Department of Labor disagrees with you guys. I know, big bad socialist government.
Finally I’ll be getting a raise!
to a liberal, that’s far right. To a neocon, it’s far left.
Ive had a hard time explaining libertarianism to people I met. They always see it as “the other side”, no matter whether they’re democrat or republican.
It’s for the same reason I have to align myself with the right most of the time. Libertarians want the best of both worlds - small government and lower spending, and liberal social policies. Most libertarians I know (including myself) weigh fiscal issues more heavily than social ones so that’s why we are forced to vote republican in the big races (I still vote libertarian for local races).
The Cato Institute is most certainly not far right. They even sponsor a page, http://www.rightwingwatch.org/, that calls out crazy-ass far right conservatives for being idiots. On balance, the far right does much more damage to the libertarian movement than the far left. Those on the far right should be libertarians but they can’t remove their - in many cases - overtly-religious head from their own ass to get out of the way.
This all ties in with the Koch brother too, btw. To the left, the Koch brothers are far right political activists. The left chooses to ignore their very liberal social leanings (ask an average liberal if they think the Koch brothers are pro-gay marriage). It’s just that they also believe fiscal issues are ultimately more imporntant than social ones, so they financially support the right. Lesser of two evils and all that…
It’s quite sad that so few of the comments here are actually evidenced based. I hear a LOT of conjecture in this discussion. Can’t tell if this was posted in an Analyst forum or conversation at a bar.
Can anyone please cite me an example of a U.S. city that raised it’s minimum wage to $15 or less and saw an increase in the unemployment rate? Just curious.
Out of all the variables that control employment rates, minimum wage isn’t all that important. But that’s not to say raising the minimum wage doesn’t cause adverse effects. If it didn’t, why not pay everyone $40/hour? Let’s make sure the minimum wage gets everyone to the middle class. With a bigger middle class there are more consumers, right? Right?
If you think about it, what’s the downside? Give people more money and they’ll spend more money. I can’t think of a single thing, not one empire-ending economic side-effect, that could be caused by doing such a thing.
There are no evidenced-based comments/opinions either way, because no US city has ever increased their minimum wage by 50% in a relatively short time period. In a few years, we’ll know who was right.
Then tell the farmers to raise their prices.
But before you do, you should read this astounding new economic concept called “elasticity of demand”. I believe it’s covered in L1 of the CFA curriculum.
And remember too, that farmers are generally “price takers” who operate in “perfect competition”. I believe these concepts are covered in the same book.
I believe I am somewhat familiar with the theory of competition and market forces. What I am unfamiliar with is 100% alignment of textbook theory to ground reality.
As for the theory, I recall that food had a pretty low elasticity (gasolene was the lowest IIRC.) So changing price = small-to-no change in demand. You are right that in perfect competition, the price would be set by the second-lowest-cost producer. So what we are talking about here is to raise the labor cost for all suppliers simultaneously.
Of course this ignores a ton of factors that hamper true competition - “locally sourced” movement; organic vs non-organic or more generally, branded produce; economics of transporting farm goods over long distances (OK for corn and grains, not so OK for fresh veggies) and so on.
Ultimately, the laws always distort free market in some way. Farmers could produce at even lower prices using slaves and bonded laborers, not to mention child laborers. Somehow I hope that doesn’t happen. Yes, penalties for breaking the law are ultimately paid in part by consumers and in part by suppliers (remember the illegal drugs example from CFA texts) but that is the sacrifice you make for living in a free (no-slave) society.
In aggregate, food has low elasticity.
But from supplier to supplier, I imagine that when there are a thousand lettuce producers, if one asks for a 5% higher price, he’ll have a 100% drop in demand for his lettuce. Just think about that from the buyer’s point of view–if there’s no difference in your product, why should I pay you $1.05 for a head of lettuce, when I can pay the other guy $1.00.
