$12 minimum wage

[NMMB]

Well I have yet to read an economic text of any sort that raises the issue of the pricing of a product not covering such periphery issues. Why? Because you quickly head into "that's just nuts" territory....If you buy a pen from Bic, should you also pay some small tax to subsidise the eventual bulldozing and return of Bic's factory land to Yellowstone Park quality?

The issue that you appear to be unable to wrap your mind around is known as externalities and has been a staple of economics for about a century or so. If you haven't been able to find this topic in economic texts I would suggest that you haven't been reading economics texts. Trust me, it is there. I have been studying environmental economics for the past 6 years and am presently working on my PhD in economics... this is not something that I am making up and is not something new and should not be a difficult concept for anybody to comprehend. If you are really having problems here I would suggest that it is more that you don't want to accept it than you can't understand it, since you appear to be at least a moderately intelligent chap.

As for your question about the bic pen - the answer is without any doubt, "yes" (in theory at least).

 

[moses]

Also, just to observe one other thing. I am, unlike Michael, not very educated in economics. I've read a few texts, and took a minor in college, but that's about it. One thing I do know, is that there is almost nothing that "no serious economist would ever suggest." Hell, nobel prize winners have suggested that increasing debt load for the country is a good thing. Economics is a very broad field, with quite a number of recognized schools of thought. It is not all Chicago, Neo-Classical, blah blah.

That said, I am pretty sure the principal that externalities exist and are part of the real cost of a product is pretty well recognized accross the field. What that means and what should be done about it - another thing altogether.

 

[Jim]

I find that the most riveting and informational text about economics to read is my own P&L sheets each month. *No theory just reality.*

 

[jmhUT]

I find that the most riveting and informational text about economics to read is my own P&L sheets each month. *No theory just reality.*

Amen brother.

As an aside, this thread looks to be taking on a bit of a mean-spirited tone. Ultimately we are all arguing opinions here. We should be able to do so without making it personal. I for one engage in these types of debates not only to express an opionion but also to solicit opposing viewpoints. I typically either leave feeling more secure in my own belief or intrigued by a new idea that may ultimately lead to my own better understanding of an issue. Either way I'm better off. It's a bit offputting when the debate degenerates into an argument, which is of less use to all of us. I think it also telnds to chase others away rather than encouraging particupation. Passion is fine but let's keep it respectful shall we?

Just my $.02. It's not my forum, just my preference.
Cheers,
Jeff

 

[moses]

Jeff,

Thanks for the reality check. If my tone sounded argumentative or, worse yet, mean-spirited, I apologize. Not my intention at all. This is, after all, a gentlemens' forum, so I hear, so I will try not to undo that too much....

Shane

 

[NMMB]

Jeff,

Thanks for the reality check. If my tone sounded argumentative or, worse yet, mean-spirited, I apologize. Not my intention at all. This is, after all, a gentlemens' forum, so I hear, so I will try not to undo that too much....

Shane

I expect that I sounded argumentative, and I suppose that is what I was doing... but if I sounded mean-spirited then I did a poor job representing myself as it was not in any way my intention. I do apologize if I have offended any other B&B'er.

 

[Wolfman]

The state of CA is considering another minimum wage increase. My boss has put me on notice that if it does go up, I'll be packing my desk because I earn more than twice the current minimum wage for new hires. In order for the company to remain "politically correct" in the eyes of equal opportunity and the county employment dept. he'll let me go so he can keep his current crop of temp and minimum wage earners. And he wonders why all the management he has are looking for something else, and CALOSHA violations are stacking up like dimes.

 

[moses]

Wow, I think I'd be looking for something else anyway - doesn't sound like a great person to work for....

 

[Andre]

On the mean spritedness theme, as I told someone else, I don't get overly worked up over impersonal internet posts, because I realize that they can often sound far worse than ever intended. The only thing that will actually offend me is an OBVIOUS personal attack, and I don't think any has been tendered here. Hopefully nobody has interpreted such in mine. Sitting across a table over a beer is about the only way to catch all of the nuance of human speech.

On Externialities. I know about that, but my point is I think that one can take them to rediculous extremes that bear little realistic relation to the original product. In those cases, they go to far and can only lead to consideration that brig things to a halt. I VERY seriously doubt that ANY portion of the current purchase of a Bic pen is earmarked for the costs of bulldozing said factory in 2025. You may, in fact, be paying for PAST issues. Perhaps I overstated, or wasn't really clear.

Anyway, think about this:
Let's say you start with a company making $X. You work really hard to do a good job, to attend school in the evenings, you make the right career choices, etc. After five years of hard work, you are selected for a special training path that will start you at $28,000/yr, and has career opportunities much further. Excitedly, you sign on and look forward to this new opportunity in your life. You worked hard, and this is where it got you.

