Impending Minimum Wage hike causing restaurants to close

[Starlight]

You know what is frustrating about arguing with you? You make claims not to be a communist, yet most of your beliefs and arguments come straight from the communist handbook,

You know what is frustrating about you? You see everything that you disagree with as "communism" even when it's got nothing to do with communism and has never been associated with communism.

The non-American democratic West in the 1950s and 1960s was not communist. Can you get that through your head? France, Denmark, Sweden, Norway, New Zealand, Australia, Canada, the UK etc are not communist and have never been communist. Within the last century or so, they've all been democracies, they've not had dictatorships, and they've never been communist. But at various times they've had strong redistributive economic policies, and depending on your definition of the term, you might want to label them 'socialist' or give them that label at certain periods of their history.

So your argument seems to go "well we can't have the policies that worked in those countries because communism didn't work!" which is just stupid. Yes, communism didn't work. I agree. But what did work, and worked very well, was the redistributive economic policies that a wide variety of successful Western countries have tried.

See, the problem with your entire plan is your absolute trust in the government to make it work,

I do trust my government. I wouldn't trust the american government though. You guys have a serious corruption problem which needs a major solution.

if your plan was so great and wonderful, Europe should be thriving and doing much better than the US, yet the reality shows that Europe doesn't seem to be doing better then the US is.

Only some countries in Europe have followed the kinds of policies I support. Other countries in Europe have had fascist dictators or communist ones. So Europe overall is a very mixed bag of different recent histories.

It also depends on what you mean by "thriving and doing much better than the US". The HDI report you cite makes a little bit of an effort to combine various factors but not a great one, and seems to overly favor GDP. Because, yes, I think that on an overall balance of factors, much of Europe is doing much better than the US and I would much rather live there than in the US.

If your plan was true and accurate, shouldn't most Western European nations be ahead of the US and not at or even behind the US?

Yes. So on a multi-factor analysis like this one, the US is 21st, behind many European countries. On this OECD one the US is doing better at 7th, still behind the Scandinavian countries and others. On the single factor of happiness (although arguably happiness is itself very multi-factor in origin) the US is 10th, once again behind all the socialist-democracies of Europe.

The countries that consistently score the best on these multi-factor analyses are the Scandinavian countries, France, Switzerland, the Netherlands, the UK, Ireland, Australia, NZ and Canada. And the US is typically somewhere on the tail-end of this list or off the bottom of it - often quite far off it. You can often almost split the first-world countries into two groups on a lot of these lists, with the US typically being in the 2nd tier of first-world countries, while the historically socialist democracies are all the ones in the first tier. That is how I tend to mentally think of the US - as a second-tier first-world country.

The things these top countries have in common are:
1. Modern western democracies.
2. Free market capitalism.
3. Very low corruption.
4. Strong government services.
5. A history of strongly redistributive government economic policies.

I concede a legitimate discussion can be had over which of these things are more important factors than others. And I also concede that the fact that a lot of these countries have significantly changed the structure of their economies within the last 30 years and significantly altered the strengths of their redistributive policies can make it hard to disentangle whether their current good performance is a after-effect of good historical policies that gave them a fundamentally sound and well-structured society, or whether it stems from very recent policies.

So in 100 years, has the 'non-American democratic west' done any better than the US has?

Yes, generally much better in almost all areas. The US has had certain advantages in some areas due to simply having a larger population. Thus total US productivity and spending tends to look humongous when compared to any of the other much smaller Western countries.

Let's try dumping a few million immigrants on top of your Scandinavian friends and see how well they handle it

I agree that a high rate of culturally-dissimilar immigration can pose serious problems. However, I note that typically in the US, Mexican immigrants tend to work hard and form a significant part of your minimum wage / lower than minimum wage labor force, doing many of the low-wage jobs such as cleaning and farm-work that a lot of Americans would prefer not to do themselves. And your perceived problem with government dependency is not with Mexican immigrants, but rather is with Black Americans. So as far as I can tell, your Mexican immigration appears to be making your country richer rather than costing you money, because for the most part they are not being given government services and are instead acting as slave-labor. Whereas I get the impression that Black Americans probably are a net economic drain on your system, but they're not recent immigrants.

Your precious 'non-American West' was saved by the US and rebuilt after a destructive war ended up destroying much of it

It's cute how Americans re-imagine themselves as the great benevolent rescuer who swooped in to save everyone. When in actuality, the US stayed out of WWII until they were actually attacked themselves. Not exactly the unselfish motivations you'd like to re-imagine it as being. And the fact that additional forces were enough to tip the balance is not at all the same as winning the war single-handedly.

I agree the post-war rebuild was a really good idea and really successful. It's good to finally reach agreement that large government programs to build up economies and infrastructure are a great idea.

[lilpixieofterror]

lilpixieofterror,

Over the 80 years in Western society there hasn't been a very big problem with inherited wealth because:
1) People have typically had more than one child, and so at every generation the wealth is split between multiple people, quickly diminishing it.

I love how you ignore experts in these ares and just make more silly claims that don't measure up to reality. The experts say that the problem has little to do with the number of heirs (you'd know this if you bothered to read them and looked at the fact rich people don't tend to have a lot of children) and has to do with the skills it takes to make that kind of money usually are not passed down to the other generations. See, what you keep forgetting is that making that kind of money requires a specific skill set that not a lot of people have. When the person that actually knew what they were doing passes on, the wealth starts to go away. 60% is done in, by the second generation, 90% is done in by the third generation. These are not things I made up, but stuff done by groups like the Wealth Counsel, will tell you. Have you bothered to research why wealth builds up and what makes it go away or do you just assume you know because you think you know what you're talking about?

2) It has been subjected to significant inheritance taxes by the government.

Did you bother to read the article I linked you to? Here, let me help you with that:

Even in Australia, where there has been no estate tax, families lose their financial wealth and the values that accumulated the wealth by the third generation.
http://www.wealthcounsel.com/free-re...rd-generation/

Oops... how embarrassing how those pesky fact things, keep getting in the way, huh?

