Corporate Moochers - how to spot them

[Canard DuJour]

Fine. I thought you were addressing the question of "any kind of displacement effect, whereby employment at one job reduces availability to be employed elsewhere."

I was addressing that question

So was I.

-- specifically with regard to Togo's claim that paying MW causes net negative externalities.

I'm happy to let my comment stand in isolation from whatever kind of discussion you want to have about P,Q and R.

As Winston Churchill put it : Without a minimum wage, the good employer is undercut by the bad, and the bad by the worst.

There's a perfectly good "Minimum Rage" thread for that sort of comment, so what are you posting it here for?

Because it adresses that question.

Who's arguing against a minimum wage in this thread? This thread is about the question of whether paying minimum wage is mooching.

No, it's about whether a business plan involving money taken from others is mooching.

 

[Bomb#20]

... and here's Part 2. Sorry about the delay, but you wrote a lot; it took a while to work through it.

So you're trying to argue that an employer should be able to hire people for less than the amount it takes to maintain them, on the basis that the difference between X and Z will be met by some other employer?...

My argument is that there is no point having such employers around. As a society, it's only worth having around employers who pay the Z of their employees, their cost to society. That isn't because of a moral judgement, or fine feelings, it's to stop other, more successful businesses having to support the losers who can't meet their costs.

Huh? Of course that's because of a moral judgment and feelings, and because of the metaphysical accounting principle your feelings appear to be based on. You're calling the MW employers "losers who can't pay their costs"; that's transparently based on the opinion that Z is those employers' costs rather than the employees' costs or society's costs or the Sultan of Brunei's costs for that matter. It's transparently NOT based on stopping other, more successful businesses having to pay X, since getting rid of the MW employers will cause the other businesses to have to pay Z instead of X and Z > X.

Only if the employees are not shifted to a better paying job. The minimum wage is a floor below which wages can't fall. Assuming that employees will simply become unemployed rather than getting a wage increase, as in your example, is a moral judgement on your part, not mine.

And no, my argument that businesses that pay too little is not based on the idea that the costs belong to someone - it's based on the idea that someone is going to have to pick up the tab, which means it's going to ultimately be paid by other businesses.

In the first place, not only if the employees are not shifted to a better paying job. I'm not assuming the employees will simply become unemployed. When some guy is shifted to a better paying job his cost to society becomes W instead of Z and W < Z, yes; but that doesn't mean he suddenly stops consuming Z. It just means the new employer is now picking up Z - W of the tab by paying him a wage. What the new employer pays no longer counts as an externality to society since she's now party to a contract with him; but she certainly still counts as one of the other businesses. So yes, the other businesses still have to pay Z instead of X. So if you are arguing that there is no point having MW employers around based on the idea that other businesses are going to have to pick up the tab, getting rid of the MW employers won't stop other businesses having to pick up the tab.

And in the second place, on what planet is "employees will simply become unemployed rather than getting a wage increase" a moral judgment?!? It's a prediction. Why did you call it a moral judgment? Is it because even though you insist your case doesn't depend on moral arguments, you still keep making them, and I keep not making them, and I keep pointing yours out, and you wish to equalize the rhetorical disadvantage this gives you? Is that why you put words in my mouth like "you're trying to argue that an employer should..." even though I didn't argue anything of the sort?

Moreover, your analysis takes for granted that the way MW employment keeps going and going decade after decade is by means of those employers receiving a subsidy from other more successful non-loser businesses,

No, your assumption that the alternative to paying below minimum wage is unemployment is taking that for granted.

Huh? Where do you get this stuff? You just make up any bloody thing you want and declare me to be assuming it? Where the bejesus do you see me suggesting that the alternative to paying below minimum wage is unemployment? Have you considered sticking to reality-based arguments?

If the business isn't relying on those payments, the wage rises to the new minimum and people keep their jobs.

Note that it doesn't matter who the costs belong to, who is getting subsidised, etc. etc.

If it doesn't matter then why do you keep making claims about such things?

It's a simple cause and effect. Minimum wage goes up. If the business doesn't vanish, then there isn't a problem. If the business does go, then it must have been relying on those payments in some way, no matter who morally owns what.

