1.He has no clue about economics.
http://www.theeroticreview.com/discussion_boards/viewmsg.asp?BoardID=39&SortBy=DateCreated%20desc&Search=batra&SearchType=1&DayFrom=300&DayTo=0&MessageID=111560&frmSearch=1
I better get to work or my economy will be in shambles . I'll save the other nine for another day.
He talks about raising the minimum wage, but overlooks the fact that that will drive up the cost of goods. What good is a raise if the cost of everything you buy is driven up by it?
Also, he talks about the great social network of Europe, let me give a clue here, EUROPE IS FRIGGIN BROKE!!! Greece is falling apart and the rest of the EU is right on its heels. The governments can no longer afford these programs and half of the EU population just can't seem to understand why...
the view held by most liberals that capitalism can be reformed to be beneficial to the working class. Most posters here have a narrow focus on economic theory usually based on their own self intrest. No one posting here has "credibility" because few posters take a position and fully support it with valid arguments. Willy constantly drones on and on about how capitalism can be reformed and attempts to support his ideas with half baked references about how "good" capitalism is as an economic system. As an economist Willy has all of the credibility of any liberal who thinks capitalism can be reformed. So fuck you quad.
I'm opposed to capitalism. I think it ought to be replaced with a democratic economy. I like David Schweickart's Economic Democracy model as well as Michael Albert's PARECON model.
However, if we're stuck with capitalism for the time being, we might as well make it slightly less horrible.
the capitalist class do while you try to implement these softer more inefficient forms of capitalism?
so, if that becomes a problem, you can constrain them again in other ways.
On the ranch here we call that sort of thing " counterrevolutionary" behavior. The management tends to favor a harsh remedy for it. It is put into a category with treason and prosecuted accordingly.
Small improvements beats no improvements.
That all depends on what you mean by improvements. Improvement can be measured in the value of assets allocated by the capitalist to the working class. The dollar amount of those assets is generally determined by the politicians who represent the interests of the working class.
Quad,
Instead of trying to refute my post below, you post this. You might as well admit that you're too dim to debate me. 
Snow,
raising the minimum wage tends to drive DOWN the cost of goods. The reason being is that if you put more money in the pockets of consumers, there's less need to borrow money. When fewer people borrow money, less money is introduced into the economy via the fractional reserve banking system.
But let's suppose that's all bullshit. Prices wouldn't go up regardless, since producers don't determine prices. Rather prices are a reflection of what the market will bear.
Greece, Ireland, Iceland, and Spain are in a lot of trouble. I think the consensus is that they joined the EU far too early. I don't follow it all that closely, but it seems that what good ole Rumsfield dubbed "old Europe" seems to be doing just fine.
-- Modified on 7/6/2010 2:03:52 PM
"raising the minimum wage tends to drive DOWN the cost of goods."
-You will never, ever, find any economics textbook to make such an argument. It simply is not possible to raise costs on a producer and expect prices to fall unless their is a greater than proportional increase in productivity driving the cost increase. Raising the minimum wage is an exogenous shock independent of productivity. Your reference to a fractional reserve banking system is completely irrelevant.
"But let's suppose that's all bullshit."
-Excellent analysis of your own position.
"Prices wouldn't go up regardless, since producers don't determine prices. Rather prices are a reflection of what the market will bear."
-Producers determine prices just as much as consumers do. Its a combination of supply and demand. So if costs go up, supply will decline and equilibrium prices will rise unless you assume demand is perfectly elastic (nonsense except for individual generic brands perhaps but not for any market overall) but even then, prices would stay the same, never fall. Further, if your argument is that raising wages increases incomes, then demand would go up, which would also increase prices.
So let's review. Cost increases reduce supply and salary increases raise demand. By the most basic principals of economics, prices have to go up.
(caveat: this refers to normal goods; for inferior goods demand may actually fall as wealthier consumers switch away from these products to purchase higher quality items. Demand for macaroni & cheese may fall as consumers increase demand for steak. But overall, prices in the economy will climb as incomes go up. And overall, prices in the economy will climb as costs go up.)
As for "old Europe", Spain and Portugal would have to be included (and why not Greece?). Spain as you mentioned is in trouble and Portugal right now is a disaster. And no, the rest of "old Europe" is not doing fine either. Have you checked out unemployment figures for France and Italy?
Zisk,
My apologies. I misspoke. I meant to say that raising the minimum wage tends to have a negative impact on inflation, not that it causes deflation.
