First of all, historically speaking, every increase in minimum wage has been accompanied with an increase in unemployment, and that's only when you increase it a little. Jack it up that much and you'll see a big portion of the economy dry up and an even larger portion move to a commission-based structure in an effort to compensate.

On the other hand, it's not that clear cut: http://www.cepr.net/documents/publicati ... 013-02.pdf

Beware of equating correlation and causation.

The increase in health premiums driven by ObamaCare are similar, and look at the result: long-term unemployment and a rapid increase in part-time help. This year alone, more than 700,000 of the 917,000 jobs added to the economy were part-time.

Long term unemployment is a result of Obamacare? I had thought it was due to the recession. The increase in part-time employment is correct, and unfortunate. But between that and our former health care system, it is the lesser of two evils.

Contrary to popular left-wing belief, it is not the responsibility of companies to hire people and pay them fairly, especially not someone else's definition of fair.

Why not? Who else will look out for the working class? The economy won't ensure fair compensation. If anything, it will ensure the working class is paid less and less over time, a creeping war of attrition that will result in massive wealth and income inequality. From there, we will see riots and collapse. We're seeing the stirrings of unrest already.

TheWizard wrote:First of all, historically speaking, every increase in minimum wage has been accompanied with an increase in unemployment, and that's only when you increase it a little. Jack it up that much and you'll see a big portion of the economy dry up and an even larger portion move to a commission-based structure in an effort to compensate.

So you'd go to McDonalds and you'd see people getting paid based on how many burgers they cooked and how many they sold. Such positions as janitors and such which couldn't be moved to a compensatory frame would instead move to part-time and as-need. As unemployment spread, you'd find people desperate enough to take these part-time jobs, just as you're seeing now.

I'd say the evidence is far more mixed. Wages are just one component of a businesses costs, and one that is some cases can be passed along to consumers, or sometimes absorbed by the company. The minimum wage in the jurisdiction I live in was recently raised substantially (about 25%), with no change in unemployment.

Reasonably high wages ($30/hr hamburger flippers may be a little much) are an essential component of a middle class, which is in turn an essential component of a healthy and prosperous society.

TheWizard wrote: The increase in health premiums driven by ObamaCare are similar, and look at the result: long-term unemployment and a rapid increase in part-time help. This year alone, more than 700,000 of the 917,000 jobs added to the economy were part-time.

Employment is a huge issue, which I've floated here in another thread. There are global issues driving this problem though, and wages are just one small consideration.

As for ObamaCare, there are high profile economists who believe rates are going down, not up:

http://www.nytimes.com/2013/07/26/opini ... c=rss&_r=0

TheWizard wrote: The idea of a 'maximum wage,' while ridiculous, has also been tried before. When wages are capped, worthwhile people are attracted by benefits. The actual health insurance debacle that the country is in RIGHT NOW is the result of wage caps, as it became a standard to supply insurance through the employer. As it turned out, that was always a bad idea. When people purchased their own insurance they controlled the market, the prices were lower and more people had it.

The implicit suggestion here is that markets always function effieciently, with unencombered competition, unemotional, rational purchase decisions, honest practice among the corporate illuminati, and other theories found in economic texts. Real life, unfortunately, has informed us of greater complexity, and also of less than encouraging aspects of human behavior.

Wages of some in the EU have been capped, and to good effect. Doctors in the UK, to stick with our medical examples, have their salaries "capped" to a large degree, as they are employees of the state, and receive a set schedule of payment. I works. There are many in the world that would cut off an important appendage to get into the UK to live.

Recent experience has shown us that there are no bounds to greed, and to the amount of wealth that can (and will) be extracted by from the economy by individuals who feel so entitled. For those at the apex of the financial sector in the US, payment of hundreds of millions, or even billions, for dubious services is not considered uncommon today. In the wink and nudge atmosphere of those so favoured, only intervention by the people (ie- the state) is going to prevent outrage from evolving into surrealism, in terms of salaries received.

TheWizard wrote: Contrary to popular left-wing belief, it is not the responsibility of companies to hire people and pay them fairly, especially not someone else's definition of fair. It is the responsibility of companies to stay in business, and they hire employees where the return of the productivity of the employee is greater than the employee's cost. When the government interferes with that is when you see the very people whom the government pretends to be helping, suffer.

I disagree. It is the responsibility of the community at large to decide what is fair, not Bill Gates, or the Koch brothers, or the local manager of the Motel 8, or the neigbourhood McDonalds. These latter were not elected, have no mandate, and in many cases no education of knowledge of larger sociological issues, beyond their own narrow business experience. We can take it a step further, and say it is up to the community whether or not they stay in business. It could be that we can do without McDonalds, or Motel 8's. Whether this is so or not, it is not up to the business community to say. It is up to us.

Your nanny-state ideology aside, it is the responsibility of people to look after themselves. We're seeing right now what happens to people who think that their lives belong in someone else's hands, and it's not pretty.

And yes, it is specifically Obamacare that is lengthening a recession that should have ended years ago. Jobs aren't going to come back because no one who employs knows for sure what the future holds, and this administration, as we saw this WEEK, has demonstrated that they will change the rules illegally and without notice.

Currently the administration is anti-small business. These are bad times because of it. I used to employ upwards of 30 people, and am working as a consultant instead because there is no point in working my ass off to give 40% of what I make to the fed, 9% to the state, maybe as much as 5% to a city, and then try to pay employees with the rest.

TheWizard wrote:Your nanny-state ideology aside, it is the responsibility of people to look after themselves. We're seeing right now what happens to people who think that their lives belong in someone else's hands, and it's not pretty.

