Quote :

"That will never happen."

In your mind. But you see, I don't trust government in general. So when the government comes in and sets a price floor without regard to actual value of the product, you'll have to forgive me when I am skeptical.

Quote :

"Minimium wage is economically better for everyone."

Which must be why one organization who is a major proponent for it doesn't want to have to pay it. riiiiiiiiiiight...

7/20/2006 11:57:10 PM

Quote :

"Which is why McDonalds pays minimum wage."

that depends

Quote :

"I don't trust government in general. So when the government comes in and sets a price floor without regard to actual value of the product, you'll have to forgive me when I am skeptical."

Well take an economic course. You'll see why economically, we need the governement to patch the leaky boat that is capitalism.

Quote :

"Which must be why one organization who is a major proponent for it doesn't want to have to pay it. riiiiiiiiiiight..."

Ad hominem. BTW I watched that episode of whatever it was that was on too.

[Edited on July 21, 2006 at 12:00 AM. Reason : ]

7/20/2006 11:58:00 PM

Yahhhh, I'll get a raise, thanks china & war

7/21/2006 12:07:42 AM

Quote :

"GrumpyGOP: It isn't often that I sit back and allow Kris of all people to do all the hard work for me. "

I certainly hope that's not the case here, considering it's pretty clear he doesn't know what he's talking about...

---

Quote :

"Kris: Well take an economic course..."

[no], don't "take an economic course." major in it instead, then come back and talk to us.

7/21/2006 7:16:56 AM

Quote :

"Well take an economic course. You'll see why economically, we need the governement to patch the leaky boat that is capitalism."

I was valedictorian in Economics (B.S.) at NC State for 2006.

Nowhere will any econ professor tell you that price floors are helpful. They are simply not. It is correcting for a market failure that isn't there. Thus, it is inducing a market failure.

When the government comes in to fix the "leaky boat that is capitalism," they should do it in places where an actual market failure (like externalities, free-rider, etc.) exists and not where they think one exists. You may think that the "unequitable distribution of income" is a market failure, and for all that capitalism is, it surely isn't a hippie's ideal for distrubution methods. But that doesn't make it a market failure, its simply the market calling a spade a spade. Some people are only worth $5 an hour.

7/21/2006 7:45:38 AM

Quote :

"Its basic economics, you know, the kind that liberitarians know nothing about. I know you like to think that you have economists on your side here, but economics is an easy major, joe blow could be an econ major. Any good economist knows the basic market failures. Price floors can be ineffectively implemented, but that by no means implies that all are bad."

Yes, Kris, any trained economist can tell you the basic market failures, such as pollution and national defense. And we can debate whether the price for milk is prone to market failure, necessitating a price floor in which large quantities of milk are dumped by state regulators. But the market for labor is a completely different animal from the market for milk. Prices and quantities supplied of labor move very slowly, as such the labor market is not prone to quick periods of surplus followed by shortage in the way milk is (it looks more like continuous degrees of labor surplus).

If prices were endemically low, as you seem to think they are, then we should see chronic labor shortages. As such, this is not that form of market failure, quantity supplied is meeting or exceeding quantity demanded. If anything, it seems labor is in a cronic surplus, hinting that the price paid is currently too high. Economists theorize this is because wages are sticky in only one direction: firms are adverse to cutting wages for fear of hurting worker moral and yet perfectly willing to raise wages to fill needed positions.

Eitherway, the objection here is that the market equilibrium price is too low for comfort. We know this anecdotally, the supply of labor is not perfectly inelastic, the demand for labor is not perfectly inelastic, there is no shortage of labor, so the price is demonstrably not too low.

Therefore, I propose, that the minimum wage is close to but already above the equilibrium market price (young black men already suffer from 20% unemployment). Raising it even higher will only exacerbate the problem.

"Minimum wage is higher than market price. Companies employ less people than the would if it was market price. Sucks, but it's generally not that bad"
Not that bad? I suspect here is where we really disagree. Someone who is already unskilled and poor with few options getting thrown out of work is VERY bad. I knew someone who couldn't get a job, any job, for an extended time; it is not pretty, thankfully they had savings until they got a job at WalMart for $8 an hour. I could not imagine the misery of being unable to get a job with no savings and a family, it would be hell on Earth, yet you sit there and say "it's generally not that bad."

