Corporate Moochers - how to spot them

[Jayjay]

Unless the subsidy is conditional on employment, the employer is not a middle man in the transaction.

Oh. Did you not know this was a truth in America? We've been talking about it all through this thread. It's law in many states and it's pushed in many others.

See, the conservatives push this thing called "welfare reform" which also goes by the name "workfare" in which you are forced to look for a job and take any job offered to you in order to get welfare benefits. because (turn off your irony meter before you read this part...) if you aren't out there working, you're A MOOCHER!

Indeed. If you make working a precondition for benefits, then it would be a subsidy. But some people here argue that any kind of welfare to full-time employees is a subsidy.

Now here's a few indisputable facts:

1. Most minimum wage jobs (Walmart, McDonalds, etc) are for very large companies that make enough profit to create multi-millionaires of their executives and billionaires of their CEOs.
2. Comparable companies (Costco, Starbucks) doing essentially the same business still make marvelous profits while paying their employees enough to live without welfare.

ergo Group 1 is moochers since group 2 proves that they won't fold if they pay living wages.

First, they are not doing essentially the same business, as they have different niches and cost structures. Otherwise, all Walmart/MacDonalds employees could just quit and go work for Costco/Starbucks. That doesn't happen, because the businesses are in fact sufficiently different that one can't replace the other.

Second, what's wrong with making all profitable companies across the board pay their fair share? If profits are the problem, then by all means tax all the businesses according to how much profit they make, but there's no reason to single out certain types of companies over others. This is particularly important as we get more advanced automation and more and more people are going to fall to the minimum wage category or below.

So here's my corporate welfare moocher reform: As long as your highest paid worker makes more than 20x you lowest wage worker, you have to pay Living Wage Minimum. If your highest paid worker (including all packages, options and perks, of course) makes less than 20X the lowest paid, then feel free to all work for peanuts while your company grows. We love start-ups and family businesses after all. But once you think you're worth more than 20x your lowest paid worker and also think you can earn that money while government assistance keeps your workers off the streets, then you're a moocher and your business is taxed sufficiently to personally pay the welfare of your own employees.

I can already see a big hole in that plan: franchises. MacDonalds corporation owns some restaurants directly, but there is no reason why they would have to... they could easily just separate the corporate entity from franchises altogether to meet the criteria above without making any cuts to their corporate profits, or without having the franchises raise their bottom salaries. To generalize, these kind of plans are just going to force businesses to split and restructure and maybe cause some minor administrative overhead, that's all.

 

[Canard DuJour]

Why should an employer meet living costs, you ask? For precisely the reason you acknowledged with respect to employers in general - which is all "the employer" could have meant in context.

Non-sequitur. All businesses, being the only sources of income in an economy, have to be able to pay for all the costs of the society, or that society will crumble. It does not follow from that premise that an individual employer has to pay for some specific cost.

Then it's not a non-sequitur as that's not what I'm claiming. But it does follow that businesses which can't or don't cover living costs are subsided by those that can and do.

No, they are not, because those living costs are not the responsibility of those particular businesses to cover in the first place.

They would be without welfare, ultimately payed for by other businesses.

Some people are always going to be unable to contribute enough to cover their own maintenance, but that's a problem that exists independently of their employers.

So? Things like food production are subsidised to address issues that exist independently of farmers, but nontheless subsidise farmers.

A business is only subsidised if it doesn't pay its own costs and externalities.

Which it doesn't if other businesses cover costs that would otherwise be theirs.

What's not fair is taking money from people who don't have yachts to maintain the workforce of employers who do.

Who's suggesting that?

Opponents of a minimum wage.

With progressive taxation, welfare means taking a little bit away from those who make enough to pay their own upkeep and more, and redistribute it to those who make less. You and Underseer appear agree with this scheme when it comes to the unemployed, but for some reason you think it is a great injustice on taxpayers if the recipient happens to have a full-time job.

When a middle man gets wealthy from subsidy by non-wealthy donors, yes.

Unless the subsidy is conditional on employment, the employer is not a middle man in the transaction. Whether a household qualifies for food stamps for example is determined only by household size and income, not on how many or what kind of jobs the members of the household have.

Nothing to do with it. The employer gets labour cheaper than if he had to pay living costs regardless.

As for "non-wealthy donors" and the quip about minimum wage opponents is an attempt at a strawman - a person's opposition or support to minimum wage is orthogonal issue to opposition or support of a social safety net.

I've yet to see a rational explanation why an employer should be responsible for its employee's living costs in addition to the labor. And if the employer is not responsible for those costs in the first place, then having the employee receive tax-payer funded welfare does not turn the employer into a moocher.

A human's living costs are labour costs. Calling them "additional" costs is like saying you're prepared to pay for steel or electricity but not the "additional" costs of producing them which you think gov't should pay for. Yet you've just said that businesses are the only sources of income in an economy. It follows that tax payer-funded welfare is redistributed from businesses that cover living costs to those that don't. That is subsidy.

Do unemployed people not have living costs? Yes or no?

Yes. Ones which are met by people producing stuff which is viable without welfare in a decent prosperous society, enabling others to produce stuff which otherwise wouldn't be.

As for whether cost of making something is relevant, consider for example scrap metal. Making a brand new car costs a certain amount of money, but cars get totalled in accidents and lose their value due to wear and tear. A scrap yard who pays you $100 to get rid of your old car is certainly not paying the full cost of creating that car. The price tag of $100 is just what you and the scrap yard agreed is a fair amount at that point in time. If the car in question was fairly new and destroyed in an accident or is otherwise defective, it's very well possible that over its lifetime that car was a net loss to the society. That loss eventually has to be paid by someone but there's nothing in that math that says that the scrap yard should take responsibility for anything but the $100 (plus whatever other costs are involved in running a scrap yard in general).

The same is true of labor.

Nah it isn't. Scrap cars simply aren't analagous to labour in that sense and I don't know why you think they are.

Some people's labor is not simply worth the living costs of the laborer and that cost has to be subsidized by rest of the society somehow. But it is a subsidy to that particular individual, not his employer.

Which isn't really relevant. The same burger flipped by Steve Jobs or a neurosurgeon wouldn't fetch a penny more. The limiting factor is what consumers will pay for burgers. If that doesn't cover living costs, the deficiency is in that employer's business plan.

 

[Jayjay]

Why should an employer meet living costs, you ask? For precisely the reason you acknowledged with respect to employers in general - which is all "the employer" could have meant in context.

Non-sequitur. All businesses, being the only sources of income in an economy, have to be able to pay for all the costs of the society, or that society will crumble. It does not follow from that premise that an individual employer has to pay for some specific cost.

Then it's not a non-sequitur as that's not what I'm claiming. But it does follow that businesses which can't or don't cover living costs are subsided by those that can and do.

No, they are not, because those living costs are not the responsibility of those particular businesses to cover in the first place.

They would be without welfare, ultimately payed for by other businesses.

Some people are always going to be unable to contribute enough to cover their own maintenance, but that's a problem that exists independently of their employers.

So? Things like food production are subsidised to address issues that exist independently of farmers, but nontheless subsidise farmers.

A business is only subsidised if it doesn't pay its own costs and externalities.

Which it doesn't if other businesses cover costs that would otherwise be theirs.

Except that cost would not "otherwise be theirs". Repeating that statement without backing it up doesn't make it true. You've not shown evidence that absent welfare, the employers would magically be forced to pay more. Look at other countries that have no welfare: are lowest-earning workers in those countries paid more or less than USA? Look at USA before there was general welfare, were workers paid more then? Or imagine a hypothetical, that the welfare payouts were ten times as much. Do you think then the people working at Walmart would accept lower pay if they didn't need the money as much? Do they just enjoy working 60 hours a day so much that if only they had financial independence, they'd do it almost voluntarily?

What's not fair is taking money from people who don't have yachts to maintain the workforce of employers who do.

Who's suggesting that?

Opponents of a minimum wage.

With progressive taxation, welfare means taking a little bit away from those who make enough to pay their own upkeep and more, and redistribute it to those who make less. You and Underseer appear agree with this scheme when it comes to the unemployed, but for some reason you think it is a great injustice on taxpayers if the recipient happens to have a full-time job.

When a middle man gets wealthy from subsidy by non-wealthy donors, yes.

Unless the subsidy is conditional on employment, the employer is not a middle man in the transaction. Whether a household qualifies for food stamps for example is determined only by household size and income, not on how many or what kind of jobs the members of the household have.

Nothing to do with it. The employer gets labour cheaper than if he had to pay living costs regardless.

That's completely imaginary. Social safety net increases the bargaining power of workers and increases the price of their labor. If they were in a position to ask for higher pay, there is nothing stopping them now (or more accurately, things that are stopping them now such as anti-union measures are something they have to contend with independently of whether they are on welfare or not). If anything, removing that safety net would force workers to compromise on their already meager living costs rather than demand higher pay.

Do unemployed people not have living costs? Yes or no?

Yes. Ones which are met by people producing stuff which is viable without welfare in a decent prosperous society, enabling others to produce stuff which otherwise wouldn't be.

That's false, unless you think minimum wage employers don't pay any taxes whatsoever. The profits from Walmart are (in principle) taxed the same way as profits from Costco, so they pay their share of the living costs of the unemployed the same as everyone else. Are you saing that Walmart should be solely responsible not only for living costs of its own employees, but also those it doesn't employ? But for some reason other, non-minimum wage companies should have no such requirements?

As for whether cost of making something is relevant, consider for example scrap metal. Making a brand new car costs a certain amount of money, but cars get totalled in accidents and lose their value due to wear and tear. A scrap yard who pays you $100 to get rid of your old car is certainly not paying the full cost of creating that car. The price tag of $100 is just what you and the scrap yard agreed is a fair amount at that point in time. If the car in question was fairly new and destroyed in an accident or is otherwise defective, it's very well possible that over its lifetime that car was a net loss to the society. That loss eventually has to be paid by someone but there's nothing in that math that says that the scrap yard should take responsibility for anything but the $100 (plus whatever other costs are involved in running a scrap yard in general).

The same is true of labor.

Nah it isn't. Scrap cars simply aren't analagous to labour in that sense and I don't know why you think they are.

