Is "hard work" a virtue?

[Reverend Rick]

If we accept this data, it more or less proves that increased minimum wage does not necessarily = increased unemployment.

In the short run, if I own a McDonald's, I will cut back help. In the long run, it will not work and I will have to have more help again. This will raise my labor expense and require me to charge more for a big mac. Higher prices will reduce the amount of product I sell in the short run and require another lay off. In the long run, my customers will become accustomed to my higher prices and return. I will hire more help once again and everything will return to normal.

Inflation will take away everything an employee gains after he/she gets a raise.

The gap between the rich and poor only expands further. 35 years ago, one hour of minimum wage work would buy 7 gallons of gasoline.

 

[Jackytar]

Make a claim that is falsifiable.

Job retraining is an example of socialism that does not work.

This is why free market propaganda uses anecdotes instead of research to get their point across.

Perhaps you missed the part about the labor department's own study.

To me, these three falsifiable facts, taken together, demonstrate more than adequately that a country's economy is not strengthened by haphazard, indiscriminate deregulation.

Your examples are too complex to simply make a point in an internet discussion forum by two non-economists. For example, I could make the argument that FDR's Controller of the Currency, J.F.T. O'Connor, rigged the financial markets with explosives, in a manner of speaking, when, in 1936 during the height of the depression, he required banks to hold investment grade bonds, which seemed like a good idea at the time. The letter grade provided by the rating agencies suddenly became a requirement. Later, in the 70's, I think, Congress added that it could only be a handful of rating agencies that provided these grades, Moody's, Standard and Poors, and Fitch. When complex derivatives were developed, largely by career mathematicians and physicists, these agencies had no idea how to grade them though they made an attempt because they were required by law and even posted their models on the internet. The investment banks got their triple-A ratings by threatening to take their business elsewhere (the rating agencies are paid by the banks). The hapless investor had no choice but to accept these ratings. On July 10th 2007, Moody's saw the light and started downgrading hundreds of these subprime bonds. You know the rest.

You might also be interested to know that there is a Federal regulatory body in place to oversee these transactions. It's called the Office of Thrift Supervision and the interim director, a mister Scott Polikov, testified at senate hearings that his agency is responsible. They simply never did their jobs, for reasons that would make you groan. The various regulatory bodies actually compete to supervise different aspects of the banking industry by making promises of leniency. Self interest at work. They want to keep their jobs.

I'll restate that I'm not interested in debating these "facts". I simply haven't got the time or the inclination. Suffice it to say that this is what can happen when we enter the free market with well-intended regulations. We skew incentives in ways that nobody predicted. And to state that the US is in a recession is a falsifiable fact that supports your position that free markets are bad is an astonishing over-simplification of an exquisitely complex economic system. It would be the same as if I were to say "Free market principles has lifted 400 million asians out of poverty". What the heck are you going to do with that? If you actually believe that you are making a valid point then I have nothing else to say. I am too keenly aware of the futility of fixed belief.

All you've done so far is support my point, which was that free market capitalists generally rely on anecdotes, misleading statistics and fantasy worlds (like the one where only free market capitalism can produce a pencil) instead of facts to argue their opinions.

Case in point.

Jackytar

 

[Jackytar]

I respect the "free market" argument in principle, but in practice it sometimes resembles the Southern plantation owner who criticizes the North for meddling with his freedom to do as he pleases with his property.....sure, he is technically correct....but he is not really interested in freedom, he is only interested in "freedom" in a special sense, namely the sense which benefits himself.

A very thoughtful post, Mr Spinkles.

I think it's important to note that free - market Libertarians do not stand in defence of greedy business interests seeking to gain advantage over consumers or tax payers or other business interests through legislation. We believe in just the opposite. I'm learning that a lot of folk associate free - market Libertarians with cronyism, and this is unfortunate. Nothing can be further from the truth.

