On Minimum Wage: Edgar the Exploiter

[Capitalist Pig]

A video that brilliantly illustrates the Austrian argument against Minimum Wage laws.

[Capitalist Pig]

The video is quite simplistic in it's construction, yes, as are the other videos by the user bitbutter on taxation. However, I believe their intended audience are people with little or no exposure to economic theory. They are good enough for their purpose; of initiating discussion, and implanting the intellectual seed that get people thinking about, even questioning, the basic functions of a regulatory government and economic interventionism that they have taken for granted all their life.

[rat1]

Minimum wage laws are obviously a tool that governments & the rich use to further suppress poor Simon in the video, the common man. It's unfortunate that so many people support these laws, actually thinking the government is helping them.

More likely the people passing these laws are either too incompetent to understand the long term consequences of what they're doing (like Kim), or purely interested in winning election by giving the people what they think they want.

A free market boils down to a situation in which human value and freedom is determined by the circumstances of ones birth (wealth, intelligence, talents, fitness, ect).

Therefore, I oppose both free markets and any workarounds applied by the state.

Natural selection also boils down to talent, fitness, intelligence, and access to resources... are you opposed to nature? When you suppress the natural selective functions your society begins accumulating waste, ultimately to the greater harm of the whole organism.

[Pa3s]

I think this remains true regardless of the economic system one lives under.

Maybe, yes. One could say that intellectual or physical deficiencies already determine the level of freedom. This is something which can only be partly compensated. However, the degree of social/economical justice can be controlled by people. Some systems offer more than others.

What about a market regulated by the market—e.g. having privatized regulatory/legal firms, whose economic interest would be in facilitating norms of market behavior that people generally agreed with?

To be honest: I don't know if that changes much.

Natural selection also boils down to talent, fitness, intelligence, and access to resources... are you opposed to nature? When you suppress the natural selective functions your society begins accumulating waste, ultimately to the greater harm of the whole organism.

Are disabled people waste to you? If not, how is the situation of someone who can't get a job to make a living much different from that? They might not be as talented, intelligent or fit as the other people. Does that mean they don't deserve a decent life? Does that mean they have not the right to be as free as others?

The laws of nature contradict many ethical ideals. If you say I'd oppose nature by trying to work against these laws, you're right.

[rat1]

Are disabled people waste to you? If not, how is the situation of someone who can't get a job to make a living much different from that? They might not be as talented, intelligent or fit as the other people. Does that mean they don't deserve a decent life? Does that mean they have not the right to be as free as others?

Everyone is going to die including you.
On the strict principle I don't care if these people die, since their death happened naturally. Now there is charity of family, friends, and society which they can live off. The ones who die no one cared to keep alive. That's reality... it's futile trying to avoid it. By trying to avoid it you simply kill the entire organism.

The laws of nature contradict many ethical ideals.

Delusional ethical ideals which are the source of infinitely more problems.

If you say I'd oppose nature by trying to work against these laws, you're right.

Then you would be one of the people giving charity, which I am not opposed to.

[Pa3s]

Everyone is going to die including you.

Thanks, I thought I was immortal.

On the strict principle I don't care if these people die, since their death happened naturally. Now there is charity of family, friends, and society which they can live off. The ones who die no one cared to keep alive. That's reality... it's futile trying to avoid it. By trying to avoid it you simply kill the entire organism.

I'm not talking about dying, I'm talking about living. And what is the bolded part supposed to mean? Is it natural if more than 100 workers die because a poorly maintained sweatshop in Bangladesh burned down? If the "organism" can't offer social justice then it better died (re: evolution).

Then you would be one of the people giving charity, which I am not opposed to.

"Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime."

[mu4]

Adding hkkmr's chatbox quote to this thread because I think it's relevant.

[/FONT][/COLOR]

Minimum wage laws are obviously a tool that governments & the rich use to further suppress poor Simon in the video, the common man. It's unfortunate that so many people support these laws, actually thinking the government is helping them.

Yes, business and government collude to create the minimum wage to keep the man down.

Bullshit. People fought for this a long time ago very hard, and these people weren't in business or government, they just wanted their piece of pie.

