Ontario raising minimum wage to $15

[dismal]

You can't set your price below what it costs to produce + a reasonable profit if you want to stay in business.

First of all, yes you can. people do it all the time when they need to make inventory space or get rid of product before it expires.

Secondly, what constitutes a "Reasonable profit"?

Thirdly, if employees are considered service providers (The service being their labor to perform a given task), then why aren't they also entitled to a reasonable profit? (The overhead being things needed to maintain a household for said employees. Homeless people with an insufficient caloric intake don't make for good service providers.)

How could anyone possibly think there is some sort of "entitlement to a reasonable profit"?

That's some seriously delusional babble there.

 

[Crazy Eddie]

I don't believe that a company needs an infinite pool of profits to fund anything.

The thing is you consider any analysis of whether they can afford it irrelevant. The only way it can be irrelevant is if the pool is infinite.

It's irrelevant because short-term loss of profit margins do not immediately destroy productive companies. Unproductive companies are ultimately a drain on the economy and are better off being left to fail anyway.

If the company is a marginal operation, if they have no profits to pay the increase it is still unlikely that they will go out of business. They either have capital invested in the business that they want to protect or more likely, they have loans that the bank doesn't want to write off.

So they lose on each item and yet make it up in volume? You realize that's a joke, not sound economics?

There are MANY companies that operate regularly on unsound economics. A minimum wage increase would cause many of them to go under for this very reason. Interestingly, a long-term effect is that the people formerly employed by unproductive companies will probably get picked up by more productive ones as they fill the empty market niche left by their competitors; unlike the minimum-wage payers, those competing companies are in a better position to reinvest in their workers with on-the-job training and continuing education their field. This is yet another advantage of creative destruction.

And what you miss is that in the long run the profit ratio is fixed.

Bullshit. This isn't even true for a specific INDUSTRY, let alone a specific COMPANY, and absolutely is untrue for the whole of the economy. Profit margins fluctuate dramatically depending on market conditions and market conditions are constantly changing. What Don is describing is the effort of supply-side economists to maximize profit margins as much as possible by making companies immune to those sorts of fluctuations and shielding them from the consequences of their own inefficiencies. The result is stagnating wages and a disconnect between wages and productivity. Ironically, this produces downward pressure not just on wages, but on productivity as well.

 

[LordKiran]

First of all, yes you can. people do it all the time when they need to make inventory space or get rid of product before it expires.

Secondly, what constitutes a "Reasonable profit"?

Thirdly, if employees are considered service providers (The service being their labor to perform a given task), then why aren't they also entitled to a reasonable profit? (The overhead being things needed to maintain a household for said employees. Homeless people with an insufficient caloric intake don't make for good service providers.)

How could anyone possibly think there is some sort of "entitlement to a reasonable profit"?

That's some seriously delusional babble there.

You think people aren't entitled to profit off their honest labor as opposed to subsisting on it like serfs? That's some seriously delusional babble there.

 

[LordKiran]

Delete

 

[SimpleDon]

=============== continued from above ===============​

(The basic problem is that you are trying to ignore supply and demand.) The market is very resilient against anything but very heavy-handed intervention in this regard--

I am not ignoring supply and demand. I just said that the interaction of the two doesn't set the price. And that demand is not infinite, that in order to have economic demand it is not sufficient for there to be a supply and the desire to own a product or to consume a service, there has to be money to realize the desire. And that the economy is demand lead and that it is no longer constrained by the supply.

I don't believe that the economy is "very resilient against anything but very heavy-handed intervention" in any regard. If this was true, the government interventions would have a minimal effect on the economy. But we know that this is not true and the vast majority of your fellow free market enthusiasts would agree.

It is worth noting at this point again that the government defines the roles and the structure of the players in the economy such as corporations and the professionals that are allowed to do critical jobs. That, as in the broader society, in the market it is the government that defines and enforces what behavior is acceptable. That it is the government that defines and enforces property rights. And important for our discussion it is the government that determines the income distribution to the participants.

In 1980 supply side economists were certain that the market was not resistant to government intervention and that it was government intervention that had pushed up wages and suppressed profits. They were correct.