That's a non sequitur twice over. How on earth would the business not vanishing imply there isn't a problem? The business might react with layoffs, which would be a problem for some of its employees. (Which they might solve by getting other jobs, so don't waste both our time accusing me of claiming the alternative to paying MW is unemployment.) It might react by hiring fewer people than it would have otherwise, which would be a problem for those it would have hired who consequently remain unemployed or with jobs they like less. It might react by raising prices, which would be a problem for its customers. It might simply pay the higher expense, retain less earnings, and react by spending less on capital to grow the business, as a result producing less product than it would have otherwise, which would be a problem for the people who would have become customers but are turned away for lack of capacity.

And secondly, if the business does go, then what it must have been relying on is the wage level being as low as it was. That doesn't imply it was relying on welfare payments to its employees, unless the welfare payments caused the wage level to stay low. If you contend that it does, how does it cause this? By a physical mechanism or by magic?

This is why you keep on trying to drag moral arguements back into it. In my arguement it doesn't matter who benefits, who is being subsidised, or who the payments are for. All that matters is that the business goes away when they stop. By contrast you have to keep on trying to argue that I'm relying on a moral judgement, so that you can drag moral judgements back in and get a more favourable result.

What I'm dragging in is the fact that you keep making arguments in which your premises don't imply your conclusions. The fact that many of them are moral premises in incidental; I point it out because when you have a moral premise and a non-moral conclusion it makes it painfully obvious that the premise doesn't imply the conclusion, so I don't have to work as hard to explain why your argument fails.

Interesting hypothesis. It implies that if all businesses were employing a mix of skilled workers and unskilled workers, and all businesses were paying market rate for all their employees, so the skilled workers get a decent wage and the unskilled workers get MW, then every business would be surviving on the subsidies paid to it by every other business, we'd all be prospering by taking in one another's laundry, and the universe would disappear in a puff of logic.

??? No, it implies that above minimum wage economic activity is being used to subsidise minimum wage activity. For simplicity's sake we assume two different businesses, since you're assuming a case where a business is driven out of the market by a minimum wage hike. However, there is no reason why one part of a company can't subsidise another, and many companies explicitly work on that basis.

Excuse me? That's not my assumption. You're the one who brought up the MW employer no longer being in business: you wrote "My argument is that there is no point having such employers around." You propose not having them around; I examine the consequences of your proposal. That's how discussions work. So don't try to lay it at my door.

As for the substantive part of your claim, no, it implies exactly what I said it implies. If you were only claiming one activity is subsidizing the other and it can all be within the same company, then your accusation that I was arguing an employer should be able to hire people for less than the amount it takes to maintain them, because Z - X will be met by some other employer [your italics!] would have made no sense. Your proposal to not have the MW employers around, because that would stop other, more successful businesses having to support the losers who can't meet their costs, would have made no sense. What, the point of government imposing a "living wage" requirement is to stop one part of a company from subsidizing another part of the same company, because all the companies that explicitly work on that basis are holding themselves back? What, they're too stupid to figure out how to maximize profit and we need to protect their stockholders from themselves? If the alleged subsidy were between two parts of the same company then it wouldn't be an externality! You wrote "other", twice. You wrote it for a reason. What reason, "For simplicity's sake."??? Bull. You assumed two different businesses for a real reason: because that's what you needed to assume in order for your case for a "living wage" law to make a lick of sense.

And that's the problem with what Wallmart is doing. They displace other businesses to provide employment on a subsidised basis, relying on other businesses (via the taxpayer) to help them meet their employment costs.

Saying it over and over doesn't make it true.

No, it's your insistance that the jobs would disappear if the additional payments went away, that makes it true. If dropping the additional payments leads to a loss of the business, then the business was dependent on those payments, irrespective of who they were made to.

Quote me insisting any such thing! It's ridiculous. Without welfare payments, poor people would be more inclined than ever to accept minimum wage jobs; a lot of jobs above minimum wage would probably be bid down to minimum, reducing marginal cost of labor, which would probably increase the number of jobs available. Where do you get this attitude that you can just make up any old position and claim it's something I insist on?

