Minimum wage - leads to price increases more regressive than sales tax, only 35% of the benefits go to those under 2x poverty line

[dismal]

Putting it up because the law bans selling it at a lower price is an artificial reason that distorts the market. Putting a price up (if you can) because it is required to stay in business is not.

But the effect of each is the same. An external event - say a world shortage in the supply of chicken, would have the same impact as a government making chicken harder to get. The only difference is that you are labelling one as 'artificial'. Can you explain how the artificiality of it, rather than the size, or economic impact, makes such a difference?

If there is a supply shock (let's say a fire destroys a local chicken farm) the price goes up from $3 to $5. This is because the market is saying "send us more chickens". The quantity demanded outstrips the quantity supplied at the previous price. The price goes up and maybe it becomes economic to start trucking in chickens from miles around. The price going up to $5 allows people who have demand for chicken at $4 to have their needs met by tapping into higher cost sources of supply. The higher price is signal that allows producers of chickens to take action to meet more human needs. On the other side the higher price tells people who are only marginally into chicken and only willing to pay $3 for it to buy mutton or potatoes or whatever else instead. More supply is induced into the market, and the limited supply of chicken flows to those who value it most. A reasonable allocation of resources to needs.

Now if the local farm does not burn down but the government comes into a market where chickens are selling for $3 and decrees "thou shalt not sell a chicken for less than $5" we have a variety of disfunctions occur. First, everyone who was happier buying chicken at $3 or $4 but not willing to pay $5 now has less of their needs met. They are buying mutton or potatoes or whatever because the government is barring a transaction between a willing buyer and a willing seller. The chicken farmer would be delighted to sell chickens to these people but he is banned from doing so by law so he produces fewer chickens than he otherwise would. Maybe he's selling enough chickens at $5 that he's raking in more dough overall and he figures his best bet is to spend some of that gain electing politicians who will vote to raise chicken prices even more. He's riding a government cartel and he likes it. Maybe he makes some of this up by selling chickens on the black market and bribing local officials to look the other way. Maybe as the black market for chicken heats up rogue chicken farmers pop up operating at the fringes of society to meet the clamoring demand for chicken at $3 and $4. At least until some Maduro-esque politician sends out the troops to crack down on the illegal and unpatriotic chicken selling. So, this results in fewer consumer needs being met, underutilization of chicken farm resources, black markets and corruption.

Sounds a bit like the US sugar market.

 

[Nice Squirrel]

Still waiting for you to apply that advanced economics you say you know to my question.

I did answer. Just because you won't accept that I set you example into the real world and introduce uncertainty and actual market forces to the question.

As of now your "advanced economics" seems to consist of little more than putting your hands over your ears and saying "NANANANANANANANA I can't tell you anything at all about supply and demand and prices."

I think it's been well noted that "the law of supply and demand" when place in the real world has more contributing factors than numbers someone pulled out of one's ass. Like I said, your potential buyers perceptions are often more important drivers of demand than price. If all other meats are currently at $20 per pound then the price of chicken meat may seem a bargain and demand will continue to rise. If a new study just came out stating that eating chicken will give you permanent youth, then the demand might stay the same or go up. People might also think that $3 is tainted and only buy $10 chicken. Why do I mention these? Because these are the types of things that actually happen in the marketplace.

I know it may be a hard concept for someone who only had one week of a basic college level microeconomics and probably has never price products on the retail market nor actively increased demand or has set prices far above market to create the illusion of luxury. Would you like to hear the story of how a bottle of bleach was labeled differently and consumers actually would pay 10 times the price even after they were shown the labels that both bottles contained 100% bleach? 90% of people still paid 10x the price. Supply was not even a factor. This is a very common phenomenon in the marketplace.

Do you know about tulip bubble?

This isn't advanced economics, but the actual way things work. You work in oil, you know price for oil skewed by speculation and investor's hopes to make profits not by the actual supply or cost of production?

It would be a very odd academic discipline indeed if they handed out PHD's and Nobel prizes in a subject where they taught you in the second week it was impossible to answer even very basic questions in the subject matter. It would also call into question why they bothered to teach you you could in the first week.

Apparently we've moved onto the second week. I very much doubt they will hand out a Nobel prize for an over-simplistic description and one that doesn't describe reality very well. Or are you stating that economics is an empirical science?

Feel free to continue to demand I use Aristotelian physics to describe the interior of a black hole.

 

[Togo]

If it is a community based business, more money in the hands of the employees relates to more money available for demand. This coo coo theory completely forgets this.