Too high a minimum wage is a disaster for some people. Even if you could be assured you are picking the right price merely the chance that you are going to needlessly destroy people's lives is worthy of inaction. Conversely, wages being too low is merely an inconvenience, they could be earning more but aren't, maybe it will balance out by making it easier to change jobs due to the shortage of labor. Not to mention there is room to maneuver in the event of a recession swelling the ranks of people seeking temp jobs as low skilled labor.

[Edited on July 21, 2006 at 8:34 AM. Reason : sp]

7/21/2006 8:21:13 AM

Quote :

"considering it's pretty clear he doesn't know what he's talking about..."

And somehow I've yet to hear someone attempt to argue that market power doesn't exist.

Quote :

""take an economic course." major in it instead, then come back and talk to us."

Majoring in it is a waste. Any business course contains subject matter that is painfully easy. Major in something that you need to take classes to learn, and learn business on your own.

Quote :

"Nowhere will any econ professor tell you that price floors are helpful. They are simply not."

It depends on the market. Price floors account for market failures of imperfect competition due to monopsony. Let's look at an example. Let's say we have a mill town. There is one employer in this town. Being a monopsonist, this employer can effectively reduce wages well below market price. Wages left alone will never return to market price, so what is to be done? Obviously something must be done if the market can't adjust for it. So what must happen is that a price floor must be applied. Will this create a surplus? Not neccesarily. The demand for labor is going to be inelastic up to the market price, thus a surplus will not be created.

The market failure we're talking about here is market power and imperfect competition. Having fewer buyers than sellers causes less competition (this doesn't mean the supply or demand changes, more that the smaller number of entities buying creates less competition) between buyers than sellers, thus the price can artificially be driven down from the market price.

Quote :

"If prices were endemically low, as you seem to think they are, then we should see chronic labor shortages."

Not neccesarily. You see the oppurtunity cost for not working is not eating for unskilled workers. Thus this only increases the market power of the buyers of labor.

Quote :

"As such, this is not that form of market failure, quantity supplied is meeting or exceeding quantity demanded."

Not true. It is artificially being pushed down from market price due to imperfect competition.

Quote :

"Therefore, I propose, that the minimum wage is close to but already above the equilibrium market price (young black men already suffer from 20% unemployment). Raising it even higher will only exacerbate the problem."

That may be, I have no idea. I'm just trying to explain to you why we have a minimium wage, as we have it for a very good reason, and you don't seem to understand it.

Quote :

"Not that bad?"

Yeah it sucks. But labor surpluses are going to happen anyways. Unemployement is a fact of life.

Quote :

"I knew someone who couldn't get a job, any job, for an extended time; it is not pretty, thankfully they had savings until they got a job at WalMart for $8 an hour. I could not imagine the misery of being unable to get a job with no savings and a family, it would be hell on Earth, yet you sit thereand say "it's generally not that bad.""

That's a really sad story. Seriously, I almost felt a tear, and the WSV was playing full blast.

Where is your concern for this man when he is working but making less than it costs to survive?
Where is your concern for him when he works all day yet still falls deeper and deeper into debt?
You're saying "We shouldn't do this because this bad situation might happen occasionaly for a very short period of time. Instead we should have this other situation where stuff just as bad happens all the time."
Drastically undervalued labor is just as bad as them not having a job at all. You might be giving them breadcrumbs, but that's not enough for him to feed his family with.

Quote :

"Too high a minimum wage is a disaster for some people."

I agree, but it's not going to happen much, and when it does it will only be for a short time. It's much better than always having unskilled labor drastically undervalued.

Quote :

"Conversely, wages being too low is merely an inconvenience, they could be earning more but aren't, maybe it will balance out by making it easier to change jobs due to the shortage of labor."

Not nearly. Wages being lower than living costs causes debt. It also causes our government to pay some of the difference in welfare. I certainly don't think I should be paying to support the people whos employers won't pay them enough.
Additionally, the lower price on unskilled labor will not cause a shortage in the same that a higher price does not cause a surplus (which I've explained earlier). The market is not elastic.