And what they proposed to do was that the government should intervene to reverse this and to suppress wages and increase profits to increase the the incomes of the already wealthy. And the government did do this. They passed tax cuts, they stopped raising the minimum wage, they stopped supporting the unions, started increasing the government's support of the corporations, started allowing the concentration more corporate control over the economy by larger and fewer corporations, started rolling back the burdening of exchanges with externalities such as having to clean up their own pollution or the burden of having to sell only safe products manufactured in safe factories paying decent wages.

... and I don't want to give the government the sort of control on our economy that would be necessary to force what you want.

What makes you so fearful of the government? I would think that you would be happy with the government that we have now. It is solidly in the control of the party of neoliberalism and anything the wealthy and the corporations want, they get. Exactly the principles that you support, here in this blog.

They have promised to do the things that you want to do, relieve the free market of government oversight, especially the financial sector, banks, because they have learned to regulate themselves and to play nice, not like they did before 2008. To reduce taxation on the rich and to shift it to the non-rich, because the wealthy don't need the government, why should they pay for it? To re-establish the joys working for a living rather than living off of government largess, people like me, disabled and all of those children who chose the wrong parents. To turn government services into private, for profit corporations like was done in Russia. You want the US to be like Russia don't you?

You, Reagan, and Milton Friedman are making the same mistake that Marx made. You are proposing an economic system based on conjecture, on an unproven fantasy that is unsupported by history or even theory. Like Marx you are proposing to replace a large part of the regulation of society that government currently does with the regulation by the economic system, to subject large segments of society to the questionable "discipline" of competitive markets, including education, the national defense, health care and jurisprudence.

Whereas you are proposing a system that has been shown not to work.

See, this where your memorized, randomly placed talking points fail you, not to mention your failure to read and/or to understand my posts.

I am proposing to keep the economy that we have right now, the mixed market, government and private enterprise working together, capitalistic economy that you see working quite well everyday. The economy that has provided for you and yours everyday that you and yours are here. The most successful economy that the world has ever seen. The economy that defeated both fascism and communism within fifty years.

Why do you think that it is a failed system?

Your fantasy is that the adaptations that capitalism made were a mistake and that the 99% can be changed to accept your vision of an optimized capitalism. That markets can self-regulate and control much of what government does now. That rather than we using capitalism to improve our lives it would be better to let capitalism change us to improve capitalism. And like Marx, you are wrong.

I realize the markets aren't good at self-regulating.

Jeez, Loren, I wish that you had told me that about 3,000 of my words ago, and long before I made a complete fool of myself.

Oh, well, it isn't the first time and I expect it won't be the last. I have to stop assuming that I can keep it straight who has said what here. I apologize.

Ignore about 40% of what I wrote. The regulation parts. What I wrote is true, I just shouldn't have directed it to you.

But you are wrong about there being no need to raise wages, the income inequality that we are seeing now will just continue to grow and it will continue to anger the workers even though they don't know what the problem is. And I find your desire to not offend the capitalist system unconvincing. It is what happened in 1980, and then the neoliberals weren't concerned with offending the system when they bent it to increase profits.

Besides, it is this redirection of money from wages to profits that explains the Great Moderation and the low growth in the economy because the rich save their money, which takes it out of the economy and the non-rich spend their money which boosts the economy. I know that you believe that savings somehow find their way back into the economy, but it isn't true and I can tell you why in a later post. For now, just think about why hasn't anyone worried about too much savings causing inflation?

=============== continued below ===============​

 

[Loren Pechtel]

You can't set your price below what it costs to produce + a reasonable profit if you want to stay in business.

First of all, yes you can. people do it all the time when they need to make inventory space or get rid of product before it expires.

Technicality. I meant on an ongoing basis, not a clearance situation.

Secondly, what constitutes a "Reasonable profit"?

The market defines it. If an industry is too profitable new players will enter and drive down the price. If it's not profitable enough there will not be replacements when existing players die, thus raising the price. Note that it's not just a simple %, the riskier the field the higher the profit margin must be to attract players.

Thirdly, if employees are considered service providers (The service being their labor to perform a given task), then why aren't they also entitled to a reasonable profit? (The overhead being things needed to maintain a household for said employees. Homeless people with an insufficient caloric intake don't make for good service providers.)