Yeah economists don't argue this theory because the more money in the hands of employees comes from less money in the hands of someone else.

In this case the owner of the business. Where that person is living in a different area, it can still create a local problem. Where that person is, for example, in a tax haven, or spending their money overseas, the effect is to extract money from the economy.

 

[dismal]

I did answer. Just because you won't accept that I set you example into the real world and introduce uncertainty and actual market forces to the question.

I detected nothing resembling an answer to the question. But I may have just missed it.

All I'm getting from you is some hand-waving version of "we have no effing idea". Is that your answer? When you took your advanced economics classes is this how you answered questions on the tests?

Q. The market for chicken is currently clearing at $3. The government passes a law saying banning anyone from selling chicken at less than $10, what does your advanced-level-beyond-the-first-week-of-Econ 101 say will happen to the supply and demand for chicken?

A. Tulip bubbles, bleach on my taint, zizzerzazzerzuzz, oil, that's just the thing -- no one knows.

200+ years of smart people thinking about the relationships between supply, demand, and prices. Entire departments in major universities dedicated to this stuff. Presidential Councils of economic advisors. Nobel Prizes.

And yet we have no effing idea what will happen to the supply and demand for chicken if the government artificially raises the price above the current market clearing level. No idea at all.

 

[dismal]

Yeah economists don't argue this theory because the more money in the hands of employees comes from less money in the hands of someone else.

In this case the owner of the business. Where that person is living in a different area, it can still create a local problem. Where that person is, for example, in a tax haven, or spending their money overseas, the effect is to extract money from the economy.

The people who have less money are the owner of the business, the customers of the business (Assuming some of the cost is passed on to customers) and the people who no longer have jobs.

The first two are quite important in that owners of the business are the ones who spend capital creating minimum wages jobs (meaning them having less money will result in fewer jobs), and customers of the business are the ones you are counting on for all that demand kick that supposedly is created by all that extra money that is now out there if we ignore the fact it came out of someone else pocket. The third group doesn't matter if we simply pretend it does not exist, which is common practice around here.

 

[Jimmy Higgins]

It seems to be the point that you are trying to make. Profits disappear, people become unemployed, Palin becomes President. Pretty much economic armageddon.

You're trying to avoid actually addressing the issue.

Actually, that'd be you. According to the 2000 paper, the cost for the poorest quintile for the year due to cost increases from the wage hike was $84 a year. So costs did go up, but not by much. And no notable link shows employment dropping noticeably due to a hike as well... mainly because fewer employees means less opportunity for more money.

And how much did their income go up by, though?

Well, the minimum wage went up a buck so if they worked at least 84 hours for the year...

 

[Nice Squirrel]

I did answer. Just because you won't accept that I set you example into the real world and introduce uncertainty and actual market forces to the question.

I detected nothing resembling an answer to the question. But I may have just missed it.

It's tough, I know buddy.

All I'm getting from you is some hand-waving version of "we have no effing idea". Is that your answer?

Actually without more information we can only speculate at the answer. That is my answer.

200+ years of smart people thinking about the relationships between supply, demand, and prices. Entire departments in major universities dedicated to this stuff. Presidential Councils of economic advisors. Nobel Prizes.

You do know there are entire schools of economics as well as prize winners who only construct mind models and refuse to match them to reality. One of the great mistakes of these schools is the assumption that humans make rational decisions. So I wouldn't go praising all schools and Ph.D.s in economics.

And yet we have no effing idea what will happen to the supply and demand for chicken if the government artificially raises the price above the current market clearing level. No idea at all.

Not unless we know the other outside factors involved.

 

[Togo]

But the effect of each is the same. An external event - say a world shortage in the supply of chicken, would have the same impact as a government making chicken harder to get. The only difference is that you are labelling one as 'artificial'. Can you explain how the artificiality of it, rather than the size, or economic impact, makes such a difference?

If there is a supply shock (let's say a fire destroys a local chicken farm) the price goes up from $3 to $5. This is because the market is saying "send us more chickens". The quantity demanded outstrips the quantity supplied at the previous price. The price goes up and maybe it becomes economic to start trucking in chickens from miles around. The price going up to $5 allows people who have demand for chicken at $4 to have their needs met by tapping into higher cost sources of supply. The higher price is signal that allows producers of chickens to take action to meet more human needs. On the other side the higher price tells people who are only marginally into chicken and only willing to pay $3 for it to buy mutton or potatoes or whatever else instead. More supply is induced into the market,

So far this is identical to the government scenario. I've stripped out one sentence which I'll cover at the end.

