Minimum Rage: The remix

[DBT]

That's always the leftist answer. Eat the seed corn.

As opposed to the rightist answer, "Hold all the grain in the silos of the temple for the Gods while the multitudes starve in Goshen."

The best answer is the middle ground.

But it's not ''the middle ground'' in actual practice, where a small percentage of the population have control of most of the Worlds wealth and power.

 

[ksen]

Some do. Most don't.

That's bullshit loren and you know it. And if you don't know it that says more about you than about anyone else.

 

[Jarhyn]

In other words you want to eat the seed corn.

Sure, those things exist--but they wear out. New things are developed that need new tools. You want to eat that capital so there will be no new tools.

In the long run your path leads to the extinction of the human race.

You must have a dreadfully low opinion of people if you think that we don't want to do work. I seek work out, and when unemployed and when not needing money I still work.

Some do. Most don't. Don't think you're representative of the average person--you're here, after all. The average person doesn't participate in things like these forums.

Good thing I don't just base this on me but literally EVERYONE I have even been remotely acquainted with outside of anime conventions (seriously... I think something about having obsessive hobbies drives laziness through the roof).

People want to make tools. People want to use tools. People want to create BETTER tools. People will maintain the tools we have. Neither effort nor tools will stop existing in the absence of a master, king, lord, slave owner, or investor.

 

[Sabine Grant]

The ultimate pro argument regarding minimum wage and communicated by the CEO of the second largest retail company in the US :

http://www.businessweek.com/article...ds-the-cheapest-happiest-company-in-the-world

“We know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty,”

and of course that is part of the Costco philosophy based on,

It treats its employees well in the belief that a happier work environment will result in a more profitable company.

Need I to explain why a well treated employee will result in higher productivity? By well treated, it only needs a read of the article to gain insights as to how Costco treats well its employees. It only takes comparing wages for the same job positions between the largest retailer Walmart and Costco to gain even greater insight as to how Costco treats well its employees.

http://www.glassdoor.com/Hourly-Pay/Costco-Wholesale-Hourly-Pay-E2590.htm

http://www.glassdoor.com/Salary/Walmart-Salaries-E715.htm

Of course as customers, we are bound to be affected by the low or high morale of the employees who will interact with us. An employee whose morale is weighed down by the reality of not being able to meet their monthly BLEs is certainly not going to be as customer oriented as an employee whose mind is free from such burdens.

 

[Togo]

Some do. Most don't.

You need to get out of the house and meet some more people.

 

[KeepTalking]

Good thing I don't just base this on me but literally EVERYONE I have even been remotely acquainted with outside of anime conventions (seriously... I think something about having obsessive hobbies drives laziness through the roof).

I think you are looking at those con-goers with obsessive hobbies in the wrong light. For the most part, I don't think they are lazy either. It is just that the things they are interested in working on are not generally seen as productive by the rest of society. They would be perfectly happy working as artists, costume designers, etc., but there is a lack of paying jobs for those things, and in general, they have to be very lucky to be able to turn the work they put into their hobbies into a career.

 

[Jarhyn]

I understand that some may involve themselves in their culture. Many do not. When surveyed on exactly the question of personal motivation, 9 out of 10 answered that if they had money they wouldn't work and that they had no desire to other than to consume anime. It was the most disheartening experience I've had in a long time.

 

[ksen]

Who cares if some con-goers won't want to work? The amount of people that would be helped is worth the cost.

 

[Jarhyn]

The tangent was more an aside to who I wasn't about to make the claim that everyone wanted to work, but rather to show the exception that proved the rule that people generally want to work, and that it would not be a bad idea to just give people the means to live, and let those who do more work get more excess, with diminishing returns due to progressive taxes.

 

[KeepTalking]

I understand that some may involve themselves in their culture. Many do not. When surveyed on exactly the question of personal motivation, 9 out of 10 answered that if they had money they wouldn't work and that they had no desire to other than to consume anime. It was the most disheartening experience I've had in a long time.