You are the one who made the analogy:

A human's living costs are labour costs. Calling them "additional" costs is like saying you're prepared to pay for steel or electricity but not the "additional" costs of producing them which you think gov't should pay for.

I was just showing that there are indeed cases where no-labor factors of production likewise turn out to be a net loss to society that somebody has to cover. Cars break down, electricity can't be stored efficiently for long, steel rusts, and so on. If the producer can't sufficiently utilize these factors the costs might be higher than the value produced by them and the losses have to be covered by other production. It's the same with people: the energy and resources used to create a human being or keep him alive might very well be higher than the value of his labor.

Some people's labor is not simply worth the living costs of the laborer and that cost has to be subsidized by rest of the society somehow. But it is a subsidy to that particular individual, not his employer.

Which isn't really relevant. The same burger flipped by Steve Jobs or a neurosurgeon wouldn't fetch a penny more. The limiting factor is what consumers will pay for burgers. If that doesn't cover living costs, the deficiency is in that employer's business plan.

The business plan is definicient only if it fails to make sufficient profit, all externalities taken into account. If you make some of those business plans non-viable, it'll be a net loss to society, and it isn't even likely to reduce inequality as those who'd otherwise be producing at least part of their own living costs would now be jobless and entirely dependent on rest of society.

 

[Loren Pechtel]

So here's my corporate welfare moocher reform: As long as your highest paid worker makes more than 20x you lowest wage worker, you have to pay Living Wage Minimum. If your highest paid worker (including all packages, options and perks, of course) makes less than 20X the lowest paid, then feel free to all work for peanuts while your company grows. We love start-ups and family businesses after all. But once you think you're worth more than 20x your lowest paid worker and also think you can earn that money while government assistance keeps your workers off the streets, then you're a moocher and your business is taxed sufficiently to personally pay the welfare of your own employees.

I can already see a big hole in that plan: franchises. MacDonalds corporation owns some restaurants directly, but there is no reason why they would have to... they could easily just separate the corporate entity from franchises altogether to meet the criteria above without making any cuts to their corporate profits, or without having the franchises raise their bottom salaries. To generalize, these kind of plans are just going to force businesses to split and restructure and maybe cause some minor administrative overhead, that's all.

Exactly. All this does is chop up businesses.

We already have companies that go with an outsourcing model for everything other than their core operations, it's not an unworkable business model.

 

[Canard DuJour]

Why should an employer meet living costs, you ask? For precisely the reason you acknowledged with respect to employers in general - which is all "the employer" could have meant in context.

Non-sequitur. All businesses, being the only sources of income in an economy, have to be able to pay for all the costs of the society, or that society will crumble. It does not follow from that premise that an individual employer has to pay for some specific cost.

Then it's not a non-sequitur as that's not what I'm claiming. But it does follow that businesses which can't or don't cover living costs are subsided by those that can and do.

No, they are not, because those living costs are not the responsibility of those particular businesses to cover in the first place.

They would be without welfare, ultimately payed for by other businesses.

Some people are always going to be unable to contribute enough to cover their own maintenance, but that's a problem that exists independently of their employers.

So? Things like food production are subsidised to address issues that exist independently of farmers, but nontheless subsidise farmers.

A business is only subsidised if it doesn't pay its own costs and externalities.

Which it doesn't if other businesses cover costs that would otherwise be theirs.

Except that cost would not "otherwise be theirs". Repeating that statement without backing it up doesn't make it true. You've not shown evidence that absent welfare, the employers would magically be forced to pay more. Look at other countries that have no welfare: are lowest-earning workers in those countries paid more or less than USA? Look at USA before there was general welfare, were workers paid more then? Or imagine a hypothetical, that the welfare payouts were ten times as much. Do you think then the people working at Walmart would accept lower pay if they didn't need the money as much? Do they just enjoy working 60 hours a day so much that if only they had financial independence, they'd do it almost voluntarily?

Yeah, actually, I gave detailed argument earlier ITT that existing low wage employers would have to pay more, and that many would simply be unsustainable. And if the kind of employment and conditions you're on about were to displace the food and retail businesses currently employing most MW workers, the latter would have been no less subsidised. It wouldn't happen anyway because those conditions are no longer acceptable to the society in which they must operate, but positing it as the alternative is just roundabout admission that they require subsidy in a decent prosperous society.

What's not fair is taking money from people who don't have yachts to maintain the workforce of employers who do.

Who's suggesting that?

Opponents of a minimum wage.

With progressive taxation, welfare means taking a little bit away from those who make enough to pay their own upkeep and more, and redistribute it to those who make less. You and Underseer appear agree with this scheme when it comes to the unemployed, but for some reason you think it is a great injustice on taxpayers if the recipient happens to have a full-time job.

When a middle man gets wealthy from subsidy by non-wealthy donors, yes.

Unless the subsidy is conditional on employment, the employer is not a middle man in the transaction. Whether a household qualifies for food stamps for example is determined only by household size and income, not on how many or what kind of jobs the members of the household have.

Nothing to do with it. The employer gets labour cheaper than if he had to pay living costs regardless.

That's completely imaginary. Social safety net increases the bargaining power of workers and increases the price of their labor. If they were in a position to ask for higher pay, there is nothing stopping them now (or more accurately, things that are stopping them now such as anti-union measures are something they have to contend with independently of whether they are on welfare or not). If anything, removing that safety net would force workers to compromise on their already meager living costs rather than demand higher pay.

I.e. businesses would be sustainable even if the shortfall in living costs weren't met by anyone. I doubt it, but employers would still be getting labour cheaper than if they had to cover living costs, which is what I said.

Do unemployed people not have living costs? Yes or no?

Yes. Ones which are met by people producing stuff which is viable without welfare in a decent prosperous society, enabling others to produce stuff which otherwise wouldn't be.

That's false, unless you think minimum wage employers don't pay any taxes whatsoever. The profits from Walmart are (in principle) taxed the same way as profits from Costco, so they pay their share of the living costs of the unemployed the same as everyone else. Are you saing that Walmart should be solely responsible not only for living costs of its own employees, but also those it doesn't employ? But for some reason other, non-minimum wage companies should have no such requirements?

No, what I said stands regardless of everyone paying taxes.

As for whether cost of making something is relevant, consider for example scrap metal. Making a brand new car costs a certain amount of money, but cars get totalled in accidents and lose their value due to wear and tear. A scrap yard who pays you $100 to get rid of your old car is certainly not paying the full cost of creating that car. The price tag of $100 is just what you and the scrap yard agreed is a fair amount at that point in time. If the car in question was fairly new and destroyed in an accident or is otherwise defective, it's very well possible that over its lifetime that car was a net loss to the society. That loss eventually has to be paid by someone but there's nothing in that math that says that the scrap yard should take responsibility for anything but the $100 (plus whatever other costs are involved in running a scrap yard in general).

The same is true of labor.

Nah it isn't. Scrap cars simply aren't analagous to labour in that sense and I don't know why you think they are.

You are the one who made the analogy:

A human's living costs are labour costs. Calling them "additional" costs is like saying you're prepared to pay for steel or electricity but not the "additional" costs of producing them which you think gov't should pay for.

I was just showing that there are indeed cases where no-labor factors of production likewise turn out to be a net loss to society that somebody has to cover. Cars break down, electricity can't be stored efficiently for long, steel rusts, and so on. If the producer can't sufficiently utilize these factors the costs might be higher than the value produced by them and the losses have to be covered by other production. It's the same with people: the energy and resources used to create a human being or keep him alive might very well be higher than the value of his labor.

Well it doesn't show that. They're simply losses and don't have to be covered by someone elses' production, and not analagous to human living costs.

Some people's labor is not simply worth the living costs of the laborer and that cost has to be subsidized by rest of the society somehow. But it is a subsidy to that particular individual, not his employer.

Which isn't really relevant. The same burger flipped by Steve Jobs or a neurosurgeon wouldn't fetch a penny more. The limiting factor is what consumers will pay for burgers. If that doesn't cover living costs, the deficiency is in that employer's business plan.

The business plan is definicient only if it fails to make sufficient profit, all externalities taken into account.

Which it would if businesses which generate insufficient revenue to cover living costs had to do so.

If you make some of those business plans non-viable, it'll be a net loss to society, and it isn't even likely to reduce inequality as those who'd otherwise be producing at least part of their own living costs would now be jobless and entirely dependent on rest of society.

I somewhat agree. Subsidy per se isn't necessarily bad, but A) no one should be getting rich off it and B) employment at wages too far below living costs becomes pointless for everyone but the employer.

 

[fromderinside]

Wow. 125 posts already with lots of back and forth.

Solution. US government treat companies with same rationale as people. If you can't cut it you get some support until you die. If you do too well you share some with the rest.

What that suggests is that companies that make big money pay big taxes with limits on their assistances in areas where they qualify just as do individual tax payers. If you make too much as a taxpayer you are limited on how much you can deduct and for what you can deduct. So it should be for companies.

Oh yeah and disconnect benefits to employers who help employees from their profits. A tougher task I know, but, it appears necessary.

 

[Jayjay]

A business is only subsidised if it doesn't pay its own costs and externalities.

Which it doesn't if other businesses cover costs that would otherwise be theirs.

Except that cost would not "otherwise be theirs". Repeating that statement without backing it up doesn't make it true. You've not shown evidence that absent welfare, the employers would magically be forced to pay more. Look at other countries that have no welfare: are lowest-earning workers in those countries paid more or less than USA? Look at USA before there was general welfare, were workers paid more then? Or imagine a hypothetical, that the welfare payouts were ten times as much. Do you think then the people working at Walmart would accept lower pay if they didn't need the money as much? Do they just enjoy working 60 hours a day so much that if only they had financial independence, they'd do it almost voluntarily?

Yeah, actually, I gave detailed argument earlier ITT that existing low wage employers would have to pay more, and that many would simply be unsustainable. And if the kind of employment and conditions you're on about were to displace the food and retail businesses currently employing most MW workers, the latter would have been no less subsidised. It wouldn't happen anyway because those conditions are no longer acceptable to the society in which they must operate, but positing it as the alternative is just roundabout admission that they require subsidy in a decent prosperous society.