Now if the local farm does not burn down but the government comes into a market where chickens are selling for $3 and decrees "thou shalt not sell a chicken for less than $5" we have a variety of disfunctions occur. First, everyone who was happier buying chicken at $3 or $4 but not willing to pay $5 now has less of their needs met.

Identical to the fire scenario above.

They are buying mutton or potatoes or whatever

Identical to the fire scenario above.

The chicken farmer ... produces fewer chickens than he otherwise would. Maybe he's selling enough chickens at $5 that he's raking in more dough overall

Identical to the fire scenario above.

So, this results in fewer consumer needs being met, underutilization of chicken farm resources,

In other words, people have to pay more for chickens. And if they aren't willing to, fewer chickens will be sold at a higher price.

But that is what we agree will happen, and it's the same in both scenarios. All you've done is substituted the word dysfunctions for artificial. So I'll ask again, what is the difference between the two scenarios, other than one involves government and one does not? Is there an economic difference? Can you point to it please?

Oh, and that sentence? This one:

and the limited supply of chicken flows to those who value it most. A reasonable allocation of resources to needs.

Can you describe why 'chickens go to those willing the pay the most' is somehow equivalent to 'value it the most' let alone a 'reasonable allocation of resources to needs'? You'd be right if spending power was largely equal, but, and this may be a shock to you, some people have more money than others. So how does willingness to pay somehow become 'needs'?

 

[ksen]

If it is a community based business, more money in the hands of the employees relates to more money available for demand. This coo coo theory completely forgets this.

Yeah economists don't argue this theory because the more money in the hands of employees comes from less money in the hands of someone else.

How come the opposite doesn't seem to bother you but this does?

 

[dismal]

That is my answer.

Aright. I'll mark you down as someone who has no capacity to answer a question that has anything to do with the relationships between supply, demand and prices.

Up to now I had just not been aware that this was due to superior, advanced knowledge. Your advanced knowledge was hard to distinguish from complete ignorance.

- - - Updated - - -

Yeah economists don't argue this theory because the more money in the hands of employees comes from less money in the hands of someone else.

How come the opposite doesn't seem to bother you but this does?

WOT

 

[ksen]

Yeah economists don't argue this theory because the more money in the hands of employees comes from less money in the hands of someone else.

How come the opposite doesn't seem to bother you but this does?

WOT

Maybe I read your post wrong.

Did you mean:

1) economists don't argue this theory BECAUSE the more money in the hands of employees comes from less money in the hands of someone else, or

2) economists don't argue a theory that says more money in the hands of employees means less money in the hands of someone else (presumably owners?).

 

[Togo]

Aright. I'll mark you down...

Yes of course. Because a reluctance to apply a simplistic rule-of-thumb must be ignorance. There can be no other explanation.

 

[dismal]

Yeah economists don't argue this theory because the more money in the hands of employees comes from less money in the hands of someone else.

How come the opposite doesn't seem to bother you but this does?

WOT

Maybe I read your post wrong.

Did you mean:

1) economists don't argue this theory BECAUSE the more money in the hands of employees comes from less money in the hands of someone else, or

2) economists don't argue a theory that says more money in the hands of employees means less money in the hands of someone else (presumably owners?).

Most Economists are capable of looking beyond first order effects and doing simple math, which in combination reveal this argument to be total unadulterated crapola.

Most economists don't like to be associated with crapola.

 

[dismal]

Aright. I'll mark you down...

Yes of course. Because a reluctance to apply a simplistic rule-of-thumb must be ignorance. There can be no other explanation.

He has not gone past making simple arguments into making advanced arguments. He has claimed there is no ability to know anything about the relationship between supply, demand and price.

 

[ksen]

Yeah economists don't argue this theory because the more money in the hands of employees comes from less money in the hands of someone else.

How come the opposite doesn't seem to bother you but this does?

WOT

Maybe I read your post wrong.

Did you mean:

1) economists don't argue this theory BECAUSE the more money in the hands of employees comes from less money in the hands of someone else, or

2) economists don't argue a theory that says more money in the hands of employees means less money in the hands of someone else (presumably owners?).

Most Economists are capable of looking beyond first order effects and doing simple math, which in combination reveal this argument to be total unadulterated crapola.

Most economists don't like to be associated with crapola.

Thanks I guess, but you didn't answer my question.

If you were saying that more money in the hands of employees means less money in the hands of someone else, like owners, and you didn't have a problem with that then I wonder if you similarly have no problem with more money in the hands of owners means less money in the hands of employees.

