Wealth Redistribution or Wealth Return?

[Loren Pechtel]

What do you mean I have "never addressed" this. I have addressed it in raising the fact that the cost of production is much more than just labor wages. Some study indicated raising wages to $15 an hour impacted value meal prices by a buck or so.,. ie raising wage 50 to 100% impacted the final price by much lower percentage, because the cost of production involves buildings, food, management as well. Secondly, the issue can be raised as to why inertia is an acceptable reason to pay people a wage they can't remotely hope to live off of. Yes, we can have more jobs if wages are lower, but the heck good is that for our economy?

Yeah, they like to pretend this. For a while it's even true--it takes time for that minimum wage increase to percolate all the way through the economy. That doesn't mean it won't show up eventually, though.

In the long run minimum wage increases simply lead to enough inflation to neutralize them.

Just because our ability to measure this is very poor doesn't mean it's not there.

The question becomes if it is too difficult to measure, what is the significance of claiming it exists? While a wage hike can influence a desire to reduce the number of people working, the number of people working also impacts the amount of production one can have. A fast food joint can limit the number of people at a joint to just one... but one person can only fulfill so many orders. Automation in definitely an issue for lower wage workers, but usually the expense of automation is better when replacing higher paid workers (see coal mining). For fast food, you need people to prep the food. That simple. The fewer you have, the less food that can be prepared. The math is simple.

Something being hard to measure doesn't make it not exist.

As for the number of people at fast food. Off the top of my head I'm thinking of drink machines where you simply push a button for the cup size and it knows how to fill it, and drink machines on the customer side, you get an empty cup. I'm sure there's more but I've never worked fast food to see what's being done.

 

[laughing dog]

In the long run minimum wage increases simply lead to enough inflation to neutralize them.

There is no theoretical basis for that claim. Do you have any actual empirical evidence to support your view? I ask, because as you persistently point out, minimum wage workers make up a very small portion of workers, which suggests that any increase in the minimum wage has a small, perhaps even imperceptible, increase in economy-wide costs.

 

[Loren Pechtel]

Your graph assumes instant adjustment,

The graph doesn't say anything at all about time. It seems to me it's completely agnostic about how long a market takes to reach a new equilibrium. Where do you see an assumption of instant adjustment?

A criticism that ignores the messiness is unconvincing. I don’t see anyone rejecting theory, just dogmatic simplistic claims.

JH wrote "Wouldn't it be easier for you to prove your case by showing how jobs decreased or workable hours decreased?", reversing burden of proof, and wrote "and then min wage hike didn't kill jobs", making an unsupported positive claim that the theory's prediction turned out to be wrong. Looks like rejecting theory to me.

What?!

A: Minimum wage hikes will kill jobs!
*minimum wage hikes don't seem to kill jobs*
A: The number of jobs it killed were too small to measure.
*laughter subsides*
A: It is your job to prove minimum wage hikes don't kill jobs!

This is worse than pussygate, where after all the damn whining over honor in the White House, the evangelicals vote en masse for Trump. Here we have economic conservatives, a group that have insisted that minimum wage hikes would kill jobs... and now that the job losses haven't been recognized, we get the response 'We never said they'd be measurable!' *jaw drop*

We have one clearly non-zero data point: American Samoa. It most certainly killed jobs.

We have many "data" points where it would be impossible to observe anything but a huge change. These are conveniently misinterpreted as saying the value is zero, but that's not what they really say. All they actually show is that typical minimum wage increases in typical economies do not produce a result above the noise floor.

We also have the law of supply and demand that clearly indicates a drop in jobs should happen.

Our theory addresses all of these points. You try to handwave away from #1 and #3 and treat #2 as evidence of zero. You're the one making the claim at odds with expectation, the burden is on you.

 

[Loren Pechtel]

In the long run minimum wage increases simply lead to enough inflation to neutralize them.

There is no theoretical basis for that claim. Do you have any actual empirical evidence to support your view? I ask, because as you persistently point out, minimum wage workers make up a very small portion of workers, which suggests that any increase in the minimum wage has a small, perhaps even imperceptible, increase in economy-wide costs.

What you don't understand is that the workers above them will also be wanting raises.

 

[laughing dog]

In the long run minimum wage increases simply lead to enough inflation to neutralize them.

There is no theoretical basis for that claim. Do you have any actual empirical evidence to support your view? I ask, because as you persistently point out, minimum wage workers make up a very small portion of workers, which suggests that any increase in the minimum wage has a small, perhaps even imperceptible, increase in economy-wide costs.