A belief in smaller governments does not equate with "laissez faire" concerning what we believe are legitimate government roles, to include protecting individuals from unfair business practices. If you do not believe in government, you will get no government, a bastardization of libertarian principles exemplified most recently by the Bush administration.

And only extreme Libertarians espouse views that government roles such as certain public works are illegitimate. Libertarians are not opposed to collectivism that does not require heavy-handedness on one group of people over another to implement. Because of this we prefer it be at the local level, for the sake of vigilance.

We simply recognize that there exists spontaneous order in the marketplace that cannot be improved upon no matter how much this seems counter-intuitive on it's face, or in certain "special" instances. And, insofar as possible, within the restraints neccesitated by the darker side of human nature, we should get out of the way. That it's a conceit of individuals and elected officials to believe they know better, no matter how well-intended. And that this has been proven time and again.

Jackytar

 

[Joe_Stocks]

Hi Mr. Sprinkles,

If Wiki can be trusted, it seems the data clearly shows it is not necessarily true that increased minimum wage = more unemployment. Here we see increased minimum wage from 1940 to 2000: File:History of US federal minimum wage increases.svg - Wikipedia, the free encyclopedia
The minimum wage increased seven-fold during this period.

And yet, during the same period unemployment fluctuated around 5% with no obvious upward trend: File:US Unemployment 1890-2008.gif - Wikipedia, the free encyclopedia

If we accept this data, it more or less proves that increased minimum wage does not necessarily = increased unemployment.

Take it look at my link above (Walter E. Williams study: Youth and Minority Unemployment). But the fallacy you are committing is looking the unemployment rate of everybody when a very small percentage of people have jobs that pay the minimum wage. Obviously, you can only look at the unemployment rates of the people that work minimum wage jobs. When you do that you see more often than not there is an increase in unemployment among the very people working minimum wage jobs.

 

[Wandered Off]

I think it's important to note that free - market Libertarians do not stand in defence of greedy business interests seeking to gain advantage over consumers or tax payers or other business interests through legislation. We believe in just the opposite. I'm learning that a lot of folk associate free - market Libertarians with cronyism, and this is unfortunate. Nothing can be further from the truth.

Just an example, in the past few days, the Libertarian Party in Texas helped defeat a toll-road proposal from the Republican governor. Some people might think Libertarians would always favor privatization like toll roads, but the governor's proposal had provisions that legally prevented competition with the private toll road operators - and the Libertarians fought it on that basis.

 

[Sunstone]

Minimizing Economic Opportunity by Raising the Minimum Wage

For what should be obvious reasons even to you, Rick, I did not bother reading the Heritage Foundation propaganda.

How changes in the minimum wage affect the economy - by G. Andrew S. - Helium

This was a good article as far as it went. But it exclusively discussed theory and presented no relevant empirical evidence to back up it's theory. Consequently, it was interesting, but it did not provide strong evidence for its thesis. I could just as easily theorize that demand for some categories of labor is relatively inelastic and without providing empirical evidence for that notion, there would be no grounds to prefer my thesis over the thesis of the author.

How Does Minimum Wage Affect the Economy? | eHow.com

I wasn't too impressed by his weakly citing irrelevant facts to make his point. His point, by the way --- that minimum wage has both helped and hurt workers --- comes across as fence-sitting in his case because he does not give relevant ways that it helps and hurts workers.

 

[Alceste]

Job retraining is an example of socialism that does not work.

Perhaps you missed the part about the labor department's own study.

Your original claim was that the free market has a better solution to every social problem than government. Examples of ineffective government policies do not support your point, unless you can provide equivalent counter-examples of successful for-profit solutions for the same problems.

For what it's worth, I think "job retraining" for welfare and unemployment insurance recipients, if it is not tied to a guarantee of employment in the selected industry (i.e. contractual agreements between government and privately owned industry), is a stupid idea and was bound to fail. But universities, which are not government-run, also fail to guarantee employment in the chosen industry. So this example doesn't demonstrate that everything the government does is stupider and more bound to fail than everything the free market does, which was your original point.