Let's take a closer look at your statement. People should look after themselves- yes? What is the best way to do this in the complex world we live in today? Because this surely does not mean farming, or molding machine tools in one's garage. In a community of 310 million people, "looking after one's self" necessarily means participating in forming policy for everyone, because everyone could be, and most often is, affected by such decisions. Not much point in being "independent" and growing your own crops, if the policies of the federal government cause their destruction through global warming, for example. Today looking after ourselves means doing things like reigning in the obscene waste of Wall Steet, refusing to have one's kids sent off for dubious foreign wars, and insisting on environmental protections. None of these things can be done alone. It is all about group, policitical action.

TheWizard wrote: And yes, it is specifically Obamacare that is lengthening a recession that should have ended years ago. Jobs aren't going to come back because no one who employs knows for sure what the future holds, and this administration, as we saw this WEEK, has demonstrated that they will change the rules illegally and without notice.

Accomplished economists, such as Paul Krugman for example, have noted that the recovery could go much faster if Obama's policies were extended, not curtailed. More stimulus money, more unemployment benefits, more going to the working class would mean more demand, and hence increasing production and employment.

There are several major factors causing high unemployment today, including globalization and computerization of various occupations. These are difficult things to deal with, and I suspect they will be impossible to deal with in the sort of right wing atmosphere prevailant in the US today. This has ominous implications.

TheWizard wrote: Currently the administration is anti-small business. These are bad times because of it. I used to employ upwards of 30 people, and am working as a consultant instead because there is no point in working my ass off to give 40% of what I make to the fed, 9% to the state, maybe as much as 5% to a city, and then try to pay employees with the rest.

40% Personal rate, or corporate rate? If I am not mistaken, the top personal rate in the US today is 35% (not counting deductions). And the corporate rate is based on profit, not gross income. No profit, no tax.

The top personal rate where I live is 44% (federal and provincial), unemployment is about 6.5%, few complain they are hard done by, and there are more people that want to live here than can be accepted. This money is, as one commentator put it, the price of civilization.

etudiant wrote:Accomplished economists, such as Paul Krugman . . . ..

I'm intrigued by this. Just what is an "accomplished" economist? Someone who can make real world predictions and help develop fiscal policies that help improve the economy?

But economics is not an exact science, is it? Arguably it's such a complex field more like an abstract math that doesn't quite relate to the real world except by theories which cannot ever be tested. That's why there are are competing schools of thought in economics that are so easily co-opted into political ideologies.

So what makes Krugman an accomplished economist? I know he argues in favor of deficit spending and so is aligned with the political left. Beyond that, I don't know enough about economics to comment intelligently on the subject except to suggest it's more theoretical than science and, as such, subject to made up narratives that cannot be empirically tested.

geo wrote:

etudiant wrote:Accomplished economists, such as Paul Krugman . . . ..

I'm intrigued by this. Just what is an "accomplished" economist? Someone who can make real world predictions and help develop fiscal policies that help improve the economy?

But economics is not an exact science, is it? Arguably it's such a complex field more like an abstract math that doesn't quite relate to the real world except by theories which cannot ever be tested. That's why there are are competing schools of thought in economics that are so easily co-opted into political ideologies.

So what makes Krugman an accomplished economist? I know he argues in favor of deficit spending and so is aligned with the political left. Beyond that, I don't know enough about economics to comment intelligently on the subject except to suggest it's more theoretical than science and, as such, subject to made up narratives that cannot be empirically tested.

I wouldn't say economics is entirely theoretical, as theories have been tested by history, and reasonable conclusions drawn from them, but I think you are right on in suggesting that it is highly political. Even Henry Kissinger once stated that he had come to believe that ultimately, all economic questions are essentially political ones.

The only competing theories are those that have political or ideological beliefs behind them. There is no competition in math, but that only goes so far in describing human society. When those of extreme views say that they have a competing, and differing economic theory (such as those on the far right in the US today), what they really mean is they would like society to be a certain way,and would like to discuss only the sort of math that reinforces this.

The lessons drawn from the great depression, for example, were that standing by and waiting for the market to correct itself was a disaster, and vigorous government intervention, JM Keynes style, works. Markets do not correct themselves, no matter how much the right wing may foam at the mouth when hearing such blasphemy. How much to correct them, and how often? Now we verge into politics. Too much bureaucracy can be a problem, too little regulation can be destructive. The middle ground may be disputed, but there are major historical trends that cannot be.

I guess to answer your question, competent economists are those that admit and embrace political and social issues, and don't assume the world can be reduced to numbers. I think Krugman does this.

Would you be willing to pay $7.00 for a cheeseburger that only cost $1.00 today?

Funny how the price of a product can magically change the quality.

Wizard. Thanks for pointing this out.

TheWizard wrote:The increase in health premiums driven by ObamaCare are similar, and look at the result: long-term unemployment and a rapid increase in part-time help. This year alone, more than 700,000 of the 917,000 jobs added to the economy were part-time.

Would you be willing to pay $7.00 for a cheeseburger that only cost $1.00 today?

Maybe, maybe not. Are you saying that a hike in minimum wage would increase burger prices by 700%?

TheWizard wrote:First of all, historically speaking, every increase in minimum wage has been accompanied with an increase in unemployment,

Is this a statement of fact?

I know Elizabeth Warren is a controversial person in DC, but watching that made me appreciate her. She's willing to engage in the details and get muddy. The questions she asked are the questions I'd have. Although cause and effect here is devilishly complicated, and bias creeps in too easily.

I think the largest issue is still the one Geo pointed out. If our local minimum wage is higher than companies from other countries competing in the world market, then corporations based in the US will have a more difficult time competing. Naturally, this applies to trade goods that are purchased overseas. I don't see that it applies to businesses such as McDonalds, however. Labor intensive portions of the supply chain can exist in each country independently, and a franchise in California isn't selling it's fast food overseas. A $3 happy meal in the US costs $1 in India, for example.