I had no idea Scott Walker was so popular

[Uncle Sparky]

Donations must be declared, that is sufficient regulation for me.

Hard donations must be declared. There are many ways around it. - source - The Colbert Report. Education should always be so entertaining.

[regexcellent]

I'm not sure about declaring donations. It kind of encourages retaliation by supporters of the other side. There are websites where you can get maps of a particular candidate's donors' residences. It's scary.

[giblets]

I'm not sure about declaring donations. It kind of encourages retaliation by supporters of the other side. There are websites where you can get maps of a particular candidate's donors' residences. It's scary.

Is someone really going to try to kill someone for donating to a political candidate?

[Kuciwalker]

The value of everything is the price, but not necessarily the cost.

No. The market price is a tool by which we can estimate the marginal value of a thing. The market price is not the actual marginal value, and the marginal value is not the value.

Value is subjective. Marginal value is objective but not directly observable. The market price is objective and observable.

[regexcellent]

My mistake.

[kentonio]

The value of everything is the price, but not necessarily the cost.

Workers would be paid based on supply and demand. If wages fall too low nobody will work for you and they'll all go to your competitors, just like with everything else. That is the real floor on wages.

Why would your competitors feel the need to compete on wages? Your entire case depends on there being a shortage of workers thus forcing employers to compete. What happens when its the workers competing for the employment?

[Jaguar]

Both sorts of competitions happen simultaneously.

[Kuciwalker]

Wages would fall to as low as companies could get away with offering as I said. There are natural floors as workers have to be able to afford basic housing, food etc, but again I ask you, why would a company willingly choose to pay more than they have to in a market where there are no in built protections for workers? Especially in an economy with significant unemployment?

"As low as the could get away with offering". That's a key qualifier there! How little can they get away with offering? It is actually a lot more than the cost of housing, food, etc. - there are LOTS of people the US who don't have strong job protections, who don't have especially rare skills, but somehow manage to earn well above the amount needed to sustain their own existence. And in other places and other times, before we even had labor laws of this sort, we still saw large groups of people paid more than subsistance wages. How did that happen? What determined each person's wage?

Who said it was almost zero? I said (and you even bolded it) 'the lowest possible level they felt they could get away with'.

And so far you haven't given any explanation as to what that level is. Now you've said that it's at least subsistence level; but evidence suggests that employers usually can't get away even with that - the have to pay something much higher than a subsistence wage.

You keep referring to your job, but a) I have no idea what that job is or the circumstances arouand b) your job does not exist in a vacuum.

I'm an actuary. It's probably simplest if you think of me as something between a programmer and a lawyer.

For one thing if the non-unionized workers started receiving wages and conditions that were drastically bad then you'd see a massive growth in unions.

Many types of job are just naturally difficult to unionize. As an example, lawyers can't unionize because there's no way to prevent someone outside the union from stealing your clients by offering a lower billable rate (wage). And again, even in places where unions are virtually nonexistant, we see wages far above subsistence levels.

Funny, I work in an industry where crunch times are commonplace and the expectation was always that people would work long hours and extra days for no direct reward when needed. A couple of years ago the working hours directive became a big thing and everyone was talking about what a terrible effect it would have. In practise it made no significant difference to companies, they just had to actually start looking after their employees better. If you don't hold a stake in a company, then why exactly should that company be entitled to expect you to give your time for no financial reward? Are you a serf?

I am perfectly free to quit my job and look for a new one. Serfs aren't. In fact, that is the defining characteristic of a serf. That is what the word "serf" means! When serfdom ended in all the various nations of Europe, that meant that serfs were now free to offer their labor to someone other than their feudal lord.

If you want to talk supply and demand btw, what exactly do you think workers do with the money when they receive higher wages?

If you double every worker's wage by fiat, they will take that new flow of income and spend it on a flow of goods. The rise in costs combined with the rise in nominal spending will in short order raise prices until they are at about twice the level they were before. This doesn't help anyone. You might as well just add an extra zero on to the currency and be done with it - everyone would have ten times as much income!