It's true that in reality countries that have a welfare system also have other regulations to curb child labor or workign hours or workplace safety, so coming up with empiral evidence to isolate the effect of welfare alone is impossible. But it does give us a generic idea that the more desperate people are, the lower they'll be paid for the same labor. This is simple intuitive truth: the more desperate you are for a job, the lower salary you'll accept. Of course such a society would be worse for the unfortunate, and the people would require no less subsidies, but the only factor that is relevant as to whether welfare is a subsidy to minimum wage employers is whether those corporations would be forced to pay higher wages or not. It is not relevant whether those employees would then be forced to live on charity or with their parents or would starve slowly to death or be forced to take second jobs or sell their organs or give blowjobs on back alleys or whatever else might result.

Unless the subsidy is conditional on employment, the employer is not a middle man in the transaction. Whether a household qualifies for food stamps for example is determined only by household size and income, not on how many or what kind of jobs the members of the household have.

Nothing to do with it. The employer gets labour cheaper than if he had to pay living costs regardless.

That's completely imaginary. Social safety net increases the bargaining power of workers and increases the price of their labor. If they were in a position to ask for higher pay, there is nothing stopping them now (or more accurately, things that are stopping them now such as anti-union measures are something they have to contend with independently of whether they are on welfare or not). If anything, removing that safety net would force workers to compromise on their already meager living costs rather than demand higher pay.

I.e. businesses would be sustainable even if the shortfall in living costs weren't met by anyone. I doubt it, but employers would still be getting labour cheaper than if they had to cover living costs, which is what I said.

The point is that they would not have to cover living costs absent welfare. Therefore they are not getting labor any cheaper, on the contrary the labor is slightly more expensive because some people can get by on welfare alone. Therefore, welfare is not a subsidy to minimum wage employers, therefore, minimum wage employers are not "moochers" in this sense. This is a rather straightforward argument.

How the society meets the shortfall is irrelevant to the question. Maybe they tax the rich. Maybe they tax the poor. Maybe the let the poor die in the gutter. It's the same as considering how society deals with costs of natural disasters: let's say there is a flood, and somebody has to fix the damage. Does that mean that companies who sell supplies to to flood-impacted areas should be forced to do it at a loss, or not at all? Would that be an effective solution for disaster relief? I think not.

Do unemployed people not have living costs? Yes or no?

Yes. Ones which are met by people producing stuff which is viable without welfare in a decent prosperous society, enabling others to produce stuff which otherwise wouldn't be.

That's false, unless you think minimum wage employers don't pay any taxes whatsoever. The profits from Walmart are (in principle) taxed the same way as profits from Costco, so they pay their share of the living costs of the unemployed the same as everyone else. Are you saing that Walmart should be solely responsible not only for living costs of its own employees, but also those it doesn't employ? But for some reason other, non-minimum wage companies should have no such requirements?

No, what I said stands regardless of everyone paying taxes.

You do realize this part pertains to living costs of the unemployed, right? So how does taxing a non-minimum-wage company to pay for the living costs of an unemployed person, enable a minimum wage employee to produce that otherwise wouldn't be produced? Either you are again completely misunderstanding what the topic is or you've failed to explain what leap of logic that would make it true.

As for whether cost of making something is relevant, consider for example scrap metal. Making a brand new car costs a certain amount of money, but cars get totalled in accidents and lose their value due to wear and tear. A scrap yard who pays you $100 to get rid of your old car is certainly not paying the full cost of creating that car. The price tag of $100 is just what you and the scrap yard agreed is a fair amount at that point in time. If the car in question was fairly new and destroyed in an accident or is otherwise defective, it's very well possible that over its lifetime that car was a net loss to the society. That loss eventually has to be paid by someone but there's nothing in that math that says that the scrap yard should take responsibility for anything but the $100 (plus whatever other costs are involved in running a scrap yard in general).

The same is true of labor.

Nah it isn't. Scrap cars simply aren't analagous to labour in that sense and I don't know why you think they are.

You are the one who made the analogy:

A human's living costs are labour costs. Calling them "additional" costs is like saying you're prepared to pay for steel or electricity but not the "additional" costs of producing them which you think gov't should pay for.

I was just showing that there are indeed cases where no-labor factors of production likewise turn out to be a net loss to society that somebody has to cover. Cars break down, electricity can't be stored efficiently for long, steel rusts, and so on. If the producer can't sufficiently utilize these factors the costs might be higher than the value produced by them and the losses have to be covered by other production. It's the same with people: the energy and resources used to create a human being or keep him alive might very well be higher than the value of his labor.

Well it doesn't show that. They're simply losses and don't have to be covered by someone elses' production, and not analagous to human living costs.

The scrap yard in the analogy is not making a loss. It pays $100 for the totalled vehicle, covers the costs to haul it out and dismantle it to parts, and makes a profit selling the materials. In case of an accident for a new car, this might not cover the resources and energy spent building the car versus the added value the car has provided over its lifetime. Depending on situation, the losses might be paid by the previous owner, the insurance company (and indirectly, other insurance company customers), or the manufacturer, or the state. But I think we can both agree that in this analogy, there is no logical reason why the scrap yard, which is analogous to the minimum-wage employer, should be forced to pay for losses, or that running a scrap yard is somehow an inviable business model that is subsidized by society at large.

Some people's labor is not simply worth the living costs of the laborer and that cost has to be subsidized by rest of the society somehow. But it is a subsidy to that particular individual, not his employer.

Which isn't really relevant. The same burger flipped by Steve Jobs or a neurosurgeon wouldn't fetch a penny more. The limiting factor is what consumers will pay for burgers. If that doesn't cover living costs, the deficiency is in that employer's business plan.

The business plan is definicient only if it fails to make sufficient profit, all externalities taken into account.

Which it would if businesses which generate insufficient revenue to cover living costs had to do so.

If you make some of those business plans non-viable, it'll be a net loss to society, and it isn't even likely to reduce inequality as those who'd otherwise be producing at least part of their own living costs would now be jobless and entirely dependent on rest of society.

I somewhat agree. Subsidy per se isn't necessarily bad, but A) no one should be getting rich off it and B) employment at wages too far below living costs becomes pointless for everyone but the employer.

A) If nobody can get rich off it, nobody will do it. There needs to be sufficient profit in a business for it to attract capital.
B) If employment at wages becomes pointless to the employees, they will quit, thereby making it pointless to the employer as well.

As for the first point about covering living costs, that's entirely arbitrary and to some extent even harmful. Let's say you have a small town with a number of viable businesses. One day there is a flood, and the damages need to be paid for somehow. Which businesses should pay for it? The construction companies and carpenters who the town needs to employ to get stuff fixed? Or the coffee shops and restaurants who're brought to a brink of bakruptcy anyway? Or the supermarkets and home depot that now get more customers as people need to resupply and build up their houses? Or maybe, levy a tax to all the companies equally?

 

[Jayjay]

Wow. 125 posts already with lots of back and forth.

Solution. US government treat companies with same rationale as people. If you can't cut it you get some support until you die. If you do too well you share some with the rest.

What that suggests is that companies that make big money pay big taxes with limits on their assistances in areas where they qualify just as do individual tax payers. If you make too much as a taxpayer you are limited on how much you can deduct and for what you can deduct. So it should be for companies.

Oh yeah and disconnect benefits to employers who help employees from their profits. A tougher task I know, but, it appears necessary.

Why should companies that don't cut it get any support? The key difference between companies and people is that generally, we can't let people just die, but we can let companies go bankrupt. Giving life support to failing companies doesn't make much sense to me.

 

[Canard DuJour]

A business is only subsidised if it doesn't pay its own costs and externalities.

Which it doesn't if other businesses cover costs that would otherwise be theirs.

Except that cost would not "otherwise be theirs". Repeating that statement without backing it up doesn't make it true. You've not shown evidence that absent welfare, the employers would magically be forced to pay more. Look at other countries that have no welfare: are lowest-earning workers in those countries paid more or less than USA? Look at USA before there was general welfare, were workers paid more then? Or imagine a hypothetical, that the welfare payouts were ten times as much. Do you think then the people working at Walmart would accept lower pay if they didn't need the money as much? Do they just enjoy working 60 hours a day so much that if only they had financial independence, they'd do it almost voluntarily?

Yeah, actually, I gave detailed argument earlier ITT that existing low wage employers would have to pay more, and that many would simply be unsustainable. And if the kind of employment and conditions you're on about were to displace the food and retail businesses currently employing most MW workers, the latter would have been no less subsidised. It wouldn't happen anyway because those conditions are no longer acceptable to the society in which they must operate, but positing it as the alternative is just roundabout admission that they require subsidy in a decent prosperous society.

It's true that in reality countries that have a welfare system also have other regulations to curb child labor or workign hours or workplace safety, so coming up with empiral evidence to isolate the effect of welfare alone is impossible. But it does give us a generic idea that the more desperate people are, the lower they'll be paid for the same labor. This is simple intuitive truth: the more desperate you are for a job, the lower salary you'll accept. Of course such a society would be worse for the unfortunate, and the people would require no less subsidies, but the only factor that is relevant as to whether welfare is a subsidy to minimum wage employers is whether those corporations would be forced to pay higher wages or not. It is not relevant whether those employees would then be forced to live on charity or with their parents or would starve slowly to death or be forced to take second jobs or sell their organs or give blowjobs on back alleys or whatever else might result.

Unless the subsidy is conditional on employment, the employer is not a middle man in the transaction. Whether a household qualifies for food stamps for example is determined only by household size and income, not on how many or what kind of jobs the members of the household have.

Nothing to do with it. The employer gets labour cheaper than if he had to pay living costs regardless.

That's completely imaginary. Social safety net increases the bargaining power of workers and increases the price of their labor. If they were in a position to ask for higher pay, there is nothing stopping them now (or more accurately, things that are stopping them now such as anti-union measures are something they have to contend with independently of whether they are on welfare or not). If anything, removing that safety net would force workers to compromise on their already meager living costs rather than demand higher pay.

I.e. businesses would be sustainable even if the shortfall in living costs weren't met by anyone. I doubt it, but employers would still be getting labour cheaper than if they had to cover living costs, which is what I said.

The point is that they would not have to cover living costs absent welfare. Therefore they are not getting labor any cheaper, on the contrary the labor is slightly more expensive because some people can get by on welfare alone. Therefore, welfare is not a subsidy to minimum wage employers, therefore, minimum wage employers are not "moochers" in this sense. This is a rather straightforward argument.