Six months later, the Government passes a law that the new min wage is $12/hr (for the sake of arguement, about $24,000/yr in full-time America). This means that the person with no real skills, doing a no skill distribute-the-mail job that you started at @ $X, and worked hard to get past, now earned a big chunk of what you do. What should happen? Should your boss raise the wages of everybody with wages that were formerly meritorious in nature, but which now are effectively min wage or nearly so? Can a company always afford such a situation? Have YOU as a hard working go-getter just been screwed (This'll teach you!). Should you just be happy that your fellow workers are now making just about what you make, even though they didn't do anything except avoid getting fired? Should a business that has a lot of min wage workers raise the price of their products, or employ fewer workers (contrary to common sense, lots of businesses can't just absorb the cost). If the price goes up, how will this affect the cost of living for poor consumers (what if the company makes diapers, or milk)? Who decides who gets fired and what happens to them when you do?

Things are not so simple when you operate under the mandate of regulation, because if you regulate A, it usually affects B. If you haven't accounted for B, you end up screwing somebody (often the very people you set out to help).

In the end, it's just fake politics anyway, since in the U.S. most people earning min wage are in middle class families earning extra cash; most people in the bottom quintile don't stay there long; almost nobody works long at min wage; and only about 4% of "the poor" actually remain poor for more than a decade. The majority of the "symbolic" victims of society, the African-American families make $50,000+ (a healthy enough wage). There are lots of common ideas (possibly true somewhere) that simply aren't true in America. We absolutely should provide a safety net for those that need it, but worrying about min wage workers is just a political code to make the elite whites who espouse raising it feel better, since the common sense about it is usually wrong, "but who doesn't want to help the poor?"

C'mon lets have the free market truly reign...., END ALL REGULATION TO DO WITH WORK..., I like hard work, particularly when I'm paying for it - so no more safety equipment, no need to heat or cool the offices anymore ...., let's get rid of it once and for all (and not just the poor).

You're not really thinking this through (and I realize you are being somewhat sarcastic). The REASON a free market, without excessive regulation, will NOT decend into employment anarchy, is because it is not in the best interest of a company to endanger its workers. It won't and doesn't happen. This is just a Shibboleth raised by unions and anti-capitalists to explain why every little nuance of business life MUST be regulated (an absolute necessity under Socialism). How long would you voluntarily work somehwere that had no heat in winter, and which killed on employee every day? Sure, there are dangerous jobs that people do and which need more regulation than working at the Virgin Megastore (Like coal mining), but the vast majority of businesses will simply change voluntarily if they become so dangerous that nobody wants to work there. A register clerk at the Virgin Megastore doesn't need a union or excessive regulation (min wage laws), since they can simply work somewhere else. when the Megastore can't find clerks to work for $2/hr in a non-A/C'd building in Florida, it will quickly get A/C and raise its wages to match its competition. And the wage will always stabilize naturally at the highest point that is reasonable for the overall job (across companies), since if it didn't, the best employees will always work for the guy willing to pay even more. (the basic supply and demand curve). It's only when Government effectively creates subsidies and caps that the natural function of the system falls apart - usually leading to less employment and lower overall wages. The supply and demand curve is so basic to economics that I am always surprised when people pretend it doesn't always work the same. It always does because it is based on how people think and react in real life.

Andre

 

[moses]

Andre,

Your point that supply and demand pressures will force adequate safety, etc. in the absence of regulation is interesting. And in truth it probably has some merit in the modern US. I think it is worth remembering, however, how bad working conditions really were at one point. And they did not improve through simple supply and demand. They improved as a result of two things. Organization of supply, and regulation. And frankly, even with the regulations we have, there have been some Very Bad Things that have happened where companies chose to ignore regulations. On the one hand that is a demonstration that regulation isn't 100% effectice, but it is also a demonstration that labor supply may not alone be enough to enforce worker and environmental safety.

Might I also point out, on the environmental side, that free market pressures were not enough, despite the public uproar, to directly correct the very dangerous direction we were headed in the 70s. I don't think most people realize how bad this country's air and water would be without the CAA and CWA. And industry submitted to those KICKING AND SCREAMING. Which would not have been the case had the free market alone been enough. Which, after all, is the point of the externality concept. These are called externalities because the cost is not internalized. Which is another way of saying that the free market alone generally will not account for them.

Shane

PS - That does not answer Andre's points about the min. wage at all. Frankly, I think his arguments correctly point out some of the very serious problems with the minimum wage.