Spending on education and infrastructure (if managed well, anyway) has some of the best returns out of all possible spending. The problem is that it usually takes at least a decade to be realised and is very hard to measure because you're now living in the world where the spending took place so you can only imagine would it would be like without it. I linked earlier to that article with an expert saying that there'd be a 1.3% drag on growth by 2020 if the roading infrastructure in the US wasn't funded to the level it needs to be, so you blithely saying "not as useful to the economy as money making money" only reflects your short term thinking. I think short-term thinking is what got the US into the terrible position they're in now. More short term thinking isn't going to get you out of the hole.

I'm sure most people would prefer to work shorter hours if they could, while maintaining the same or similar lifestyle. You're not going to find many people who enjoy working 36 hour weeks in Walmart just so they have enough money to put basic food on their table.

Did I say "to blame"? No. What I said is that back in the 60's through to the 80's, there was a hope of the future where the average employee did not need to work that long. That hasn't materialised, at all. In fact life has only gotten more expensive (requiring both parents to work) and more stressful. Meanwhile the very richest in society are living a life of luxury. Clearly this is at the expense of everyone else.

Jack's knee-jerk response was to say that everyone earning $50/hour would be "communism" and that therefore it wouldn't work. What I'm saying is actually if we had a better capitalist society that more fairly rewarded the masses, the masses could have a better quality of life than they currently do, at only minor expense to those at the very top (because having $4bn in your bank account isn't of much practical additional benefit over having $3bn, but the difference between $100k and $50k is quite significant).

I don't know where you get I'm attacking you. I was merely stating that low-wage income isn't enough for live on.

I stand by that the government shouldn't be helping anyone, but we're kinda forced to, right? I do believe that all the programs we can't get rid of should be restructured.

I can agree with that. In an ideal world the government shouldn't have to help anyone. Unfortunately there will always be people who if you give them some $$ to help themselves get through a rough patch, they will later on return $$$$$ back to society. A separate issue is the people who cost $$$$ and never return anything back to society - if they're just lazy or indolent then it's their fault, but if they're disabled or disadvantaged through no fault of their own, helping them is compassionate. An old aphorism is that a society can be judged by how it treats its weakest members.

I wonder how you treat one-off compensation issues, such as the horizon oil well problem - do you believe the government was correct to stand in and offer compensation to businesses and individuals who were harmed by the oil spill? I think in an ideal world it would be the oil company that would foot 100% of that bill, but the problem with that is that no businesses would ever want to take risks due to the cost involved and so the government ends up being the backstop for all the big problems like that.

https://secure.wikimedia.org/wikipedia/en/wiki/Kibbutz

Yes, we should go back to a classical laissez faire Austrian economy; not that there has ever been one of those in, say, the USA, ever. Reason? Because it works, a lot better than Keynesian economics. Now, if you were able to find some evidence of a proper laissez faire Austrian economy working worse than a Keynesian economy, then I'd be happy to consider it, but I have yet to see one work anywhere near as well as the few true laissez faire Austrian economies that have existed.

The minimum wage increases unemployment. If there was no minimum wage, sure, once a lowest-tier worker finds a job he might not be earning much at all but he's earning SOMETHING, and he's getting valuable job experience. In addition, as he moves up the ranks and gets better jobs, his pay will increase and the lack of a minimum wage won't affect him; having a minimum wage can stop or slow the beginning of that process tremendously. The Labour party in New Zealand wants to increase minimum wage to $15; this is bad for me because I may lose my job or have my hours cut; my hours cut it bad for my employer rather than me, but in the long run his business will be more stressed because all the minimum wage workers aren't working as much as previously.

Since when has a classical economy not been "fast" enough to keep up with itself? And applied Keynesian economics doesn't decrease unemployment for long, and in the long run will increase unemployment and/or lower the standard of living for everyone else.

@CAFG, to the best of my knowledge a kibbutz is not an enforced thing. For communism to work in a society where people want MORE than others, communism will always have to be enforced to have wage equality; this means there will be social inequality due to some ruling over others, which defeats the point of communism. In addition, having a flat wage instantly decreases the amount of new businesses, if not destroying it. Why make a business when you're only going to get the same wage as before?