And I've already explained why the market clearing wage couldn't stay that low, precisely becasue of the desperate condition it would leave people in.


It's entirely relevant whether people would rely on parents, charity etc since the costs would still ultimately be met by productive endeavours which can actually support humans. The only difference is bypassing gov't.

Such a society would not be worse "for the unfortunate," it would be worse period. It would not in fact be tolerated, and legal prohibtions and sanctions already exist which, absent welfare, would transfer much of the cost to employers operating in such conditions.

Whether low payers would have to pay more is not the only relevant factor. Even if society and consumers tolerated the desperate conditions you tout as the alternative (which they wouldn't), that's still tacit admission that said employers can't operate in a decent and prosperous society without others sustaining their employees.

What's irrelevant is whether you want to quibble over calling that "subsidy" - though I can't think of a better word.

How the society meets the shortfall is irrelevant to the question.

It is the question

Maybe they tax the rich. Maybe they tax the poor. Maybe the let the poor die in the gutter. It's the same as considering how society deals with costs of natural disasters: let's say there is a flood, and somebody has to fix the damage. Does that mean that companies who sell supplies to to flood-impacted areas should be forced to do it at a loss, or not at all? Would that be an effective solution for disaster relief? I think not.

..whereas this isn't.

Do unemployed people not have living costs? Yes or no?

Yes. Ones which are met by people producing stuff which is viable without welfare in a decent prosperous society, enabling others to produce stuff which otherwise wouldn't be.

That's false, unless you think minimum wage employers don't pay any taxes whatsoever. The profits from Walmart are (in principle) taxed the same way as profits from Costco, so they pay their share of the living costs of the unemployed the same as everyone else. Are you saing that Walmart should be solely responsible not only for living costs of its own employees, but also those it doesn't employ? But for some reason other, non-minimum wage companies should have no such requirements?

No, what I said stands regardless of everyone paying taxes.

You do realize this part pertains to living costs of the unemployed, right? So how does taxing a non-minimum-wage company to pay for the living costs of an unemployed person, enable a minimum wage employee to produce that otherwise wouldn't be produced? Either you are again completely misunderstanding what the topic is or you've failed to explain what leap of logic that would make it true.

No, it pertains to welfare recipients, most of whom are now actually employed. Because their wages don't cover their living costs. If their employers had to pay the difference it would obviously cost them more, whether you think they should or not

As for whether cost of making something is relevant, consider for example scrap metal. Making a brand new car costs a certain amount of money, but cars get totalled in accidents and lose their value due to wear and tear. A scrap yard who pays you $100 to get rid of your old car is certainly not paying the full cost of creating that car. The price tag of $100 is just what you and the scrap yard agreed is a fair amount at that point in time. If the car in question was fairly new and destroyed in an accident or is otherwise defective, it's very well possible that over its lifetime that car was a net loss to the society. That loss eventually has to be paid by someone but there's nothing in that math that says that the scrap yard should take responsibility for anything but the $100 (plus whatever other costs are involved in running a scrap yard in general).

The same is true of labor.

Nah it isn't. Scrap cars simply aren't analagous to labour in that sense and I don't know why you think they are.

You are the one who made the analogy:

A human's living costs are labour costs. Calling them "additional" costs is like saying you're prepared to pay for steel or electricity but not the "additional" costs of producing them which you think gov't should pay for.

I was just showing that there are indeed cases where no-labor factors of production likewise turn out to be a net loss to society that somebody has to cover. Cars break down, electricity can't be stored efficiently for long, steel rusts, and so on. If the producer can't sufficiently utilize these factors the costs might be higher than the value produced by them and the losses have to be covered by other production. It's the same with people: the energy and resources used to create a human being or keep him alive might very well be higher than the value of his labor.

Well it doesn't show that. They're simply losses and don't have to be covered by someone elses' production, and not analagous to human living costs.

The scrap yard in the analogy is not making a loss. It pays $100 for the totalled vehicle, covers the costs to haul it out and dismantle it to parts, and makes a profit selling the materials. In case of an accident for a new car, this might not cover the resources and energy spent building the car versus the added value the car has provided over its lifetime. Depending on situation, the losses might be paid by the previous owner, the insurance company (and indirectly, other insurance company customers), or the manufacturer, or the state. But I think we can both agree that in this analogy, there is no logical reason why the scrap yard, which is analogous to the minimum-wage employer, should be forced to pay for losses, or that running a scrap yard is somehow an inviable business model that is subsidized by society at large.

I meant car depreciation which you apparently compare to human living costs. It's simply loss and doesn't have to borne by someone else - certainly not scrapyards which aren't remotely analagous to MW employers.

Some people's labor is not simply worth the living costs of the laborer and that cost has to be subsidized by rest of the society somehow. But it is a subsidy to that particular individual, not his employer.

Which isn't really relevant. The same burger flipped by Steve Jobs or a neurosurgeon wouldn't fetch a penny more. The limiting factor is what consumers will pay for burgers. If that doesn't cover living costs, the deficiency is in that employer's business plan.

The business plan is definicient only if it fails to make sufficient profit, all externalities taken into account.

Which it would if businesses which generate insufficient revenue to cover living costs had to do so.

If you make some of those business plans non-viable, it'll be a net loss to society, and it isn't even likely to reduce inequality as those who'd otherwise be producing at least part of their own living costs would now be jobless and entirely dependent on rest of society.

I somewhat agree. Subsidy per se isn't necessarily bad, but A) no one should be getting rich off it and B) employment at wages too far below living costs becomes pointless for everyone but the employer.

A) If nobody can get rich off it, nobody will do it. There needs to be sufficient profit in a business for it to attract capital.
B) If employment at wages becomes pointless to the employees, they will quit, thereby making it pointless to the employer as well.

A) Then we should incentivise investment away from the kind of production that can't support people. We do this with a minimum wage.
B) Then employers would have to pay more. Unless you mean where employees are starving and desperate, in which case what I said stands.

As for the first point about covering living costs, that's entirely arbitrary and to some extent even harmful. Let's say you have a small town with a number of viable businesses. One day there is a flood, and the damages need to be paid for somehow. Which businesses should pay for it? The construction companies and carpenters who the town needs to employ to get stuff fixed? Or the coffee shops and restaurants who're brought to a brink of bakruptcy anyway? Or the supermarkets and home depot that now get more customers as people need to resupply and build up their houses? Or maybe, levy a tax to all the companies equally?

Is this a random question or is it supposed to be some kind of analogy?

 

[Underseer]

Those who oppose raising the minimum wage clearly want more big government on precisely the kind of programs they usually complain about.

The only way to have both a lower minimum wage and less big government is to let a large number of people starve in the streets, which will lead to a massive social breakdown, increased crime, etc.

I guess now we know why they passed all those draconian "tough on crime" bills in the past few decades. They're getting prepared for the inevitable result of their own policies.

 

[Rhea]

A) If nobody can get rich off it, nobody will do it. There needs to be sufficient profit in a business for it to attract capital.

Now that's a funny thing to say. A very odd and demonstrably false thing to say.

One could ask the folks in my town who are family farmers how that's working out. They aren't going to get rich, but they do it anyway for other reasons. I'm sure as certain not going to get rich in my $5,000/year job and I still do it. My daughter's lemonade stand is not going to get her rich - and she knows this - and she loves doing it. The local hairdresser makes the same choice. The bistro on the corner, ditto. The family that owns the shoe repair store. Even the author who writes and writes and is certainly not doing it "to get rich".

Millions of people do millions of things including starting businesses for purposes other than "getting rich."

 

[Loren Pechtel]

Those who oppose raising the minimum wage clearly want more big government on precisely the kind of programs they usually complain about.

The only way to have both a lower minimum wage and less big government is to let a large number of people starve in the streets, which will lead to a massive social breakdown, increased crime, etc.

I guess now we know why they passed all those draconian "tough on crime" bills in the past few decades. They're getting prepared for the inevitable result of their own policies.

You're describing some of them.

I oppose raising the minimum wage and in fact think it should be eliminated. That does not mean I hold the anti-welfare philosophy of the right--I do believe we need a decent welfare system. I especially support things like the EITC--the system should be set up so that working betters your position.

 

[Jayjay]

The point is that they would not have to cover living costs absent welfare. Therefore they are not getting labor any cheaper, on the contrary the labor is slightly more expensive because some people can get by on welfare alone. Therefore, welfare is not a subsidy to minimum wage employers, therefore, minimum wage employers are not "moochers" in this sense. This is a rather straightforward argument.

And I've already explained why the market clearing wage couldn't stay that low, precisely becasue of the desperate condition it would leave people in.


It's entirely relevant whether people would rely on parents, charity etc since the costs would still ultimately be met by productive endeavours which can actually support humans. The only difference is bypassing gov't.

Such a society would not be worse "for the unfortunate," it would be worse period. It would not in fact be tolerated, and legal prohibtions and sanctions already exist which, absent welfare, would transfer much of the cost to employers operating in such conditions.

Whether low payers would have to pay more is not the only relevant factor. Even if society and consumers tolerated the desperate conditions you tout as the alternative (which they wouldn't), that's still tacit admission that said employers can't operate in a decent and prosperous society without others sustaining their employees.

Of course a society without welfare would be worse for everyone: That's why we have welfare. But would that society be better off if the minimum-wage employers were eliminated? The former lower paid employees would now be jobless, requiring even more support, and absent a safety net I can't possibly imagine how that could be considered a decent and prosperous society. The argument that it would is based on the notion that all minimum wage employees could be hired at higher level, yet still generate sufficient profit for their employers to stay in business. Sure, some might make it: those who are actually valuable employees, but are for whatever reason not in a position to bargain for better pay, but the ones whose contribution is less than their living costs would now be unemployed.

Besides, there are plenty of other businesses that would not be viable if welfare were eliminated. For example, businesses who cater to poor people. Cutting costs would mean that the poor would have to tighten their belts even more, which would hurt these businesses and the magrinal ones would become unviable. So if your argument is that minimum wage employers can't operate in such an economy, therefore we should force them to pay a special tax, why shouldn't non-minimum wage companies (like Costco) that would suffer under the same conditions be likewise taxed? Burdening only the minimun-wage employees based on that hypothetical is completely arbitrary.