Your examples are too complex to simply make a point in an internet discussion forum by two non-economists. For example, I could make the argument that FDR's Controller of the Currency, J.F.T. O'Connor, rigged the financial markets with explosives, in a manner of speaking, when, in 1936 during the height of the depression, he required banks to hold investment grade bonds, which seemed like a good idea at the time. The letter grade provided by the rating agencies suddenly became a requirement. Later, in the 70's, I think, Congress added that it could only be a handful of rating agencies that provided these grades, Moody's, Standard and Poors, and Fitch. When complex derivatives were developed, largely by career mathematicians and physicists, these agencies had no idea how to grade them though they made an attempt because they were required by law and even posted their models on the internet. The investment banks got their triple-A ratings by threatening to take their business elsewhere (the rating agencies are paid by the banks). The hapless investor had no choice but to accept these ratings. On July 10th 2007, Moody's saw the light and started downgrading hundreds of these subprime bonds. You know the rest.

You might also be interested to know that there is a Federal regulatory body in place to oversee these transactions. It's called the Office of Thrift Supervision and the interim director, a mister Scott Polikov, testified at senate hearings that his agency is responsible. They simply never did their jobs, for reasons that would make you groan. The various regulatory bodies actually compete to supervise different aspects of the banking industry by making promises of leniency. Self interest at work. They want to keep their jobs.

I'll restate that I'm not interested in debating these "facts". I simply haven't got the time or the inclination. Suffice it to say that this is what can happen when we enter the free market with well-intended regulations. We skew incentives in ways that nobody predicted. And to state that the US is in a recession is a falsifiable fact that supports your position that free markets are bad is an astonishing over-simplification of an exquisitely complex economic system. It would be the same as if I were to say "Free market principles has lifted 400 million asians out of poverty". What the heck are you going to do with that? If you actually believe that you are making a valid point then I have nothing else to say. I am too keenly aware of the futility of fixed belief.

Case in point.

Jackytar

Another thing free market advocates do is excuse themselves from the obligation to demonstrate causality.

FYI, the Office of Thrift Supervision was - I think - three people. The banking industry lobbied very aggressively to be in that regulatory position, rather than supervised by the more robust government bodies, like the FTC. This is not an example of government regulation causing economic turmoil, but an example of how excusing an industry from meaningful regulation - at their request, and with their sincere assurances that we only need to "let the market work" - causes economic turmoil.

 

[Magic Man]

Hi mball,



Actually, this increases unemployment among the very people you are attempting to help. It's not rocket science, when you artifically raise the price of labor (surprise, surprise) businesses hire less people.

That makes sense, since most businesses can actually do the work they need to with 25% less employees. They just like to pay more people to do the same amount of work.

 

[Magic Man]

Hi Mr. Sprinkles,



Take it look at my link above (Walter E. Williams study: Youth and Minority Unemployment). But the fallacy you are committing is looking the unemployment rate of everybody when a very small percentage of people have jobs that pay the minimum wage. Obviously, you can only look at the unemployment rates of the people that work minimum wage jobs. When you do that you see more often than not there is an increase in unemployment among the very people working minimum wage jobs.

Maybe you could point out some relevant parts, since I don't have time to read an entire book or even a small part of one.

Explain to me how businesses can just get rid of some people when they have the same amount of business. If it takes 10 people to make 10 radios in one day and you fire 5 of them to save money, it'll take you 2 days to make 10 radios. You're then making half the money you were before, whereas if you kept those 5 people, you'd be making the same money you were before, but paying out, say, 33% more.

Explain to me how it makes sense for that business to fire those 5 people.

 

[Magic Man]

Rick, would you mind providing something other than opinion articles, please? Do you have anything with facts and figures that backs up your opinions, or just other people's opinions that agree with yours?