Of course, I can see that you are trying to muddle through to a pop-Keynesian argument about [aggregate] demand. I'll warn you ahead of time that the argument doesn't work; it's a lay misunderstanding of Keynesian macroeconomics.

[Kuciwalker]

Both sorts of competitions happen simultaneously.

Jaguar is skipping to the end of my argument

[kentonio]

I am perfectly free to quit my job and look for a new one. Serfs aren't. In fact, that is the defining characteristic of a serf. That is what the word "serf" means! When serfdom ended in all the various nations of Europe, that meant that serfs were now free to offer their labor to someone other than their feudal lord.

Which led to workers receiving a fair compensation for their labours right? Oh no wait, it actually led to workers being abused and exploited by the rich because just having the freedom to work where you please is actually no freedom at all when all your choices are abuse and exploitation.

As I said earlier, this is not theoretical, you can look back in time and see exactly what happens when workers do not have worker protections. Yet because people have enjoyed the results of previous generations having fought for worker rights and have forgotten why those rights came about, its fashionable now to talk about how unnecessary they are. This is peoples lives we're talking about, and while you may be lucky enough to have the skills and resources to move large distances to find new gainful employment, for a factory worker in a rural area with a family, or a low skilled city worker who has spent his life in the same manual industry, this stuff can literally be the difference between life and death once you get rid of the social safety net and start slashing away worker protections.

If you double every worker's wage by fiat, they will take that new flow of income and spend it on a flow of goods. The rise in costs combined with the rise in nominal spending will in short order raise prices until they are at about twice the level they were before. This doesn't help anyone. You might as well just add an extra zero on to the currency and be done with it - everyone would have ten times as much income!

The discussion is not about increasing the supply of money, just about how that money is distributed. More money spread out amongst society equals higher consumerism equals more demand for products.

[rah]

Don't discount the productive boost of a happy employee.
I would also expect to see more incentive based agreements.

[Kuciwalker]

As I said earlier, this is not theoretical, you can look back in time and see exactly what happens when workers do not have worker protections. Yet because people have enjoyed the results of previous generations having fought for worker rights and have forgotten why those rights came about, its fashionable now to talk about how unnecessary they are. This is peoples lives we're talking about, and while you may be lucky enough to have the skills and resources to move large distances to find new gainful employment, for a factory worker in a rural area with a family, or a low skilled city worker who has spent his life in the same manual industry, this stuff can literally be the difference between life and death once you get rid of the social safety net and start slashing away worker protections.

If you actually perform this exercise of looking at the historical time path of wages, you'll notice that it is far more tightly correlated with labor productivity. No set of labor regulations instituted in 1850 would be able to ensure workers received 1950s real wages; we simply weren't capable of producing that quantity of goods per capita. (Not to mention many of the goods workers could buy in 1950 didn't exist yet.)

This returns us to the question: what determines wages in the absence of unions or regulations? The answer is clearly not "companies pay just enough to keep their workers alive"; they observably pay well above subsistence wages even in the absence of unions or regulation. What is your answer?

My answer, the correct answer, is supply and demand. Workers compete for jobs and companies compete for workers.

The discussion is not about increasing the supply of money, just about how that money is distributed. More money spread out amongst society equals higher consumerism equals more demand for products.

This is precisely the pop-Keynesian argument I warned you against. I warned you against it because it's wrong. Unfortunately you are going there anyway, so I have to detour into yet another refutation of the biggest popular myth in macroeconomics.

The first clue that you're wrong is that you are conflating stocks and flows. The supply of money is a stock. The distribution of money is a distribution of the big stock of money into lots of little personal stocks of money.

What you mean to say is that you want to change the distribution of income. Income is a flow. You are concerned that the current distribution of income isn't equitable. Fine. Your proposed solution, however, works very poorly.

