be careful about what they wish for.
 
RandFan said:
Perfectly legitimate point. Of course, getting rid of most employees in society will have an adverse affect on consumption. Perhaps rich people should be careful about what they wish for.
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I think it's rather gross how mgidm is making the case that poor people don't matter anyway, so they shouldn't wish for a raise.
 
mgidm86 said:
Here's another angle:

Meet "Smart Restaurant": The Minimum-Wage-Crushing, Burger-Flipping Robot
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A topic for a different thread.

Or maybe not...

Likewise, artificially boosting the minimum wage will only hasten the reckoning by subsidizing job replacement by intelligent machines.
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Whatever we do, we're about to wedge ourselves firmly between a rock and a hard place. We obviously can't let the minimum wage fall behind and risk leaving large swaths of our own population to suffer in ever-increasing poverty. And we obviously can't let large swaths of our population go without any income whatsoever, through no fault of their own.

We may reach a point where it's necessary for the government to somehow either pay each citizen enough to maintain a standard of living, or provide the necessities directly.
 
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RandFan said:
I've not claimed that increasing minimum wage boosts total economic output.
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OK. Then perhaps don't reply (twice) to me stating that [there is no evidence that] / [asking for evidence that] increasing minimum wages boosts total economic output. Because your replies represent themselves as, well, responses to that.

So to conclude: No evidence has been advanced that increasing minimum wages increases economic output.
 
The_Animus said:
Trickle-down is total garbage. [ . . . ] Raising the minimum wage is pretty much the exact opposite.
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Erm . . . that is what I said (differently).

Hence "minimum wage rises boost economic growth / output" is not a necessary part of the argument for minimum wage / minimum wage rises. Particularly since there is no evidence that it is correct and IMO standard economics argues that it is incorrect.

Isn't it plausible that raising the minimum wage would also increase production output because demand and transaction speed would increase?
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Yes, but there are larger offsets to that. If you just look at the group of people who get a wage rise (and ignore the rest of the system) then these folks with little doubt provide a net stimulus.
 
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