I guess my experience is with a different set of the con goers, the cos-players, as my daughter is into that along with most of her friends. They spend weeks before a con obsessing over their costumes, and laboring over sewing machines during most of their free time within that period.

There is one of her friends who I might have labelled as lazy in that regard, as she is always showing up at the last minute to to get help with her costume, causing headaches and late nights for the rest of the group. But I recently found out that she is quite the cartoonist, and spends much of her free time drawing. I doubt that any of them would call their hobbies "work", however, so it might depend upon how they were surveyed.

I do attend some of the cons, I am a gamer myself, and will attend if there is significant gaming to be done. I guess a good percentage of those who are not into the cosplay or artistic aspects of the hobby themselves might fit that characterization of laziness, I just don't see it in those that I am most familiar with.

 

[ksen]

The tangent was more an aside to who I wasn't about to make the claim that everyone wanted to work, but rather to show the exception that proved the rule that people generally want to work, and that it would not be a bad idea to just give people the means to live, and let those who do more work get more excess, with diminishing returns due to progressive taxes.

Ah gotcha, going back down to terror level 1.

 

[KeepTalking]

The tangent was more an aside to who I wasn't about to make the claim that everyone wanted to work, but rather to show the exception that proved the rule that people generally want to work, and that it would not be a bad idea to just give people the means to live, and let those who do more work get more excess, with diminishing returns due to progressive taxes.

Sorry for contributing to that tangent...

I do agree with your overall sentiment, and recognize that there are definitely exceptions to the rule. For myself, some might regard me as lazy if I was in a position where I did not have to work, as the "work" I would like to do if given that opportunity would be writing, building/painting models, and possibly game design. I think a good portion of my time in that situation, however, would be dedicated to actual gaming, reading, and of course, frequenting discussion boards.

 

[ksen]

srsly, keeping up with some of these guys is just like a job. I do more "research" for these discussions than I ever did for anything else.

 

[Lumpenproletariat]

#197


Canard DuJour

. . . when neoclassical economists say 'OK, sure, real firms don't work like that. But entire markets or industries behave as if prices and wages were set by Econ101 supply and demand, marginal revenue etc.' ..Because that, as Sraffa et al pointed out, undermines the model entirely. Because you cannot then assume independent supply and demand curves with a unique optimum equilibrium price. More like a different demand curve intersecting any point on the supply curve.

It means that, for example, it isn't axiomatic that any MW raise must reduce demand for labour. You could still say that a big enough raise would reduce demand, but (duh) there was never any argument about that.

It IS axiomatic that any cost increase, including labor cost, not accompanied by a quality increase (or any other change), must reduce demand for whatever costs more.

This means a SMALL cost (wage) increase must result in a lower demand.

If you deny this, there is a question you must answer:

Generally, in what other part of the economy do you deny that a supply-and-demand change (e.g. cost increase) results in the corresponding change predicted by classical economics? And at what magnitude of change (higher cost/wage level) do you recognize that the supply-and-demand principle does take hold and cause a drop in demand?

Specifically (as an example), if the price of oil goes up by 5% (or even only 1%), does that not cause a corresponding incremental decrease in the demand for oil (all other factors being equal, unchanged), and subsequent higher cost for products dependent on energy, e.g., higher cost of many products due to higher transportation costs?

It is agreed that a higher cost on a large scale, like a 50% increase, always causes a reduced demand.

But what about a 40% increase? What about a 30% increase? 20%? 10%? etc.?

If you insist dogmatically that the reduced demand occurs only if the increase is very high, like 50% or 40% etc., then you have to explain at what point the higher cost suddenly stops having this negative impact on demand.

If you can't give any explanation or can't identify what the cutoff point is -- 20%? 10%? -- then the only logical conclusion to draw is that there is NO cutoff point, and that this relation between cost change and demand change is the same, at any percentage of cost increase, no matter how small, and the only reason there appears to be no change when the cost increase is very low is that the amount of change in demand is too small to measure.