You propose to raise labor's share of income (wages * hours worked) by increasing the dollar amount of wages. You hope that this will leave hours worked unchanged, or even increase hours worked. Your pop-Keynesian argument will proceed like such:

1. Rich people save most of their income.

2. Poor people spend most of their income.

3. Therefore if we take income from the rich and give it to the poor, more money will be spent, which means that more people will try to buy goods. Companies that produce goods will have to hire more workers (or give their existing workers more hours) to supply all of these goods people are trying to buy.

4. Thus wages went up, hours worked went up, employment went up, and production went up. It's a free lunch!

There are three crucial flaws in this argument:

1. The first is obvious and doesn't rely on actually reading the steps very closely. It's just obvious that we cannot actually increase production forever by legislating wage increases. At some point our society no longer has the capacity to produce more stuff, and any wage increases are the same as adding another zero to the end of your currency - prices and wages go up, but in exact proportion to each other, and production is unchanged.

2. The second is that the distinction between "saving" and "spending" is actually nonsense. The word "saving" here conflates two fundamentally different things: holding onto a stock of money, and spending that money to purchase new capital (e.g. a house, car, or factory). To the degree that the rich people were already spending their money on new capital, at some level they were hiring actual people to build that capital (e.g. to build a house) and those workers lose that income when you take it from the rich.

2a. You might object at this point that rich people don't really "invest" their money, they buy financial assets like stocks and bonds. However, when they do that they have to give money to someone, and that someone is again faced with the choice between holding onto that stock of money or giving it to someone else in return for something. Eventually all that money has to leave the financial system and be spent hiring real people to build real things, it doesn't just go around in circles forever.

3. The third is the assumption that when you increase wages, employers won't choose to hire fewer workers. If employers scale back hours in response to higher wages, then income could actually decrease, causing production to fall and making us all worse off than before.

Therefore, if you want to redistribute income to poor people, you can't justify it from the idea that it will "create jobs". #1 tells us that only in very special circumstances (recessions) could this ever "create jobs". Most of the time it will just raise the level of prices. #3 tells us that his policy could actually destroy jobs, possibly making some workers better off at the expense of the newly unemployed. The correct way to try to redisribute income is to take it directly from rich people and give it to poor people.

[Kuciwalker]

btw, don't start trying to quote various Keynesian economists at me in an attempt to refute that. None of them believe the pop-Keynesian story about saving and spending, and if you read them as doing so you are reading them wrong.

[kentonio]

If you actually perform this exercise of looking at the historical time path of wages, you'll notice that it is far more tightly correlated with labor productivity. No set of labor regulations instituted in 1850 would be able to ensure workers received 1950s real wages; we simply weren't capable of producing that quantity of goods per capita. (Not to mention many of the goods workers could buy in 1950 didn't exist yet.)

Quantity of goods only has relevence in terms of the level of the standard of living. We're not talking about people in 1850 having TV's, but there was no real reason why so many workers at that time should have been living at the poverty level while rich industrialists made vast fortunes off their labour.

This returns us to the question: what determines wages in the absence of unions or regulations? The answer is clearly not "companies pay just enough to keep their workers alive"; they observably pay well above subsistence wages even in the absence of unions or regulation. What is your answer?

No, you keep trying to talk about how things clearly happen in the absense of unions or regulation when in fact both exist. Despite a job not being unionized or seeming to be strongly regulated, both have effects on all modern labour practices, and regulation is certainly in place. Why do you think the GOP are so determined to remove it?

My answer, the correct answer, is supply and demand. Workers compete for jobs and companies compete for workers.

Overly simplistic theory. I've raised numerous examples of why it doesn't work in times of high unemployment and in areas where there are very few employers 'competing' for employees.

1. Rich people save most of their income.

Not necessarily save, but that money does go into a much more exclusive spiral. You can argue about how it becomes invested in business etc, but I have far more faith in cash being invested into business via demand.

2. Poor people spend most of their income.

Absolutely correct.

3. Therefore if we take income from the rich and give it to the poor, more money will be spent, which means that more people will try to buy goods. Companies that produce goods will have to hire more workers (or give their existing workers more hours) to supply all of these goods people are trying to buy.