You haven't shown that the cost of a decent lifestyle is an "employment cost";

I don't need to. It's irrelevent to my argument. (it's also a moral arguement, which you claim to be avoiding)

If it's irrelevant to your argument then why do you keep asserting it? And yes, it's a moral argument you're making. In contrast, my pointing out that you made an unsupported moral claim is not a moral claim on my part. It's simply an observation of the fact that you made a moral claim. Now, if I'd said "the cost of a decent lifestyle is not an employment cost", that might be a moral claim, depending on context. But that's not what I said. See how it works?

you haven't shown that Walmart wouldn't be able to get workers for the same or lower price if the welfare weren't available, which is what "relying on" means;

Again, don't need to. If the welfare is made unavailable, and Walmart closes as a result, then there was a reliance on that welfare. If the minimum wage goes up and Walmart closes, there was a reliance on the lower wage. If Walmart doesn't close when a minimum wage rises and replaces a welfare payment, then what's the problem?

If Walmart doesn't close when a minimum wage rises and replaces a welfare payment, then the problem is you falsely asserted they were relying on the welfare payment. And if the minimum wage goes up and Walmart closes, there was a reliance on the lower wage, but that's not the same thing as a reliance on the welfare payment.

In the first place, the employer isn't "claiming" it. The employee is offering it for sale and the employer is amenable. You're talking as though the employer were preventing the guy from selling his labor elsewhere..

They are. Being available for work is written into the contract.

And?

And that means that working 9 to 5 at one job stops him working 9 to 5 at another. The employer is not merely amenable, he is purchasing the labour, in competition with other potential purchasers. Selling to one means not selling to another,

And? Working 9 to 5 at one job is not something the employer does. It's something the employee does. The employee is stopping himself from selling his labor elsewhere; the current employer isn't stopping him.

If somebody else offers the employee a better job he can take it. The employer's only legal recourse in the event that the employee makes himself unavailable is to sack him; and the fact that the MW employer will stop paying him is no deterrent to the guy from selling his labor elsewhere -- when he leaves he's getting a bleeding raise.

What happens if new job pays better, but no longer allows him to claim welfare, so he's actually worse off overall?

Huh? The old job doesn't allow him to claim welfare either. Allowing people to claim welfare isn't something jobs do; it's something the government does. If what you mean is, what happens if the government no longer allows him to claim welfare, so he's actually worse off overall if he takes the better paying job, then what happens is he keeps the MW job because for some bizarre reason him taking a lower paying job was something the government decided to buy, and the government got what it paid for. On what planet is that something Walmart did?

This is why minimum wage distorts the job market.

Minimum wage distorts the job market in a variety of ways; whether those distortions are a good or bad thing is off-topic in this thread. But what you're describing looks like a way peculiar welfare policies distort the job market, not a way minimum wage distorts it.

Someone claiming welfare is incentivised to keep on in minmum wage employment until he can get not just a raise, but a raise over and above the welfare payment. So he gets discouraged from developing his skills in a more challenging role, and the employer gets to retain a skilled employee that would otherwise move to a better job, at below his market rate.

Is this how welfare works in the UK? What, if you make minimum wage, say 12K a year, then the government will give you, say, an additional 8K in welfare? But if you make above minimum wage, say 16K a year, then the government cuts you off completely? If this is the rule, I'm having a tough time grasping what outcome it is that the government might be optimizing for, that this could be a rational strategy for accomplishing.

But no doubt they have their reasons. Whatever. I'm not following why you think any of this means the employer is getting the employee at below his market rate. When the government in effect bribes the guy not to develop his skills in a more challenging direction, that means they're bribing him to keep his market rate low. The MW employer is getting him for below what his market rate would have been had he developed his skills; but that's not the same thing as getting him for below what his market rate actually is given the skills he actually has. Heck, I'm sure I'm paid below what I could have made if I'd become a brain surgeon; but that doesn't mean my employer is mooching electrical engineering services from me at below my market rate.

Their labour, and the labour of others, is all that it available to pay for it. Unless you're using magic pixies. From the point of view of the economics of the society, that's exactly why we keep them around.

Huh? We keep them around for reasons A, B, C and D; but from the point of view of a consideration that ignores A, B and C, only D is a reason to keep them around; therefore we only keep them around for reason D? That's your argument?!? Ignoring something doesn't make it go away. We keep them around for the sake of all the benefits, not just the benefits viewable from the point of view of economics.

Sure, but only the benefits from the point of view of economics are going to help pay his upkeep. Nice though it is to have people around, somehow we have to pay for him, and only his labour is going to do that.