As a result, yes, we have seen that most fortunes typically disappear by the third generation. Unfortunately the combination of people having fewer children on average, and the removal of inheritance taxes, means this will no longer be the case in the future. So saying it's worked fine for us up until now is not relevant, and it in fact did not at all work fine prior to the world wars when there was a very powerful aristocracy in Europe who had immense inherited wealth. And while it is true that a number of them had lost it all due to gambling, the majority of them had not.

That's nice and we're talking about the US... not Europe. Nice trying to shift those goal post around, but again... hasn't much of Europe had a wealth redistribution plan going on (by your own words) for 100 years? So 100 years, after your dreams of utopia are being implemented, it seems your plan still isn't working and you still have a 'very powerful aristocracy', eh? Besides, the US does not have an aristocracy, the rich people around here are either big into business or some kind of celebrity. That kind of money doesn't tend to last past a few generations (besides, it was an American that said, “The parent who leaves his son enormous wealth generally deadens the talents and energies of the son, and tempts him to lead a less worthy life.”). If you have a problem with a 'very powerful aristocracy', I suggest you take it up with your European pals.

That is not the case if the fortune is large enough for people to live off the interest/dividends generated by it, as is now generally the case with the very wealthy. People with sufficiently large fortunes need never work at all.

That's nice and again... who are you to determine what people can and can't do, with their own money?

I recall about half of the current rich list are inheritance vs self-made. That percentage is going down over time.

And you're attacking the US, not the rest of the world, or did you forget that? We're also taking about the rich in general, not just the ultra wealthy. Likewise, let us take the US list:

Bill Gates - Self made
Warren Buffet - Self made
Larry Ellison - Self made
Koch Brothers (tired at #4) - Inherited, but only on the second generation

So 3/5ths of the US top are self made, with the other two building further upon the wealth they inherited. Will their wealth continue into the 3rd generation and will their company stay family owned? Hard to say, but history shows it will not last forever.

Yet though, the ultra rich are only a small part of the rich class in general. If we go into those who are millionaires, 60% will end up broke by the second generation and 90% will end up broke by the 3rd generation. You can say, "But that is because it is split further and further!" which I'm sure plays a part, but a decent investment plan and the will to work to build upon what you have could turn even a moderate fortune, into a bigger fortune and keep it going. Problem is... the skills required to do this don't tend to go much beyond the 2nd generation.

Are you therefore in favor of helping these people by relieving them of some of their burdensome wealth?

Sorry, but you can't help those who have no desire to help themselves and taking their money from them would be stealing what is not yours and I'm not thief.

Well it's only their "own money" in the sense that society and the government has set up a social and economic system within which everyone participates and the government prints money and then says it has value and everyone agrees to that and various rules are followed about how the whole system works, and finally we say that if someone ends up with some money as a result of this system then it's "their own money". What I'm getting at is that the entire notion of people having "their own money" is a social construct and is the end product of how society has chosen to operate just as much as its an end product of anything the person themselves did to get that money (eg found it on the ground, worked for it, inherited it, earned it as interest on money in the bank, won it betting on a horse etc). So society quite reasonably can say what people can and can't do with 'their own money' because society had quite a large say in how that person got that money in the first place, and in fact is the one saying that it is 'money'.

You claim you are not a communist, but here you go again... taking pages from the communist handbook. Foolish people, tend to be separated from their money sooner or later and you still haven't told me what gives you the right to take what isn't yours to start with. Sure, you come up with justifications, such as your above, which you seem to think gives you the right to steal what isn't yours and give it to somebody else, but again... how well did that work out when it has been tried before? Last I checked, piles of dead bodies seem to have built up when this was tried in other countries, so again... how can you claim not to be a communist, when you're basically arguing here that nobody owns anything and everything you have is actually property of the state?

The notion that some people seem to have that any money that happens to fall into their hands at any point in time is absolutely "theirs" by some sort of divine right, and that they are totally justified in keeping it or doing with it as they please, and that they owe nothing at all to society as a whole, and that anyone who tried to take away any of their money would be totally and utterly wrong to do so... I find to be utterly bizarre. It's a kind of extremely self-entitled greed. If anyone objects to society taking some of that money back to fund all the roads, courts, police, hospitals, schools, and social things that helped this person gain that money in the first place, then as far as I'm concerned that person is unspeakably selfish and ungrateful and is welcome to move to Russia and never come back.

Most of the ultra rich, here in the states, actually give quite a bit of money to charities and poor groups. While it is entertaining to watch you flat out ignore this little fact, in the US, our richest are also some huge donators of charity and give gobs of money to charity groups, so go ahead... keep throwing out, "DUH THEY ARE GREEDY!" and just ignore evidence that works against your claims while ignoring your own greed. You want to take what is not yours, from somebody else, and give it to others and make up justifications for why you're allowed to steal things from people who you don't like. Nice, do you always jump though these sort of self justifications to justify yourself before you try to steal things from other people?

The people of most Western democracies largely trust their governments. The US is a massive exception because your government is ridiculously corrupt, plus most of your Republican party is currently trying to sabotage the functions of your government to 'prove' that government doesn't work. When government is actually by the people and for the people it tends to run pretty efficiently and people tend to trust it because they see it actually working for them. So currently, in the US public distrust of your government is around 75% while here in NZ it's 14%.

It is always entertaining to watch idiots talk about things they know nothing about. Hummm... it couldn't be the fact that US started out as a rebellion against a government it didn't trust, while your country was granted independence from it's mother country. Imagine that... a country that started off as a rebellion against a government it didn't trust, has a history of less trust in the government vs a country that was granted independence from its mother country. Now, let us look at reality again, can you give me a justification that a government should be given absolute trust when governments have taken part in some of the worst human rights violations, in history? Now, can you actually give a real argument here, or are you going to keep debating though assertion and hoping people don't call you on your assertions?

Obviously they are. Previously they had no assistance, now they have assistance.

This should be entertaining...

Food = better than no food

How many Americans are starving?

Healthcare = better than no healthcare

How many Americans have gone with no healthcare?

House = better than no house

How many Americans are homeless?

