You do know that if there wasn't a minimum wage anymore, some companies would just stop increasing the pay they give to their workers, and pay newer ones even less, and there is still no guarantee that prices of things required to live (i.e. food, clothes, shelter) would decrease in price.

I actually wonder how many people who don't like the idea of a minimum wage have lived on minimum wage (or below it, because that would be a better demonstration of why it is needed).

What you are literally saying:

"You do know that if the demand decreases there is still no guarantee that prices will decrease."

This is true, but if you aren't willing to assume that firms will generally behave rationality there's basically nothing we can talk about w.r.t. economics. v:)v

More than you'd think.

Unfortunately, there are a number of companies out there that are run by people who see personal gain as more important than the success of their business. Heck, the idea that short term gains are of extreme importance is the reason why the economy is so screwed up, too many companies ignored long term implications of their actions (or the implications of what would happen if everyone was doing what they were doing).

protip: economic rationalism is an oxymoron.

mscbuck, did this hurt you as much as it hurt me?

If Ron Paul gets elected I'm gonna move to Mexico and get beheaded.

Hey Guys

[quote=John F. Kennedy]The world knows that America will never start a war. This generation of Americans has had enough of war and hate... we want to build a world of peace where the weak are secure and the strong are just.[/quote]
lol!

give him a break Freelancer, everyone knows that even thinking about having a communist government was considered an act of war against the USA.

/notentirelysarcasm

@jon'c

It is impossible to have complex economics be rational, because human beings are inherently irrational. While aspects of economics can be rational, overall, it the economy can be quite irrational.

@alpha1

Please take an economics course.

Speaking of Armageddon, anyone seen "Inside Job" yet? I caught the ass-end of it last night & thought that it looked decent enough.

But they don't teach you the most important part! In order to run such a dysfunctional economy as ours, the main ingredient is corruption. Okay, eventually people figure out that there isn't enough to go around, but in the meantime, we'll just convince everybody there is, swipe all their money, get rewarded for it and disappear.

Actually freelancer, the dysfunctional economy and corruption mix with each other in a positive feedback loop. The corruption means that ideas that work in corporations get put forth into a nations economy, causing major problems, and the loudest voices who try to solve those problems tend to be the ones involved in corruption.

No, but they teach you the Rational Choice Theory, what rationality means in the context of microeconomics, why it's an important assumption and why it's approximately correct even though most people are consciously irrational.

Most importantly they'll teach you how to avoid overt non sequiturs. Basically what alpha1 did here was respond to a discussion about Shikoku-inu with an ethnic slur against the Japanese; he might be right, and maybe it makes sense if you don't understand the jargon, but he's way off topic.


Edit: Let me make this clear. You need to assume that agents in an economy are generally rational - that is, they make choices which benefit themselves - because if we assume otherwise there is absolutely nothing we can say about the economy. As alpha1 correctly inferred, without this assumption you cannot create a model which shows raising the minimum wage causing inflation, because we cannot predict that firms will raise prices as the scarcity of money decreases. However, without this assumption, we also cannot claim that the minimum wage should ever be increased, because firms could spontaneously decide to lower prices just because they feel like it. Economics discussions are in full retard mode if you don't assume rational decision-making.

Economists "assume" rationality in the same way that engineers "assume" car drivers are capable of computing triple integrals in their heads, or in the same way that biologists "assume" people will consciously choose genetically-superior mates. It doesn't take much work to realize that these are bad assumptions but it turns out it doesn't actually matter at all in the big picture.

Okay? And what happens when wealth gets aggregated overmuch into the hands of the agents who made the best choices which most benefited themselves? Greedy algorithms always produce the global optimum, amirite?

If economic rationality is defined as grabbing as much cash as possible from a limited supply then such 'rationality' is incompatible with all human sensibility, dignity, and even efficiency.

Why do we even pretend that this bull**** is anything but a pathetic failure of a way to distribute resources?

Um, no. The Iowa caucuses are just as important as they've always been. That is to say, they're not important to get a candidate nominated, much less elected, if that candidate is considered "acceptable" by only about a third of his party's voters despite a long history of running in party primaries, and if that candidate has put all his eggs in one basket and has virtually no organization outside of Iowa, and if that candidate is likely to have as much trouble appealing to moderates as he does appealing to his party because of extreme positions like wanting to shutter the Department of Education.



I've found only one national poll that says this, from September 27.

Heres an actual honest question, what are Ron Paul's foreign policies for countries that are allies? Also, does he plan to let companies continue practices that risk the economies of other countries?

Too bad the goddamn grays killed JFK.

Are all of your lives really that bad that you have to cry about who's gonna try to be president every time it happens to make you feel better?

God damn people, notice the ****ing pattern or stop ****ing about it so much.

I mean, its not like US president has an effect on the way the US is run, and can have effects on many other countries around the world.

Oh, wait...

I totally agree with you, sarcasm aside.

Regarding minimum wage:
Consider the following (incredibly simplified) scenario.