Yes–if you can simultaneously raise the price of all laborers, this would not be a problem. But exactly how do you do that? Minimum wage for lettuce-pickers is already $15, right? At least in LA, it is.
except its not going up to $40/hour. its going up to the level required to survive (apparently), which is being supplemented by the EITC and other benefits anyway. i rarely hear republican or libertarians focus on the EITC or food stamps as a grand evil in the same way they do the minimum wage. taxes for the EITC and other benefits have to come from somewhere and they either come from new debt or higher taxes, both of which lead to higher taxes or a return to broad poverty in the long run. the argument against higher taxes and greater support for labour doesn’t work when corporate profits are 67% above historical averages and 40% above previous highs and corporations are sitting on boatloads of cash accumulated by far-too-favourable policy while governments run perpetual deficits. why run deficits to pad corporate profits? bankrupt country, flourishing corporations. great solution. the argument isn’t even about minimum wage in particular, its about a historic misallocation of capital.
i’m a canadian where all parties are considered leftist if placed on the U.S. political spectrum. i see the Democrats as centrist at worst and potentially even slightly rightist when placed on the Canadian or global political spectrums. that makes U.S. libertarians extremely right in most of the world’s eyes.
I put the EITC in another category. Rewarding someone that’s earning a wage with a tax credit isn’t so bad, nor does it create a huge shortfall (their taxes are pretty meager anyway). I’d still rather not hand out tax credits, but I like that better than a minimum wage. (Please note I said “minimum wage” and not “raising the minimum wage.” I’m completely against any minimum wage at all.)
The news makes a big deal about minimum wage increases, but the reality is it won’t affect that many people. It’s really just something the left can point to to say they’re looking out for the working man while not actually elevating anyone into the middle class through minimum wage increases alone.
It’s good politics and bad economics. The two seem to go well together.
^ so you’d rather see the minimum wage disappear, another 10 million people start working for $1/hr and collecting $15,000 in EITC and other benefits, and your taxes go up say 10-20% to support all of this? that is why no minimum wage and maximum employment is a terrible idea. some jobs just aren’t worth doing, especially if the government has to supplement the difference between a survivable wage and the market wage.
^If that’s really how you think it would play out, especially over the medium-term, we’ll really just sit here and argue with each other. I believe free market forces sort shit out…eventually. There would be some pain, no doubt, but we’d be better off in the long run.
lord knows how us CFAs hate to argue…
but seriously, how else would it play out? if you wish to maintain a certain level of quality of life for your population (e.g. basic shelter, food, access to education and health care), and you say they have to work a certain # of hrs or earn a certain # of dollars to achieve it, and the market wage for a 5th busboy on staff is $3/hr…
if there was no minimum wage, i would hire as many literate people as possible if the going wage was $5/hr or below. doesn’t matter what industry. i know the government is going to go into hock to keep my employees alive. by the time the government has to pay the piper, i’ll have made my dough and will get to keep most of it.
^Honestly, I don’t have the energy for this type of debate this afternoon. There are so many variables to consider…no, perhaps tomorrow morning I’ll tackle this. Or, Friday. We haven’t had a good ole Libertarian Friday in a few years.
LA’s labor unions want to be exempted from the $15 minimum wage if they collectively bargain a lower rate.
http://www.vox.com/2015/5/27/8670529/la-union-exemption-minimum-wage
Probably because their leaders/attorneys are smart enough to realize that it would set the price floor above the value of labor supplied and would cut their ranks, and therefore dues paying members. Imagine that, simple economics at work…
I don’t really see my taxes going down as minimum wage rates increase… when it comes to revenue, governments behave like drug addicts, they always need more.
it is funny. a leftist policy like the minimum wage could actually destroy labour union power. this is part of the reason why i like the idea of a reasonable minimum wage as it helps price unions out of the market. labour unions are unnecessary if the government sets terms that are agreeable to the broad population and the corporation or corporations pay enough to make employees truly happy.