I don't appreciate you quoting me from chatbox and mentioning me. If I want to post in this thread, I will.

The Austrian's and their adherents and followers can believe what they want. I think they're wrong and their beliefs aren't rational.

Please don't quote me again or mention me as I have you on ignore.

[Pa3s]

The market is a complex system and can not be efficiently governed. It can only be influenced to a variable extent. Any attempts to control the market lead to a dysfunctional market (also to a variable extent).

A free market boils down to a situation in which human value and freedom is determined by the circumstances of ones birth (wealth, intelligence, talents, fitness, ect).


Therefore, I oppose both free markets and any workarounds applied by the state.

[Kim]

"Although his wage is low, Simon appreciates the independence it gives him."

The independence you get from living on the street because his monthly wage of $480 is not enough to pay rent?

[Absurd]

After watching that vid I find it hard to believe that Gammas on this site aren't millionaires. I thought they're the owners. I wouldn't post propaganda on this site, though. You might lure out/"provoke" Socialists and their economic policies, Cpig.

[Kim]

So what is this guy supposed to do? Obviously that is not enough money to live on. A tent city around the factory? I am asking in practical terms now.

Edit: $7 an hour gives you $1120 - big difference. You can live on that (I have).

[Iris]

So what is this guy supposed to do? Obviously that is not enough money to live on. A tent city around the factory? I am asking in practical terms now.

Edit: $7 an hour gives you $1120 - big difference. You can live on that (I have).

I have friends who have lived on that as well.

[Kim]

Split rent with a friend? Get another job? Learn a trade? He has options.

If he is already working 40 hours a week, he hardly has time or energy to get another job and learn a trade.

I'm sure it's possible but you'd have to be frugal as hell. Figure 20% is wiped out by taxes (federal/state/local/sales/etc.) leaving $880. *** off another $480 from the hypothetical rent example (let's be generous and assume utilities are included too), and that leaves $400 leftover when there's still food to buy, insurance payments to make, cellphone bills to pay, etc. etc.

So with $480 you have options, but with $1120 you have a hard time?

[Kim]

Not what I was implying. IMO, it's a shit situation in either case.

I did ok on $1120. It wasn't great, but with $480, I would have been homeless. It's ridiculous to say it barely makes a difference. It makes a world of difference. Imagine a town with a factory as the main employer and 1000 workers earning less than $500. Economic wasteland.

[Kim]

Congrats, but I'm not sure how you did it lol. I've worked it out on paper before and it never adds up.

I even lent money to people who never paid me back. Heroic, eh?

And min. wage laws can make a world of difference to an employer with already slim margins of profitability; having to pay every employee another $500+ might be just enough to send their finances into the red and force the factory to cease operations

.

I still cannot imagine a town with 1000 Simons living on less than $500. It's absolutely ridiculous.

[mu4]

And what of the factory forced into closure due to hikes in mandatory wage rates?

Businesses that go out of business because of minimum wage are bad businesses probably operated by incompetent individuals, I see no problem with these business going out of business. If no-one is competent enough to fill the void, that's still not a economic problem but a social one.

I'm not interested in "welfare" for most business. A lot of business are simply old and don't provide anything society needs or will need in the future.

Minimum wage is rarely the biggest factor in the collapse of a business, I would say a wage rate at minimum wage and the business still going out of business means that the business itself is simply unproductive and useless.

[mu4]

Congrats, but I'm not sure how you did it lol. I've worked it out on paper before and it never adds up.

Try sharing, and pooling resources. I've lived on less and you can do it if you share with 3-4 people. I didn't support myself but we supported each other until I could support myself.

[ashlesha]

Realistically, we're talking about teenagers who work part-time who still live at home. They would only be making that low wage for maybe 3-6 months before their pay goes up.

uh, no. where do you live that the only people you see working minimum wage jobs are teenagers?

[Kim]

Your point is another example that the current system is broken. I was referring to what would happen if minimum wage were removed.

If minimum wage were removed, the non-teenagers working minimum wage jobs now would make even less. It's not like they would magically move up into higher income categories.

[InvisibleJim]

If minimum wage were removed, the non-teenagers working minimum wage jobs now would make even less. It's not like they would magically move up into higher income categories.