Like I said, prices are determined by what the market will bear. In other words, it's a give and take between producers and consumers. But simply saying, as Snow did, that raising the minimum wage increases prices simply is not true. No producer will raise prices if consumers aren't willing to pay those prices.
My understanding of what Rumsfeld referred to as "Old Europe" would be western Europe that we redeveloped after WW2. I was specifically thinking of Germany, France, Norway, Sweden, Netherlands, Denmark, etc.
France does have an official higher unemployment rate than the US, but that means something different than it does here, because of their social safety net. The numbers there are also higher since they actually bother to count their unemployed.
"But simply saying, as Snow did, that raising the minimum wage increases prices simply is not true. No producer will raise prices if consumers aren't willing to pay those prices."
You are for some reason thinking producers will refuse to raise price if they cannot sell the exact same amount as before. That is just not the case. Some consumers will still be willing to pay the higher price, just not all of them.
Again, this is basic supply and demand. Part of any cost increase will be passed along to the consumer in the form of higher prices. How much depends on elasticity. But prices will climb.
A producer will not raise price to the point that NO CONSUMER would purchase it. Then the quantity demanded will be zero. But if costs increase, the new price will be higher. SOME consumers will drop out of the market but some will remain. Its no different than before the cost increase. The price of the product already was too high for certain consumers, but others buy it. I rarely go the movies anymore because I don't think its worth 10 bucks for an hour and half of entertainment. But obviously many others still do. Reduce the price and I might go more often. Raise the price to $11 and more will stay away but not everyone.
Draw yourself a simply supply and demand graph. A cost increase will reduce the supply curve BY DEFINITION. When supply is reduced the producers are simply not willing to produce as much as before. Unless the demand in this market is perfectly elastic, there is now a shortage in the market. This shortage is what gives the producers the incentive to raise price.
Producers will always raise their price if consumers are willing to pay it, but if you can sell more goods at a lower price, and ultimately gain more profit, then they will lower their price.
Raising the minimum wage isn't just a cost to a producer. It has the effect of increasing demand in the rest of the economy. After all, people have more money in their pockets. That increase more than offsets the increase in marginal costs for a single producer, assuming we're not talking about inelastic goods.
It's for this reason that more often than not, you see unemployment decrease after you raise the minimum wage. The only time it doesn't have this effect is when the background inflation rate exceeds whatever gains a minimum wage increase would have. Given our current situation of overproduction, this is an idea worth heeding.
-- Modified on 7/7/2010 12:20:24 AM
"if you can sell more goods at a lower price, and ultimately gain more profit, then they will lower their price."
--that is true by definition but has nothing to do with the point at hand. The question is what is the specific impact from increasing costs to the producers. What you describe is what will happen when there is a surplus, not a shortage.
"Raising the minimum wage isn't just a cost to a producer. It has the effect of increasing demand in the rest of the economy"
--we've already covered that. This will only further serve to increase prices if demand goes up.
"That increase more than offsets the increase in marginal costs for a single producer, assuming we're not talking about inelastic goods."
--its not offsetting, its exacerbating. I will say this once more only. Costs decrease supply. By definition. Supply is a function of costs. When supply falls, prices will rise. If demand increases, then prices will also rise. If supply falls and demand increases, then the shortage is even greater and prices will rise that much more.
I'm not even going to comment on your unemployment effect because you are dead wrong empirically, and its irrelevant since this entire discussion is about, and only about, what happens to prices.
For the last time, and then go look it up in any economics textbook that exists in the entire world, an increase in costs unrelated to productivity increase will cause prices to rise. An increase in demand will cause prices to rise. Put them both together and prices will rise. If you need the names of some introductory textbooks to help you understand this concept, I'll be more than happy to give you some references. But until you understand the most basic of supply and demand concepts, you should stop trying to invoke them.
I am not arguing that adding costs to production will not raise prices. What I'm suggesting to you is that raising the minimum wage is not a cost, once everything is factored in.
"What you describe is what will happen when there is a surplus, not a shortage."
---A surplus is precisely what we have. It is classic overproduction.
Yes, increasing demand, if supply remains the same, will result in higher prices. Our problem as of late has been deflation, not inflation. And we desperately need to increase demand to take that overproduction out of the economy.
In other words, stop talking about this as if we're in a vacuum. We have very specific economic problems right now, that call for specific approaches to solve the problem. Increasing supply when we have an over abundance of production would do nothing but lead to bigger problems in the future. Feel free to review the reasons why Volcker increased interest rates in the late 70's to solve our stagflation problem.