 

[Alceste]

In the short run, if I own a McDonald's, I will cut back help. In the long run, it will not work and I will have to have more help again. This will raise my labor expense and require me to charge more for a big mac. Higher prices will reduce the amount of product I sell in the short run and require another lay off. In the long run, my customers will become accustomed to my higher prices and return. I will hire more help once again and everything will return to normal.

Inflation will take away everything an employee gains after he/she gets a raise.

I note that this picture assumes the profit margin and the salaries of managers and CEOs of MacDonalds will remain constant, and changes to minimum wage regulations will affect only the wages of minimum wage employees.

This doesn't appear to be the case, IME. The most cost-effective layoffs and salary cuts are management positions, since they earn more money. I've seen this myself during cost-cutting layoffs at my last job. All the front line service people kept their jobs, because they are absolutely essential to the functioning of the organization, and because they are the cheapest employees to keep. The cuts definitely hit managers the hardest, since just one of their salaries is worth three service staff. Also, their jobs are non-essential when it comes to service provision. An unsupervised employee works just as effectively (and often more so) as a supervised one, provided independence is a quality selected for during the hiring process.

The gap between the rich and poor only expands further. 35 years ago, one hour of minimum wage work would buy 7 gallons of gasoline.

Ain't that the truth. And the people at the top who make policy always seem to forget that when the gap gets wide enough, the poor tend to get fed up and start chopping off heads.

 

[Jackytar]

Your original claim was that the free market has a better solution to every social problem than government. Examples of ineffective government policies do not support your point, unless you can provide equivalent counter-examples of successful for-profit solutions for the same problems.

For what it's worth, I think "job retraining" for welfare and unemployment insurance recipients, if it is not tied to a guarantee of employment in the selected industry (i.e. contractual agreements between government and privately owned industry), is a stupid idea and was bound to fail. But universities, which are not government-run, also fail to guarantee employment in the chosen industry. So this example doesn't demonstrate that everything the government does is stupider and more bound to fail than everything the free market does, which was your original point.

The market does provide better targeted training. Look at the placement rates of any educational institution and they will outperform work development programs every time. The majority of people spending their own money on education has a keen eye to employ-ability. It doesn't work every time but perfection isn't the standard we are measuring against. And besides all that, the free market doesn't require that folks spend their money wisely. Just that it's their money.

You said, "Find me something that is falsifiable, and I will try to falsify it for you." So I picked an example right out of today's headlines. Obama set aside 1.6 billion dollars of our money for this. The only people who benefited are the folks who run the program. And again you waffle then immediately write...

Another thing free market advocates do is excuse themselves from the obligation to demonstrate causality.

...when the point I was making is that neither one of us has the capacity to make such claims of causality when discussing something as complex as your statements. That it is absurd to even suggest this is even possible in such a forum. Have you established causality? Because I must have missed it. Seems to me you merely declared it.

So which is it, Alceste? You reject ideological statements such as "I Pencil", and simple examples like job retraining, and now counterpoints presented on your own absurd example to show it's absurdity. I feel like I'm trying to put a sweater on an octopus.

FYI, the Office of Thrift Supervision was - I think - three people. The banking industry lobbied very aggressively to be in that regulatory position, rather than supervised by the more robust government bodies, like the FTC. This is not an example of government regulation causing economic turmoil, but an example of how excusing an industry from meaningful regulation - at their request, and with their sincere assurances that we only need to "let the market work" - causes economic turmoil.

It is an example of unintended consequences writ large, with a dash of cronyism thrown in the mix, but mostly the massive incompetence of the federal government - the very same people you want to entrust the bulk of our nations wealth to as if they were trustworthy custodians of our tax dollars or even as if they have our our best interests, and not their own, at heart.

Free market economists are not opposed to "meaningful" regulation. In fact, we demand it as essential. We just have different ideas as to what this means. One based on well thought out and historically proven principles. Not some vague notion of social justice that requires coercive taxation and an erosion of individual liberties to conform to your grand scheme.