See, I've traveled around the world and I do know, for a fact, that your precious 'non-western countries' have all of these things going on too. If your claims were true... shouldn't Europe be better off in all measurements, yet is it?

I'm kinda lost for words at this point...
I'm trying to figure out whether your a troll, a moron, or whether you just like seeing people suffer.

Either/or fallacy. I give lots of my time and money to charity groups that I feel have a cause and I'm not forced to, by the government (as you seem to want to happen, which rarely helps anybody). In fact, so do many of the rich people that you so despise do as well. I know your black/white fundy brain is incapable of processing disagreements and incapable of understanding degrees, but if the government was as great as taking care of the poor as you claim... why are there still poor that need taken care of or again... does this require the government to take more and more money and to ever expand to make your dreams of utopia come true? A simple question that you avoid... why?

I'm baffled by the truly absurd and ridiculous and non-factual assertion that people receiving government welfare in general never get off government assistance.

Never said they don't, but is is quite odd that the amount of people on government assistance seems to ever expand and yet... the problem of poverty still hasn't been solved and seems to never be anywhere close to solved, so it takes and ever expanding government, requiring ever more money, and the problem seems to never be close to solving. How much more money and how much bigger does the government need to expand to solve the problems of poverty Starlight? A question I haven't seen any of your kind answer. Why?

I agree that sometimes that is the case - eg if they are too-old or too-sick to ever support themselves again. And the alternative - letting them die - certainly gets them off government assistance, but doesn't seem like a particular great solution.

Another either/or fallacy... 50 million people and growing... are too old and/or too sick and need an ever expanding government to take care of them? Hummm... interesting... so when will this problem be solved or will the government need to expand and need even more money, to do very little in actually solving these problems. These people are still poor and still require even more 'assistance'. It seems almost as if your plans of utopia are just pipe dreams that never will come true. Imagine that...

My 'dreams of utopia' as you put it, have been true in my own country's fairly recent history. I would like to see other countries learn from out example, and would like to see us walk-back some of the recent right-wing swings to our economy that were ill-conceived and which have been damaging.

By your opinion, but I know how opinions work. How many people are on government assistance? How many people will be added to government assistance? Has government assistance ever dropped down in your country? Likewise, what is your plan for making your dreams come true in countries with different geopolitical considerations that don't have the same conditions that your home country has? Just because your dream works in one country, what reason do you have to assume it will work elsewhere?

I think you are getting confused because communists and myself see the same sort of things (huge wealth inequalities, the presence of severe poverty) as a problem and both want to act to address them. We have different solutions however to those problems. Communism proposes abolishing the free market economy and have the government directly control all business and all prices. Whereas I live in one of the freest capitalist market economies in the world and don't propose to abolish it and don't propose to have the government in direct control of all businesses and prices. Plus, historically communism has been associated with dictatorships, and I live in a democracy which I don't want to see change.

100 years later and the problem of poverty still exist, despite huge amounts of cash being spent and continuing to be spent, on an ever expanding government to take care of all of your needs. How much more money is it going to take to solve the problem of poverty? Besides, if giving people money was all it took to solve problems, the people that inherit lots of money should be doing great, yet they do not. Why not?

[Joel]

A significant problem with this is that a lot of countries that were doing really well subsequently decided that it sounded like a great idea to switch to extreme free-market policies. A lot of the Western world made significant changes to the way their economies in the 80s, 90s, or 00s to switch over to extreme free-market ideas that quite a lot of economists had begun to think sounded like great ideas.

Oh? What countries? I'm not aware of any extreme free-market countries in the world for about the past 100 years.

As far as I know most Western countries have been growing farther from free-market, often at an exponentially increasing rates, over the past 100 years or so. That's the case for the U.S.

Anyway, these indices do have historical data. I see that Fraser's shows the changes you mention, with

deregulated economies tend to cause cycles of booms and busts

I disagree, regarding what causes the cycles.

Overall, as far as I can judge, NZ has done a lot worse economically since the changes in the 80s/90s.

I don't know much of anything about NZ. I tried googling and found this interesting:
http://www.whaleoil.co.nz/2014/09/po...ut-basis-fact/
Median household income in NZ has been rising since about 1994 (was falling before that).

First of all, markets are artificial constructs and so require quite a bit of regulation in order to run smoothly.

If by artificial you mean created by human beings, then true I guess, but that doesn't imply the need for government regulation. Unless by "regulation" you just mean enforcement of property rights (including contracts, fraud being illegal, etc), then fine. Yes free market implies non-violation of property rights.

People are greedy and so keep trying to find ways to sabotage markets for their own interests. They will try to form monopolies to force others out of business.

Which doesn't really work in a free market. In a free market the way to out-do competitors is to make a better and/or cheaper product. So a businessman that does far better at serving the consumers 'forces' competitors either out of business or to keep up.
The actual monopolies in the world tend to be government created and enforced, which is not free-market.

So in order to run a market that runs smoothly and freely and doesn't get constantly sabotaged by the players, the government needs to be actively keeping it running smoothly, providing rules for businesses transactions and policing them. Setting up the rules and framework is essential for the market itself to be free and to function properly. You can't have a free market without government, which is one reason why extreme libertarianism is utter nonsense.

Extreme libertarians agree that there needs to be enforcement to stop theft and fraud. Call that government if you like.

Redistribution of wealth is something that happens outside a market framework. Here's an analogy. Imagine that the market is a casino room for players to game against each other (say, at poker), with the government owning the casino. Players are given their chips, and go into the room and play their poker and other games against each other as much as they wish (policed by the casino to ensure no cheating). They return and bank their chips. The next day they come in, take their chips, and proceed into the gaming room. Let's say the casino has the policy of always giving out at least a few chips to the people who have nothing in their account. So if a player loses all their money or has none to begin with, the casino says "bad luck, but here's a few chips to get started with, because the gaming is better if everyone's playing". To fund this, they charge everyone a fee of a single chip at the end of each day for playing. My point is that redistributive process occurs largely independently of the free market system: The redistribution is occurring when players bank and subsequently receive their chips, whereas the free market is occurring in the gaming room when they play one another. The casino tampering with the rules of the game is not necessarily required in order to have redistributive processes also operating.