I'm not talking about entitlement. However, if you want to apply that model look at what happens: The company that can't compete goes out of business (dies).

 

[Loren Pechtel]

Loren wrote: "You can't set your price below what it costs to produce + a reasonable profit if you want to stay in business."
I am swapping this around to "f you want to stay in business, [y]ou can't set your price below what it costs to produce + a reasonable profit."

Well, first, this is confusing a number of things such as the price of a single item and the total company profit. Companies often have multiple products and some may make profits while others don't and there may be reasons for this such as new entry into a market to corner the market or that product#2 profit is dependent on product#1 being sold, even at a small loss. Plus, start up companies may be looking for making a profit in the long-term, not the short-term, and so may accept losses. Let's ignore all that for now...

You're focusing on the trees and ignoring the forest.

I will add the following rule to Loren's set of a single rule on businesses staying afloat:
"If you want to stay in business, give your employees a living wage and allow them to have career growth and other incentives."

If you can't do that, then you actually have a bad business model because you will waste and abuse your labor resource until it bites you.

History shows that this is not a required part of a business model.

Your side seems to think that business owes people simply because they exist. Welfare systems are the government's job, not the companies.

 

[Loren Pechtel]

First of all, yes you can. people do it all the time when they need to make inventory space or get rid of product before it expires.

Secondly, what constitutes a "Reasonable profit"?

Thirdly, if employees are considered service providers (The service being their labor to perform a given task), then why aren't they also entitled to a reasonable profit? (The overhead being things needed to maintain a household for said employees. Homeless people with an insufficient caloric intake don't make for good service providers.)

How could anyone possibly think there is some sort of "entitlement to a reasonable profit"?

That's some seriously delusional babble there.

They live in a fantasyland where there always is a good solution. Thus businesses and people are entitled to a reasonable income.

 

[dismal]

How could anyone possibly think there is some sort of "entitlement to a reasonable profit"?

That's some seriously delusional babble there.

You think people aren't entitled to profit off their honest labor as opposed to subsisting on it like serfs? That's some seriously delusional babble there.

The are entitled to make what someone will willingly pay them for a good or a service. They are not entitled to this number being above $0. Whether you're selling hamburgers, your labor, services oiling up bikini models, or rocks you pick up from your driveway.

 

[dismal]

How could anyone possibly think there is some sort of "entitlement to a reasonable profit"?

That's some seriously delusional babble there.

They live in a fantasyland where there always is a good solution. Thus businesses and people are entitled to a reasonable income.

That's why we don't have business failures right? Businesses can just go to court(?) and assert their right to make a reasonable profit.

 

[Loren Pechtel]

The thing is you consider any analysis of whether they can afford it irrelevant. The only way it can be irrelevant is if the pool is infinite.

It's irrelevant because short-term loss of profit margins do not immediately destroy productive companies. Unproductive companies are ultimately a drain on the economy and are better off being left to fail anyway.

You're not making sense here.

You are correct that in the short run profit & loss doesn't decide the fate of businesses. You are not establishing that this has any relevance to the situation, though, because the changes being discussed are permanent, not short term.

If the company is a marginal operation, if they have no profits to pay the increase it is still unlikely that they will go out of business. They either have capital invested in the business that they want to protect or more likely, they have loans that the bank doesn't want to write off.

So they lose on each item and yet make it up in volume? You realize that's a joke, not sound economics?

There are MANY companies that operate regularly on unsound economics.

So you think they should lose money and make it up on volume??

A minimum wage increase would cause many of them to go under for this very reason. Interestingly, a long-term effect is that the people formerly employed by unproductive companies will probably get picked up by more productive ones as they fill the empty market niche left by their competitors; unlike the minimum-wage payers, those competing companies are in a better position to reinvest in their workers with on-the-job training and continuing education their field. This is yet another advantage of creative destruction.

Reality: Some will be picked up, some will be left unemployed.

And what you miss is that in the long run the profit ratio is fixed.