Exactly, so a strong society is one that would remove its weaker elements from the whole. It doesn't matter if it's their fault or not, especially considering how subjective that is; you could say someone has no work ethic because of the environment they were brought up in, or due to a psychological problem out of their control. No, the proper way to handle people like this is to cut them off completely, and let them find help from other members of society. If they have spent their life only looking out for themselves, and have no one who would help them, that is their own fault.

You've expressed that this is not compassionate, yet I don't remember anyone asking for a compassionate government. I know I don't want Hallmark in charge of government policies. They are obligated to do what is best for the whole of society, not to screw over the hard-working middle class majority for a couple unskilled, inept, disabled welfare bums. Almost all of these people will never contribute anything to society except more children, which will grow up in a scummy environment with their lazy parents and just suck off welfare themselves as adults. This is a disgusting cycle that needs to be stopped, rather than the current system which rewards them with a bonus check for every kid they pop out even though they can't afford food for themselves in the first place.

There are two ways to fix this broken aspect of the government and of society itself. The first is to simply stop all welfare programs, allow people to fend for themselves. The government wouldn't give help to private citizens or large corporations or government officials, or anyone in-between. Those who would die without help will either be motivated to actually do something productive with their lives, or society will be better off. It works out well for the normal people, either way. Perhaps if they let a few people starve to death because they had fifteen kids when they couldn't even manage to feed themselves, the rest of the welfare trash might realize their own sheer stupidity and sub-human way of living, and actually change for the better. This may be considered too extreme though, at least transitioning directly to this from our current society, which is why I offer the second alternative.

The other way they can do it is to increase the downsides of receiving government help. By being eligible to receive welfare, you have to agree to certain terms that are not in your favor. One of them could be that you have to undergo surgery to make it impossible for you to have children in the future. Alternatively, this surgery could just be a requirement if you're on the welfare over a certain time period, or you could be simply forced to get an abortion in the event you become pregnant (you'd always have the option of stopping welfare instead of the abortion). If the woman waits past the first trimester to report her pregnancy because she doesn't want to endanger her checks, then she can either receive the abortion and a hysterectomy, or be permanently cut off from all future welfare.

Perhaps other downsides could even be profitable for the government, which would both reduce the number of people on social welfare and have the program partially paying for itself. If they could make welfare profitable, that would be even better. One obvious option is that to qualify for welfare for any period of time, you have to sign your body over to the government in the event of your death. Then when you eventually die, the government would sell your organs to hospitals, which would generate them revenue. Of course the welfare bums would need to have random drug testing and annual checkups to ensure they aren't abusing their bodies, but that's in their best interests anyways.

I'd say that would be a very insignificant price to pay for all the free money they receive over their lifetime, and at least they would eventually contribute to society in some small way. It'd also stop the welfare trash from being able to use drugs, which if the reason why many of them need to be on welfare in the first place. A lot of people on welfare sell their food stamps for half value in order to get cash for their addiction. It's really quite disgusting, and this would help alleviate that problem as well.

As I've demonstrated here, there are many steps the government could take to simultaneously increase its revenue, decrease its spending, and enrich society as a whole. If the government would take a few of these steps to focus on making the lives of normal people better, and making the life of a welfare bum less desirable, we'd all be much better off.

You should educate yourself on this matter. The official advice from the Ministry of Labour is that putting the minimum wage up to $15 would have cost between 4,280 and 5,710 jobs. Meanwhile 274,900 people would get a pay rise totalling $518M. That's a benefit of $103,600 per job lost.

It would be quite unfortunate if you were amongst those 5,710 people who lost their jobs. But also quite unlikely.