What's irrelevant is whether you want to quibble over calling that "subsidy" - though I can't think of a better word.

It is the explicit topic of this thread: whether minimum-wage employers are "corporate moochers", i.e. subsidized.

How the society meets the shortfall is irrelevant to the question.

It is the question

Maybe they tax the rich. Maybe they tax the poor. Maybe the let the poor die in the gutter. It's the same as considering how society deals with costs of natural disasters: let's say there is a flood, and somebody has to fix the damage. Does that mean that companies who sell supplies to to flood-impacted areas should be forced to do it at a loss, or not at all? Would that be an effective solution for disaster relief? I think not.

..whereas this isn't.

Then you failed to understand the analogy, because the analogy is precisely about how society might pay for shared costs such as supporting those who can't fully or even partially support themselves.

Do unemployed people not have living costs? Yes or no?

Yes. Ones which are met by people producing stuff which is viable without welfare in a decent prosperous society, enabling others to produce stuff which otherwise wouldn't be.

That's false, unless you think minimum wage employers don't pay any taxes whatsoever. The profits from Walmart are (in principle) taxed the same way as profits from Costco, so they pay their share of the living costs of the unemployed the same as everyone else. Are you saing that Walmart should be solely responsible not only for living costs of its own employees, but also those it doesn't employ? But for some reason other, non-minimum wage companies should have no such requirements?

No, what I said stands regardless of everyone paying taxes.

You do realize this part pertains to living costs of the unemployed, right? So how does taxing a non-minimum-wage company to pay for the living costs of an unemployed person, enable a minimum wage employee to produce that otherwise wouldn't be produced? Either you are again completely misunderstanding what the topic is or you've failed to explain what leap of logic that would make it true.

No, it pertains to welfare recipients, most of whom are now actually employed. Because their wages don't cover their living costs. If their employers had to pay the difference it would obviously cost them more, whether you think they should or not

See the question above: "Do unemployed people not have living costs?". True, this exchange in general is about the employed. But I was bringing up the support for unemployed to show that the living costs of a person are something that exist independently of their employment. You seem to have missed that point because you dodged the question.

Well it doesn't show that. They're simply losses and don't have to be covered by someone elses' production, and not analagous to human living costs.

The scrap yard in the analogy is not making a loss. It pays $100 for the totalled vehicle, covers the costs to haul it out and dismantle it to parts, and makes a profit selling the materials. In case of an accident for a new car, this might not cover the resources and energy spent building the car versus the added value the car has provided over its lifetime. Depending on situation, the losses might be paid by the previous owner, the insurance company (and indirectly, other insurance company customers), or the manufacturer, or the state. But I think we can both agree that in this analogy, there is no logical reason why the scrap yard, which is analogous to the minimum-wage employer, should be forced to pay for losses, or that running a scrap yard is somehow an inviable business model that is subsidized by society at large.

I meant car depreciation which you apparently compare to human living costs. It's simply loss and doesn't have to borne by someone else - certainly not scrapyards which aren't remotely analagous to MW employers.

They are, in the sense that they buy something (scrap metal vs. labor) at a cost that is lower than the cost it took to create or maintain it originally (new car vs. person's living costs). Yes, you are right, the cost and possible losses of a totaled car are borne by someone else than the scrap yard who buys it for pittance, and that's exatly the point: living costs of a person are also borne by someone else, and it's not the responsibility of whoever happens to buy that person's labor., even if it is for a pittance. If the scrap yard in the analogy is not a "moocher" then neither is the minimum-wage employer.

If you make some of those business plans non-viable, it'll be a net loss to society, and it isn't even likely to reduce inequality as those who'd otherwise be producing at least part of their own living costs would now be jobless and entirely dependent on rest of society.

I somewhat agree. Subsidy per se isn't necessarily bad, but A) no one should be getting rich off it and B) employment at wages too far below living costs becomes pointless for everyone but the employer.

A) If nobody can get rich off it, nobody will do it. There needs to be sufficient profit in a business for it to attract capital.
B) If employment at wages becomes pointless to the employees, they will quit, thereby making it pointless to the employer as well.

A) Then we should incentivise investment away from the kind of production that can't support people. We do this with a minimum wage.
B) Then employers would have to pay more. Unless you mean where employees are starving and desperate, in which case what I said stands.

Let's say I am able to pay 50% of my own upkeep. So basically what you're saying is that I should be forbidden to take a job that lets me contribute that 50% back to society? Is it really better to have those who can't pull their own weight not be allowed to pull even part of their weight? Where is the sense in that?

The employers would not have to pay more. Only if they want the job done so that they can afford to pay more, in which case, the employees could negotiate a higher pay anyway. In real world of course the negotiating positon of the employees is often quite lopsided compared to employers, but that's a separate issue entirely.

As for the first point about covering living costs, that's entirely arbitrary and to some extent even harmful. Let's say you have a small town with a number of viable businesses. One day there is a flood, and the damages need to be paid for somehow. Which businesses should pay for it? The construction companies and carpenters who the town needs to employ to get stuff fixed? Or the coffee shops and restaurants who're brought to a brink of bakruptcy anyway? Or the supermarkets and home depot that now get more customers as people need to resupply and build up their houses? Or maybe, levy a tax to all the companies equally?

Is this a random question or is it supposed to be some kind of analogy?

It's a thought expriment on who should be responsible for paying for costs that aren't caused by anyone in particular. To make it more analogous to human living costs, let's say the town is not a stranger to floods and could have predicted one was going to happen again eventually.

 

[Jayjay]

A) If nobody can get rich off it, nobody will do it. There needs to be sufficient profit in a business for it to attract capital.

Now that's a funny thing to say. A very odd and demonstrably false thing to say.

One could ask the folks in my town who are family farmers how that's working out. They aren't going to get rich, but they do it anyway for other reasons. I'm sure as certain not going to get rich in my $5,000/year job and I still do it. My daughter's lemonade stand is not going to get her rich - and she knows this - and she loves doing it. The local hairdresser makes the same choice. The bistro on the corner, ditto. The family that owns the shoe repair store. Even the author who writes and writes and is certainly not doing it "to get rich".

Millions of people do millions of things including starting businesses for purposes other than "getting rich."

There's nothing wrong with charity. But history shows that it's not a sufficient solution for social welfare.

 

[Canard DuJour]

The point is that they would not have to cover living costs absent welfare. Therefore they are not getting labor any cheaper, on the contrary the labor is slightly more expensive because some people can get by on welfare alone. Therefore, welfare is not a subsidy to minimum wage employers, therefore, minimum wage employers are not "moochers" in this sense. This is a rather straightforward argument.

And I've already explained why the market clearing wage couldn't stay that low, precisely becasue of the desperate condition it would leave people in.


It's entirely relevant whether people would rely on parents, charity etc since the costs would still ultimately be met by productive endeavours which can actually support humans. The only difference is bypassing gov't.

Such a society would not be worse "for the unfortunate," it would be worse period. It would not in fact be tolerated, and legal prohibtions and sanctions already exist which, absent welfare, would transfer much of the cost to employers operating in such conditions.

Whether low payers would have to pay more is not the only relevant factor. Even if society and consumers tolerated the desperate conditions you tout as the alternative (which they wouldn't), that's still tacit admission that said employers can't operate in a decent and prosperous society without others sustaining their employees.

Of course a society without welfare would be worse for everyone: That's why we have welfare.

Indeed and one the worse things would be the condition of the working poor. Worse than would be acceptable to the consumers and society on which the businesses depend. Worse than is permissible by laws implemented to eradicate such conditions in the first place. So if the food and retail businesses which employ most MW earners wanted to continue employing, they'd have to start paying toward costs previously covered by welfare. Which of course some couldn't.

But would that society be better off if the minimum-wage employers were eliminated? The former lower paid employees would now be jobless, requiring even more support, and absent a safety net I can't possibly imagine how that could be considered a decent and prosperous society. The argument that it would is based on the notion that all minimum wage employees could be hired at higher level, yet still generate sufficient profit for their employers to stay in business. Sure, some might make it: those who are actually valuable employees, but are for whatever reason not in a position to bargain for better pay, but the ones whose contribution is less than their living costs would now be unemployed.

Whatever argument you're on about isn't one I've made and nothing to do with the comments to which you've appended yours.

Besides, there are plenty of other businesses that would not be viable if welfare were eliminated. For example, businesses who cater to poor people. Cutting costs would mean that the poor would have to tighten their belts even more, which would hurt these businesses and the magrinal ones would become unviable. So if your argument is that minimum wage employers can't operate in such an economy, therefore we should force them to pay a special tax, why shouldn't non-minimum wage companies (like Costco) that would suffer under the same conditions be likewise taxed? Burdening only the minimun-wage employees based on that hypothetical is completely arbitrary.

Had that been my argument, I'd say because their employees require less welfare. Obviously. But it wasn't my argument. Why not address what I actually said?

What's irrelevant is whether you want to quibble over calling that "subsidy" - though I can't think of a better word.

It is the explicit topic of this thread: whether minimum-wage employers are "corporate moochers", i.e. subsidized.

How the society meets the shortfall is irrelevant to the question.

It is the question

Maybe they tax the rich. Maybe they tax the poor. Maybe the let the poor die in the gutter. It's the same as considering how society deals with costs of natural disasters: let's say there is a flood, and somebody has to fix the damage. Does that mean that companies who sell supplies to to flood-impacted areas should be forced to do it at a loss, or not at all? Would that be an effective solution for disaster relief? I think not.

..whereas this isn't.

Then you failed to understand the analogy, because the analogy is precisely about how society might pay for shared costs such as supporting those who can't fully or even partially support themselves.

It's barely tangential to the issue of supporting those who can't support themselves, never mind "precisely". The issue of those who can't support themselves is itself tangential to the problem, ie production of too little value to support people - however capable - in decent conditions.

Do unemployed people not have living costs? Yes or no?

Yes. Ones which are met by people producing stuff which is viable without welfare in a decent prosperous society, enabling others to produce stuff which otherwise wouldn't be.