Bullshit. This isn't even true for a specific INDUSTRY, let alone a specific COMPANY, and absolutely is untrue for the whole of the economy. Profit margins fluctuate dramatically depending on market conditions and market conditions are constantly changing. What Don is describing is the effort of supply-side economists to maximize profit margins as much as possible by making companies immune to those sorts of fluctuations and shielding them from the consequences of their own inefficiencies. The result is stagnating wages and a disconnect between wages and productivity. Ironically, this produces downward pressure not just on wages, but on productivity as well.

The long term profit ratio is fixed. It bounces all over the place in the short term because the correction mechanism is so slow. (And what I'm talking about doesn't apply to monopoly situations anyway. That's why companies like Apple can rack up so much money.)

- - - Updated - - -

How could anyone possibly think there is some sort of "entitlement to a reasonable profit"?

That's some seriously delusional babble there.

You think people aren't entitled to profit off their honest labor as opposed to subsisting on it like serfs? That's some seriously delusional babble there.

An entitlement implies someone decreeing it and paying for it.

Who, God?

 

[Don2 (Don1 Revised)]

An entitlement implies someone decreeing it and paying for it.

Who, God?

So you think god decreed that corporations are entitled to reasonable profits?

 

[Loren Pechtel]

I am not ignoring supply and demand. I just said that the interaction of the two doesn't set the price. And that demand is not infinite, that in order to have economic demand it is not sufficient for there to be a supply and the desire to own a product or to consume a service, there has to be money to realize the desire. And that the economy is demand lead and that it is no longer constrained by the supply.

The interaction of supply and demand sets what people are willing to pay. The cost of production + profit sets the minimum that companies will sell for.

When the former exceeds the latter companies rake in the money and in time competitors show up and shift the curve down until the numbers match. If the latter exceeds the former the market disappears. (For example, many types of repair.)

I don't believe that the economy is "very resilient against anything but very heavy-handed intervention" in any regard. If this was true, the government interventions would have a minimal effect on the economy. But we know that this is not true and the vast majority of your fellow free market enthusiasts would agree.

What I'm saying is the market will steamroll over most interventions, not that there will be no effect from them. Consider a case where the effect is very obvious: Rent control. What happens when the state imposes rent controls?

1) Companies find ways around it. I'm thinking of my parents in the 50s, renting an apartment. Unfurnished apartments simply did not exist, all you could get is furnished with some extremely overpriced furniture. You also had to move when your lease was up so they could sock the next guy with the extremely overpriced furniture. In reality renters were worse off than if there were no rent controls in the first place.

2) Companies provide an inferior product. Why spend money on maintenance? The properties turn into disaster areas.

3) Companies don't provide a product at all. Almost nobody builds new apartments in rent control areas.

4) Underhanded dealings. You have to pay bribes to move up the list of who gets in.

In 1980 supply side economists were certain that the market was not resistant to government intervention and that it was government intervention that had pushed up wages and suppressed profits. They were correct.

You continue to blame this on government intervention when there is no reason to think it was. There were two big factors at work here:

1) Imports of manufactured goods were becoming an important factor. Unions had been riding fat based on the fact that the US was the only real source of many products, if the union controlled the US workers in the field they had great power. However, now the companies had to deal with foreign competition and could no longer pass the cost on to the consumer. Unions were basically destroyed except when they had a somehow captive market.

2) The information revolution. More and more workers were replaced with automation and that automation costs money. The higher the capital/worker ratio the more of the profit you would expect to go to the company.

And what they proposed to do was that the government should intervene to reverse this and to suppress wages and increase profits to increase the the incomes of the already wealthy. And the government did do this. They passed tax cuts, they stopped raising the minimum wage, they stopped supporting the unions, started increasing the government's support of the corporations, started allowing the concentration more corporate control over the economy by larger and fewer corporations, started rolling back the burdening of exchanges with externalities such as having to clean up their own pollution or the burden of having to sell only safe products manufactured in safe factories paying decent wages.

You realize Reagan's tax cuts weren't really that big? He closed an awful lot of loopholes at the same time. Reagan-era taxes collected a smaller percent of a larger pie (not the neo-con fantasy of huge growth, but a lot of money that had been previously sheltered from tax became taxable.)

Minimum wage, I agree.

Unions, they still get support. They were destroyed through their loss of a monopoly position.

Corporate consolidation--this wasn't an issue of the government allowing. It was an issue of the information revolution making it beneficial for companies.