Yes, so... what made you think they are actually getting paid any more unless they were in a job that happened to really made that much anyway?

[Kim]

Yes, so... what made you think they are actually getting paid any more unless they were in a job that happened to really made that much anyway?

Did I think that? I am confused.

[Kim]

Did you watch the video I linked for you?

It's 30 minutes long! I have a day job, you know...

[Kim]

Take some time tonight to watch the video. Sacrifice 30 minutes of sleep to get educated.

You are a crazy person...

[Iris]

There's a lot of evidence that abolishing the minimum wage reduces unemployment. Look at Singapore. They have no minimum wage, and their unemployment rate is virtually nothing. Currently it's at 1.9%. 1.9%!!!!!!!!!!! Less than 2%, with no minimum wage. And they enjoy one of the highest standards of living of any country in the world, higher GDP/capita than the United States, high savings rates, etc.

If this Shangri-La appeals to you, just be sure to read this article before moving there http://www.businessinsider.com/singa...gs-2012-2?op=1 ...

[Aquagraph]

There's a lot of evidence that abolishing the minimum wage reduces unemployment. Look at Singapore. They have no minimum wage, and their unemployment rate is virtually nothing. Currently it's at 1.9%. 1.9%!!!!!!!!!!! Less than 2%, with no minimum wage. And they enjoy one of the highest standards of living of any country in the world, higher GDP/capita than the United States, high savings rates, etc.

We agree on this matter but in this argument you mix correlation and causation. I hope Singapore won't be considered as a valid aspect in this conversation.

[xerx]

*sigh* Many things in economics have been proven already, by abundance of evidence, mathematical calculation, etc. I'm surprised you don't believe in any of it. There's really no point in discussing this with you.

Mathematical modeling doesn't constitute proof unless it's based on controlled experimental data. Virtually all economic models start with untested assumptions (or disproved ones) and build a logical framework around them. Oh, I'm sure it sounds impressive, till you realize that math can be used to model hot air.

The standard of proof is so much higher in the physical science it blows economics out of the water; these people don't know what it's like to question central dogma, to account for all the variables; they don't know what it's like to really know something.

I would suggest, xerx, that you read up on the Nobel Prize of Economics. You'll be surprised to learn that years of research and application of mathematics has gone into each one of these theories.

It doesn't matter what you call the prize; without experiments it's just an echo chamber and a reflection of the selection committee's biases. And by the way, Paul Krugman and Joseph Stiglitz have won it. Stiglitz for proving that markets aren't informationally efficient.

[Pa3s]

We are talking about disabled people being kept alive by the government instead of dying.
...
Isn't your entire point that a disabled person is incapable of learning to fish for themselves, so the government should be obligated to take care of them? How on earth are you teaching disabled people to fish by giving them government hand outs?

No, I was not talking about disabled people. I compared their situation to the situation of people who are healthy, but have less fortunate circumstances. I have stated before that I'm not in favour of attempts to control the market. I am competely against markets, please read my posts before replying.

It's clear to me that actually disabled people have to rely on some kind of charity. But giving charity to healthy people doesn't make sense, since they are able to work and improve their life standards, if they had the chance.

That the forces of natural selection are responsible for their death rather than some socially / politically motivated killing

They are not being deliberately killed by our economic/social system. Their poor life standards are merely a byproduct of its principles.

If you owned a factory, why would you want it to burn down? It's to the advantage of the owners and the entire society that factories aren't burning down.

Another one of your pearls of wisdom! The factory burned down because the owners wanted to maximize their profits. It probably worked for years and they kept it that way because they gave a shit about the working conditions or safety.

You mean a government-manipulated market puts limits on people's values? [...]

I'm not going to try and explain anything to you. I did this before and it led nowhere.

[rat1]

No, I was not talking about disabled people. I compared their situation to the situation of people who are healthy, but have less fortunate circumstances. I have stated before that I'm not in favour of attempts to control the market. I am competely against markets, please read my posts before replying.

You say you oppose markets, and yet you also somehow oppose living through natural selection; even calling nature itself unethical... I don't know how you think the forces of nature can be overcome without a social structure and a working market. I'd love to hear how you think that's be possible, because it isn't. I hope you aren't imagining that government could successfully control that from the top down.