That's false, unless you think minimum wage employers don't pay any taxes whatsoever. The profits from Walmart are (in principle) taxed the same way as profits from Costco, so they pay their share of the living costs of the unemployed the same as everyone else. Are you saing that Walmart should be solely responsible not only for living costs of its own employees, but also those it doesn't employ? But for some reason other, non-minimum wage companies should have no such requirements?

No, what I said stands regardless of everyone paying taxes.

You do realize this part pertains to living costs of the unemployed, right? So how does taxing a non-minimum-wage company to pay for the living costs of an unemployed person, enable a minimum wage employee to produce that otherwise wouldn't be produced? Either you are again completely misunderstanding what the topic is or you've failed to explain what leap of logic that would make it true.

No, it pertains to welfare recipients, most of whom are now actually employed. Because their wages don't cover their living costs. If their employers had to pay the difference it would obviously cost them more, whether you think they should or not

See the question above: "Do unemployed people not have living costs?". True, this exchange in general is about the employed. But I was bringing up the support for unemployed to show that the living costs of a person are something that exist independently of their employment. You seem to have missed that point because you dodged the question.

See my answer above? Read it again.

Well it doesn't show that. They're simply losses and don't have to be covered by someone elses' production, and not analagous to human living costs.

The scrap yard in the analogy is not making a loss. It pays $100 for the totalled vehicle, covers the costs to haul it out and dismantle it to parts, and makes a profit selling the materials. In case of an accident for a new car, this might not cover the resources and energy spent building the car versus the added value the car has provided over its lifetime. Depending on situation, the losses might be paid by the previous owner, the insurance company (and indirectly, other insurance company customers), or the manufacturer, or the state. But I think we can both agree that in this analogy, there is no logical reason why the scrap yard, which is analogous to the minimum-wage employer, should be forced to pay for losses, or that running a scrap yard is somehow an inviable business model that is subsidized by society at large.

I meant car depreciation which you apparently compare to human living costs. It's simply loss and doesn't have to borne by someone else - certainly not scrapyards which aren't remotely analagous to MW employers.

They are, in the sense that they buy something (scrap metal vs. labor) at a cost that is lower than the cost it took to create or maintain it originally (new car vs. person's living costs). Yes, you are right, the cost and possible losses of a totaled car are borne by someone else than the scrap yard who buys it for pittance, and that's exatly the point: living costs of a person are also borne by someone else, and it's not the responsibility of whoever happens to buy that person's labor., even if it is for a pittance. If the scrap yard in the analogy is not a "moocher" then neither is the minimum-wage employer.

Nah, what I meant was that depreciation in car value DOESN'T have to be borne by someone else like human living costs do. It's just loss, "written off", end of, and no one starves when it isn't compensated for. If we accept the equivalence you draw between the value of a new car and the cost of living, there is no depreciation and the scrapyard/employer gets the equivalent of a new car, then does something with it that only generates $100 revenue. That's nonsense in the case of a scrapyard, almost by definition, but not unlike what a below-cost employer does.

If you make some of those business plans non-viable, it'll be a net loss to society, and it isn't even likely to reduce inequality as those who'd otherwise be producing at least part of their own living costs would now be jobless and entirely dependent on rest of society.

I somewhat agree. Subsidy per se isn't necessarily bad, but A) no one should be getting rich off it and B) employment at wages too far below living costs becomes pointless for everyone but the employer.

A) If nobody can get rich off it, nobody will do it. There needs to be sufficient profit in a business for it to attract capital.
B) If employment at wages becomes pointless to the employees, they will quit, thereby making it pointless to the employer as well.

A) Then we should incentivise investment away from the kind of production that can't support people. We do this with a minimum wage.
B) Then employers would have to pay more. Unless you mean where employees are starving and desperate, in which case what I said stands.

Let's say I am able to pay 50% of my own upkeep. So basically what you're saying is that I should be forbidden to take a job that lets me contribute that 50% back to society? Is it really better to have those who can't pull their own weight not be allowed to pull even part of their weight? Where is the sense in that?

No, I'm saying we should incentivise investment away from businesses that only allow people to pay 50% of their upkeep.

The employers would not have to pay more. Only if they want the job done so that they can afford to pay more, in which case, the employees could negotiate a higher pay anyway. In real world of course the negotiating positon of the employees is often quite lopsided compared to employers, but that's a separate issue entirely.

If they don't pay someone to get the job done, they're not employers. Employers -people who do pay to get job done- would, by your latest assertion, have to pay more.

As for the first point about covering living costs, that's entirely arbitrary and to some extent even harmful. Let's say you have a small town with a number of viable businesses. One day there is a flood, and the damages need to be paid for somehow. Which businesses should pay for it? The construction companies and carpenters who the town needs to employ to get stuff fixed? Or the coffee shops and restaurants who're brought to a brink of bakruptcy anyway? Or the supermarkets and home depot that now get more customers as people need to resupply and build up their houses? Or maybe, levy a tax to all the companies equally?

Is this a random question or is it supposed to be some kind of analogy?

It's a thought expriment on who should be responsible for paying for costs that aren't caused by anyone in particular. To make it more analogous to human living costs, let's say the town is not a stranger to floods and could have predicted one was going to happen again eventually.

How is it relevant? Production costs typically aren't caused by anyone in particular. The cost of steel or flour or electricity or whatever is just a brute fact, not caused by anyone in particular. It's incurred by whoever needs the stuff unless it's subsidised. There might be good reasons for the subsidy, which might have nothing to do with some beneficiaries, but that doesn't make them any less a subsidised. The already marginal coffee shops and restaurants in your scenario are not in fact viable if the flood is expected. And if the flood is meant to be equivalent to human living costs, businesses which can't meet them require subsidy.

 

[Jayjay]

Of course a society without welfare would be worse for everyone: That's why we have welfare.

Indeed and one the worse things would be the condition of the working poor. Worse than would be acceptable to the consumers and society on which the businesses depend. Worse than is permissible by laws implemented to eradicate such conditions in the first place. So if the food and retail businesses which employ most MW earners wanted to continue employing, they'd have to start paying toward costs previously covered by welfare. Which of course some couldn't.

But would that society be better off if the minimum-wage employers were eliminated? The former lower paid employees would now be jobless, requiring even more support, and absent a safety net I can't possibly imagine how that could be considered a decent and prosperous society. The argument that it would is based on the notion that all minimum wage employees could be hired at higher level, yet still generate sufficient profit for their employers to stay in business. Sure, some might make it: those who are actually valuable employees, but are for whatever reason not in a position to bargain for better pay, but the ones whose contribution is less than their living costs would now be unemployed.

Whatever argument you're on about isn't one I've made and nothing to do with the comments to which you've appended yours.

Besides, there are plenty of other businesses that would not be viable if welfare were eliminated. For example, businesses who cater to poor people. Cutting costs would mean that the poor would have to tighten their belts even more, which would hurt these businesses and the magrinal ones would become unviable. So if your argument is that minimum wage employers can't operate in such an economy, therefore we should force them to pay a special tax, why shouldn't non-minimum wage companies (like Costco) that would suffer under the same conditions be likewise taxed? Burdening only the minimun-wage employees based on that hypothetical is completely arbitrary.

Had that been my argument, I'd say because their employees require less welfare. Obviously. But it wasn't my argument. Why not address what I actually said?

Alright, either you or I is missing the point here, so let's step back and I'll summarize the entire argument so far as I've understood it. You can then show me where you think I am misrepresenting you or if I missed some crucial point.

You (not you personally, but also Togo and Underseer and whoever else brought up the same points): Minimum-wage employers are corporate moochers, because they are subsidized by welfare.

Me: They are not subsidized by welfare, because the welfare goes to the employee and not the employer.

You: The welfare goes to the employer, because if it weren't for welfare the employees would not be able to sustain themselves and the employer would have to raise wages.

Me: If you imagine a world where there was no welfare, but otherwise all regulations were the same, employers would not have to raise wages because the employees would be more desperate and would accept lower wages. Enough employees would survive by other means (charity, family, working more, compromising quality of living, and sacrificing their health or futures).

You: The hypothetical assumes a world that would not be a decent and prosperous society, so the fact that minimum wage employers could operate there shows that such businesses don't have viable business models in decent societies.

Me: There are also non-minimum wage employers who would be able to prosper in such a society. Basically anyone who caters cheap goods to the poor would get more business if there were more poverty, regardless of what they pay their employees. For example, Costco. Therefore the fact that a company can operate in a non-decent society doesn't tell us anything about how viable their business model is in a decent society.

So the way I see it, I've countered all your arguments so far, and if you climb that ladder of reasoning up back to the original claim, you'd have to conclude that welfare sn't a subsidy and minimum wage employers aren't "moochers".

How the society meets the shortfall is irrelevant to the question.

It is the question

Maybe they tax the rich. Maybe they tax the poor. Maybe the let the poor die in the gutter. It's the same as considering how society deals with costs of natural disasters: let's say there is a flood, and somebody has to fix the damage. Does that mean that companies who sell supplies to to flood-impacted areas should be forced to do it at a loss, or not at all? Would that be an effective solution for disaster relief? I think not.

..whereas this isn't.

Then you failed to understand the analogy, because the analogy is precisely about how society might pay for shared costs such as supporting those who can't fully or even partially support themselves.

It's barely tangential to the issue of supporting those who can't support themselves, never mind "precisely". The issue of those who can't support themselves is itself tangential to the problem, ie production of too little value to support people - however capable - in decent conditions.

The living costs of people (everyone, not just those who can't support themselves) are a cost that the society has to cover somehow. And so is covering costs from acts of nature. Some people can maybe cover their own costs after a disaster, just like some people can cover their own living costs by their own income from employment or investments or whatever. But who do you think should be responsible for disaster relief for people who can't get by on their own? Say, a person who needs supplies from Home Depot to fix his house after a storm, or a person who needs gasoline for a generator after hurricane took out the power lines. Do you think that Home Depot or Texaco should be forced to sell those guys supplies at a discount or not at all? Is it Home Depot's problem if people didn't have insurance, or buitl their houses next to flooding rivers or wherever?

If you think not, then I don't se what basis you have for forcing analogous costs to be paid by minimum-wage employers, who have nothing to do with the fact that some people's labor is not worth their living costs.