Now you're contradicting not just reality but yourself -- you previously stipulated that the labor of others is also available to pay for him. And I listed three more sources of support.

As far as labor being all that's available to pay for it goes, where are you getting that notion?

It's a simplification of the idea that economic value comes from economic activity. Absent some kind of fixed asset, labour is the only commodity society has to trade for money.

Yes, I know, your argumentation has the smell of LTV all over it. "Economic value" isn't an observable; when you invoke it you're doing metaphysics. In any event, society has a variety of other things to trade for money, including fixed assets, unfixed assets, and opportunities to rearrange deployment of resources for mutual advantage; and society can create money ex nihilo without trading for it.

The point I'm making is that you keep trying to raise the moral question of where the costs are assigned

No, you keep raising that moral question, and I keep pointing out your mistakes.

, suggesting 'society' pay for costs,

Quote me. That society pay for those costs isn't a suggestion; it's the status quo. You're the one making a suggestion -- you're advocating that the burden of those costs be transferred to whoever volunteers to buy something society has for sale. Society can assign those costs any way it sees fit; all I'm suggesting is that society not make that decision by falling prey to its own self-deception.

while ignoring that any cost, no matter where or how it is assigned, will ultimately be paid for via economic activity. In practice that means paid for by a business.

What evidence do you have that I'm ignoring this, the fact that I'm not persuaded by your arguments? Have you considered the alternative explanation that maybe it's because you keep making unsound arguments?

But there is only one source of cash here. Ultimately, you're still arguing for one business subsidising another.

You skipped a step there. This part is Step 1:

"Sure, which is why in practice we tax businesses, and spread the revenue around the whole community. But there is only one source of cash here. Ultimately, you're still arguing for one business subsidising".​

This part is Step 3:

"another.",​

...Can you exhibit Step 2, where you get from there to the MW employer being the recipient of said subsidy?

I don't need the employer to be the recipient.

Of course you need that, assuming you want to defend the claim that a MW employee on welfare is one business subsidizing another. To claim one business is subsidizing another is exactly to assert that that other business is the recipient. Are you withdrawing that claim?

If he draws no benefit from the subsidy, then withdrawing it in favour of a minimum wage hike won't make any difference to him. If it makes a difference, he was benefiting from it.

That's a transparent non sequitur! If he draws no benefit from the subsidy, then withdrawing it won't make any difference to him. You threw in the "in favour of a minimum wage hike" part gratuitously. It's the minimum wage hike that makes a difference to the employer, not the subsidy to the employee. The circumstance that you choose to link the two in your own mind doesn't change the reality of which one makes a difference to him and what he is or isn't drawing a benefit from. If your inference procedure were valid then we could use it to prove anybody benefits from anything. We could argue that if the Jamaicans drew no benefit from American taxpayers' spending on the International Space Station, then withdrawing that spending in favor of financing an invasion of Jamaica won't make any difference to them.

(Incidentally, just to remind you how long the road you've embarked on is, it will take far more than exhibiting a benefit to support a claim of mooching. Lots of benefits people receive are simply positive externalities, which are something humans distribute in their wakes like skin flakes without any expectation of getting paid for them. Whether the employer benefits from the welfare payments is arguable; but it's beyond doubt that the local 7-11 benefits: the welfare recipient can now afford to buy milk there. That doesn't imply the 7-11 is mooching by charging for milk. So even if you eventually succeed in exhibiting a benefit to the employer, you'll still have to find a way to get from there to a mooching conviction.)

If the employer is claiming all their labour (the benefit of their presence) but not paying for the cost of their presence, then they are creating a negative externality.

... And in the third place, your claim of implication is a non sequitur. If somebody creates both costs and benefits, and he delivers all the costs to me and all the benefits to you, that does not constitute you creating a negative externality. That's him creating a negative externality.

Another moral argument. It doesn't matter to my arguement.

If you mean your claim that the employer is creating a negative externality was a moral argument that doesn't matter to your case, then we can move on. Or do you mean I'm making a moral argument? If so, you're quite mistaken -- I'm simply pointing out that your argument contained an incorrect claim.