It's clear to me that actually disabled people have to rely on some kind of charity. But giving charity to healthy people doesn't make sense, since they are able to work and improve their life standards, if they had the chance.

I don't know why you are attempting to debate me over this point. The argument for natural selection pertains to the disabled, not healthy people.

They are not being deliberately killed by our economic/social system. Their poor life standards are merely a byproduct of its principles.

And as you expand the economic structure through 'helping' these people you are increasing the causes of their problems in the long run. The solution is for society to dismantle, and to return to natural regulatory principles by embracing natural selection. You were saying that's unethical why?

Another one of your pearls of wisdom! The factory burned down because the owners wanted to maximize their profits. It probably worked for years and they kept it that way because they gave a shit about the working conditions or safety.

This is the only part where I agree with you, thinking more about it. This is why I am against civilizations formation in the first place. I don't really consider myself an austrian economist. I think that philosophy is idealistic and naive. My preference is I would have no social structure at all.

[Pa3s]

Ok, I'll try to explain my arguments because it seems as we're talking about different things. This will probably be my last post in this thread.

You say you oppose markets, and yet you also somehow oppose living through natural selection; even calling nature itself unethical... I don't know how you think the forces of nature can be overcome without a social structure and a working market. I'd love to hear how you think that's be possible, because it isn't. I hope you aren't imagining that government could successfully control that from the top down.

I don't know if we're talking about the same regarding "natural selection". These rules are applied to human societies in theories such as social darwinism. That's what I oppose. Our societies are extremely complex and people are born in vastly different circumstances. If we'd still live as hunter-gatherers, the chances to be successful would be more balanced and fair. Other than that, it's just inhumane, imho. We regard people as equals when it comes to legislature and yet, we measure their freedom by their ability to generate money. I do not believe that everyone should have exactly what everyone else has, but I'm sure that the current situation leaves much to be desired.

Nature is not a sentient being and not capable of controlling things. What we call nature is just the sum of the actions of organisms and the existance of inanimate objects. Ethics are an invention of humans, so we are the only ones able to apply and judge them. Nature can be "cruel" (or rather, its results) and I think that we should compensate this. However, not in the form of a welfare state.

Markets and states are not the only kind of social structures. I don't oppose social structures, but I prefer alternatives to what we have now. This can be autonomous communes for example, with worker-owned and -managed production means and decentralised, planned production according to need. In these societies, people govern themselves and can split the necessary work and give everyone the chance to do their share.

I don't know why you are attempting to debate me over this point. The argument for natural selection pertains to the disabled, not healthy people.

No, it pertains to everyone. To recapitulate, I was trying to say that most people agree to grant disabled people help so they are able to live their lives. That's because they were born that way. In our politically correct world, few would dare to say they should not live, be executed/neutered or anything like that because of their "bad genes" or "uselessness". But on the other side, there are people who are basically healthy, able and willing to work. Some of those people still don't get jobs and not everyone agrees that they should receive help as well. However, everyone is born with more or less distinct talents and intelligence. But in today's society, those who are born lucky are able to get rich and powerful, whereas others barely reach adulthood. It's almost like in medieval times when you're either a peasant or an aristocrat.

And as you expand the economic structure through 'helping' these people you are increasing the causes of their problems in the long run.

Does not apply, since I already said that I neither support markets nor states.

The solution is for society to dismantle, and to return to natural regulatory principles by embracing natural selection. You were saying that's unethical why?

I don't agree. We've lost our animal-like innocence long ago when we built the first societies and pursued science. There's no tuning back.

[Absurd]

Right on the money once again. Hkkmr you might want to think about paying me for posting on this site.

[anndelise]

Natural selection is completely different from Social cohersion.

[rat1]

there are about 16 waking hours in a day. 16 x 7 = 105 waking hours in a week. Working more than 40 hours is not enjoyable but very doable

Natural selection is completely different from Social cohersion.

Society has developed as an escape from natural pressures.... social selection is alot less brutal than natural selection.

[anndelise]

Society has developed as an escape from natural pressures.... social selection is alot less brutal than natural selection.