And by no problem I don't mean that you don't have a problem with the reality that that's what happens but rather that you don't have a problem with owners having more even though workers have less but that you do have a problem with workers having more if that means owners have less.

 

[laughing dog]

As a professional economist, I must interject that readers should take dismal's pronouncements about economics and what most economists think with more than a grain of salt.

 

[Axulus]

Yeah economists don't argue this theory because the more money in the hands of employees comes from less money in the hands of someone else.

How come the opposite doesn't seem to bother you but this does?

WOT

Maybe I read your post wrong.

Did you mean:

1) economists don't argue this theory BECAUSE the more money in the hands of employees comes from less money in the hands of someone else, or

2) economists don't argue a theory that says more money in the hands of employees means less money in the hands of someone else (presumably owners?).

Most Economists are capable of looking beyond first order effects and doing simple math, which in combination reveal this argument to be total unadulterated crapola.

Most economists don't like to be associated with crapola.

Thanks I guess, but you didn't answer my question.

If you were saying that more money in the hands of employees means less money in the hands of someone else, like owners, and you didn't have a problem with that then I wonder if you similarly have no problem with more money in the hands of owners means less money in the hands of employees.

And by no problem I don't mean that you don't have a problem with the reality that that's what happens but rather that you don't have a problem with owners having more even though workers have less but that you do have a problem with workers having more if that means owners have less.

Where did he say it was a "problem"? It seems like suddenly the conversation got disjointed:

"More money in the employees hands means more demand so more stuff sold"

dismal: "No it doesn't, because more money in their hands means less money in other hands"

ksen: "Why do you have a problem with that?" <--------HUH?

- - - Updated - - -

As a professional economist, I must interject that readers should take dismal's pronouncements about economics and what most economists think with more than a grain of salt.

Can you point out the best example from one of his points in this thread?

Also, if one of your students answered a question to the following question on a test:

"Question - chicken sold for $3/lb before a price floor law of $10/lb was enacted. How will the quantity demanded for chicken change as a result of the law?"

Answer: "Actually without more information we can only speculate at the answer."

Would you give that answer full points, and say "very insightful!"?

 

[ksen]

Where did he say it was a "problem"? It seems like suddenly the conversation got disjointed:

"More money in the employees hands means more demand so more stuff sold"

dismal: "No it doesn't, because more money in their hands means less money in other hands"

ksen: "Why do you have a problem with that?" <--------HUH?

I don't know if he said it was a problem at all. But I've been spending the last couple of posts to him asking for clarification but he doesn't seem to want to provide it.

I have no idea if he meant what you are saying he said. I would like to know, but I'm not holding my breath about it.

 

[dismal]

Yeah economists don't argue this theory because the more money in the hands of employees comes from less money in the hands of someone else.

How come the opposite doesn't seem to bother you but this does?

WOT

Maybe I read your post wrong.

Did you mean:

1) economists don't argue this theory BECAUSE the more money in the hands of employees comes from less money in the hands of someone else, or

2) economists don't argue a theory that says more money in the hands of employees means less money in the hands of someone else (presumably owners?).

Most Economists are capable of looking beyond first order effects and doing simple math, which in combination reveal this argument to be total unadulterated crapola.

Most economists don't like to be associated with crapola.

Thanks I guess, but you didn't answer my question.

If you were saying that more money in the hands of employees means less money in the hands of someone else, like owners, and you didn't have a problem with that then I wonder if you similarly have no problem with more money in the hands of owners means less money in the hands of employees.

And by no problem I don't mean that you don't have a problem with the reality that that's what happens but rather that you don't have a problem with owners having more even though workers have less but that you do have a problem with workers having more if that means owners have less.

Arkirk's argument was that more money in the hands of employees would be a magical font of new demand. Good, bad, or other this is not a valid argument if the money is taken away from someone else.

It's like arguing you can fill up a pool by dumping buckets of water into one end of the pool while ignoring the fact you are filling up the buckets in the other end of the pool.

Clear enough?

 

[dismal]

"Question - chicken sold for $3/lb before a price floor law of $10/lb was enacted. How will the quantity demanded for chicken change as a result of the law?"

Answer: "Actually without more information we can only speculate at the answer."

If only it were that we could have a discussion like "Well, what information do you need? What sort of information would lead you to what answer?".

It's more like:

Answer: Advanced economics teaches us this question is unanswerable.

It's an insistence that the entire discipline is a complete failure at predicting anything about supply, demand and prices. Intellectual nihilism.