You're dead wrong on the minimum wage. It lowers unemployment without fail. Don't make me prove it. If you bother to look, you can compare the unemployment rate the month a minimum wage increase took effect, and look at the unemployment rate 12 month later to see what effect it had. When you bother to look at the data, come back and tell me what you find.
"I'm suggesting to you is that raising the minimum wage is not a cost"
Then you have no understanding of the concept of costs. Wages are costs. Pure and simple. A minimum wage forces employers to pay higher wages than they otherwise would. There is no possible way not to consider this a cost. Period.
"Our problem as of late has been deflation, not inflation."
The US is not suffering from deflation. Do you know what deflation means? That is a reduction in the CPI. This past year has seen relatively low inflation, not deflation. According to the latest BLS report in June "Over the last 12 months, the index increased 2.0 percent". Regardless, your point is totally irrelevant to the effect of min wage on prices or unemployment.
"Increasing supply when we have an over abundance of production..."
Whoever said anything about increasing supply? This has always been about the effect of a minimum wage. Which reduces supply.
"You're dead wrong on the minimum wage. It lowers unemployment without fail. Don't make me prove it."
I won't make you prove it because you can't. There are literally hundreds of economic studies published on the minimum wage. Only one ever that I am aware of suggested an employment increase (Card and Kruger 1994), and that was for a very localized market on fast food jobs along the NJ Turnpike, and they did not factor in respondents who lived across the state border. Others did this which overturned their results and this study has been since thoroughly discredited. All other studies conclude workers lose jobs -- the only question is which type of workers are most greatly affected. Even economists who are advocates of min wage do not deny this, they just generally argue that the loss is centered on teen-agers, not family men so their loss is not as bad as the gain to family earners who keep jobs at now higher wage. This point is greatly debated. What is not debated at all, is that jobs are lost.
I couldn't find a recent meta survey of all past min wage-unemployment studies but here is one that is older:
Summary of past minimum wage studies done by Joint Economic Committee under Clinton administration
http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm
Here is summary from recently published economics paper in Journal of Human Resources 2007 which shows even long-run harm done by min wage to teenagers who lose jobs:
'Exposure to minimum wages at young ages could lead to adverse longer-run effects via decreased labor market experience and tenure, and diminished education and training, while beneficial longer-run effects could arise if minimum wages increase skill acquisition. Evidence suggests that as individuals reach their late 20s, they earn less the longer they were exposed to a higher minimum wage at younger ages, and the adverse longer-run effects are stronger for blacks. If there are such longer-run effects of minimum wages, they are likely more significant than the contemporaneous effects on youths that are the focus of research and policy debate.'
----------------------------------------
Now back to more of your nonsense...
"you can compare the unemployment rate the month a minimum wage increase took effect, and look at the unemployment rate 12 month later to see what effect it had."
No you can't. That's called bad science. You accuse me of living in a vaccuum and yet you want to conclude the effect of min wage by looking at unemployment 12 months later, as if nothing else could have changed in the meantime. Have you heard of a trend? If unemployment is falling, and then a min wage is implemented, unempl may still fall, but now by less than its previous trend. Doesn't mean the lower unemp rate later on was caused by the win wage. It may have kept it from falling even further. Once accounted for various other changing factors (tax policy, tariffs etc), effect of min wage is job loss. Plain and simple. This is not controversial. Min wage causes job loss. There may be other reasons to still support a min wage, but it is absolutely insane to argue min wage is not a cost, or that it leads to job creation.
Now for the love of Pete, go buy an Introduction to Economics textbook. Enough already. Stop using terms you do not understand. Its time for this thread to die an unnatural death.
Let me spell it out for you. I'll start with the minimum wage first.
Here's the data I'm looking at. Feel free to review it yourself if you think I'm a liar.
http://www.cch.com/press/news/2007/MinimumWageChart.pdf
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LFS21000000
(punch in the years you want to look at on that 2nd link at the top of the page.)
Here are the dates of when the minimum wage was increased, followed by the unemployment rate for that month, then followed by the unemployment rate 12 months later when that increase has had a chance to filter throughout the economy.