In the drunken mother scenario, should the government assign the million pound debt to you and garnish your wages for life, on account of the cost of the presence of the person whose benefit you claimed being, therefore, "your cost"? Or should the government perhaps just take away the thousand pounds, as partial compensation to the pedestrian, and leave it at that?

In practice, that is actually what the law does - it allows victims to sue the estate.

Yes, just so. Are you proposing that as a model for what to do about the MW employer getting all the welfare recipient's labor? If so, why the "living wage" advocacy? The welfare payments are what the employee costs society -- they correspond to the million pounds of damage the mother did -- and you propose to make the employer pay that much? Why wouldn't you instead cap the bill to the employer at whatever marginal profit she draws from the guy's labor? That's what would correspond to the thousand pounds the heir received from the estate.

No, it doesn't. Your employees receive welfare to supplement their wages. Welfare is paid for from tax money. My business pays tax money, ergo, my business is supporting your employees. If you gain a benefit from this, I am paying for your business. If you gain no benefit from this, then nothing bad will happen if we remove the welfare payments and raise their wages instead.

Which bit are you disputing?

See above. I'm disputing the bit where you leap from "you gain no benefit from P" to "nothing bad will happen if we remove P and add Q".

It's not a moral judgement, it's a brute fact. Society demands that employees receive X, from whatever source. It's not my moral judgement, or yours, it's a brute fact. If your business doesn't pay it, mine will have to. What we think about the morality of the situation is utterly irrelevent.

Okay. Then how do you get from "If your business doesn't pay it, mine will have to." to "If mine will have to then yours is mooching."?

A business that consumes all of a person's labour, must meet all of their costs. It's not a complicated principle.

... Let's analyze the principle itself. A business must meet whatever costs the government assigns to it; we have a society and "it has labour" that's sold, which is to say, we're democracies and our respective voters have voted to make our respective governments the de facto part-owners of all our individual labor; our legislatures currently choose to sell the labor jointly owned by the government and its subjects for no less than minimum wage; but if our legislatures instead choose to put your principle into effect and take up refusing to sell the labor they have for less than the cost of maintaining the employee,

No, no no, you're still trying to make a practical arguement into a moral one. It's nothing to do with arbitrarily deciding where costs should lie, it's nothing about where the costs lie at all. It's about the brute fact that costs have to be paid. Look, let's blame the moon, ok? Everything is the fault of the moon, not the employers, not the employees, not society, the moon.

What, are we schoolchildren, that you're playing "I'm rubber, you're glue; whatever you say bounces off me and sticks to you!"? Where do you see a "should"? Where do you see blame? Where do you see any claim about where the costs lie at all, except right there in the principle you propounded?

Even with all moral responsbility safely in orbit, it's still the fact that we have two businesses, one of which pays for the costs of 100 people and employs 50, and one of which pays for the costs of 50 people and employs 100. Which one do we want more of, and which do we want less of?

Note the absence of any moral arguements whatsoever. Nothing about who should pay what cost, whose burdens belong to whom, or who is responsible. We still have a problem if we have too many of the second kind of business.

Is that the discussion you want to have? Is your point that society would be better off with more type I companies and fewer type II companies, and you think raising the MW a lot would help us get it? Nothing to do with responsibility or whose costs they are? Then what are you doing in this thread? The people arguing against raising the minimum wage are off in the minimum rage thread. This is the corporate moochers thread. Are you suggesting that "We want less of this type of business. Therefore, this type of business is mooching." is a valid argument? What, do you serously imagine moocherhood depends on what you and I and society want?!? Or are you finally realizing you have no case for the belief you've been advocating, so you're trying to change the subject?

(In any event, your question of which we want more of, and your claim that too many type II businesses is a problem, gloss over the fact that employees are not interchangeable parts. You talk of the costs of 50 and employing 100 as if those numbers are all we need to know and it doesn't matter which people are employed doing what. That's not how it works. You ask which "we" want more of. Who is "we"? As for me, it might well be that I'd rather have an extra type II company than an extra type I company, if the reason for the difference is that the type I company is hiring type A people and the type II company is hiring type B people. Because if that's what's going on, then the two types of business are providing different services to society. I know, as all people familiar with the law of diminishing returns know, that how much benefit society gets from an extra unit of a given service depends on how much of it there already is. If there are a hundred type I companies and ten type II companies we might well need another type II company; at any rate that's certainly more likely than it is if there are ten type I companies and a hundred type II companies. So the devil is in the details -- we'd need quite a bit more information in order to decide what we want more of than simply who's paying the costs of how many people. The mileage of people who haven't caught up with the marginalist revolution and are stuck in the dark ages of economics, philosophizing about where economic value comes from, may vary.