Imagine you own a company that makes staplers. Say it takes 2 employees 1 hour working together to make 1 stapler. There's currently no minimum wage in this imaginary economy, so you pay these 2 employees a competitive wage of $2 per hour. This means that it costs you $4 worth of labor to make 1 stapler (For simplicity, imagine that you have no additional production costs). You sell the stapler for $6, making a profit of $2 for each stapler. Business is good. Then, suddenly, the government decides that your competitive wage is unfair to your employees. They set a "minimum wage" of $3 per hour. Now for the same quality and level of work, you need to spend $6 to make 1 stapler. What do you do to maintain your profit?

1. Raise the price of the stapler to $8. Congratulations, you still make your profit of $2. But now you're driving inflation by increasing the cost of a product without increasing it's value.

2. Keep the price the same, but fire one of your employees and force the other to produce the same stapler by him/herself. Awesome. Now you've just destroyed a job (raising unemployment), degraded the quality of work for your remaining employee, and quite likely degraded the quality of your product without reducing the price.

3. Consider moving your factory to an economy that does NOT have a minimum wage restriction. If you can balance out the import tax and shipping costs, you could still remain competitive and still make your profit. (Lost jobs in the economy)

Still think minimum wage benefits the economy?
Consider this: Your profits are being cut into because you are FORCED to pay your unskilled labor a wage beyond what they're worth. You decide to make up for it by cutting the pay of the management. Now you're only paying your middle management a few dollars above min wage and you're discouraging your lower level employees from striving towards advancement, because the tiny pay increase is not worth the significant added responsibilities. This is what's destroying the middle class in America.

"But Sarn, what's the ensure that the greedy, corporate, bastards pay a fair wage?"
Consider this, using the previous scenario.

Rewind to before there's a minimum wage. You're paying your 2 employees $2 an hour, and making a profit of $2 for each stapler. Business is good. Suddenly, you develop expensive tastes. You want MORE PROFIT!!! You can't increase the price cause StaplersRUs is selling their stapler for $6 too and you have to stay competitive. So you give your employees a pay cut. Now you're giving them $1 an hour instead of $2. You make a profit of $4 per stapler. Life is great. Until your two employees get fed up and get a job at StaplersRUs, which is still paying $2 an hour. Now you're making $0 profit cause you have no products to sell.

This is how a healthy economy works, in a nutshell. The only time this becomes a problem is when 1) you're the only one in town that makes staplers or 2) you scheme with the owner(s) of the other stapler companies to fix the stapler price, and/or the employee wage so you can all make more money. But this is why we have antitrust laws.

I would point out that the competitor would have to actually be hiring for those people to be able to quit. Also, what is to stop companies from putting things in employee contracts to stop them from defecting to a competitor?

edit: just to add, aren't libertarians against things like anti-trust laws? After all, they are just another government restriction on what businesses can do.

Your example is silly because it completely ignored material costs.

This is a good question.

First, note that there's nothing inherently wrong with monopolies. There is something called a "natural" monopoly which forms due to decreasing marginal costs. A natural monopoly is a perfectly healthy market outcome; contrary to public opinion, natural monopolies can't just charge whatever they want. They have a price ceiling, which is simply any price that will prevent new competitors from being able to match their price without taking long-term losses.

The problem with monopolies is that natural monopolies are probably impossible in practice. All monopolies IRL are either government-granted (patents, copyrights, franchises, exclusive licensing) or they are formed through criminal duress (trusts and cartels.) Basically, in the former case, the problem is government interference in the first place. In the latter case, it falls under the responsibility of the government to protect the rights of consenting action and property ownership, which are both required in order to have any real economy.

That's what I think, as someone who believes the free market generally produces good (but sub-optimal) outcomes. I'm not a Libertarian. I read books and I don't have Aspergers, so I really can't tell you what Libertarians specifically believe about anti-trust laws. My guess would be they oppose anti-trust legislation for the singular reason that "the government is bad."


(Before someone :words: at me about "antitrust ≠ monopoly," understand that trusts and cartels exist for the express purpose of creating monopolies. Antitrust laws : monopolies :: the Civil War : slavery.)

Here's the other thing about Ron Paul: His gains have mostly come at the expense of candidates who are not Mitt Romney. That's great for now, because it might win him Iowa. It's terrible for him in the long run, because his limited support among Republicans means he can only win primaries so long as 35% of the vote is enough to win primaries with -- that is, so long as the field remains divided among more than two candidates.

Ugh not worth it, there's just too little time....

Good luck Jon'C, carry forth

That would be why I said, "(For simplicity, imagine that you have no additional production costs)".

not to mention things like population growth. If someone came up with an economic policy that would cause neither inflation nor deflation, doesn't put certain population groups at an extreme disadvantage (i.e. once a stapler salesman, always a stapler salesman, and your kids will also be stapler salesmen), then they would probably win the Nobel Prize for economics, because such a system would require deep studies into human behavior as both an individual and in groups (in many different situations), studying the many different cultures that will be interacting with your economy (e.g. trading in resources that you cannot get in your own country), research into population growth, human health, and far too many other factors, some of which are possibly not even known yet (as in, nobody realizes that it effects the economy directly).