The operation of redistributive processes can therefore coexist with a free market, without inherently impinging on the freedom of the market mechanisms.

State redistribution involves taking property from some people. There is no non-neutral (not effecting people's behavior in the market) way to do that.
And it is typically done by taxing market exchanges (e.g. the sale of labor services, the purchase of goods). The state thus is a third party, forcibly intervening in market exchanges. So it is difficult to consider it as being outside the market.
(Not to mention that the very intent of redistribution is to effect a change in the market.)

Personally I tend to define the free market as being voluntary exchanges in the absence of violation of property rights. Thus you can't have free markets if peoples' property is unsafe. With the job of good government to be to protect everyone and their property. If the entity charged with protecting peoples' property ends up instead being the one confiscating their property, then I'd see that as anti-free-market, just as I would view any theft as being anti-free-market.

Of course, there may well be some socially sub-optimal consequences of a totally free market, and it therefore may well be desirable to build rules into how the market can operate in order to make it more socially reasonable (the existence of a minimum wage being one such rule).

If you hated the low-skilled and wanted to price them out of the market (and create unemployment), a legal minimum wage would be a good way to achieve that end. I recall hearing about how it was used for that very purpose in South Africa, to price low-skilled blacks out of the market, to protect "white jobs".
But that doesn't seem socially reasonable.

[Starlight]

I don't know much of anything about NZ. I tried googling and found this interesting:
http://www.whaleoil.co.nz/2014/09/po...ut-basis-fact/

LOL, okay you've managed to find quite possibly the single least reputable person in the entire country: That bloggers' corruption and horrible character was literally the major scandal of last year's election. And he's then citing a fringe extremist claiming how literally almost everybody in NZ who thinks they know something about inequality is actually wrong, including all the experts on it.

The actual monopolies in the world tend to be government created and enforced, which is not free-market.

A lot of libertarians I've heard talk don't seem to realize that currently nearly all governments in the world each have a department permanently dedicated to preventing monopolies forming and actively breaking up any monopolies that do form. That is why the monopolies that do exist tend to be government created - because ones that are not government approved are actively eradicated. You can't say "look at the world and see that the free market is not producing monopolies", because it the free market keeps regularly trying to form monopolies and governments keep preventing it doing so.

My own preferred solution for handling industries that suffer from monopolistic problems is for the government to own a company competing in the industry, which is itself run as a private company and is no different to any other company other than that the government is the majority shareholder. As the majority shareholder the government can direct the board/CEO to be as price-competitive as possible, and to not engage in non-competitive practices, and therefore the company can set a base level for competitiveness within the industry. Any profit the company makes goes to the government and so less taxes are needed to fund government expenditure, and competition within the marketplace is ensured. This creates jobs, ensures competitiveness, and lowers taxes, and I think the government should own these sort of companies within each major industry that might otherwise be subject to monopolistic problems.

Extreme libertarians agree that there needs to be enforcement to stop theft and fraud. Call that government if you like.

I do and will.

State redistribution involves taking property from some people. There is no non-neutral (not effecting people's behavior in the market) way to do that.

Well everything ultimately has effects. The government's monetary policy is inherently non-neutral - the way the entire fiscal system is set up and how the printing of money works and how banks work is all non-neutral. And however it is that people get their initial money that they enter the free-market system with is non-neutral. I think a mistake libertarians commonly make is believing that these things can somehow all happen in a neutral way, or that the government can somehow at one and the same time stay completely neutral while simultaneously providing all the functions that are necessary to make a free market run smoothly and not turn into some anarchistic Western cowboy movie or end up like the Feudalistic middle ages.

(Not to mention that the very intent of redistribution is to effect a change in the market.)

Well no, not normally. Giving money to poor people is usually primarily intended to stop them starving to death and secondarily to ensure that kids born into a poor family have the opportunity to be fed and educated and grow up to be productive citizens. Because our society works better when kids grow up to be productive citizens rather than becoming uneducated career criminals. Any incidental results of a change in the market are probably largely incidental to those goals. Occasionally a tax is intended to produce a market change - we have an extremely high tax on cigarettes here that is intended to make people stop smoking, but that is the only example I can think of where the primary intent of the tax is to induce a market change. With almost every single other tax the primary goal is to get money for government expenditures, and any market consequences caused by the taxes themselves are largely unintentional and coincidental.

If you hated the low-skilled and wanted to price them out of the market (and create unemployment), a legal minimum wage would be a good way to achieve that end.

Well, except that it doesn't actually achieve that end as a matter of fact according to the dozens of empirical studies that have now been done on the subject.

I'm curious: In your idealistic libertarian utopia, how do these people who are earning much lower than the current minimum wage survive? Let's say that working 80 hours a week they have enough money for food and possibly a roof over their heads. How do they pay for healthcare? What happens if they get sick and can't work any more?

Libertarianism seems great for the winners, but seems pretty much like hell-on-earth for those born into poor families, or with not a particular great intellect, or for those with ongoing health problems. Do they just die off and then society thrives via survival of the fittest?

I also wanted to respond to something you said earlier:

In the long run, the tendency is for market wages to equal the marginal revenue
...
The point where marginal cost equals marginal revenue is the profit-maximizing point.
If marginal revenue is less than marginal cost, that means that reducing the workforce will cut costs by more than the decrease in revenue. So a profit-seeking businessman will want to downsize as long as marginal revenue is less than marginal cost.
On the other hand if marginal revenue is more than marginal cost, that means that hiring additional labor services will increase revenue by more than the increase in costs. So, again, a profit-seeking businessman will want to expand production as long as marginal revenue is less than marginal cost.
Either way, this drives marginal revenue and marginal cost towards being equal.

I want to try to make clear to you what is wrong with this argument.

Firstly, that logic suggests that the marginal revenue and marginal cost curves cross one another in the vicinity of the final employee. So maybe the final person employed, plus or minus one person, will cost the employer close to the marginal revenue (as it happens, this is not actually the case, as I'll argue below). So this says nothing about the relationship of the other employees to their productivity – it says nothing at all about how close or not close the marginal revenue and marginal cost curves are to each other in other sections of the curves.