Jackytar

 

[Alceste]

You said, "Find me something that is falsifiable, and I will try to falsify it for you." So I picked an example right out of today's headlines. Obama set aside 1.6 billion dollars of our money for this. The only people who benefited are the folks who run the program.

OK, I'll have another look at your article and see if I can track down the study it cites and have another go at it. My point was that the article is almost entirely anecdotes about people who couldn't find any work, and that individual anecdotes are not evidence of a systemic reality. The study would have been a better thing to link to. I'm big on primary sources.

...when the point I was making is that neither one of us has the capacity to make such claims of causality when discussing something as complex as your statements. That it is absurd to even suggest this is even possible in such a forum. Have you established causality? Because I must have missed it. Seems to me you merely declared it.

I try to avoid making claims of causality for this reason. Free market advocates do not. Look at Joe talking about how raising the minimum wage increases unemployment. It's been pointed out that unemployment has remained steady despite the minimum wage increasing seven times, but he is undaunted: increasing wages still causes increased unemployment in his fantasy world, even though it doesn't in this one. Besides, even if unemployment had increased alongside minimum wage increases, (which it hasn't) that would only demonstrate correlation, not causality.

What I pointed out was that, taking three facts into consideration - that the US is the least regulated marketplace in the Western world, and that it has just spearheaded a spectacular global economic collapse due to the failure of an almost entirely unregulated industry - there appears to be no correlation between less regulation and greater economic health.

If it came off as a causal claim, my bad. I should have been more clear.

So which is it, Alceste? You reject ideological statements such as "I Pencil", and simple examples like job retraining, and now counterpoints presented on your own absurd example to show it's absurdity. I feel like I'm trying to put a sweater on an octopus.

OK, well here's what I like to see: research.

I can make up opinions, and ideological statements myself. Reading those of others is not convincing, especially those who make a comfortable living advocating a particular world view, whether purposefully, as is the case with free market think tanks, or by the inherent nature of their industry, as is the case with people who write newspaper articles.

It is an example of unintended consequences writ large, with a dash of cronyism thrown in the mix, but mostly the massive incompetence of the federal government...

Well, I don't know what planet you're living on, but here on earth most of us are aware that the "massive incompetence" in question was allowing the bankers to regulate themselves.

- the very same people you want to entrust the bulk of our nations wealth to as if they were trustworthy custodians of our tax dollars or even as if they have our our best interests, and not their own, at heart.

Where did I say this?

Free market economists are not opposed to "meaningful" regulation. In fact, we demand it as essential. We just have different ideas as to what this means. One based on well thought out and historically proven principles. Not some vague notion of social justice that requires coercive taxation and an erosion of individual liberties to conform to your grand scheme.

Where did I advocate "coercive" taxation or the erosion of individual liberties?

If you are in favour of meaningful regulation, then we agree.

 

[blackout]

Well, I don't know what planet you're living on, but here on earth most of us are aware that the "massive incompetence" in question was allowing the bankers to regulate themselves.

Sadly Alceste, I don't think that most people are aware of this at all.
Most people think the Federal Reserve is actually federal.
(gee... I wonder why? )
They have no idea that private banking families charge their govt.
(ie... you and me)
interest, just for the "right" of using their family money...
which is backed by absolutely nothing tangible.

And it's not like the public school cirriculums bring light to any of this either.
Yet they do a stellar job mass conforming young minds to pledge their blind allegiance....

 

[Jackytar]

Where did I say this? Where did I advocate "coercive" taxation or the erosion of individual liberties?

You want to tax the rich. Taxes are coercive. Coercion erodes liberty.

Jackytar

 

[Magic Man]

You want to tax the rich. Taxes are coercive. Coercion erodes liberty.

Jackytar

So, we shouldn't have taxes?

 

[Alceste]

You want to tax the rich. Taxes are coercive. Coercion erodes liberty.