Moreover, even if you turn out to be right about which we need more of, there's still a gaping hole in your argument: it appears to take for granted that outlawing the practice of employing 100 and paying the costs of 50 will cause there to be more companies employing 50 and paying the costs of 100.)

For example, a burger flipper might have dialysis on Monday, Wednesday and Friday so he's only available for work on Tuesday and Thursday. All of the labor he has to give, that his employer according to your argument is "claiming all of", is therefore 16 hours a week. A business that consumes all of a person's labour must meet all of their costs, according to your not complicated principle;

For it not to be a subsidy, yes. Generally we subsidise people who are sick. The problem, again, is that you are trying to turn a practical point into a moral imperative.

Quote me. Where, in my calculation, do you see anything about morality? All I did was pick a practical situation that applies to thousands of real people, and plug your rule into it, thereby exhibiting the absurd implications of the principle you advocated. No, the problem is that you aren't willing to admit to yourself that your principle is wrong, so you're inventing a different point and kidding yourself that it's what I meant.

People with kidney failure may end up being a net drain on the economy.

Exactly. And your line of argument in this thread amounts to observing somebody being a net drain on the economy and inferring that whoever he sells his labor to must also be a net drain on the economy.

If everyone has kidney failure simultaneously, we go bankrupt. In practice, we subsidise people who are sick, and pay for that with a net transfer away from areas of economic activity that turn a net profit.

Exactly. And we do the same for a lot of healthy people -- children, old people, and people who have insufficient skills to enable them not to be net drains on the economy.

The point about businesses who pay their workers less than they cost to maintain is that they are in a situation that is only sustainable by transferring money from those areas of economic activity where workers are paid more. It is below the break-even point. As a society, we need to see about replacing these businesses with those that are more profitable where we can.

I'm not seeing how that follows. The business paying 12 pounds an hour to a patient who costs society 35 can instantly be replaced by one that's more profitable -- just have a business that won't accommodate employees with special needs. The replacement business hires a regular person who only costs society 10 pounds an hour. Sure, society now has to come up with a 35 pound subsidy instead of a 23 pound subsidy; but at least now the business is above break-even. Sure, the society is still in a situation that's only sustainable by transferring money from those areas of economic activity where workers are paid more; but at least the business isn't. I'm not seeing how defining the business as being in a sustainable situation or not is the most important criterion for us to apply in deciding what businesses need to be replaced. If that's the most important criterion then it tells us to lay off all the renal failure patients and make them live 100% off charity; that's an absurd result; so by reductio ad absurdum, the initial premise that we need to replace such businesses must be wrong.

This really isn't that complicated. You have a society. It has costs, set at a minimum per person by that society. And it has labour. The labour is sold to meet the costs. If business A does not pay enough for the labour to meet the costs, then that cost has to be met by another business. There's lots of intermediate steps, but that's what it boils down to.

But the labour isn't sold to meet the costs.

Why does that matter? It pays for the costs anyway.

Sorry, I assumed you said it was sold to meet the costs because you thought it mattered. If it doesn't matter, then presumably what matters is simply getting as much of the cost covered as possible, any which way. So it comes down to the calculation any monopolist makes -- if we raise our prices, customers will buy less from us. Will they buy so much less that we'll end up with less money than if we charged the lower price? Or will they buy only a little less, so the loss from leaving some product unsold is more than made up for by the higher price per unit?

The point is, while that's a perfectly sensible calculation to perform, and it may well give you a solid practical argument for raising the minimum wage, there are two things that sort of reasoning can never give you. First, it can never give you an argument for a "living wage" law. The price point that maximizes how much of the cost is covered depends on the elasticity of the demand for unskilled labor; that's going to be completely independent of the amount of money it takes to provide whatever lifestyle society deems decent, which proponents choose to label "living wage" for rhetorical purposes. So if they ever match it's just a random coincidence. So all you'll have is an argument for a higher wage, not an argument for a "living wage".