What you don't understand is that the workers above them will also be wanting raises.

So? Workers always want raises. But they don’t get them. Are you seriously arguing that if the minimum wage increases by x%, then all wages in the long run increase by x%? If so, you need more than “want means get”.

 

[Loren Pechtel]

In the long run minimum wage increases simply lead to enough inflation to neutralize them.

There is no theoretical basis for that claim. Do you have any actual empirical evidence to support your view? I ask, because as you persistently point out, minimum wage workers make up a very small portion of workers, which suggests that any increase in the minimum wage has a small, perhaps even imperceptible, increase in economy-wide costs.

What you don't understand is that the workers above them will also be wanting raises.

So? Workers always want raises. But they don’t get them. Are you seriously arguing that if the minimum wage increases by x%, then all wages in the long run increase by x%? If so, you need more than “want means get”.

Anyone making over minimum wage is doing so because competition for workers made the companies have to pay that amount. While there can be substantial deviation from this in the short run the market will always head towards that direction.

If the inflation rate is already higher than the minimum wage increase it will have little effect. If it's below the minimum wage increase the eventual result will be that amount of inflation.

 

[laughing dog]

In the long run minimum wage increases simply lead to enough inflation to neutralize them.

There is no theoretical basis for that claim. Do you have any actual empirical evidence to support your view? I ask, because as you persistently point out, minimum wage workers make up a very small portion of workers, which suggests that any increase in the minimum wage has a small, perhaps even imperceptible, increase in economy-wide costs.

What you don't understand is that the workers above them will also be wanting raises.

So? Workers always want raises. But they don’t get them. Are you seriously arguing that if the minimum wage increases by x%, then all wages in the long run increase by x%? If so, you need more than “want means get”.

Anyone making over minimum wage is doing so because competition for workers made the companies have to pay that amount. While there can be substantial deviation from this in the short run the market will always head towards that direction.

Why? Are you under the mistaken impression there is some constant wage premiums in labor markets that miracously cause non-minimum wages to eventually increase by the same percentage as the minimum wage.

If the inflation rate is already higher than the minimum wage increase it will have little effect. If it's below the minimum wage increase the eventual result will be that amount of inflation.

That contradicts your bogus claim that inflation will increase by the percentage increase in the minimum wage.

Your explanations appear to be magical thinking.

 

[Loren Pechtel]

In the long run minimum wage increases simply lead to enough inflation to neutralize them.

There is no theoretical basis for that claim. Do you have any actual empirical evidence to support your view? I ask, because as you persistently point out, minimum wage workers make up a very small portion of workers, which suggests that any increase in the minimum wage has a small, perhaps even imperceptible, increase in economy-wide costs.

What you don't understand is that the workers above them will also be wanting raises.

So? Workers always want raises. But they don’t get them. Are you seriously arguing that if the minimum wage increases by x%, then all wages in the long run increase by x%? If so, you need more than “want means get”.

Anyone making over minimum wage is doing so because competition for workers made the companies have to pay that amount. While there can be substantial deviation from this in the short run the market will always head towards that direction.

Why? Are you under the mistaken impression there is some constant wage premiums in labor markets that miracously cause non-minimum wages to eventually increase by the same percentage as the minimum wage.

Of course. Money is simply an accounting unit of the underlying value--nothing has changed about the relative values, the market will return to the same ratios even if the accounting unit changed.

If the inflation rate is already higher than the minimum wage increase it will have little effect. If it's below the minimum wage increase the eventual result will be that amount of inflation.

That contradicts your bogus claim that inflation will increase by the percentage increase in the minimum wage.

Your explanations appear to be magical thinking.

You continue to JAQ rather than address the point.

 

[laughing dog]

In the long run minimum wage increases simply lead to enough inflation to neutralize them.

There is no theoretical basis for that claim. Do you have any actual empirical evidence to support your view? I ask, because as you persistently point out, minimum wage workers make up a very small portion of workers, which suggests that any increase in the minimum wage has a small, perhaps even imperceptible, increase in economy-wide costs.

What you don't understand is that the workers above them will also be wanting raises.

So? Workers always want raises. But they don’t get them. Are you seriously arguing that if the minimum wage increases by x%, then all wages in the long run increase by x%? If so, you need more than “want means get”.

Anyone making over minimum wage is doing so because competition for workers made the companies have to pay that amount. While there can be substantial deviation from this in the short run the market will always head towards that direction.