What theoretical argument or empirical evidence is there to indicate that there is this cutoff point at which cost increase has no impact? If you have neither logic or empirical data to support your cutoff theory, then it is only reasonable to assume that there is NO cutoff point. And thus, higher cost, including labor cost, must result in at least some incremental decrease in the demand.

It was assumed that higher oil/gas prices a few years back resulted in higher food prices. Was this proved by empirical data? What was the evidence? The higher prices could have been caused by other factors. Was there really a close correlation of the two events?

There are plenty of examples where it is assumed that a small change in one condition causes a small change elsewhere. A good example is crop damage.

CROP DAMAGE -- Again and again in the news it is reported that crop damage is expected to cause future price increases, because of reduced supply. But do those price increases always occur?

It's all based on supply-and-demand. By this principle the forecasters easily predict the price increases. Such as a frost in Florida causing an increase in the price of citrus products, orange juice, e.g. And yet plenty of consumers a few months later seem to notice no change in the price of these products.

Does that mean the forecasters were wrong? No. It means that the total damage was not widespread enough to produce enough change to be noticeable, or noticeable to all consumers. Or the change may have been localised to a limited geographical area. In fact, there could even be some price DEcreases in some places, despite an overall incremental price increase.

So if you insist that a small labor cost increase does not cause a small decrease in the demand for labor, you must explain at what point in the higher and higher degree of cost increase the supply-and-demand principle kicks in and does produce that decrease in demand, since everyone agrees that beyond some threshold level of higher wage there is this decrease in the demand for labor. What is the threshold? How do you know what it is?

As long as this remains unanswered, the only reasonable conclusion to draw is that there is no threshold level and that even a small labor cost increase results in an incremental decrease in demand for labor.

 

[Cheerful Charlie]

At the peak of the Clinton boom years, when the econony was hot, unemployment dropped to less than 4% Yeah, people WILL work, given a chance with employers not dicking people around, because they'll quit and get a job down the street.

We have been there but many people seemed to have not learned that lesson.

 

[DBT]

This means a SMALL cost (wage) increase must result in a lower demand.

Not if a business is willing to pay a given wage rate without passing the added cost on to customers or consumers. That is, they see it as the cost of doing business, just like they do with suppliers and contractors, etc.

The problem being, the business has to pay the suppliers and contractors at their rates, but see the wages of 'low level' employees as a means to reduce their production costs. An easy target.

So those on the bottom of the income scale, with very little bargaining power or leverage are kept working for a pittance, a rate that anyone in management would consider unthinkable in relation to themselves.

 

[Togo]

#197

Canard DuJour[/B]]. . . when neoclassical economists say 'OK, sure, real firms don't work like that. But entire markets or industries behave as if prices and wages were set by Econ101 supply and demand, marginal revenue etc.' ..Because that, as Sraffa et al pointed out, undermines the model entirely. Because you cannot then assume independent supply and demand curves with a unique optimum equilibrium price. More like a different demand curve intersecting any point on the supply curve.

It means that, for example, it isn't axiomatic that any MW raise must reduce demand for labour. You could still say that a big enough raise would reduce demand, but (duh) there was never any argument about that.

It IS axiomatic that any cost increase, including labor cost, not accompanied by a quality increase (or any other change), must reduce demand for whatever costs more.

This means a SMALL cost (wage) increase must result in a lower demand.

If you deny this, there is a question you must answer:

Generally, in what other part of the economy do you deny that a supply-and-demand change (e.g. cost increase) results in the corresponding change predicted by classical economics?

Well certainly in the area my company specialises in, which is software sold to large finanical firms, cost increases appear to have almost no effect on aggregate demand. This is probably because the firms can't actually do without the software except at an expense far greater than the cost of the package. Cost simply isn't the critical factor. It's important as a differentiator between packages, but has no effect at all on aggregate demand across them. As a result we've some fairly dramatic fluctuations in the market price for the product over the last decade or so.