The first link below has a nice graph showing the unemployment rate vs the real (after inflation) minimum wage. The only correlation that can be drawn from the graph is that increasing the minimum wage decreases unemployment. But when have facts and figures gotten in the way of your ideas about how the world works?

http://thestandard.org.nz/minimum-wage-crunch-time/
http://thestandard.org.nz/how-to-put-half-a-billion-into-working-families-pockets/

You have a baker that comes in every morning to make cookies. He is able to make 400 cookies in an hour. His labor cost is $13 an hour (with benefits, as the bakery is so kind as to offer him health and helps pay for it, and that is with the extra fees the corporation pays to have employees). In labor, each cookie costs .03 in initial labor. Ingredients cost 0.25, and other salaries/wages increase the price by an additional .15 a cookie. Fixed costs such as business insurance, building lease, power, are an additional .10. Cost of cookie = 0.53 (.03+.25+.15+.10) cents. The company sells the cookie at $1 each, which hedges against cost of shrinkage, compliance cost (such as vermin infestations, etc), for about a 88% markup - industry standard usually being to double the price. This extra money not only hedges against these risks, but also goes towards company profits, which are reinvested into new products, refining old products, further training, and so on. The company plans on offering espresso beverages, smoothies, and having a holiday party for employees as well as loyal customers with the extra profits. Further in the future, they hope to offer training classes with renowned bakers for their employees to better their technique.

Minimum wage is increased to $15 - which is unfortunate, because $13 an hour is pretty decent pay for the position. The cost of this cookie is now .04 + .25 +.20 +.10 = .59. Price of the cookie increases to $1.11.

However,

The ingredients also come from a company that is also facing minimum wage increases. Cost of ingredients is now .35. Cost of the cookie is now 0.69, marked up to $1.30. Your money buys 30% less cookie than it did the day before. This logic follows for many products that require several steps or several people to work on them.

Some industries were not hurt by the increase in minimum wage, most likely because they were already making $15 or more an hour, or about $29k a year. But, the cost of their basic goods that rely on products that are made with labor below the threshold goes up - including grocery items (where possible, many produce items have ceilings, but other necessities such as shampoo/soap, coffee, meat, etc will face issues). In an essence, the standard of living goes down for people who were already making money at the new minimum wage standards as standard of living goes up for those that were below the standard of living.

In more 'luxurious' industries the effects of this are not immediately visible. A matter of fact, immediately they will get a burst of new business - everyone making more money will see a drastic increase in buying power in the short term (paycheck comes in before a new purchase price is set by the company). This stresses the supply as demand increases, and price rises to stay afloat, or else they are forced to decrease quality to maintain prices, meaning that a lot of these products that were a luxury are once again a luxury - or else drop down in the value chain.

So then there are three choices a company has:

Lower the cost of products sold be cutting back hours, not offering raises unless mandated by law, using cheaper pieces/ingredients.

Outsource products to someplace not effected by new labor laws, import the products and label them as their own through trade agreements.

Increase price while maintaining quality and risk losing customers easily effected by price.


Each has their own advantages and disadvantages. More often than not companies choose to go with cheaper pieces/ingredients and hope that customers do not notice. I could go into the advantages/disadvantages of each if you wanted me to. :\

In the NZ case, most companies will simply increase the price. Because it'll be a nationwide change that affects 274,900 people, when company X puts their price up to cover it, everyone will know why that is. If company X puts up their price because they were using minimum wage labour, and company Y doesn't because they were already paying more than minimum wage, then it makes company Y more competitive with company X and they should be rewarded for that.

Also the figures I quoted above are from the Ministry of Labour, who are tasked with preparing an annual report to the Minister of Labour about the options for raising the minimum wage. It's the official advice the government uses when making the decision, so while it isn't beyond reproach, we shouldn't set their advice aside as if it were uninformed.

Then you've accomplished nothing. Since you raised prices, the cost of living goes up, meaning it requires you to make more money to live, meaning that the minimum wage increase really did nothing because you'll 'need' another to cover the new prices.

The increase in the minimum wage will increase the spending power of those who are earning minimum wage, generally by more than the cost in products.

Everyone else who earns more than minimum wage will definitely be eating the price increase without any automatic increase in pay, yes. But I'm ok with that.

Then you're lowering everyone to the minimum standard of living at once, meaning that the next time you 'need' to increase minimum wage you're increasing a lot more people's paychecks, it spirals out of control. And you're forgetting that part of the cost of products is wage. Not to mention brain drain's pressure on a workforce. And you're assuming that everyone working at an organization will continue to retain the same hours and face no cuts in time, and that they will maintain raises above the rate of natural inflation (on top of the inflation caused by minimum wage increases).

How is anyone 'lowered' to a minimum standard of living?