Jackytar

Taxes are only "coercive" to those who are disinclined to contribute a portion of their personal wealth to society for the benefit of everyone. Likewise, regulations of any kind are "coercive" to those who are disinclined to behave responsibly. Do you think the manufacturing industry should be allowed to dump toxic chemicals into our drinking water? Regulations that prohibit toxic dumping are ineffective unless they are enforced, and enforcement costs money. That money comes from taxes. On the one hand, you have the manufacturing industry arguing that regulations prohibiting toxic dumping are coercive, and on the other hand, you have the rich - some of whom are owners and primary shareholders of those same industries - arguing that paying taxes to enforce laws against toxic dumping are coercive.

Meanwhile all the rest of us are happy to know that somebody somewhere is making an effort to prevent toxic chemicals and / or sewage entering our drinking water, and are more than happy to pay for this service. However, we think you should pay too. Sure maybe that corrodes your individual freedoms in some small way, but not nearly as much as ebola would.

 

[Jackytar]

Taxes are only "coercive" to those who are disinclined to contribute a portion of their personal wealth to society for the benefit of everyone. Likewise, regulations of any kind are "coercive" to those who are disinclined to behave responsibly. Do you think the manufacturing industry should be allowed to dump toxic chemicals into our drinking water? Regulations that prohibit toxic dumping are ineffective unless they are enforced, and enforcement costs money. That money comes from taxes. On the one hand, you have the manufacturing industry arguing that regulations prohibiting toxic dumping are coercive, and on the other hand, you have the rich - some of whom are owners and primary shareholders of those same industries - arguing that paying taxes to enforce laws against toxic dumping are coercive.

Meanwhile all the rest of us are happy to know that somebody somewhere is making an effort to prevent toxic chemicals and / or sewage entering our drinking water, and are more than happy to pay for this service. However, we think you should pay too. Sure maybe that corrodes your individual freedoms in some small way, but not nearly as much as ebola would.

One of the most astounding examples of straw man argument I've ever seen - and this from someone who clearly knows how to identify logical fallacies. I'm disappointed. And starting to feel that I'm as likely to get an honest debate out of you as I am to get Ebola from drinking water.

Jackytar

 

[Mr Cheese]

taxes are evil, we all know this is an american ethic....

as americans, by and large, personified here by jackytar... are "individuals" out for themselves...

this essentially is selfishness at its best

In England we call this "I'm alright Jack" which means:

(originally: "**** you, Jack, I'm all right!!" - described the bitter dismay of sailors ("jacks") returning home after wartime in the Navy to find themselves not treated as patriots or heroes, but ignored / sneered at by a selfish, complacent, get-ahead society - phrase was subsequently toned down for acceptable general use.)
Attitude of "every man for himself, survival of the fittest, devil take the hindmost", ... but also, that all the possible advantages (however gained), success (however won) and satisfaction (whatever the cost to others) belong to me first!" Narrow-focus, narrow-gauge pseudo-Darwinian selfishness glorified as a sensible philosophy of society and life.
People who find it hard to say "I'm all right Jack!" outright, say to anyone they find no longer useful: "I'm trying to get my life in order right now, so can you respect that, please?!..." (just before they throw themselves laughing into more fun and merry chaos!)

(British) A comment that indicates a selfish attitude. Not worried about any problems your friends and neighbours might have. Often associated with strikes and other trade union industrial actions.



It is THIS attitude which prevails all of american culture...and arguably is the deep seated core of the problem of everything that is under discussion here and is american itself.

Of course, fortunatly this is not the whole story, however, it is far to prevelant to be ignored

 

[Mr Cheese]

Meanwhile all the rest of us are happy to know that somebody somewhere is making an effort to prevent toxic chemicals and / or sewage entering our drinking water, and are more than happy to pay for this service. However, we think you should pay too. Sure maybe that corrodes your individual freedoms in some small way, but not nearly as much as ebola would.

its "some one else's problem"....