7/21/2006 2:02:15 PM

Quote :

"I was valedictorian in Economics (B.S.) at NC State for 2006. Nowhere will any econ professor tell you that price floors are helpful. They are simply not. It is correcting for a market failure that isn't there. Thus, it is inducing a market failure. When the government comes in to fix the "leaky boat that is capitalism," they should do it in places where an actual market failure (like externalities, free-rider, etc.) exists and not where they think one exists. You may think that the "unequitable distribution of income" is a market failure, and for all that capitalism is, it surely isn't a hippie's ideal for distrubution methods. But that doesn't make it a market failure, its simply the market calling a spade a spade. Some people are only worth $5 an hour."

Go to Britain or Italy. A Post-Keynesian economics professor would happily refute that.

7/21/2006 2:27:13 PM

Quote :

"Kris: Majoring in it is a waste. Any business course contains subject matter that is painfully easy. Major in something that you need to take classes to learn, and learn business on your own."

ah, this here pretty well illuminates your economic beliefs...

7/21/2006 3:10:42 PM

And your lack of contrubution to this discussion is even more telling.

To me economics is like political science. Anybody can do it, and it offers no practical use.

You could always try to provide an arguement if you like, or you can just keep attempting to argue agianst my creditbility instead.

[Edited on July 21, 2006 at 3:41 PM. Reason : ]

7/21/2006 3:40:13 PM

Quote :

"It depends on the market. Price floors account for market failures of imperfect competition due to monopsony. Let's look at an example. Let's say we have a mill town. There is one employer in this town. Being a monopsonist, this employer can effectively reduce wages well below market price. Wages left alone will never return to market price, so what is to be done? Obviously something must be done if the market can't adjust for it. So what must happen is that a price floor must be applied. Will this create a surplus? Not neccesarily. The demand for labor is going to be inelastic up to the market price, thus a surplus will not be created."

HAHAHAHAHAHAHAHAHAHAHAHAHA



___

And while you're at it, why not just make the mill hire up all the unused labor in the town too. There must have been some market failure for them not to be using all those poor, innocent people as laborers in their selfish quest for profit.

You are either a communist masquerading as economically educated or you just have a really poor understanding of what constitutes a market failure.
Those poor, imobile people! You see, you're totally overlooking the free movement of people in the economy. They simply leave the mill town if they aren't paid what they're worth you stupid fuck!

[Edited on July 21, 2006 at 4:06 PM. Reason : damn]

7/21/2006 4:02:29 PM

Your attack on economics as being something simply to be learned on your own is a lot like me building a lego bridge and then deciding that a degree in civil engineering is worthless.

7/21/2006 4:03:31 PM

Quote :

"Those poor, imobile people! You see, you're totally overlooking the free movement of people in the economy. They simply leave the mill town if they aren't paid what they're worth you stupid fuck!"

Unfortunately that may not be a possibility. A car and gas are expensive.

Quote :

"And while you're at it, why not just make the mill hire up all the unused labor in the town too. There must have been some market failure for them not to be using all those poor, innocent people as laborers in their selfish quest for profit."

I'm not talking about anything other than simply making capitalism work. Labor should meet the market price, if it cannot then the government must step in to enforce the market price. Same with externalities or any other market failure.

Quote :

"You are either a communist masquerading as economically educated or you just have a really poor understanding of what constitutes a market failure."

Really?
http://en.wikipedia.org/wiki/Market_failure

I'm having trouble believe you actually graduated in economics without understanding imperfect competition and market power.

[Edited on July 21, 2006 at 4:17 PM. Reason : ]

7/21/2006 4:15:39 PM

Quote :

"Labor should meet the market price, if it cannot then the government must step in to enforce the market price."

Ok, here's something you're wrong on, although its more likely that you just misstated your position.

The labor is meeting the market price even in your hair-brained examples. What you mean is "labor should meet the market price that would prevail in a perfectly competitive market"

Inequitable distribtution on income is not, in and of itself, a market failure. It is a perceived market failure, and governments have been known to try to get involved. But that doesn't make it a market failure.

Also, in your situation, why don't the people bargain collectively for better wages? I mean, it seems that you only look at it as if the power is in the firm's hands. The people of the town that need those jobs aren't any more dependent on the mill than the mill is on the people of the town. It is much more expensive to move a factory than a poor family. Hands down.

Your problem is that you perceive firms as hugely profitable enterprises, when in actuality, most firms only make positive accounting profits, not economic profits. What that means is that when you raise the cost of production--labor, in this case--they fall to negative economic profits, and even though to the untrained eye it may look like profits, the plant will eventually close down.