I haven't "forgotten that part of the cost of products is wage", I don't even know why you said that.

I also don't know what "Not to mention brain drain's pressure on a workforce" is supposed to mean. Somehow by paying people on minimum wage more, highly skilled and highly paid people are going to want to leave the country?

I'm wondering if you've considered the economic impact of approximately 15% of the workforce getting 15% pay rises all at once. They're going to spend that money into the economy. They're also going to pay more in taxes to the government.

Post has been edited 1 time(s), last time on Oct 18 2011, 1:11 am by Lanthanide.

Before the minimum wage increase, someone on their own abilities/training has achieved $15/hr. Someone else with much less training/ability makes only $10. Minimum wage increases to $15/hr. The standard of living minimum threshold is raised from $19,200 to $28,800 (new minimum wage *40*4*12, so before taxes). The second worker is now making the same amount as the first worker, so they are both now at the standard of living minimum threshold. So everyone that was making anywhere between $11-$15 before the minimum wage increase is actually being impoverished as a result.

Brain drain is when people leave a company/country to pursue other options over insufficient wages, benefits, or morale. It usually related on a large scale, but going back to the example here it'd be like the worker previously making $15/hr leaving the company to make $20/hr at another company. The previous company not only loses that worker but also any expertise he had brought to the table. South Africa especially has had a huge problem with it and is having a hard time keeping people in SA, because if you're smart many American or European companies will pay for them to be trained for a much better job elsewhere. In order to prevent brain drain you have to offer the previous worker more compensation to keep them, which again would raise price of goods sold.

As for "they're going to spend that money into the economy" I have two things to say to that. First off, maybe. Recently speaking, Americans have been putting extra money towards previous debt instead of new products. Secondly, its like I stated with apply pressure to supply and demand - they might be able to buy more in the short term, but as demand forces prices to rise that will no longer be true. Eventually they'll stop buying as prices go back up.

Although in our case we're talking about going from $13 to $15, not a 50% increase like $10 to $15, or $13 to $19.50.

And yes, people who are earning just above the current minimum wage, $13.50, will be bumped up to $15. People who were earning $15 will now probably want to be paid more, so they may or may not receive a pay rise too. I'd imagine the ripple would stop at around the $18-19 mark though.

New Zealand currently have a large migration going to Australia. Funnily enough, it's actually the lower end of the workforce that are going there, because Australia has a minimum wage of $15/hour as well as 9% superannuation that all employers must pay on top of the wage. Many industries in Australia, because of their awards system and strong unions, actually have minimum wages of between $18 and $21.

In this case, putting the NZ minimum wage up to $15 is more likely to slow down the migration, not increase it.

Yes, but they would have to pay that debt anyway. That's what debt is. The sooner it is paid (because you got a pay rise), the less interest you pay on it, so you come out even further ahead. Debt is paying for past consumption; the faster it is paid back, the quicker we can have some new consumption.

There is definitely an inflation aspect to it. But inflation will happen anyway. Currently the minimum wage is $13. If National win the election, they will likely put it up to $13.25, which will be below the rate of inflation (that's what they did this year). The point of putting the minimum wage up to $15 is to give people a real increase in spending power. It may only last 3-4 years before being completely wiped out by inflation, assuming no future increases are done. But again, I don't have a problem with that.

This comment on slashdot pretty much sums up my response to Azrael above, and a discussion with Cent in the shoutbox:
http://politics.slashdot.org/comments.pl?sid=2485776&cid=37775034

No. My failures are my own. My successes are my own. Other people's successes and failures are their own. There are, of course, other factors, like my parents helping me along, or people hurting others and causing them to fail, but I don't blame anything for my failures.

You probably shouldn't try to psychoanalyze people who you don't know at all. Maybe most people do what the link says; attribute successes to themselves, failures to external factors. I don't believe I do (well, a little bit, of course; but full-out? Probably not), and you're going to have a hell of a time proving otherwise.

Post has been edited 1 time(s), last time on Oct 21 2011, 1:33 am by Centreri.

Actually my point is that it's a prevalent attitude in America. I'm not the only one who has noticed it.

If that was your point, than you need to learn how to convey your point better. If that was your point, then it had absolutely nothing to do with my argument with you.