And second, it can never give you a case for accusing the employers who pay less than your calculated optimal wage of mooching. Customers who pay less than monopolists charge aren't mooching; they're simply customers who aren't providing the monopolists enough profit for the monopolists to care to pursue them.

Ok, so why would a society want to charge businesses to pay for an inadequate solution? If you break a window and replace it with cardboard to keep the wind out, you're filling an existing hole with cardboard, and making a situation better. But you're still going to want to replace that cardboard with glass at the earliest opportunity.

Two reasons. First, because you may have a lot of broken windows. Sometimes cardboard in the window is a very practical solution to an immediate problem, when you have no capacity to get the glass replaced all at once.

And second, because people aren't glass. If people were glass then throwing out the guy with renal failure and replacing him with a brand new pane would be cheaper than patching him, and it would give you a better view through the window. But we patch him up anyway because we don't want to replace him with a new pane. And the same goes for many of the unskilled. Spending extra money to get an adequate solution isn't going to actually deliver an adequate solution -- it isn't going to turn them into people capable of doing high-demand jobs.

You are arguing for a policy that it appears will increase the cost the other businesses have to bear;

Disagree.

Well, first, it depends on the elasticity of the demand for unskilled labor. When the marginal income from hiring a guy is 6 pounds an hour, how many fewer people do you have to employ before putting the law of diminishing returns into reverse drives that marginal income up to 10 pounds an hour? Will the extra four pounds you get from one employer who hires a worker at the higher price make up for the 6 pounds you won't get from another employer who doesn't hire a worker because the price went up, plus the benefit his customers won't get from the stuff that worker won't be producing?

And second, pricing some unskilled people out of the labor market decreases the extent to which people learn their skills from on-the-job training. That will increase the need for formal classroom training, which will be paid for by the state, i.e., by subsidies from other businesses.

How large these effects are is an empirical matter; who's right is a matter for the minimum rage thread.

you're trying to justify that policy by accusing those who don't already follow it of being leeches;

Nope. That's merely commentary. I'm happy to point out that they are leeches, but their desirability or not is not based on leechdom.

I.e., you're going to keep right on asserting that they're leeches even though every argument for their alleged leechdom has been shot down in flames, and your plea is that making that accusation is okay even if you can't back it up because your main point doesn't depend on it. No dice -- this is the leechdom thread.

It's based on the fact that they require a net transfer of cash from others to keep going.

But they don't require it. Going by your nonstandard definition of "require", it's their workers who require it. The employers could keep going whether those workers get the net cash transfer or not.

I put a fairly detailed account of ATown and Btown in a recent post - why not have a look at that and see if that helps you understand the argument?

Okey dokey...

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).

Hang on a sec. Walmart can't be doing that without employees. If Walmart is paying less than the prevailing wage in Atown, why are Atowners taking jobs at Walmart? And if Atowners are willing to work for less than the existing firms pay, why haven't the existing firms cut their wages? If it's because they're just too nice to do that, why haven't new firms -- not large retailers, just outfits much like the existing firms only less nice -- sprung up and already competed the existing firms out of business?

Can you see how it's arrival might result in a net loss to Atown?

I can see how anybody can spin a hypothetical scenario in which anything might result in a net loss to anyone. But according to laughing dog (who is an economics professor), towns in the real world are competing with each other with special tax breaks to try to get Walmart to move in. Why would towns do that if Walmart's arrival is a net loss to them? If their city councils, familiar with their own towns' economies, think Walmart is a net gain, why should we think you know better than they do?

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?

What you're talking about is called "gentrification". Btowners benefit from Atown having a Walmart. They get lower prices from their occasional visits to Atown; and they get lower taxes because some of the people who can't do the sort of work that pays better, and therefore need to be subsidized, move to Btown to work at the Walmart. There's a reason a lot of communities gentrify. But it doesn't work if everybody tries to do it. If Atown and Btown both tell Walmart to get lost, the unskilled people don't move out of either town, both towns' tax levels stay high, and they both cost more to shop in than if Walmart were there.

Or maybe it doesn't pan out that way. Maybe there's some mechanism by which telling Walmart to get lost causes new high-pay jobs for low-skill people to materialize. If so, what mechanism?

ETA: Hey, 5000th post! (Good god, I need to get a life...)