Why? Are you under the mistaken impression there is some constant wage premiums in labor markets that miracously cause non-minimum wages to eventually increase by the same percentage as the minimum wage.

Of course. Money is simply an accounting unit of the underlying value--nothing has changed about the relative values, the market will return to the same ratios even if the accounting unit changed.

Only in the case of completely competitive markets which does not characterize the real world.

If the inflation rate is already higher than the minimum wage increase it will have little effect. If it's below the minimum wage increase the eventual result will be that amount of inflation.

That contradicts your bogus claim that inflation will increase by the percentage increase in the minimum wage.

Your explanations appear to be magical thinking.

You continue to JAQ rather than address the point.

Instead if addressing the internal inconsistency in your reasoning, you persist in JABS.

 

[ZiprHead]

Of course. Money is simply an accounting unit of the underlying value--nothing has changed about the relative values, the market will return to the same ratios even if the accounting unit changed.

We've had numerous minimum wage rate increases here in Michigan. My yearly rate increase never came close to the minimum wage increase.

 

[Loren Pechtel]

Of course. Money is simply an accounting unit of the underlying value--nothing has changed about the relative values, the market will return to the same ratios even if the accounting unit changed.

Only in the case of completely competitive markets which does not characterize the real world.

Most markets are close enough.

If the inflation rate is already higher than the minimum wage increase it will have little effect. If it's below the minimum wage increase the eventual result will be that amount of inflation.

That contradicts your bogus claim that inflation will increase by the percentage increase in the minimum wage.

Your explanations appear to be magical thinking.

You continue to JAQ rather than address the point.

Instead if addressing the internal inconsistency in your reasoning, you persist in JABS.

You're still not addressing the issue.

 

[laughing dog]

Of course. Money is simply an accounting unit of the underlying value--nothing has changed about the relative values, the market will return to the same ratios even if the accounting unit changed.

Only in the case of completely competitive markets which does not characterize the real world.

Most markets are close enough.

Not on this planet.

If the inflation rate is already higher than the minimum wage increase it will have little effect. If it's below the minimum wage increase the eventual result will be that amount of inflation.

That contradicts your bogus claim that inflation will increase by the percentage increase in the minimum wage.

Your explanations appear to be magical thinking.

You continue to JAQ rather than address the point.

Instead if addressing the internal inconsistency in your reasoning, you persist in JABS.

You're still not addressing the issue.

I am addressing the issue that your economic analysis is abysmal and internally inconsistent.

 

[Bomb#20]

JH wrote "Wouldn't it be easier for you to prove your case by showing how jobs decreased or workable hours decreased?", reversing burden of proof, and wrote "and then min wage hike didn't kill jobs", making an unsupported positive claim that the theory's prediction turned out to be wrong. Looks like rejecting theory to me.

What?!

A: Minimum wage hikes will kill jobs!
*minimum wage hikes don't seem to kill jobs*
A: The number of jobs it killed were too small to measure.
*laughter subsides*
A: It is your job to prove minimum wage hikes don't kill jobs!

Um, in whatever the heck that passage was supposed to be, can you clarify who "A" is supposed to be?

 

[Bomb#20]

The graph doesn't say anything at all about time. It seems to me it's completely agnostic about how long a market takes to reach a new equilibrium. Where do you see an assumption of instant adjustment?

In the slope of the demand curve. In the very short run, demand for labor is completely inelastic (vertical).

I lost you. If that's true then showing the demand curve sloped would seem to imply they're assuming a drawn-out time frame, not instant adjustment.

Be that as it may, why do you say demand for labor is completely inelastic in the very short run? That sounds like a claim that if a worker making $15.50 demands his pay be immediately hiked to $20, the boss will say "Okay" and start paying him $20/hr (and probably start looking around for a replacement worker.) I.e., it sounds like a claim that the boss will never say "Don't let the door hit your ass on the way out." Is that really what you mean to claim, or is there an angle here I'm missing?

JH wrote "Wouldn't it be easier for you to prove your case by showing how jobs decreased or workable hours decreased?", reversing burden of proof, and wrote "and then min wage hike didn't kill jobs", making an unsupported positive claim that the theory's prediction turned out to be wrong. Looks like rejecting theory to me.

While I could be wrong because I don't read people's minds, I interpret that response in the context of the entire discussion to mean - Show how your claim of a reduction of the amount of labor (jobs or hours worked) necessarily and always falls.