Externailities--the government has become stricter about such things, not looser.

... and I don't want to give the government the sort of control on our economy that would be necessary to force what you want.

What makes you so fearful of the government?

Powerful governments have a very bad track record.

I would think that you would be happy with the government that we have now. It is solidly in the control of the party of neoliberalism and anything the wealthy and the corporations want, they get. Exactly the principles that you support, here in this blog.

I don't support the neocons.

They have promised to do the things that you want to do, relieve the free market of government oversight, especially the financial sector, banks, because they have learned to regulate themselves and to play nice, not like they did before 2008. To reduce taxation on the rich and to shift it to the non-rich, because the wealthy don't need the government, why should they pay for it? To re-establish the joys working for a living rather than living off of government largess, people like me, disabled and all of those children who chose the wrong parents. To turn government services into private, for profit corporations like was done in Russia. You want the US to be like Russia don't you?

I'd like more oversight, not less. However, oversight != taking. I do not approve of using the corporate world as an off-the-books welfare scheme. If welfare should be provided it should be done by the government, account honestly for the costs as taxes rather than make companies pay it and pretend the cost isn't there.

See, this where your memorized, randomly placed talking points fail you, not to mention your failure to read and/or to understand my posts.

A failure to agree is not a failure to understand.

I am proposing to keep the economy that we have right now, the mixed market, government and private enterprise working together, capitalistic economy that you see working quite well everyday. The economy that has provided for you and yours everyday that you and yours are here. The most successful economy that the world has ever seen. The economy that defeated both fascism and communism within fifty years.

Why do you think that it is a failed system?

You want the economy of the 50s and 60s--never mind that the conditions that allowed that no longer exist. It just exported the shit.

But you are wrong about there being no need to raise wages, the income inequality that we are seeing now will just continue to grow and it will continue to anger the workers even though they don't know what the problem is. And I find your desire to not offend the capitalist system unconvincing. It is what happened in 1980, and then the neoliberals weren't concerned with offending the system when they bent it to increase profits.

Besides, it is this redirection of money from wages to profits that explains the Great Moderation and the low growth in the economy because the rich save their money, which takes it out of the economy and the non-rich spend their money which boosts the economy. I know that you believe that savings somehow find their way back into the economy, but it isn't true and I can tell you why in a later post. For now, just think about why hasn't anyone worried about too much savings causing inflation?

You continue to think there's an active redirection, yet ignore the forces that would have caused a redirection.

 

[Crazy Eddie]

It's irrelevant because short-term loss of profit margins do not immediately destroy productive companies. Unproductive companies are ultimately a drain on the economy and are better off being left to fail anyway.

You're not making sense here.

You are correct that in the short run profit & loss doesn't decide the fate of businesses. You are not establishing that this has any relevance to the situation, though, because the changes being discussed are permanent, not short term.

The long-term reality is that a rise in wages generally (in fact, by necessity) means an improvement in quality of personnel and quality of service. This is either because companies make sure the personnel who receive those wages are more qualified, or because companies that provide poor service do not survive. That is the LONG TERM trend that persists in reality.

There is no such thing as a "permanent change" in business. Even the long-term picture is only relevant until conditions change again, which they will, as a matter of certainty.

So you think they should lose money and make it up on volume??

No, I think they WILL lose money unless they change their business model, which MAY involve them making it up on volume. I have no interest in what businesses "should" do, that is entirely up to them.

Reality: Some will be picked up, some will be left unemployed.

Until they pull themselves up by their bootstraps, make themselves employable again and find better jobs at the new minimum wage.

And you have been around this board long enough for us to know -- without any doubt at all -- that you do not give two shits about those workers who are unable to actually do that and are happy to leave them wallowing in the welfare-funded gutter.

The long term profit ratio is fixed. It bounces all over the place

Something that "bounces all over the place" is not something that is "fixed."

 

[LordKiran]

It's irrelevant because short-term loss of profit margins do not immediately destroy productive companies. Unproductive companies are ultimately a drain on the economy and are better off being left to fail anyway.

You're not making sense here.

You are correct that in the short run profit & loss doesn't decide the fate of businesses. You are not establishing that this has any relevance to the situation, though, because the changes being discussed are permanent, not short term.

