PeakTrader.com

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MP:

What about a ‘minimum clothing price’ law?

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PeakTrader:

Higher prices will harm low income workers much more than affluent investors or high income workers, who may benefit at the expense of low wage workers.

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Producers already benefit from low wages. If they can also benefit from high prices, that’ll be great.

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If you hike the minimum wage 10%, you may increase prices only 1%.

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Of course, the increased demand, from low wage workers, who have the highest marginal propensities to consume, may increase prices a little more than 1%, along with increasing nominal growth, which includes real growth.

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Morganovich, it’s based on economics, which is something you don’t seem to know, given you continue to circle your comments around one simple partial equilibrium model. I’ve explained the economics to you several times before. So, what good what it do to explain it again?

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Your assumptions are false. The net effect will reflect significant changes, although the net effect will likely be small.

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My comments are all based on economics, i.e. mathematical and empirical models in n-space.

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The money can come from profits, high wage earners, productivity (including attracting people with higher reservation wages), etc.. Prices will rise much less than the rise in the minimum wage. I suspect, a $10 minimum wage is roughly optimal.

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You ignore the economics, both the mathematical and empirical models. I stated before (based on a mathematical model, and I could also show some empirical models):

A rise in the minimum wage can increase real economic growth.

The higher wage attracts better workers, with higher reservation wages, to increase productivity.

Minimum wage workers have high marginal propensities to consume. So, a higher minimum wage increases consumption.

Only a portion of the higher minimum wage may be passed along in higher prices, because portions will be absorbed by “excess” wages of other workers and “excess” profits.

Weak or poorly managed firms will lose business or fail. However, stronger or better managed firms will gain their business, and also gain from the increased demand.

Also, I may add, a combined increase in higher wages and unemployment benefits (if unemployment rises) can facilitate a virtuous cycle of consumption-employment.

Or, the income effect may be stronger than the employment effect. to have a net positive effect on growth and employment.

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Optimal can mean the lowest price and the highest quality, simultaneously, or the maximum (positive) income effect and the minimum (negative) employment effect.

I’ve already shown the 19th century economy was much more suboptimal than the 20th century economy.

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Sam, do you know what’s a reservation wage? There must be an explanation why the teen labor force participation rate fell, which coincides with the falling real minimum wage. Chart:

http://research.stlouisfed.org/fred2/series/LNS11300012

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High income earners or wealthy investors have higher marginal propensities to save than low income workers. Do you want to stimulate spending or saving in this depression?

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Ken your limited and make believe “economics,” like Morganovich, makes no sense. It seems to be some type of upside-down “economics.”

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Ron, when you figure out the difference between wages and prices, let me know.

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http://www.aei-ideas.org/2013/04/what-about-a-minimum-clothing-price-law/#comments

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PeakTrader:

Morganovich says: “we could have voluntary credentialing of lawyers (and doctors for that matter)…anyone can practice.”

Maybe we can import some witch doctors from Haiti to work at minimum wage, although you don’t seem to be in favor of any labor standards. Most patients don’t look for a diploma at the doctor’s office anyway.

If half of regulations are bad, then, of course, not all of them are bad.

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Of course, if the doctor has a ring in his nose, that may raise some uncertainty

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Morganovich, your simplistic views, on everything, may make sense to some people. However, in the real world, they don’t work the way you imagine.

And, using the same simple supply-demand model to explain how everything works is not a sound methodology.

Wages and prices aren’t the same.

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The ignorance of Morganovich and Ron relying on one economic model to explain the real world is like throwing a bucket of water over the side of the ship and being surprised it ended up on their faces.

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My original statement was simple, before the nonsense placed on it, by a couple of people

An increase in the minimum wage may attract more productive workers, which can completely offset the higher wage, and with other variables fixed (e.g. profits, salaries, and other inputs), that means the higher wage increases demand.

If profits, salaries, or other input costs fall, that can further increase demand, with a further rise in wages, particularly when profits, salaries, and other inputs are at “excess,” historically, or relatively high levels.

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Morganovich, you may be unwilling to work for less than $20 an hour. So, when you’re offered $10 an hour, you’ll choose to stay home, and play video games.

Of course, in this era of abundant labor, there are plenty of Morganovichs out there willing to work for much less than you.

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A hefty cost of regulation, resulting in higher prices and lower wages:

From Milwaukee Journal Sentinel articles – April 16th & 17th, 2013

“Cabbies paid rents to cab companies of $375 to $400 for a 12-hour shift and netted anywhere from $300 to $400 a week in wages.

A typical eight-mile taxi ride in Milwaukee costs $22, which is $5.55 higher than the same ride in Chicago and $2.66 higher than the average rate of 20 other U.S. cities.

Boston had the highest eight-mile rate: $24.60. The lowest fare of the 20 cities was Detroit, at $15.90.”

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Federal regulations cost about $2 trillion a year, which doesn’t include state and local regulations.

The Hidden Cost of Regulation
June 10, 2011

“Between 2001 and 2011, 38,700 new regulations were added to the Federal Register. Of the over 4000 new regulations that are currently being developed by various government departments and agencies, 224 are estimated to cost the economy more than $100 million each. And the Obama administration appears to be doubling down on regulation, with massive new regulations in the works at the Environmental Protection Agency, new health care regulations, and a host of yet to be written regulations covering financial services.

Overregulation imposes enormous hidden costs on our economy. It creates huge compliance costs on businesses, which in turn slows economic growth and constrains job creation. As America’s mountain of federal rules and regulations continues to grow, the cost on the economy increases.

In light of the persistent economic recession and growing national deficit, our nation needs to be pursuing policies that encourage real growth. Unfortunately Obama’s bureaucrats continue to crank out new expensive regulations at an incredible rate.”

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http://www.aei-ideas.org/2013/04/ij-deserves-the-nobel-peace-prize-for-its-ongoing-efforts-advancing-the-economic-liberty-of-small-business-owners/#comments

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PeakTrader:

Perhaps, pro-abortion women at “women centers” know more education for women means higher income for women and therefore fewer children (i.e. raising the opportunity cost of having children) to control population growth and raise women’s income simultaneously.

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