Secondly, it's also worth understanding the usual shape these curves tend to have and why it is that they cross. Let's say you've got a pretty standard minimum-wage type business where the employees are churning out burgers, or ice-cream, or clothing, or cheese, or beer, or some other relatively mass-produced item being created by relatively unskilled workers. The marginal cost curve plotted against number of workers tends to be nearly always very very close to flat but slightly decreasing, for the following reasons. Once the factory / restaurant has been paid for and the production facilities set up and ready to go and the initial workers are employed, then adding additional workers tends to cost pretty much the same for each additional worker hired – ie the minimum wage plus whatever overheads happen to be involved. There are also additional costs for the raw materials that the additional workers will need to use. These additional costs plus the overheads are pretty much constant with each additional worker, although they will be subject a little bit to economies of scale. Thus the marginal cost curve is almost flat but a little decreasing due to economies of scale. That curve is not overly exciting. (Although it is worth noting that a lot of people get this curve factually wrong by showing pictures of this curve increasing. But many empirical studies have found that there are almost no businesses in the entire world that operate on an area of this curve where marginal cost is increasing. This is why the term is called “economies of scale” and not “diseconomies of scale” since those are generally not a thing. In many businesses involving digital content the marginal cost can even be pretty much zero – eg the cost of selling an additional piece of pre-made software or an additional instance of an audiobook can have an essentially zero cost for the vendor.)

The interesting curve, which has an unexpected shape for the uninitiated, is the marginal revenue curve. Now each additional minimum wage worker on the production line, much like the one before him, can churn out X number of whatever-he's-making in a year and they'll each be sold for some price $Y based on whatever the owner has decided to market his product for. So the marginal revenue curve is flat, absolutely flat. And it's sitting somewhere above the marginal cost curve (otherwise the business owner really needs to rethink his pricing structure because he's going bankrupt fast). And then, at some point on the graph, the marginal revenue curve has a discontinuity – it drops to zero instantaneously due to demand for the product being exhausted. So if the plant is manufacturing pens, and selling them at $1 each, and there is annual demand for 1,000,000 pens at that price... then each additional worker brings in marginal revenue of $1 for each pen created, until at the first pen beyond the millionth the marginal revenue drops to $0.00 because those pens won't sell. (Again, a lot of people make a mistake in drawing this curve and simply draw it as a flat line. But that leaves out the crucial bit of it – that it suddenly drops instantaneously to zero, since whatever price the manufacturer chooses to sell their item at, they will only ever sell a finite number of items and any additional items they create will not sell. Thus, the limiting factor for almost all businesses, and the point where the marginal revenue curve suddenly zeroes and thereby crosses the marginal cost curve, is the point where supply exceeds the demand at the given price-point.)

This is where virtually all businesses operate within the MR-MC space: At the point where they are making exactly as much of their product as there is demand for. They won't employ more employees simply to make a giant pile of unsold burgers or unsold pens, but as long as there is more demand for more of their product they are happy to continue employing people to meet that demand because the profit with every additional product sold. I have never ever yet encountered a business that would not be happy to make and sell additional instances of their products at the price they are currently charging – no one ever turns down more business! And no one is ever unhappy to sell more items at the current price - in fact they will often give you a discount if you want to buy in bulk. This is because everyone has flat or decreasing marginal costs and their limiting factor is demand. Here is my high-quality artistic rendering of what the MR-MC curve looks like:
MCMR.png

There is nearly no business whose MR-MC curve doesn't look like that. Some really important take-aways:

1. Demand is always the limiting factor. You can always scale up your business, employ more workers etc, in order to meet demand, but finite demand will always be ultimately what limits your business growth. At any given price point, whatever you choose it to be, customers only want a finite amount of your item. Manufacturing more than that finite amount is pointless. (This is why what is called 'demand-side economics' is so important, compared to what is called 'supply-side economics' which has no merit: Increasing supply has zero value, whereas increasing or decreasing demand in any economy is what controls the growth of business because every business owner will start hiring more workers to produce more of their goods if they have reason to believe they can sell more goods.) This is why advertising is so important to businesses – because ramping up demand for your product is absolutely crucial. (When MR-MC curves are drawn wrongly with increasing MC curves, then it becomes obvious that businesses would not want to advertise because they don't want to sell any more of their products because they're too expensive to make... since this situation never happens, it's rather obvious that such MC curves are wrongly drawn)

2. The Marginal Revenue and Marginal Cost curves do not slowly curve together and meet at some equilibrium point. They are in fact curving slightly away from each other, and then they cross suddenly and instantaneously, as there is a point of discontinuity in the Marginal Revenue curve at the point where demand is exceeded. What this means is that there is never an area on the curves where the two are edging closer and closer together that could be seen as a “true indicator” of what the wages of the employees “should be”. Your idea that the wages of employees should be indicated by where the MR tends toward MC is simply impossible because the MR and MC don't tend towards each other. As a result, nothing about this curve implies that employees will be paid the wages they deserve for their productivity “in the long run”. There is no implied constraint that employees get paid anything remotely close to the value of the goods their labor is producing: The employer can be arbitrarily oppressive of them and pay them 1c per hour in order to keep his costs low, and by doing that he will maximize his profit. Thus the profit-seeking employer is motivated by profit to pay his workers much much less than they are worth to him.

The market mechanism that actually causes wages to rise and employees to be paid what they are worth is only present when there is full employment. When there are zero remaining unemployed people available for exploitation yet there still remains demand for additional products, then the employers who would then like to employ more workers then have to compete with other employers for the employees. Each employer then has to offer employees a better deal than other employers in order to keep those employees. This causes wages to rise, as employers compete to offer the better deals. Obviously the best deal that any employer can offer is limited by the MR curve – the employer cannot pay his workers any higher than the amount of revenue that the employees are bringing in (otherwise he'd go bankrupt). So eventually after a long period of full employment, the wages of employees will go up towards their productivity – ie the entire MC curve will rise towards MR as long as there continues to be full employment.

