So I was walking to work the other day when a man approached me...

[Agathon]

Changes to wages just results in a redistribution of consumption of goods in services from one group of people to another, and a possible change in the value of currency, not growth.

And what's wrong with that?

[Kuciwalker]

*sigh* we've been over this before. There's not necessarily anything wrong with that. I don't care. It wasn't the issue of debate. Ted & Co were claiming that raising the minimum wage actually creates growth.

[Agathon]

Eh, no, the whole argument in this thread was that increasing the minimum wage would drive economic growth because people would be buying more stuff.

It would mean growth for the industries which lower income people patronize, like McDeath.

[Agathon]

*sigh* we've been over this before. There's not necessarily anything wrong with that. I don't care. It wasn't the issue of debate. Ted & Co were claiming that raising the minimum wage actually creates growth

Well, IANAE, but it may well do, depending on other circumstances. I suppose you can say "well it won't on its own", but I think you can say that about almost any important economic policy.

Why would it necessarily create inflation, in any case? No-one is talking about increasing the money supply and it would perhaps inflate prices in certain areas until supply was increased.

[Kuciwalker]

Not in the long run, since if the increase in pay doesn't end up with an increase in revenue of the company paying (say, the company makes luxury cars that these workers aren't going to buy) then you get unemployment because the company is now making less money, and therefore you simply have created a divide between those who are employed and have a bit more money to spend on McDeath, as you put it, and those who are unemployed and don't have money to spend on anything.

xpost

[Kuciwalker]

Originally posted by Agathon

*sigh* we've been over this before. There's not necessarily anything wrong with that. I don't care. It wasn't the issue of debate. Ted & Co were claiming that raising the minimum wage actually creates growth

Well, IANAE, but it may well do, depending on other circumstances. I suppose you can say "well it won't on its own", but I think you can say that about almost any important economic policy.

Increase in the minimum wage cannot drive growth, as I demonstrated on the previous page.

Why would it necessarily create inflation, in any case? No-one is talking about increasing the money supply and it would perhaps inflate prices in certain areas until supply was increased.

By increasing the minimum wage, you are increasing the money supply (at least, operating on the assumption that the money would otherwise not be used, or not as much of it would be used, since it's just sitting in a capitalist's bank account - your side's assumption) because you now have effectively more money in circulation.

Reread the previous page, it's very simple.

[Agathon]

Not in the long run, since if the increase in pay doesn't end up with an increase in revenue of the company paying (say, the company makes luxury cars that these workers aren't going to buy) then you get unemployment because the company is now making less money, and therefore you simply have created a divide between those who are employed and have a bit more money to spend on McDeath, as you put it, and those who are unemployed and don't have money to spend on anything.

I think the idea is that the bosses take the pay cut if the company doesn't perform, since the minimum wage prevents lowering of labor costs. Sometimes it is more expensive to downsize than to just pay the increased wages. It need not necessarily create unemployment.

I guess I'm just protesting against the simple analysis of the situation. On the other hand, I'd just tax the rich more and hand out family benefits – those work.

[Agathon]

Increase in the minimum wage cannot drive growth, as I demonstrated on the previous page.

Not buy itself, but there can be cases where it leads to more economic activity. Saying cannot is too strong. It's not that simple.

[BlackCat]

Originally posted by Kuciwalker
No. Economic expansion occurs through discovery/exploitation of more resources (be it an increased labor pool or oil in the ground) or through increases in efficiency. Either of those can increase the real amount of goods and services that people can consume. Simple increases in wages cannot (except inasmuch as they might, possibly, lead to the two aforementioned means of economic expansion).

Changes to wages just results in a redistribution of consumption of goods in services from one group of people to another, and a possible change in the value of currency, not growth.

Living in a country that has sparse natural resources (sand, clay, chalk and a little drop of oil) except farming, then I must disagree.

Yoy are right that increasing wages unlimted does create inflation, but reasonable and controlled increases doesn't. They create demands that creates new work wich etc...

[BlackCat]

Originally posted by Agathon

Increase in the minimum wage cannot drive growth, as I demonstrated on the previous page.

Not buy itself, but there can be cases where it leads to more economic activity. Saying cannot is too strong. It's not that simple.

That is excatly the point that Kuci is missing. His one-company examples are of course certain to fail, but since the world are much more complex, then the result are totally different.

[Kuciwalker]

Originally posted by Agathon

Increase in the minimum wage cannot drive growth, as I demonstrated on the previous page.

Not buy itself, but there can be cases where it leads to more economic activity. Saying cannot is too strong. It's not that simple.

Well, I'll concede that it can, but only inasmuch as it might cause one of the two things that can create growth - such as if an increased wage made them work more efficiently. However, if this is true it's quite likely that the company will be doing it already.

[Kuciwalker]

Originally posted by BlackCat
That is excatly the point that Kuci is missing. His one-company examples are of course certain to fail, but since the world are much more complex, then the result are totally different.

In the real world it just redistributes stuff, it doesn't create new stuff.

In fact, it can actually decrease growth, because money in a capitalist's bank account is more likely to be used in the creation of new capital.

[BlackCat]

Originally posted by Kuciwalker


In the real world it just redistributes stuff, it doesn't create new stuff.

In fact, it can actually decrease growth, because money in a capitalist's bank account is more likely to be used in the creation of new capital.

Quite right except for one thing - redistribution creates new demands and thereby new work.

[Agathon]

Well, I'll concede that it can, but only inasmuch as it might cause one of the two things that can create growth - such as if an increased wage made them work more efficiently. However, if this is true it's quite likely that the company will be doing it already.

The point is that the market isn't doing it.

This is the point of minimum wage legislation, and all other interventions in the market. Markets are good for some things, bad for others, and need a shove or two in most cases.

On the other hand, sometimes it might not work, or might leave the wage earner worse off in real terms.

Markets treat labor as just another commodity, but it isn't. People generally don't decide to have children based on the economy 20 years hence, and there aren't landfills of surplus and "decomissioned" young people. People aren't born, and don't die when it suits the market.

[Ted Striker]

Originally posted by Kuciwalker


Eh, you don't live in Florida.

So what? The people in that state obviously felt that the minimum wage was benficial, that's why they voted for it.