TL;DR economic theory =/= economic practice, especially when no two countries have the exact same economic policies.

No, that person certainly wouldn't. The Nobel committee would probably question the nominee's education and parentage at length, inform him that he doesn't understand even the most basic concepts of economics necessary to intelligently discuss the subject at all, publicly shame him for doing it anyway, and send him home in disgrace.

Hmm, this is a huge problem. It's too bad economists don't have some technique for collecting and analyzing empirical evidence with many variables (perhaps we will call this 'multivariate') including some unknown amount of error caused by unknown variables, and somehow classify the strength of that correlation as either 'significant' or 'insignificant' up to some known probability of being incorrect. I will let them know about this oversight.

Two things you really really very obviously know nothing about. There's nothing wrong with ignorance but the only way to get past it is to admit it to yourself. A used micro textbook will be like $40, just read one already. Jesus.

lets just be like star trek and stop using money
hurry up and invent replicators so this can be a reality

Are you trying to say that we've become a nation of Ferengi?

Jon`C will arrive shortly to inform everyone why replicators would not spell the end of money, and in fact would probably not make our lives better in any way, and in fact would probably make them worse, since the 'logic' used by economics is exclusively counter to common sense, and of course due to the insistence by economists that economics is in fact a natural law which transcends other forms of reasoning.

What people don't seem to understand is that "money" is just an abstraction for choosing who is entitled to scarce goods. We can choose a different form of abstraction, but we can never solve the underlying economic problem because it is the nature of our universe.

We'd still need energy to power our replicators, and some land to put it on. There are finite amounts of both of these things.

If this explanation seems "counter to common sense," you are suffering from severe brain damage.



ITT people who know literally nothing about economics talking about how stupid economists are.



Edit: Bawww, my empire has fallen because very greedy businesspeople justified looting the treasury with the untested and highly-contended theories of economists from exactly one university, over the objections and dire warnings of everybody else in the field. Obv this means economists are all evil stupid ******s who just don't understand how the real world works, and that the entire field of economics is so fundamentally flawed that even some total knobs from a Star Wars internet forum can clearly see how flawed their "logic" is. Heh, "logic" with quotation marks. Because anything that defies common sense clearly isn't sound, after all, everybody has common sense, so it's just common sense that the majority is always right.

Let's deal with scarcity with simple and wrong heuristics instead of treating it as the design problem that it is.

Also, lets reward industries that cause problems (fast food, weapons manufacturers) with more resources and also make sure that the resulting unnecessary labor that solves these problems (additional health care, reconstruction efforts) is rewarded in kind.

Let's maximize monetary-efficiency at the singular expense of every other value and virtue that we claim to believe in. We're sure it will all work out through economic black magic.


Clearly, this was an isolated incident. *snort* There isn't a fundamental culture of greed practiced by every company ever because they're mandated to do so by law.

It's not like a few people own more resources than they could ever use or understand or anything. It's not like everything would be far more efficient and prosperous with more minds deciding what to do with capital than fewer.. there is so much room to lessen the value of profit in economics to make way for more important factors. Try morale for one.

We have clearly shifted to a society that values the creation and accumulation of money rather than its utility.

Of course the needle in your haystack of self righteousness is that you reject a specific group of economists because you 'clearly see how flawed their "logic" is'. At best your a hypocrite.

I'm certain some libertarians are against anti-trust laws. Like all political ideologies, the dumbest adherents are also the loudest.

Actually a short term loss investing in employee morale will increase profits later.

Of course I am.

[quote=William Blake]You cannot have Liberty in this world without what you call Moral Virtue, and you cannot have Moral Virtue without the slavery of that half of the human race who hate what you call Moral Virtue.[/quote]

And so are they. They have enslaved me with their productivism which they so cherish and which I loathe.

Who is Karl Marx??? lol idk

These "problems" are called externalities. Most economists study them thoroughly and agree they are a failure of the free market which must be resolved by government intervention. Very few economists ignore them, but they do so deliberately (Chicago, Austrian.)

Externalities will be discussed, including definitions and their implications, within the first few chapters of any introductory-level economics text. I've also discussed externalities many times, and I've previously named some notable economists who have made significant contributions to their study (including Stiglitz, who was a prominent economic advisor to the Clinton administration.) The fact that you have absolutely no idea economists care about externalities is a good sign that you do not understand the subject.

You don't know the difference between economics and finance.

Jon'C
You seem to be assuming that the people that make the decisions in big businesses will be willing to follow everything that the smartest economists say. Often, the people who get to the top of a business do it due to their people skills, not necessarily their economic skills (or, by virtue of being related to the previous owner, and having all of their relevant training payed for by said relative). Do you realy think that every single business owner would be willing to do what someone who does not have any risk involved if the company fails?