But we currently don't have full employment, and haven't had it for a long while – not since the 80s in the US I believe. This has intrigued a lot of commentators because there's no well-accepted theory as to why not. But the result has been that wages haven't risen since the 80s either, even though productivity has risen. So economic commentators have been waiting for a period of full employment to cause wages to shoot up to match productivity, yet this simply hasn't occurred. And several commentators I've heard talk about the economic recovery from the 2008 crisis have noted that, despite the fact that the stock market has now completed its recovery, wages haven't risen - and they expressed hope that as unemployment continues to decrease eventually that will cause a spike in wages. There's been some hopeful speculation in recent months that the US economy might now be reaching full employment... I guess we shall see.

[Sparko]

What this causes over time is the development of an upper class / aristocracy, where some people are born into extremely wealthy families. Over time* this group exerts greater and greater political influence, until the country essentially becomes run by them for them.

America has not historically had much of a class-based system, although most people are now familiar with trust fund kids. But Europe historically had an aristocracy, and they decided it was rather bad, and they're generally not very keen to see it return.

* not very much time, as the US has already become an oligarchy.

It's about trying to make sure everyone has a good opportunity in life. The children of rich parents will likely already have everything they need to do well, but the children of poor parents not so much. Your comment wrongly implies that I am advocating that the poor child ends up with more money than the rich child. Children who grow up with wealthy parents will benefit from that in quite a large number of ways during their life, quite apart from whether they ever get to inherit the entirety of their parents' fortunes.

I stand to gain quite a decent inheritance when my parents die, just like my mother did when her parents died. If I wanted money for nothing I would be supporting the inheritance of fortunes. But I don't think that sort of thing serves our societies particularly well. Why give so much money to people who did nothing to earn it beyond being born, when there are people in our societies who could really benefit from that money to get a fair start in life and who would be able to contribute much more to our societies as a result of some financial assistance?

So basically you are just a thief, who wants to steal money other people earned and give it to yourself and others you think are more "deserving" - Yeah great "objective morals" you have there. Your ethics disgust me.

[Bill the Cat]

I have an extremely strong objective moral framework.

Using what as a basis for your definitions?

Which as an atheist is not clouded by complicating factors like trying to work out how to interpret difficult parts of the Bible and try to apply them to issues they're not directly talking about.

But you have no reason that can't be boiled down to personal preference to care about someone else's financial situation.

We discussed it recently in this 28 page thread in Apologetics.

No one ever actually refuted Seer's claim that secular morality does nothing to actually define "right" and "wrong", only claims of what is "beneficial for the group", which has been admitted by almost every one of the atheists in that thread as "evolving".

There is no good reason to take from someone and give to someone else who didn't earn it.

[Sparko]

Well now that the wage increase (at least the partial increase to $11/hour) has taken place in Seattle, I did some checking to see what the effects have been:

http://www.foxnews.com/politics/2015...sands-workers/
Eating meals out in Seattle just got more expensive as tens of thousands of low wage workers got a raise this week to $11 an hour. It was the first scheduled pay increase on the way to $15 an hour, the highest minimum wage in the country.

Ivar’s Salmon House, an iconic Seattle seafood restaurant, decided to skip the phase-in period and began paying $15 right away.

It also raised menu prices 21 percent. The famous Fish ‘n Chips will run you $20.60 and the Wild Alaska Halibut is now $43.50. The restaurant also wrote on the menu, "Tipping is no longer necessary…we have changed the way we pay our employees."

[Bill the Cat]

Source: http://www.komonews.com/news/local/Restaurants-add-surcharges-hike-prices-to-a-298542821.html

Restaurants in the Emerald City are tacking on surcharges and increasing prices to accommodate the minimum wage increase that became law on April 1st.

"We wanted to take the most transparent route and put a surcharge on the bill that would allow customers to track what they're paying," said Chris Linker, co-owner and managing partner of Black Bottle. "We wanted to make the commitment that 100 percent of those proceeds would go back to the staff who needs it the most."

The Belltown restaurant started adding a 2 percent "wage equality surcharge" on Wednesday, when the first stage of Seattle's new minimum wage law took effect. The ordinance will eventually raise the city's minimum wage to $15 an hour.

Wednesday's step increased wages to $11 per hour for most workers.

"We can either reduce quality, we can reduce the number of hours that people work and risk losing good people, or we can raise prices," Linker added. "For us, we didn't like any of those options. We're participating in a way we feel is a genuine."

Seattle restaurateur Tom Douglas said he was also planning a similar 2 percent surcharge at his 14 restaurants.

Receipts from the South Lake Union location of Serious Pie and Biscuit showed the surcharge on Thursday. A $5 coffee, for example, had an additional $.08 fee tacked onto it.

"We felt the most competitive and least intrusive is to implement a surcharge equal to the increase in wages until all restaurants in Seattle are on the same playing field," Douglas wrote in the blog post that has since been taken down. "100 percent of this surcharge will be distributed to our staff in either wages or benefits."

Representatives for Douglas did not return multiple calls and emails for comment.

On Thursday evening, the restaurant owner wrote a second blog post, saying the surcharge would be removed in lieu of menu price increases "as many of (the customers) have suggested (they) would prefer."

Anecdotally, other restaurants are taking measures to accommodate the wage changes. A coffee shop on Capitol Hill raised prices by a dime, according to customers. McDonald's downtown increased their prices by a couple of cents, workers said.

© Copyright Original Source

[Littlejoe]

Now I guess, what remains to be seen is whether or not patronage drops proportionally to the hike(s). I didn't see that listed in those two reports...

[Sparko]

Now I guess, what remains to be seen is whether or not patronage drops proportionally to the hike(s). I didn't see that listed in those two reports...

To early to tell yet. It just went into effect on April 1.

[Cow Poke]

Well now that the wage increase (at least the partial increase to $11/hour) has taken place in Seattle, I did some checking to see what the effects have been:

http://www.foxnews.com/politics/2015...sands-workers/
Eating meals out in Seattle just got more expensive as tens of thousands of low wage workers got a raise this week to $11 an hour. It was the first scheduled pay increase on the way to $15 an hour, the highest minimum wage in the country.