They are, in the sense that they buy something (scrap metal vs. labor) at a cost that is lower than the cost it took to create or maintain it originally (new car vs. person's living costs). Yes, you are right, the cost and possible losses of a totaled car are borne by someone else than the scrap yard who buys it for pittance, and that's exatly the point: living costs of a person are also borne by someone else, and it's not the responsibility of whoever happens to buy that person's labor., even if it is for a pittance. If the scrap yard in the analogy is not a "moocher" then neither is the minimum-wage employer.

Nah, what I meant was that depreciation in car value DOESN'T have to be borne by someone else like human living costs do. It's just loss, "written off", end of, and no one starves when it isn't compensated for. If we accept the equivalence you draw between the value of a new car and the cost of living, there is no depreciation and the scrapyard/employer gets the equivalent of a new car, then does something with it that only generates $100 revenue. That's nonsense in the case of a scrapyard, almost by definition, but not unlike what a below-cost employer does.

We're not talking about getting an equivalent of a new car. The analogy stated that the car is still scrap, but during its lifetime had not generated enough value to cover it's own manufacturing costs (say, due to an accident or a defect or poor maintenance by its owner... the exact reason doesn't matter). This is equivalent of a person who's labor isn't worth what it took to produce that labor

As for costs just being "written off", consider a person who's car is his livelihood. A small time contractor, or even a wage worker who has to commute a long distance every day. His car gets totalled, and he sudenly doesn't have an income to bring food to the table. Your contention that it's "just a loss, written off, end of, and no one starves" don't really apply now do they? A cost is a cost. Trying to pretend that living costs are somehow different than other costs is special pleading, because all costs have to be paid somehow in the end. If you spend $100 more on a car, you have $100 less for food.

You still haven't said anything as to why an employee who buys a person's labor below value should be forced to cover that person's living costs, but a scrap yard who buys a person's car below that car's manufacturing and maintenance costs doesn't have such special requirements.

Let's say I am able to pay 50% of my own upkeep. So basically what you're saying is that I should be forbidden to take a job that lets me contribute that 50% back to society? Is it really better to have those who can't pull their own weight not be allowed to pull even part of their weight? Where is the sense in that?

No, I'm saying we should incentivise investment away from businesses that only allow people to pay 50% of their upkeep.

It's the same thing: In absence of opportunities to contribute 50%, those people will now be able to pay 0% of their upkeep.

And consider a person who's labor is worth 110% of his living costs, but can't find an employer who would take less than 20% markup, thus leaving him with just 90% and needing 10% supplementary income. Should that employer be disincentivised as well? The total productivity for society would be positive if he was allowed to work, so is it really preferable to force this guy to be jobless?

The employers would not have to pay more. Only if they want the job done so that they can afford to pay more, in which case, the employees could negotiate a higher pay anyway. In real world of course the negotiating positon of the employees is often quite lopsided compared to employers, but that's a separate issue entirely.

If they don't pay someone to get the job done, they're not employers. Employers -people who do pay to get job done- would, by your latest assertion, have to pay more.

That tautology doesn't negate my point in any way: nothing is forcing employers to continue to be employers if they were forced to pay a higher wage. Only those employers who would already be willing to pay a higher wage would do so, and the real question is what factors are preventing the workers from negotiating that wage anyway.

As for the first point about covering living costs, that's entirely arbitrary and to some extent even harmful. Let's say you have a small town with a number of viable businesses. One day there is a flood, and the damages need to be paid for somehow. Which businesses should pay for it? The construction companies and carpenters who the town needs to employ to get stuff fixed? Or the coffee shops and restaurants who're brought to a brink of bakruptcy anyway? Or the supermarkets and home depot that now get more customers as people need to resupply and build up their houses? Or maybe, levy a tax to all the companies equally?

Is this a random question or is it supposed to be some kind of analogy?

It's a thought expriment on who should be responsible for paying for costs that aren't caused by anyone in particular. To make it more analogous to human living costs, let's say the town is not a stranger to floods and could have predicted one was going to happen again eventually.

How is it relevant? Production costs typically aren't caused by anyone in particular. The cost of steel or flour or electricity or whatever is just a brute fact, not caused by anyone in particular. It's incurred by whoever needs the stuff unless it's subsidised. There might be good reasons for the subsidy, which might have nothing to do with some beneficiaries, but that doesn't make them any less a subsidised. The already marginal coffee shops and restaurants in your scenario are not in fact viable if the flood is expected. And if the flood is meant to be equivalent to human living costs, businesses which can't meet them require subsidy.

Living costs of a person aren't caused by anyone in particular either (except maybe that person himself, or his parents). They are just as much a brute fact.

 

[Canard DuJour]

Of course a society without welfare would be worse for everyone: That's why we have welfare.

Indeed and one the worse things would be the condition of the working poor. Worse than would be acceptable to the consumers and society on which the businesses depend. Worse than is permissible by laws implemented to eradicate such conditions in the first place. So if the food and retail businesses which employ most MW earners wanted to continue employing, they'd have to start paying toward costs previously covered by welfare. Which of course some couldn't.

But would that society be better off if the minimum-wage employers were eliminated? The former lower paid employees would now be jobless, requiring even more support, and absent a safety net I can't possibly imagine how that could be considered a decent and prosperous society. The argument that it would is based on the notion that all minimum wage employees could be hired at higher level, yet still generate sufficient profit for their employers to stay in business. Sure, some might make it: those who are actually valuable employees, but are for whatever reason not in a position to bargain for better pay, but the ones whose contribution is less than their living costs would now be unemployed.

Whatever argument you're on about isn't one I've made and nothing to do with the comments to which you've appended yours.

Besides, there are plenty of other businesses that would not be viable if welfare were eliminated. For example, businesses who cater to poor people. Cutting costs would mean that the poor would have to tighten their belts even more, which would hurt these businesses and the magrinal ones would become unviable. So if your argument is that minimum wage employers can't operate in such an economy, therefore we should force them to pay a special tax, why shouldn't non-minimum wage companies (like Costco) that would suffer under the same conditions be likewise taxed? Burdening only the minimun-wage employees based on that hypothetical is completely arbitrary.

Had that been my argument, I'd say because their employees require less welfare. Obviously. But it wasn't my argument. Why not address what I actually said?

Alright, either you or I is missing the point here, so let's step back and I'll summarize the entire argument so far as I've understood it. You can then show me where you think I am misrepresenting you or if I missed some crucial point.

You (not you personally, but also Togo and Underseer and whoever else brought up the same points): Minimum-wage employers are corporate moochers, because they are subsidized by welfare.

Me: They are not subsidized by welfare, because the welfare goes to the employee and not the employer.

You: The welfare goes to the employer, because if it weren't for welfare the employees would not be able to sustain themselves and the employer would have to raise wages.

Me: If you imagine a world where there was no welfare, but otherwise all regulations were the same, employers would not have to raise wages because the employees would be more desperate and would accept lower wages.

And I've given detailed argument as to why existing below-living-cost employment would become unsustainable in that world. You haven't adressed it except by repeating your assertion.

Enough employees would survive by other means (charity, family, working more, compromising quality of living, and sacrificing their health or futures).

Charity, families etc are not alternatives, but ultimately the same source of subsidy (whoever one ragards as beneficiaries) as I and others have repeatedly explained and you've acknowledged. Neither are further sacrificing health and living conditions alternatives since they are the reason existing MW employment would become unsustainable.

You: The hypothetical assumes a world that would not be a decent and prosperous society, so the fact that minimum wage employers could operate there shows that such businesses don't have viable business models in decent societies.

Me: There are also non-minimum wage employers who would be able to prosper in such a society. Basically anyone who caters cheap goods to the poor would get more business if there were more poverty, regardless of what they pay their employees. For example, Costco. Therefore the fact that a company can operate in a non-decent society doesn't tell us anything about how viable their business model is in a decent society.

That doesn't even the address the issue since they aren't the relevant employers by definition. It isn't even true anyway since the relevant consumers would have less or no disposable income.

So the way I see it, I've countered all your arguments so far, and if you climb that ladder of reasoning up back to the original claim, you'd have to conclude that welfare sn't a subsidy and minimum wage employers aren't "moochers".

The way I see it, you haven't countered anything beyond your assertion that employers wouldn't have to pay more, and your only additional step isn't even wrong.

How the society meets the shortfall is irrelevant to the question.

It is the question

Maybe they tax the rich. Maybe they tax the poor. Maybe the let the poor die in the gutter. It's the same as considering how society deals with costs of natural disasters: let's say there is a flood, and somebody has to fix the damage. Does that mean that companies who sell supplies to to flood-impacted areas should be forced to do it at a loss, or not at all? Would that be an effective solution for disaster relief? I think not.

..whereas this isn't.

Then you failed to understand the analogy, because the analogy is precisely about how society might pay for shared costs such as supporting those who can't fully or even partially support themselves.

It's barely tangential to the issue of supporting those who can't support themselves, never mind "precisely". The issue of those who can't support themselves is itself tangential to the problem, ie production of too little value to support people - however capable - in decent conditions.

The living costs of people (everyone, not just those who can't support themselves) are a cost that the society has to cover somehow. And so is covering costs from acts of nature. Some people can maybe cover their own costs after a disaster, just like some people can cover their own living costs by their own income from employment or investments or whatever. But who do you think should be responsible for disaster relief for people who can't get by on their own? Say, a person who needs supplies from Home Depot to fix his house after a storm, or a person who needs gasoline for a generator after hurricane took out the power lines. Do you think that Home Depot or Texaco should be forced to sell those guys supplies at a discount or not at all? Is it Home Depot's problem if people didn't have insurance, or buitl their houses next to flooding rivers or wherever?

If you think not, then I don't se what basis you have for forcing analogous costs to be paid by minimum-wage employers, who have nothing to do with the fact that some people's labor is not worth their living costs.

Because (a) the costs aren't analagous and (b) genuinely marginal MW employers have everything to do with the fact that their product isn't worth human living costs. If low margins were evidence of low value labour we should subsidise, then profitable MW employers like Walmart are certainly mooching.

