Sunday, February 17, 2013
On Government Regulation
a) It disproportionately hurts the working class. In many localities it costs thousands of dollars to start a food cart and in others hundreds of thousands of dollars to start a cab business.............b) It fosters an incestuous relationship between businesses and government. As regulations have gone up, so, too, has crony capitalism. Rent seeking - the attempt by businesses to bring about uncompensated economic gains as the result of lobbying for favorable public policy (again, something that is well beyond the capability of the average American).......Regulatory capture - the end-result of regulators being "captured" by the very industry that they regulate, a process that often has the industry itself crafting the regulation/legislation (Philip Morris with the Tobacco bill, the washing machine manufacturers setting efficiency standards in order to move their more expensive products, etc.).............c) There are currently 81,000 pages in the directory of federal regulation. Thud!............d) Legislating prices/wages isn't the same thing as legislating value. Everything is scarce and everything is rationed. The only question here is who does the rationing and how do they do it. When the government puts a cap on borrowing rates (for example), the lenders respond by rationing by risk and this de facto disproportionately impacts upon the poor. The same logic can also be applied to the minimum wage. As wages go up, skills are rationed and it is the lower skilled worker who always gets excluded (if a person only brings in $8.50 an hour and the minimum wage goes up to $9 an hour, that person is no longer profitable to the company and he will more than likely be terminated).............e) According to the Small Business Administration, it costs small businesses more than $230 billion a year to comply with government regulation. If you were even able to cut that in half, the economic benefit would be palpable.............f) The Wall Street Journal currently has the U.S. as the 10th most economically free country in the world. That's not bad except for the fact that we were previously ranked as high as 3rd in the decades prior to Bush and Obama (both of whose administrations added thousands of new and often petty regulations).............g) Oh, and if you don't think that economic freedom is important, just compare Chile, which has a lot of it, to Venezuela, which has precious little. Chile has a 15% poverty rate, a life-expectancy of 77, and 2% inflation while Venezuela has a 28% poverty rate, a life expectancy of 73, and 22% inflation (and, yes, other examples exist in which the discrepancy is even more pronounced). Me, I would much rather live in Chile.
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Concerning (D) Legislating Value. Yes, it is so true that arrogant individuals with too much power cause nothing but damage, and never any good by decreeing that something is worth an arbitrary value pulled out of thin air without regard to its real value. Click here for a discussion of the minimum age. I've noticed in such discussions that small businesses that go under from being forced to hand out a massive proportion of their meager profits as unearned welfare payments are considered "inefficient" and expendable.
And unearned welfare is all that it is, if someone's work is really worth $7.50 an hour and the government forces the company to pay them $9.50 an hour. That's $2.00 in an outright gift, completely unearned, going out the door for every employee, every hour.
All an unfunded mandate: the government forcing businesses to cough this up, while providing them no aid for doing so.
And to address your specific example on the minimum wage
"if a person only brings in $8.50 an hour and the minimum wage goes up to $9 an hour, that person is no longer profitable to the company and he will more than likely be terminated"
According to basic demographic data, this person has a slim chance that they are supporting a family on this. So most of the time this extra money is going to those who don't "need" it, in a welfare/charity sense. This is because the minimum wage is a welfare program that completely lacks and means testing or any sort of screening to determine if it is necessary to give this kind of welfare.
Since in your example the real value of the work is $8.50, and the mandated minimum wage is $9, this works out to a total amount for the year of $1000. Yes, a gift cut from the company to the worker, whether or not they are in poverty or just one member of a rich family earning some money for DVDs, of a thousand per year.
Yeah, this kind of thing forces ocmpanies to fire workers, move to another place where they are allowed to pay a fair value age, increase automation, or hike prices of services to consumers and cut back on service. The company can also try to cover this clobbering blow by cutting any sort of benefits or bonuses the employees might earn. Unscrupulous companies might cut corners on safety. Or any combination of this. None of the effects are good, and all are bad.
Sewage overflow again, Will.
Are we to conclude that the cheapest labor is the most efficient for business? That perhaps slavery was good afterall?
No one mentioned cheapest BB, or slaves. One is instead to conclude that the most efficient labor for business is the labor which is paid fairly, for the real value of th work: the meeting place between the most the worker will accept and the least the employer will offer.
This is not the cheapest, certainly, nor does it involve anything like slavery
"the most the worker will accept and the least the employer will offer." I'd rearrange the operative verbs? IMO, there is somewhat of a negative view of labor as greedy, while the CEO is a paragon of virtue. Akin to the words of Richard II after putting down the 1381
peasant rebellion-
"You wretches are detestable both on land and sea. You seek equality with the lords, but you are unworthy to live. Give this message to your fellows: rustics you are and rustics you will always be. You will remain in bondage, not as before, but imcomparibly harsher. For as long as we live, we will strive to suppress you, and your misery will be an example to posterity."
Nineteen years later, Richard was deposed, and in a kind of medieval
poetic justice, locked away in Leeds Castle. He was refused food
and slowly starved to death...like
his 'detestable rustic wretches'.
Either can be greedy if they demand more than the real value of the work, and expect it to be handed to them on a silver platter, instead of actually earning it, BB.