Ivar’s Salmon House, an iconic Seattle seafood restaurant, decided to skip the phase-in period and began paying $15 right away.

It also raised menu prices 21 percent. The famous Fish ‘n Chips will run you $20.60 and the Wild Alaska Halibut is now $43.50. The restaurant also wrote on the menu, "Tipping is no longer necessary…we have changed the way we pay our employees."

The "tipping is no longer necessary" is an interesting tidbit.

[Sparko]

The "tipping is no longer necessary" is an interesting tidbit.

Yeah I bet the wait staff really loves that part. According to the article they were making like $27/hour with tips. Now they get $15/hour

[Cow Poke]

Yeah I bet the wait staff really loves that part. According to the article they were making like $27/hour with tips. Now they get $15/hour

Yup - a friend of mine works in an upper end steakhouse, and said he'd be happy to work for FREE + tips. He's the kind of guy who is genuinely friendly and efficient - not the "fake" friendly or the "I'm only being friendly cause I want money" friendly. You just naturally want to tip the guy well! OH - one of the things he really works at is learning the customers' names - that's always impressive when the waiter greets you by name and welcomes you back.

[Sparko]

Yup - a friend of mine works in an upper end steakhouse, and said he'd be happy to work for FREE + tips. He's the kind of guy who is genuinely friendly and efficient - not the "fake" friendly or the "I'm only being friendly cause I want money" friendly. You just naturally want to tip the guy well! OH - one of the things he really works at is learning the customers' names - that's always impressive when the waiter greets you by name and welcomes you back.

We had a building worker here that was like that. He was friendly and always remembered someone's name and greeted them by it when he saw them. And we are talking about hundreds of people! The building's owners laid him off due to cutbacks. Everyone in the building who knew him gave money to a collection for him.

[Joel]

LOL, okay you've managed to find quite possibly the single least reputable person in the entire country: That bloggers' corruption and horrible character was literally the major scandal of last year's election. And he's then citing a fringe extremist claiming how literally almost everybody in NZ who thinks they know something about inequality is actually wrong, including all the experts on it.

Okay, I'll have to take your word for it. The chart of rising incomes says it's from Bryan Perry of the Ministry of Social Development, which seems to be this:
https://www.msd.govt.nz/about-msd-an...ehold-incomes/
The chart can be seen on page 12 of that report.
Is that the fringe extremist you are talking about?

A lot of libertarians I've heard talk don't seem to realize that currently nearly all governments in the world each have a department permanently dedicated to preventing monopolies forming and actively breaking up any monopolies that do form. That is why the monopolies that do exist tend to be government created - because ones that are not government approved are actively eradicated. You can't say "look at the world and see that the free market is not producing monopolies", because it the free market keeps regularly trying to form monopolies and governments keep preventing it doing so.

So we have to look to the past, before such anti-monopoly laws were used much. What I've seen is that free-market attempts such as mergers and formation of cartels were largely unsuccessful.

E.g., in the U.S.:

As Gabriel Kolko demonstrates in his masterly The Triumph of Conservatism and in Railroads and Regulation, the dominant trend in the last three decades of the nineteenth century and the first two of the twentieth was not towards increasing centralization, but rather, despite the growing number of mergers and the growth in the overall size of many corporations,

"toward growing competition. Competition was unacceptable to many key business and financial leaders, and the merger movement was to a large extent a reflection of voluntary, unsuccessful business efforts to bring irresistible trends under control. ... As new competitors sprang up, and as economic power was diffused throughout an expanding nation, it became apparent to many important businessmen that only the national government could [control and stabilize] the economy. ... Ironically, contrary to the consensus of historians, it was not the existence of monopoly which caused the federal government to intervene in the economy, but the lack of it."

http://praxeology.net/RC-BRS.htm

In the U.S., my understanding is that anti-trust law has mainly been used as a weapon by some big players against their competition.

My own preferred solution for handling industries that suffer from monopolistic problems is for the government to own a company competing in the industry, which is itself run as a private company and is no different to any other company other than that the government is the majority shareholder.

But those who want such a company to exist don't need to get the government to do it. You can do it yourselves. And by doing that, you wouldn't even have to share control of it with opposing politicians or the fickle voters. You could run it exactly the way you want: non-competitive practices, you could donate the profits to the government if you want. Win-win.

Well everything ultimately has effects. The government's monetary policy is inherently non-neutral - the way the entire fiscal system is set up and how the printing of money works and how banks work is all non-neutral.

And I oppose those things too. They only cause problems.

If you hated the low-skilled and wanted to price them out of the market (and create unemployment), a legal minimum wage would be a good way to achieve that end.

Well, except that it doesn't actually achieve that end as a matter of fact according to the dozens of empirical studies that have now been done on the subject.

It does have that effect, according to a huge number of studies spanning 50 years, compiled by the U.S. House of Representatives. The list is copied here:
http://seanwmalone.blogspot.com/2009...c_location=ufi

I'm curious: In your idealistic libertarian utopia, how do these people who are earning much lower than the current minimum wage survive? Let's say that working 80 hours a week they have enough money for food and possibly a roof over their heads. How do they pay for healthcare? What happens if they get sick and can't work any more?

First of all, that's not the relevant question. If a legal minimum wage causes that person to become unemployed, then it makes that person even worse off.
That is sufficient reason not to impose the minimum wage.

Secondly, if we get rid of all the government interventions that cause and worsen poverty, and cause economic depression, and reduce growth, and increase inequality, then fewer people will ever require assistance, those who do will need less assistance, and more people will be more willing and able to voluntarily help those who do. Things like voluntary charity, churches, and mutual aid societies would be sufficient to help the few remaining who need assistance.

Free-er markets have been the best thing in history for raising the vast majority of humanity out of poverty and into prosperity.

Firstly, that logic suggests that the marginal revenue and marginal cost curves cross one another in the vicinity of the final employee. So maybe the final person employed, plus or minus one person, will cost the employer close to the marginal revenue (as it happens, this is not actually the case, as I'll argue below). So this says nothing about the relationship of the other employees to their productivity – it says nothing at all about how close or not close the marginal revenue and marginal cost curves are to each other in other sections of the curves.