But in the context of the discussion, "necessarily and always" is an unreasonable standard to apply. Sure, employers might in principle be as addicted to unskilled labor as a junkie to heroin who just steals more stuff to fence if his dealer jacks up the price of a fix. But how plausible is that scenario in the real world? The standard shouldn't be "necessarily and always"; it should be "the alternative is less probable than the probability of an error in a study that said there was no hours reduction."

I also think that the focus on the reduction in the amount of labor is misdirected. In my view, the more important question is whether the increase in the minimum wage results in an increase or decrease in income for minimum wage workers as a group (i.e. do the benefits exceed the costs as a whole even if there are individual losers).

For purposes of public policy debate, that's a perfectly legitimate position to take -- after all, there's always somebody society throws under the bus for the sake of the greater good. But for purposes of the thread discussion, even if it increases their income as a group, when the individual losers are poor people who could have gotten jobs at the old $11/hr minimum wage but now can't get jobs at $15.50/hr, the minimum wage hike has taken away what would have been their income and given it to some different minimum wage workers, and there is no way to spin that as "Wealth Return" rather than "Wealth Redistribution".

(Of course JH may not have brought up the minimum wage job loss issue for any bearing it had on the thread -- he may have just been derailing.)

 

[laughing dog]

The graph doesn't say anything at all about time. It seems to me it's completely agnostic about how long a market takes to reach a new equilibrium. Where do you see an assumption of instant adjustment?

In the slope of the demand curve. In the very short run, demand for labor is completely inelastic (vertical).

I lost you. If that's true then showing the demand curve sloped would seem to imply they're assuming a drawn-out time frame, not instant adjustment.

Be that as it may, why do you say demand for labor is completely inelastic in the very short run? That sounds like a claim that if a worker making $15.50 demands his pay be immediately hiked to $20, the boss will say "Okay" and start paying him $20/hr (and probably start looking around for a replacement worker.) I.e., it sounds like a claim that the boss will never say "Don't let the door hit your ass on the way out." Is that really what you mean to claim, or is there an angle here I'm missing?

In your example, if the wage goes up from $15.50 to $20 due to outside forces (i.e. the business owner did not negotiate the increase), in many instances before there is a chance for the business owner or manager to make adjustments to their service or production process, they simply have to use the same amount of labor.

JH wrote "Wouldn't it be easier for you to prove your case by showing how jobs decreased or workable hours decreased?", reversing burden of proof, and wrote "and then min wage hike didn't kill jobs", making an unsupported positive claim that the theory's prediction turned out to be wrong. Looks like rejecting theory to me.

While I could be wrong because I don't read people's minds, I interpret that response in the context of the entire discussion to mean - Show how your claim of a reduction of the amount of labor (jobs or hours worked) necessarily and always falls.

But in the context of the discussion, "necessarily and always" is an unreasonable standard to apply.

Except it is the standard LP is applying. He is arguing it is always the case.

Sure, employers might in principle be as addicted to unskilled labor as a junkie to heroin who just steals more stuff to fence if his dealer jacks up the price of a fix. But how plausible is that scenario in the real world? The standard shouldn't be "necessarily and always"; it should be "the alternative is less probable than the probability of an error in a study that said there was no hours reduction."

I also think that the focus on the reduction in the amount of labor is misdirected. In my view, the more important question is whether the increase in the minimum wage results in an increase or decrease in income for minimum wage workers as a group (i.e. do the benefits exceed the costs as a whole even if there are individual losers).

For purposes of public policy debate, that's a perfectly legitimate position to take -- after all, there's always somebody society throws under the bus for the sake of the greater good. But for purposes of the thread discussion, even if it increases their income as a group, when the individual losers are poor people who could have gotten jobs at the old $11/hr minimum wage but now can't get jobs at $15.50/hr, the minimum wage hike has taken away what would have been their income and given it to some different minimum wage workers, and there is no way to spin that as "Wealth Return" rather than "Wealth Redistribution".

(Of course JH may not have brought up the minimum wage job loss issue for any bearing it had on the thread -- he may have just been derailing.)

Actually, I believe LP injected the minimum wage into this thread.

As for policy, it would be a rare policy that did not have losers and winners. Any policy that has winners and losers has redistribution.
Any wealth that is created (which is what I think of when I hear "wealth return) comes from what is produced, not from what is redistributed.

 

[Loren Pechtel]

As for policy, it would be a rare policy that did not have losers and winners. Any policy that has winners and losers has redistribution.
Any wealth that is created (which is what I think of when I hear "wealth return) comes from what is produced, not from what is redistributed.