Correct, comsumerism at its very base. Those that have: spend, those that have not: spend not.

4. Thus wages went up, hours worked went up, employment went up, and production went up. It's a free lunch!

Oh my, you mean you can't build a healthy economy by ensuring that rewards hard work and fuels economic growth? That would surely be a 'free lunch'. Instead you prefer a system where the rich spend the money wisely and the poor take what they're given and like it?

There are three crucial flaws in this argument:

1. The first is obvious and doesn't rely on actually reading the steps very closely. It's just obvious that we cannot actually increase production forever by legislating wage increases. At some point our society no longer has the capacity to produce more stuff, and any wage increases are the same as adding another zero to the end of your currency - prices and wages go up, but in exact proportion to each other, and production is unchanged.

This isn't the 20's, we're a society of consumers of disposable products. Why would we need to endlessly be raising the quantity of stuff rather than the quality or variety?

2. The second is that the distinction between "saving" and "spending" is actually nonsense. The word "saving" here conflates two fundamentally different things: holding onto a stock of money, and spending that money to purchase new capital (e.g. a house, car, or factory). To the degree that the rich people were already spending their money on new capital, at some level they were hiring actual people to build that capital (e.g. to build a house) and those workers lose that income when you take it from the rich.

This is why the proportion of wealth held by the wealthy few is so mindbogglingly huge in comparison to previous decades?

2a. You might object at this point that rich people don't really "invest" their money, they buy financial assets like stocks and bonds. However, when they do that they have to give money to someone, and that someone is again faced with the choice between holding onto that stock of money or giving it to someone else in return for something. Eventually all that money has to leave the financial system and be spent hiring real people to build real things, it doesn't just go around in circles forever.

So why is that wealth not going back into the system, but migrating to the top in ever increasing quantities?

3. The third is the assumption that when you increase wages, employers won't choose to hire fewer workers. If employers scale back hours in response to higher wages, then income could actually decrease, causing production to fall and making us all worse off than before.

You mean like the mass unemployment that we were warned would blight all our nations when minimum wage laws were introduced? I must have blinked and missed those terrible times.

Therefore, if you want to redistribute income to poor people, you can't justify it from the idea that it will "create jobs". #1 tells us that only in very special circumstances (recessions) could this ever "create jobs". Most of the time it will just raise the level of prices. #3 tells us that his policy could actually destroy jobs, possibly making some workers better off at the expense of the newly unemployed. The correct way to try to redisribute income is to take it directly from rich people and give it to poor people.

So rather than build a system whereby poor people are fairly rewarded for hard work and industry, you think its better to what exactly?

[Kuciwalker]

I'm not getting into an argument with you over the second half of that post. I can only debunk that particular brand of incoherent nonsense so many times.

Quantity of goods only has relevence in terms of the level of the standard of living. We're not talking about people in 1850 having TV's, but there was no real reason why so many workers at that time should have been living at the poverty level while rich industrialists made vast fortunes off their labour.

Are you actually claiming that you don't care about the standard of living, just the distribution of goods?

No, you keep trying to talk about how things clearly happen in the absense of unions or regulation when in fact both exist. Despite a job not being unionized or seeming to be strongly regulated, both have effects on all modern labour practices, and regulation is certainly in place. Why do you think the GOP are so determined to remove it?

Regulations are very weak on broad classes of jobs, and the amount and scope of regulation and unionization varies dramatically between different jurisdictions. And yet in the low-regulation jurisdictions we don't see anything approaching the "race to the bottom" you predict. We've never seen that. What we have seen is that the theory of supply and demand is remarkably successful at predicting wages and prices, to the degree that it may be the single most successful theory in all of the social sciences.

Overly simplistic theory. I've raised numerous examples of why it doesn't work in times of high unemployment and in areas where there are very few employers 'competing' for employees.

No you haven't. At best, you've claimed that in some cases supply outstrips demand and therefore wages are low, exactly as we would expect.

The cases where employers even attempt to cartelize to control wages are extremely rare, and successful examples even rarer. Labor is too mobile.