If the company is a marginal operation, if they have no profits to pay the increase it is still unlikely that they will go out of business. They either have capital invested in the business that they want to protect or more likely, they have loans that the bank doesn't want to write off.

So they lose on each item and yet make it up in volume? You realize that's a joke, not sound economics?

There are MANY companies that operate regularly on unsound economics.

So you think they should lose money and make it up on volume??

A minimum wage increase would cause many of them to go under for this very reason. Interestingly, a long-term effect is that the people formerly employed by unproductive companies will probably get picked up by more productive ones as they fill the empty market niche left by their competitors; unlike the minimum-wage payers, those competing companies are in a better position to reinvest in their workers with on-the-job training and continuing education their field. This is yet another advantage of creative destruction.

Reality: Some will be picked up, some will be left unemployed.

And what you miss is that in the long run the profit ratio is fixed.

Bullshit. This isn't even true for a specific INDUSTRY, let alone a specific COMPANY, and absolutely is untrue for the whole of the economy. Profit margins fluctuate dramatically depending on market conditions and market conditions are constantly changing. What Don is describing is the effort of supply-side economists to maximize profit margins as much as possible by making companies immune to those sorts of fluctuations and shielding them from the consequences of their own inefficiencies. The result is stagnating wages and a disconnect between wages and productivity. Ironically, this produces downward pressure not just on wages, but on productivity as well.

The long term profit ratio is fixed. It bounces all over the place in the short term because the correction mechanism is so slow. (And what I'm talking about doesn't apply to monopoly situations anyway. That's why companies like Apple can rack up so much money.)

- - - Updated - - -

How could anyone possibly think there is some sort of "entitlement to a reasonable profit"?

That's some seriously delusional babble there.

You think people aren't entitled to profit off their honest labor as opposed to subsisting on it like serfs? That's some seriously delusional babble there.

An entitlement implies someone decreeing it and paying for it.

Who, God?

So you don't think people are entitled to a reasonable profit for their honest labor? Good to know.

 

[dismal]

So you don't think people are entitled to a reasonable profit for their honest labor? Good to know.

Yes, well, I'm not delusional so no.

I'm curious about how things work in your version of reality. How much am I entitled to be paid for preferred labor of oiling up supermodels for nude photo shoots?

Who does the paying? The supermodels?

 

[LordKiran]

So you don't think people are entitled to a reasonable profit for their honest labor? Good to know.

Yes, well, I'm not delusional so no.

I'm curious about how things work in your version of reality. How much am I entitled to be paid for preferred labor of oiling up supermodels for nude photo shoots?

Who does the paying? The supermodels?

There's only one reality, you're just not aware of it as you're too busy being caught up in your silly little fantasies.

All business models should make room for all members involved top to bottom to profit off the venture equitably. This is not an unreasonable expectation. So to answer your question, you are entitled to earn a living that allows for a 'reasonable net profit' same as anyone else. This is provided of course that someone is willing to pay you for that service to begin with.

 

[dismal]

Yes, well, I'm not delusional so no.

I'm curious about how things work in your version of reality. How much am I entitled to be paid for preferred labor of oiling up supermodels for nude photo shoots?

Who does the paying? The supermodels?

There's only one reality, you're just not aware of it as you're too busy being caught up in your silly little fantasies.

All business models should make room for all members involved top to bottom to profit off the venture equitably. This is not an unreasonable expectation. So to answer your question, you are entitled to earn a living that allows for a 'reasonable net profit' same as anyone else. This is provided of course that someone is willing to pay you for that service to begin with.

You didn't answer the questions I asked. Unless I missed it.

Given I am obviously entitled to a fair wage oiling up supermodels for nude photoshoots, who is obligated to pay?

 

[Elixir]

Given I am obviously entitled to a fair wage oiling up supermodels for nude photoshoots, who is obligated to pay?

Same answer as always - the oil companies.

 

[ksen]

They live in a fantasyland where there always is a good solution. Thus businesses and people are entitled to a reasonable income.

That's why we don't have business failures right? Businesses can just go to court(?) and assert their right to make a reasonable profit.

We're actually getting quite close to that. See the TPP we barely dodged.