Jan. 25, 1950, 6.5%, 3.7% (a decrease)
Mar. 1, 1956, 4.2%, 3.7% (a decrease)
Sep. 3, 1961, 6.7%, 5.6% (a decrease)
Sep. 3, 1963, 5.5%, 5,1% (a decrease)
Feb. 1, 1967, 3.8%, 3.8% (no change)
Feb. 1, 1968, 3.8%, 3.4% (a decrease)
May. 1, 1974, 5.1%, 9.0% (an increase)
Jan. 1, 1975, 8.1%, 7.9% (a decrease)
Jan. 1, 1976, 7.9%, 7.5% (a decrease)
Jan. 1, 1978, 6.4%, 5.9% (a decrease)
Jan. 1, 1979, 5.9%, 6.3% (a decrease)
Jan. 1, 1980, 6.3%, 7.5% (an increase)
Jan. 1, 1981, 7.5%, 8.6% (an increase)
Apr. 1, 1990, 5.4%, 6.7% (an increase)
Apr. 1, 1991, 6.7%, 7.4% (an increase)
Oct. 1, 1996, 5.6%, 5.1% (a decrease)
Sep. 1, 1997, 4.9%, 4.5% (a decrease)
July 24, 2007, 4.9%, 6.0% (an increase)
July 24, 2008, 6.0%, 9.7% (an increase)
July 24, 2009, 9.7%, (June 2010) 9.5% (a decrease) I used June's numbers since this month's numbers aren't out yet.
So, in other words, in the 20 times the minimum wage has increased since 1950, unemployment increased 7 times, and DECREASED 12 times. And three of the times it increased one could make the case that an energy crisis or two might have had a bigger impact on the unemployment numbers.
So, now onto the rest of your post. Raising the minimum wage is a cost. Now suppose in the 1st quarter of a given year productivity at your business increases by 10%, and stays at that level. In the 2nd quarter the minimum wage increases wages by 5%. Is that a net loss?
Typically in a recession, deflation happens. Which might explain this article from last month.
http://www.goldalert.com/stories/Gold-Price-Driven-by-Deflation-Worries-
Tell me, what happens when you have a lot of debt and deflation happens?
"Whoever said anything about increasing supply? This has always been about the effect of a minimum wage. Which reduces supply."
To quote Keynes, demand creates it's own supply. At least when established markets.
You're absolutely correct that other factors could have had an effect on the economy that would affect the unemployment numbers more. However, if it made the situation worse, like you claim, then I'd think we'd be batting less than a 50% positive job growth rate average.
But if that bothers you, feel free to look at the real value of the minimum wage.
http://oregonstate.edu/instruct/anth484/minwage.jpg
Notice it reached it's peak (or I suppose it's nadir from your point of view) in 1968, when unemployment reached an average for the year at 3.5%, which was essentially full employment. In other words Zisk, when the minimum wage was worth the most, unemployment was at it's lowest level of the 20th century.
But suppose that was just a weird year. Notice that throughout the 60's the real value of the minimum wage was higher than any other decade. The 60's also averaged an unemployment rate of 4.7%. For historical comparisons, the 50s were 4.6%, 70's 6.3%, 80's 7.1%, and 90s 5.6%. GDP growth for the 60's also reached 4.4%, and on average has continually declined since then decade by decade.
-- Modified on 7/10/2010 4:30:35 AM
"Here's the data I'm looking at. Feel free to review it yourself if you think I'm a liar."
Never called you a liar. But you are pretty ignorant of basic economic concepts.
"Typically in a recession, deflation happens."
Nonsense. There have been several recessions in the US since the 1960s, and never deflation since 1956. You really get under my skin when you continue to misuse economic terms after they've been properly explained to you. For the absolute last fucking time, deflation is a drop in the CPI. Deflation is not a reduction in the rate of inflation. Deflation is negative inflation rate. This is not open to interpretation. This is a definition.
Your attempt at data "analysis" is silly. Your own table disproves your earlier claim that min wage ALWAYS reduces unemployment. Nevertheless, I'm willing to overlook that because of how useless that table is.
What is special about picking a point 12 months later? Completely arbitrary. Why not 7 months? Why not 16 months? And whatever arbitrary number you choose, you still ignore the concept of anything else changing, what economics refer to by the latin phrase "ceteris paribus". If you think you can overturn 75 years of economic research by your contrived table which basically shows nothing more than random outcomes (10/19 is as close to 50% as possible - your last example violates your own arbitrary condition of 12 months and you claim one increase is actually a decrease), feel free to publish your work in the American Economic Review.