For the greedy CEO's, I think of the big banking guys, who helped run the banks into the ground. Then they got the unnecessary TARP corporate welfare and other bailouts (which were stupidly flung at them with no reasonable strings attached), and they were like pigs at the trough.
What an employee is paid for the "value of his work" will be determined by the market.If you want the burger flipper to make fifteen bucks an hour be prepared to pay $10.00 for a McDonalds hamburger.
Rusty: There's no problem with a burger flipper making $15 an hour if he is really really good at it and earns it by doing work that is worth that wage. But that is the only valid way for him or her to make such a wage.
I absolutly agree with you dmarks.An employee should be paid what they are worth,not what the government says their worth but the market sets the base for the occupation.
If anyone thinks a forced wage increase is'nt passed on to the public they are either delusional or just plain stupid.
And BB: Thanks for an example of where the real oppression worst oppression comes from historically and now: governments.
The minimum wage hurts low-skilled workers and freezes them out of entry level opportunities. A young kid (and that's who generally make minimum wage; youngsters, retired folks, second-wager earners - and even they're only 3-5% of the work force - virtually ZERO bread-winners make the minimum wage and you really have to wonder about the wisdom of a person making minimum wage having kids) who I might be willing to give a chance at $5 an hour but not at $9 an hour (the idiotic suggestion by Obama) - that's the person who ends up getting hurt by the meddling of government.
I know that it's hard, but you can you guys just ignore wd. I'm more than happy to entertain the liberal perspective in the form of Jerry, Marcus, BB, etc. but I just cannot stomach this wd character and maybe if we simply ignore his stupidity, lack of originality, lack of nuance, measure, substance, etc., he'll at long last crawl back under his rock.
The bottom-line here is that if a person cannot produce to the level of his wage, he will be terminated. Cause, if he isn't, the job is no longer a job but a charity case instead.
I have no problem ignoring WD.In fact I find his stupidity very ignorable.
Thom Hartmann said the stupidest thing I've ever heard from anyone when talking about Chile. He claimed that Chile is still "revovering" from neoliberalism and people over at Reuters are excited that Hugo Chavez is recovering. Nothing shocks me anymore.
And that wd guy sure commented quite a bit on the previous post. I was wondering what happened to him. Is he a regular commenter or something or a weak attempt at trying to present a more progressive prospective onto this blog?
By people, I mean those who commented on Reuter's article about Venezuela.
Will said: "The bottom-line here is that if a person cannot produce to the level of his wage, he will be terminated. Cause, if he isn't, the job is no longer a job but a charity case instead."
Exactly. The moderate here understands perfectly. It is a matter of forcing businesses, especially very small ones to give unearned charity money mostly to people who don't need it. Not a very sensible policy or even worth doing, is it?
Will said: "I know that it's hard, but you can you guys just ignore..."
Yeah, good idea. I replied a bunch of times, then deleted it. No matter what good food one feeds a troll, the excrement that comes out never smells better than awful.
And the definition of "plutocrat" got expanded to include factory workers (the people that benefit from free and fair trade). I fear in the next round, it will get expanded to include penniless bums who lie in the gutter.
And yes, we need more Jerry, etc. A fine mind.
WD has a blog? Is it in english? Has his mom and dad approved its content? Does he refer to Thom Hartman? Does he quote from Think Progress?
Russ, there are studies which support the minimum wage (probably by Keynesians who are pretty much wrong on everything) and those that don't. I suspect that wd scoured the internet looking for examples of the former and is trying to now pawn this off as truth.......I personally try to examine this logically. Say that you have this guy who's working for $7.50 an hour and who is bringing in to the business $8.00 an hour of value. The owner can afford to keep him because he's still managing to make a profit off him. BUT, if you increase the cost of that worker to $9 an hour and he continues to work at the same level of productivity, unless that businessman is an idiot, that worker will more than likely be terminated. Maybe he'll get replaced. Maybe he won't but for the guy who gets terminated the minimum wage just gave him a swift kick in the balls.
Roberto, let's just say that wd is twice your age but with only half of your wisdom and open-mindedness.
Will: not to mention that the troll has a fraction of Roberto's critical thinking skills, personal knowledge base on anything, research capabilities, and familiarity on the matters being discussed.
And he understands the law of unintended consequences.
Oh, and the last time that black unemployment was below that of whites? Try the year before they passed this BS. And it's just so frigging common sensical. If a person isn't worth what the new minimum wage is (in terms of skills and productivity), they probably won't be hired (maybe if the dude is your nephew or something). I mean, how frigging high does black male teenage unemployment have to get before they realize this?......I also point to the late 1940s. At that point the black teenage unemployment rate was very low and that was probably due to the fact that the minimum wage hadn't been raised in 15 years and was hence obsolete. When will these idiots realize that by meddling they make the matters worse?
Will,you made my point with the guy making $7.50 per and returning 8.00 of value......you cant raise him to $9.00 because the market for the product demands he make $7.50.
You cant make widget for $3.00 and sell it for $2.50.
I'm not sure on the precise metric on the minimum wage and unemployment, but it is patently obvious on who gets hurt, and that's the lower skilled individual.
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