Less brutal physically, but often demands that an individual go completely against their nature (as in evolutionary nature), which tacks on its own stresses and demands that harms health. In some cases, this counters the benfits of Society.

Edited to add, i don't really want to argue. My stance is closer to a "dunno, it seems like being caught between a rock and a hard place."

[mu4]

Here's what actually happens when you raise minimum wage. These are individuals that spend nearly 100% or more of their income.

People at the bottom get paid more, they buy more. Business that are competent survive and profit off this influx of income to the lower class. Business that are incompetent die.

The businesses that survive will eat up the incompetent businesses, and buy from B2B business, which buy from other business higher up the food chain.

The thing is, trickle up economics always works. People at the bottom will by necessity use most of their income, if they're even a little product at their income level, that's just a side benefit. But what they buy and the economic activity they generate will always trickle up and create new businesses and markets. Of course society can only do this to a certain extent and that's what the minimum wage is for, to keep a base line level of economic distribution which will trickle up. A business that can't adjust to minimum wage is simply unfit for survival and should go out of business.

[rat1]

Temporary benefits and long term problems...

Less brutal physically, but often demands that an individual go completely against their nature (as in evolutionary nature), which tacks on its own stresses and demands that harms health. In some cases, this counters the benfits of Society.

Edited to add, i don't really want to argue. My stance is closer to a "dunno, it seems like being caught between a rock and a hard place."

If only we didn't develop society at all, and stuck with the brutality of natural selection, we would have been much better off.
The solution, therefor, is not to further increase the complexity of society in an even greater attempt to avoid natural brutality.
The increases in complexity of society only results in an even greater departure from our natural functioning. The problem grows...

[xerx]

Don't think I'm taking a side in this debate; economics is still a pseudoscience[1] and I'm not interested in being a partisan for one internally consistent position versus another another internally consistent position.

But in the spirit of examining alternative possibilities, one counter-argument is that Simon's new revenue would come back to Edgar because it is spent on consumption.


[1] socionics has the same predictive abilities = fail.

[xerx]

What new revenue? Did you see the part in the video where Simon lost his job because of minimum wage?

The revenue that Simon gives back to Edgar by consuming what Edgar is selling, if he kept his job while on minimum wage. Try not to hurt head thinking about it.

[xerx]

Here's a thought for you - why would Edgar knowingly pay Simon, losing money, in hopes that Simon would buy what Edgar is selling, when Simon can spend his money elsewhere?

Do part-time employees at Mcdonalds & Burger King spend all of their extra income buying Mcdonalds and Burger King, because they're that thankful for their employers, that they give 100% of their extra earned money back to them?

'Try not to hurt your head thinking about it', but when you invest, do you aim for a 0% return with a great risk of losing all the money invested? Why would Edgar, as the business owner, make a decision KNOWING that he will lose money, if there's only a small chance he would get all the revenue back, with 0% chance of making a profit?

Simon spends his money at Steve's business -> Steve pays Simon #2 -> Simon #2 spends his money at Edgar's business. The economy is more than 2 people. As I said, don't hurt your head.

If Edgar is still capturing a low market share, then he's shittily uncompetitive and deserves to go out of business.

[xerx]

But even in your example, there are other goods being bought, so Edgar would still be losing money in the transaction. He would be forced to lose money.

No, because the economy is being treated as a closed system. Both in the video and in my example. The only way for Edgar to lose money is if he's inefficient or there is low demand for what he's selling.

Ah, so if he's "uncompetitive", then he deserves to go out of business. Then here's a BETTER question - if Edgar is forced out of business, in your example, then what happens to Simon's wages, as his employee? Would this increase unemployment or decrease unemployment when affecting the economy?

Uh no, a competitor would take over his market share. Simon would go work for him.

[InvisibleJim]

No, because the economy is being treated as a closed system. Both in the video and in my example. The only way for Edgar to lose money is if he's inefficient or there is low demand for what he's selling.

I remember that time I sold imaginary sand to the theoretical arabs and this generated real value for both particpants and then I bought a yacht.

Maybe we just need to legislate so the real arabs behave like the theoretical ones.