As already explained, most of those so-called decreases are picking up an already existing downward trend. Take almost any other 12 month window where there was no min wage at the start and you'll still see a decrease during those periods. Proper analysis involves detrending the data and controlling for other factors, would would then show a consistent negative impact from win wage. I gave you plenty of cites to economic articles in the previous post and don't feel the need to give you any more. If the unemp rate goes from 8 to 6 to 4 and then a win wage is imposed and next year the unemp rate is 3, you will claim from your table "look, the min wage caused unemp to fall from 4 to 3." The rest of us will say, "look, you're an idiot." You're back to your vacuum, where nothing before or after the min wage itself is relevant to determine future events. Ridiculous.
Congrats on quoting Keynes. You do know that he was just riffing on Say's Law that "supply creates its own demand"? Or perhaps you honestly did not know that. What I honestly do not know is why you think his quote has anything to do with whether or not a min wage is a cost to firms, or if deflation occurs during a recession. He wasn't remarking on either of those. You might as well quote Bud Selig on the use of instant replay in MLB. That would be no less irrelevant.
"suppose in the 1st quarter of a given year productivity at your business increases by 10%, and stays at that level. In the 2nd quarter the minimum wage increases wages by 5%. Is that a net loss?"
Forget for the moment that you have no concept of what a 'net loss' actually means. If you are asking: have the firms' costs gone up by the imposition of the min wage (which is what we've been arguing all along) then the answer is yes. Why can't you understand that? The productivity increase already happened, and that was unrelated to the min wage which happens LATER. There was no further gain in productivity from the min wage. So whatever wages were now being paid as a result of the productivity gain in Q1, they are now being forced higher (for anyone who was still making less than min wage). Are the firms better off with both the productivity gain in Q1 and the min wage in Q2 compared to neither? Well yes. So what? That is not the question. Are they better off after the min wage then they were at the start of Q2 when they already had the productivity gain but no min wage? NO!! Your question is like asking me if I am better off winning the lottery for $1 million and then getting robbed of the cash in my wallet on the way home. I'm still up $1 million minus the $30 in cash. But are you going to argue that getting robbed was a benefit? Unless getting robbed somehow caused me to win the lottery which already happened, then of course I am worse of from being robbed. That I am still better off at the end of today than I was last week before I won the lottery does not in any way make the robbery beneficial. Likewise, imposing a min wage after a productivity gain does not benefit the firms. It raises their costs.
And that's the end for me. I don't plan to contribute anymore to the "I was stupid enough to engage with Willy" fund.
-- Modified on 7/10/2010 10:25:20 AM
I appreciate your careful construction of strawmen Zisk. Deflation is currency contraction. Inflation is currency expansion. The CPI is just a method used to measure this, nothing more. When you have inflation during a recession, that is, by definition stagflation.
My own table, and other data I provided, demonstrates the positive effect of raising wages. If you have any actual data that show otherwise, feel free to post it. The reason for the 12 month spread is to 1) give whatever changes that happened in the economy to have their approximate full effect, and to 2) eliminate any influence seasonal changes might have.
Yes, these numbers do coincede with other trends. However, if raising wages is so harmful, then why wouldn't raising the minimum wage put a stop to a trend? Rather, it seems to excellerate a trend, as unemployment reached it's lowest point when the real value of the minimum wage reached it's highest point. If that happened DESPITE the minimum wage like you claim, then explain how such a thing could have happened. You'll get brownie points by using actual data.
Since you're being intentionally dense about this, I'll just ask you this outright. Are productivity gains a cost to employees?
-- Modified on 7/10/2010 7:48:39 PM
Although they helped the Germans to a minor extent, they went virtually unscathed. Maybe that's why they are so much further along to being more fucked up than their neighbors.
-- Modified on 7/6/2010 10:09:28 PM
All your post about economy is right wing drivel of tax cut and less regulation.
You believe US is the only democracy in the world that has free market economy so you drivel on.
FYI, there many democratic countries and they regulations and they seem to work.
you had to go back six months.lol
Hey do you do windows? LMAO
Of course I do windows,and the tops of the doors and trim.Have you checked yours lately with the white glove test?
Six months ago willie was bragging on Europes greater social net and how they were fairing so well . I have European relatives that were telling me different then, and telling me now, its getting much worse.Willies words were Europe didn't need a stimulas bill since they have such a fine and dandy system .My words are ,"Its going to get a lot worse over there"."Lets fix ours before we mimic them".
I am silently waiting for willy to blame Europe's problems on Reagan..rofl