They are, in the sense that they buy something (scrap metal vs. labor) at a cost that is lower than the cost it took to create or maintain it originally (new car vs. person's living costs). Yes, you are right, the cost and possible losses of a totaled car are borne by someone else than the scrap yard who buys it for pittance, and that's exatly the point: living costs of a person are also borne by someone else, and it's not the responsibility of whoever happens to buy that person's labor., even if it is for a pittance. If the scrap yard in the analogy is not a "moocher" then neither is the minimum-wage employer.

Nah, what I meant was that depreciation in car value DOESN'T have to be borne by someone else like human living costs do. It's just loss, "written off", end of, and no one starves when it isn't compensated for. If we accept the equivalence you draw between the value of a new car and the cost of living, there is no depreciation and the scrapyard/employer gets the equivalent of a new car, then does something with it that only generates $100 revenue. That's nonsense in the case of a scrapyard, almost by definition, but not unlike what a below-cost employer does.

We're not talking about getting an equivalent of a new car. The analogy stated that the car is still scrap, but during its lifetime had not generated enough value to cover it's own manufacturing costs (say, due to an accident or a defect or poor maintenance by its owner... the exact reason doesn't matter).

I think the comment to which you reply stands in response. You restate a question based on the assumptions I dispute.

This is equivalent of a person who's labor isn't worth what it took to produce that labor

Which isn't even the issue. Rather, it's low-margin, easily substited goods and services which aren't worth what it takes to sustain the necessary labour .The same burger flipped by Steve Jobs or a neurosurgeon wouldn't fetch a penny more.

As for costs just being "written off", consider a person who's car is his livelihood. A small time contractor, or even a wage worker who has to commute a long distance every day. His car gets totalled, and he sudenly doesn't have an income to bring food to the table. Your contention that it's "just a loss, written off, end of, and no one starves" don't really apply now do they?

BINGO! Right, because it's then an occupational hazard or running cost which his occupation generates too little revenue to cover and put food on the table. One way or another he'll need susbsidy. If we subsidise the car depreciation to keep him in business, then the scrapyard (along with rest of us) is already subsidising an otherwise unviable business.

If he can still put food on the table, the depreciation is indeed just a loss he has to absorb like the rest of us would - "written off," end of - and not equivalent to human living costs.

A cost is a cost. Trying to pretend that living costs are somehow different than other costs is special pleading, because all costs have to be paid somehow in the end. If you spend $100 more on a car, you have $100 less for food.

Which isn't to say you've insufficient income for food. Living costs are different because inanimate objects like cars don't suffer.

You still haven't said anything as to why an employee who buys a person's labor below value should be forced to cover that person's living costs, but a scrap yard who buys a person's car below that car's manufacturing and maintenance costs doesn't have such special requirements.

That's because (a) I haven't said they should be forced to, but that they're subsidised if they don't and (b) the two things aren't nearly equivalent without conditions by which your scenario demonstrates my contention, not yours.

Let's say I am able to pay 50% of my own upkeep. So basically what you're saying is that I should be forbidden to take a job that lets me contribute that 50% back to society? Is it really better to have those who can't pull their own weight not be allowed to pull even part of their weight? Where is the sense in that?

No, I'm saying we should incentivise investment away from businesses that only allow people to pay 50% of their upkeep.

It's the same thing: In absence of opportunities to contribute 50%, those people will now be able to pay 0% of their upkeep.

Then it's not the same thing as I'm addressing the absence itself.

And consider a person who's labor is worth 110% of his living costs, but can't find an employer who would take less than 20% markup, thus leaving him with just 90% and needing 10% supplementary income. Should that employer be disincentivised as well? The total productivity for society would be positive if he was allowed to work, so is it really preferable to force this guy to be jobless?

No, investment in production which allows him to realise the full 110% should be incentivised, eg by making it more profitable than production which doesn't, eg by a minimum wage.

The employers would not have to pay more. Only if they want the job done so that they can afford to pay more, in which case, the employees could negotiate a higher pay anyway. In real world of course the negotiating positon of the employees is often quite lopsided compared to employers, but that's a separate issue entirely.

If they don't pay someone to get the job done, they're not employers. Employers -people who do pay to get job done- would, by your latest assertion, have to pay more.

That tautology doesn't negate my point in any way: nothing is forcing employers to continue to be employers if they were forced to pay a higher wage. Only those employers who would already be willing to pay a higher wage would do so, and the real question is what factors are preventing the workers from negotiating that wage anyway.

If they couldn't or wouldn't pay the higher wage which (per your latest assertion) they'd have to if they want to remain employers, then they were subsidised.

As for the first point about covering living costs, that's entirely arbitrary and to some extent even harmful. Let's say you have a small town with a number of viable businesses. One day there is a flood, and the damages need to be paid for somehow. Which businesses should pay for it? The construction companies and carpenters who the town needs to employ to get stuff fixed? Or the coffee shops and restaurants who're brought to a brink of bakruptcy anyway? Or the supermarkets and home depot that now get more customers as people need to resupply and build up their houses? Or maybe, levy a tax to all the companies equally?

Is this a random question or is it supposed to be some kind of analogy?

It's a thought expriment on who should be responsible for paying for costs that aren't caused by anyone in particular. To make it more analogous to human living costs, let's say the town is not a stranger to floods and could have predicted one was going to happen again eventually.

How is it relevant? Production costs typically aren't caused by anyone in particular. The cost of steel or flour or electricity or whatever is just a brute fact, not caused by anyone in particular. It's incurred by whoever needs the stuff unless it's subsidised. There might be good reasons for the subsidy, which might have nothing to do with some beneficiaries, but that doesn't make them any less a subsidised. The already marginal coffee shops and restaurants in your scenario are not in fact viable if the flood is expected. And if the flood is meant to be equivalent to human living costs, businesses which can't meet them require subsidy.

Living costs of a person aren't caused by anyone in particular either (except maybe that person himself, or his parents). They are just as much a brute fact.

Exactly. So redistribution which makes any factor of production cheaper subsidises it regardless of the fact that no one in particular caused the cost in the first place.

 

[Togo]

Alright, either you or I is missing the point here, so let's step back and I'll summarize the entire argument so far as I've understood it. You can then show me where you think I am misrepresenting you or if I missed some crucial point.

Fair enough.

You (not you personally, but also Togo and Underseer and whoever else brought up the same points): Minimum-wage employers are corporate moochers, because they are subsidized by welfare.

Eh, not quite. They're moochers because their business model involves money being taken from other businesses.

Me: They are not subsidized by welfare, because the welfare goes to the employee and not the employer.

Does nothing to address the point I was actually making, above. I don't particularly care who receives the money, merely that the business can't seem to survive without it being taken from other businesses.

The rest of the summary drifts from that start point, so I'll leave it there.

How the society meets the shortfall is irrelevant to the question.

It is the question

Maybe they tax the rich. Maybe they tax the poor. Maybe the let the poor die in the gutter. It's the same as considering how society deals with costs of natural disasters:

No matter how they do it, ultimately it is paid for from economic activity - ie other businesses.


Look at it from society's point of view. You're running your own town, Atown. A large retail (Wallmart)company wants to come in. On arrival it will compete with existing firms, driving some of them out of business (as is normal). It will pay it's workers less than those businesses, and the gap will need to be met through taxation of existing businesses (either directly, or indirectly by taxing their employees). Can you see how it's arrival might result in a net loss to Atown? Meanwhile, over in Btown, they told the same company to get lost. They keep their existing jobs, with maybe some losses, but the rest of their businesses enjoy lower taxes. Can you see how rejecting the new company might make Btown more attractive to new businesses that don't pay low wages?

Atown now has a problem - it's losing the most profitable business to Btown, and keeping only those that pay minimum wage. The solution, obviously is to attract more minimum wage business. Wages plunge, more and more money is spent subsidising the worker's living costs to try and cushion the impact. The higher wage businesses, faced with an increasingly unattractive and dangerous town, with increasingly higher taxes/costs, flee to Btown. The better paid flee with them, and educational standards and community activities slump. Atown ends up as an industrial slum of sweatshop businesses, home to the poor and desperate, and occasionally visited by prosperous Btowners after cut-price clothing and cheap burgers.

You'll notice that in that entire account, there is no mention of who deserves or ought to be saddled with what payments. That's because it's irrelevent to the point being made. You'll also note that BTown does end up being a more expensive place to shop. Which one would you want to live in?

 

[Rhea]

Look at it from society's point of view.

Yes. precisely. So we can see who is actually taking and who is actually giving.

You're running your own town, Atown. A large retail (Wallmart)company wants to come in. On arrival it will compete with existing firms, driving some of them out of business (as is normal). It will pay it's workers less than those businesses, and the gap will need to be met through taxation of existing businesses (either directly, or indirectly by taxing their employees). Can you see how it's arrival might result in a net loss to Atown?

Also remember it is paying its workers an amount that requires increases in subsidy from all others in the town collectively that they didn't have to pitch in before, all while making an enormous profit that leaves the town and goes into a very few individuals' pockets.

Meanwhile, over in Btown, they told the same company to get lost. They keep their existing jobs, with maybe some losses, but the rest of their businesses enjoy lower taxes. Can you see how rejecting the new company might make Btown more attractive to new businesses that don't pay low wages?

and to anyone who is paying attention to their taxes, same equation. Individual income taxes go up to fund these assistance programs because one company's business model plans that profits will be increased by making other taxpayers pay for the upkeep of employees. Their business model PLANS THIS.

The higher wage businesses, faced with an increasingly unattractive and dangerous town, with increasingly higher taxes/costs, flee to Btown. The better paid flee with them, and educational standards and community activities slump. Atown ends up as an industrial slum of sweatshop businesses, home to the poor and desperate, and occasionally visited by prosperous Btowners after cut-price clothing and cheap burgers.

Yup. Already documented in USA.

You'll notice that in that entire account, there is no mention of who deserves or ought to be saddled with what payments. That's because it's irrelevent to the point being made.

Although it does illustrate who are the takes and who are the makers.

You'll also note that BTown does end up being a more expensive place to shop. Which one would you want to live in?

 

[Canard DuJour]

..or imagine if all firms payed below living costs. Who'd pay for the welfare that'd be necessary to maintain consumption? One firm's labour costs are another firm's revenue. There are no Martian or Venusian consumers or tax-payers. It's just unworkable. Firms that don't pay living costs are necessarily supported by firms that do. Nothing to do with gov't responsibility or whose names are on welfare cheques.