Marginal revenue & cost refer to a pool of (approximately) homogeneous goods. In this case we are talking about mostly-interchangeable units of some kind of low-skilled labor. Because they are effectively interchangeable, any one unit can be treated as the "last" unit that can be hired or not hired, and thus the marginal revenue and cost is the same for each of them.

If some workers are more productive than the others, then the pool of labor services is not homogeneous. Their labor services would most profitably be considered as a separate pool, with its own, separate marginal cost and marginal revenue, both almost certainly higher, thus higher wages.

The marginal cost curve plotted against number of workers tends to be nearly always very very close to flat but slightly decreasing, for the following reasons....Thus the marginal cost curve is almost flat but a little decreasing due to economies of scale. That curve is not overly exciting. (Although it is worth noting that a lot of people get this curve factually wrong by showing pictures of this curve increasing.

The reason why the curve increases is that moving to the right on the curve represents an increase in the quantity demanded of that good (whether labor service or iron or lumber). This is especially clear when we are interested in talking about businesses economy-wide expanding or contracting (as we are in this case). In a free market, as the quantity demanded increases, the price will increase, all else being equal.

Your inclusion of the cost of additional raw materials purchased is misguided. The marginal cost of labor services is the cost of hiring an additional unit of services while holding all other inputs constant. Those other inputs have marginal costs and marginal revenues of their own (each pair tending to be equal).

But many empirical studies have found that there are almost no businesses in the entire world that operate on an area of this curve where marginal cost is increasing.

If so, this is likely due to the prevalent existence of artificially raised prices (such as via minimum wage laws), held above the market equilibrium. This causes a "surplus"--a pool of unemployed workers. In that case an increase of quantity demanded only serves to draw from the pool of the unemployed (and tend toward eliminating the surplus), instead of raising price, because the price is already held above equilibrium.

In many businesses involving digital content the marginal cost can even be pretty much zero – eg the cost of selling an additional piece of pre-made software or an additional instance of an audiobook can have an essentially zero cost for the vendor.)

Here you are shifting to a different thing. When we speak of marginal cost we must be clear which thing we are referring to. Marginal cost of a unit of the product (e.g. software) is not the same thing as marginal cost of hiring a unit of labor services. And both of those are different from the marginal cost of using an additional unit of lumber.
You shifted from talking about the marginal cost of a factor of production (an input) to talking about the marginal cost of the produced output. Those are very different. This also makes suspect your previous comments in that paragraph, because it isn't clear when you made that mental shift.

The interesting curve, which has an unexpected shape for the uninitiated, is the marginal revenue curve. Now each additional minimum wage worker on the production line, much like the one before him, can churn out X number of whatever-he's-making in a year and they'll each be sold for some price $Y based on whatever the owner has decided to market his product for. So the marginal revenue curve is flat, absolutely flat.

This is incorrect.
There are two reasons why marginal revenue is not flat:
1) An increase in the quantity supplied of the produced good causes the price of that good to fall.
2) It is necessarily the case that the profit-maximizing point is in a range where marginal physical output is positive but falling. (This is the law of diminishing returns. Adding an additional unit of input will increase the output, but not by as much as the previous unit of input.)

The second of the two contributes to the marginal revenue falling. The first of the two could cause marginal revenue to be rising or falling, depending on the elasticity of demand for the product. So, combined the marginal revenue could be increasing if demand for the output is elastic enough, and marginal revenue is necessarily falling if demand is inelastic.

[...]And then, at some point on the graph, the marginal revenue curve has a discontinuity – it drops to zero instantaneously due to demand for the product being exhausted.

That would happen only if the demand curve had a discontinuity, suddenly dropping (instantaneously, perfectly inelastic) to zero. Which doesn't seem likely. You used the example of pens. I don't think it's likely that pens are at a point of perfectly inelastic demand.
As well it seems unlikely that the demand for pens is perfectly elastic prior to that point, as you claim. It is far more likely that the demand for pens is relatively gently downward sloping. Sure the demand curves eventually reach zero, but there's no reason to assume that they somewhere drop instantaneously to zero.

Even if, for some good, the demand curve does have such a discontinuity, there is no guarantee that that is where marginal cost and marginal revenue cross (because MC is increasing and MR is not flat prior to the hypothetical discontinuity.)


Your following analysis of "supply-side" vs "demand-side" is a non-sequitur. A business can expand (or contract) due to either 'side'. An increase in the marginal revenue (e.g. due to an increase in the supply curve) would cause the business to expand. Likewise a fall in the marginal cost curve would cause a business to expand production, unless you try to assume, as you do, that demand is always everywhere perfectly inelastic. Which in the big picture cannot be true. Say's Law, properly understood, is one way to show that. Additional production of valued goods for sale necessarily increases aggregate demand.

(When MR-MC curves are drawn wrongly with increasing MC curves, then it becomes obvious that businesses would not want to advertise because they don't want to sell any more of their products because they're too expensive to make.

That doesn't follow. If advertising were to push up the demand curve and thus push up the MR curve, and MC is increasing, then MR and MC will simply cross at a point of higher output (and higher $). This increases total profit even though the firm is now operating at a point of higher MC, because the increase in revenue was greater than the increase in cost. (The increase in the demand curve itself increases the price of output at the current quantity of output, thus increasing revenue. It also raises MR above MC thus creating the opportunity for additional profit by expanding production.)

The market mechanism that actually causes wages to rise and employees to be paid what they are worth is only present when there is full employment. When there are zero remaining unemployed people available for exploitation yet there still remains demand for additional products, then the employers who would then like to employ more workers then have to compete with other employers for the employees.

And in a free market, markets clear. That is, the supply and demand (for labor in this case) tend toward where they are equal. At which point there is no involuntary unemployment. Involuntary unemployment happens in the case of an unfree market (e.g., wages are forced above that equilibrium by minimum wage laws). The fact that we have persistent involuntary unemployment is an indicator of just how unfree the market is.