The problem is the "winner" of a policy in many cases is the politician and all the participants are losers to varying degrees.

The thing is politicians get votes based on what the voters believe will happen, not based on what actually happens. Just look at the trumpets for a clear example of this.

As a general rule, if you have a long-standing issue and a simple solution that is not applied either the solution doesn't do what the label promises or there is a substantial difference of opinion on what the issue actually is.

 

[laughing dog]

As for policy, it would be a rare policy that did not have losers and winners. Any policy that has winners and losers has redistribution.
Any wealth that is created (which is what I think of when I hear "wealth return) comes from what is produced, not from what is redistributed.

The problem is the "winner" of a policy in many cases is the politician and all the participants are losers to varying degrees.

I know you believe that to be true. But the notion that all of the participants are losers is nonsense.

The thing is politicians get votes based on what the voters believe will happen, not based on what actually happens. Just look at the trumpets for a clear example of this.

If you are saying that a politician is not always held accountable, I agree. If you are saying that politicians are never held accountable, that is pure nonsense. Trump lost his bid for re-election.

As a general rule, if you have a long-standing issue and a simple solution that is not applied either the solution doesn't do what the label promises or there is a substantial difference of opinion on what the issue actually is.

That is true. So what?

 

[Loren Pechtel]

As for policy, it would be a rare policy that did not have losers and winners. Any policy that has winners and losers has redistribution.
Any wealth that is created (which is what I think of when I hear "wealth return) comes from what is produced, not from what is redistributed.

The problem is the "winner" of a policy in many cases is the politician and all the participants are losers to varying degrees.

I know you believe that to be true. But the notion that all of the participants are losers is nonsense.

The thing is politicians get votes based on what the voters believe will happen, not based on what actually happens. Just look at the trumpets for a clear example of this.

If you are saying that a politician is not always held accountable, I agree. If you are saying that politicians are never held accountable, that is pure nonsense. Trump lost his bid for re-election.

As a general rule, if you have a long-standing issue and a simple solution that is not applied either the solution doesn't do what the label promises or there is a substantial difference of opinion on what the issue actually is.

That is true. So what?

Raise the minimum wage is such a case.

 

[laughing dog]

As for policy, it would be a rare policy that did not have losers and winners. Any policy that has winners and losers has redistribution.
Any wealth that is created (which is what I think of when I hear "wealth return) comes from what is produced, not from what is redistributed.

The problem is the "winner" of a policy in many cases is the politician and all the participants are losers to varying degrees.

I know you believe that to be true. But the notion that all of the participants are losers is nonsense.

The thing is politicians get votes based on what the voters believe will happen, not based on what actually happens. Just look at the trumpets for a clear example of this.

If you are saying that a politician is not always held accountable, I agree. If you are saying that politicians are never held accountable, that is pure nonsense. Trump lost his bid for re-election.

As a general rule, if you have a long-standing issue and a simple solution that is not applied either the solution doesn't do what the label promises or there is a substantial difference of opinion on what the issue actually is.

That is true. So what?

Raise the minimum wage is such a case.

It is true that there is a substantial difference of opinion as to what the underlying issues are. It is not necessarily true that the solution does not do accomplish its intended purposes - that is an empirical question the answer to which depends on the specifics of the context.

 

[Loren Pechtel]

As for policy, it would be a rare policy that did not have losers and winners. Any policy that has winners and losers has redistribution.
Any wealth that is created (which is what I think of when I hear "wealth return) comes from what is produced, not from what is redistributed.

The problem is the "winner" of a policy in many cases is the politician and all the participants are losers to varying degrees.

I know you believe that to be true. But the notion that all of the participants are losers is nonsense.

The thing is politicians get votes based on what the voters believe will happen, not based on what actually happens. Just look at the trumpets for a clear example of this.

If you are saying that a politician is not always held accountable, I agree. If you are saying that politicians are never held accountable, that is pure nonsense. Trump lost his bid for re-election.

As a general rule, if you have a long-standing issue and a simple solution that is not applied either the solution doesn't do what the label promises or there is a substantial difference of opinion on what the issue actually is.

That is true. So what?

Raise the minimum wage is such a case.

It is true that there is a substantial difference of opinion as to what the underlying issues are. It is not necessarily true that the solution does not do accomplish its intended purposes - that is an empirical question the answer to which depends on the specifics of the context.

Lots of words without actually presenting any counter arguments.