More generally in the international finance markets, a cost increase has an effect, but it's very rarely the effect predicted by classical economics, or else the trading firms would simply base their trading on classical economics and demand curves. They don't.

And at what magnitude of change (higher cost/wage level) do you recognize that the supply-and-demand principle does take hold and cause a drop in demand?

I'd estimate it would take about 500% increase before the alternatives started looking good, about 700% increase before we'd see a noticeable dent, and the business would still be viable if the costs increased by 1000%. To put that in perspective, giving all the lowest paid workers in the industry a 100% pay increase would not lose us a single customer.

I'd also note that this isn't the 'point at which the supply and demand principle takes hold' - it's a psychological barrier, whereby the buyer shies away from making a decision about an external provider when the consequences are a sufficient multiple of their own salary, and it becomes cheaper to simply bring the entire external company in-house. Or to put it another way, it's the point at which, to satisfy the unchanging demand, it becomes preferable to buy the company that provides the product.

If you can't give any explanation or can't identify what the cutoff point is -- 20%? 10%? --

Identified above.

What theoretical argument or empirical evidence is there to indicate that there is this cutoff point at which cost increase has no impact?

About a decade's worth of sales data, in which the market price ('going rate') across the industry has been wildly unstable, while demand shows a smooth growth curve.

CROP DAMAGE -- Again and again in the news it is reported that crop damage is expected to cause future price increases, because of reduced supply. But do those price increases always occur?

It's all based on supply-and-demand. By this principle the forecasters easily predict the price increases. Such as a frost in Florida causing an increase in the price of citrus products, orange juice, e.g. And yet plenty of consumers a few months later seem to notice no change in the price of these products.

The prices from the softs commodity markets would take well over a year or so to filter through to the customer.

Does that mean the forecasters were wrong? No. It means that the total damage was not widespread enough to produce enough change to be noticeable, or noticeable to all consumers.

No, it's because the price to consumers didn't change at all. What happened instead was that the cost variation was absorbed by the commodities markets both in and advance and after the crop damage, and was reflected in the fluctuating profits of the dealers, insurers, middlemen, and to a very much lesser extent, some producers.

The reason is pretty obvious - consumer prices for staple FMCGs (fast moving consumer goods) aren't set by the cost base, they're set by the marketing and seller strategy. Because OJ is seen as a baseline product - one where price comparison is likely, it's often sold at a loss just to get people into the store. The guy setting the prices doesn't care about small fluctuations in the cost base, and they are small if he's working through the commodities markets, because the commodities markets is a huge lump of people charging him for absorbing just such fluctuations. That means it's not that the effect of the cost is small, it means the effect on the consumer is non-existent. The people setting the prices do not use the cost as a basis for doing so.

There will be exceptions, of course. Your local food market, OJ made from local growers, and some forms of the organics market will be sensitive to the price of oranges, as will a trendy bistro that makes the stuff from oranges on the premises. You'll see minor fluctuations there. But it's a tiny % of the market

So if you insist that a small labor cost increase does not cause a small decrease in the demand for labor, you must explain at what point in the higher and higher degree of cost increase the supply-and-demand principle kicks in and does produce that decrease in demand, since everyone agrees that beyond some threshold level of higher wage there is this decrease in the demand for labor. What is the threshold? How do you know what it is?

It varies from company to company. I don't buy the idea that your pushing, that we must have perfect information or else use your cherished assumptions, because it's entirely possible for someone to have information that is too limited to give a threshold figure, but detailed enough to know that your own assumptions in the face of even less information are principally false.

For example, my team got a 20% raise this year. We didn't increase our prices, and we didn't lose any staff. The wage pressure triggered a hunt for inefficiencies within the system, and we found some savings by reorganising senior management, and bringing some of our HR costs back in house. I'm close enough to the figures to know that we're not using the increase to justify any future price increases, so it looks very much to me like we simply absorbed the extra cost of a wage increase without any increase in price to our consumers. But then I'm working in the real world, rather than that of fantasy economics, so what do I know?