Also, kudos on using wikipedia as a reliable source for the definition of an economic term.

But even if I use that as a source...

Quote :

"Others, such as social democrats and "New Deal liberals", view market failures as a very common problem of any unregulated market system, and therefore argue for extensive state intervention in the economy, in order to ensure both efficiency and social justice (usually interpreted in terms of limiting inequalities in wealth and income"

Efficiency AND social justice. As I began, you are just think it is a market failure because you dislike the outcome.

And even if there were many instances of this monopsony, you know as well as I that an economy-wide minimum wage cannot address the issue. It is an industry specific demand and supply situation. A federal minimum wage will simply price many firms out of business and put more people on the payroll of the government cheese.

Some of you liberals made the argument earlier that we already have to subsidize these people...well a small subsidy is much better than the whole 9. Besides, less people are actually poor than you think. I live below the level of poverty in this country. In fact, because I just started my own business, I actually qualify for welfare right now. I don't take it, because I don't feel I need or deserve it. But the point is, when you read about all the poor in this country, I'm counted in there. And I'm not starving to death like you think poor people are.

7/21/2006 4:35:07 PM

Quote :

"Drastically undervalued labor is just as bad as them not having a job at all. You might be giving them breadcrumbs, but that's not enough for him to feed his family with."

Are you seriously saying it is better to have them starve to death quickly than go hungry occasionally?

I'd say the opposite: better to have some families have trouble making ends meet than to have some die.

Quote :

"I agree, but it's not going to happen much, and when it does it will only be for a short time. It's much better than always having unskilled labor drastically undervalued."

Where do you get the idea that it will be "for a short time"? If there are plenty of high-school students available to work for $6.15 why would anyone hire a non-English speaker? At a minimum wage of $6.15 they will NEVER find employment, they will end up homeless on the street with their family. You keep saying "The market is not elastic" which is utter bullshit. At a low enough wage high-school students with middle-class parents quit working, freeing up jobs for non-English speakers. Lower wage, fewer workers, elasticity! Or do you expect us to believe a high-school student with middle-class parents will work regardless of the wage? This is even before we mention the elasticity of employers (which I have covered repeatedly).

You must remember your burden of proof on this issue:
#1 You must demonstrate that labor supply and demand are both perfectly inelastic
#2 Failing that, you must demonstrate that having the poorest of the poor end up on the street is preferable to the better-off of the poor being unable to afford a plasma TV
#3 The problem of the working poor could not be corrected any other way without these side effects

Failing to prove all three of these renders a market floor on wages immoral. Unlike you, I don't mind paying for the EITC. As far as government expenditures go we spend more on farm supports (I think). It gives money to those that need it most without at the same time putting families at risk of homelessness (starvation wouldn't happen due to charity organizations).

[Edited on July 21, 2006 at 4:43 PM. Reason : .,.]

7/21/2006 4:39:50 PM

http://en.wikipedia.org/wiki/Monopsony

Go on and check this out. Especially

Quote :

"This view has however been variously questioned by the more recent literature devoted to the actual measurement of monopsony power in observed markets. On the one hand, econometric exercises on the available data have apparently ruled out significant labour monopsony for the typical West Virginia "company towns" of the early twentieth century: see Boal (1995). On the other hand, many observations appear to suggest significant monopsony power in various contemporary labour markets, from baseball players to nurses, college professors and many others. There have also been attempts to measure possible monopsony power in some non-labour markets as well. "

So the monopsony occurs not in those poor little towns, with minimum wage employees.

But instead on some of the most highly compensated employees of all. If you're concerned with that market failure, you ought to argue for higher wages for nurses and baseball players.

Also, the market failure referred to in monopsony is not the wage paid, but the amount hired...

Quote :

"For most practical purposes, what matters is monopsony power as such, whether it is exercised by one or more subjects. In standard microeconomics, where monopsonists or oligopsonists are assumed to be profit-maximizing firms, monopsony power leads to a market failure, due to a restriction of the quantity purchased relative to the (Pareto-) optimal competitive outcome."

7/21/2006 4:41:59 PM

Quote :

"Inequitable distribution on income is not, in and of itself, a market failure."

I've never said it was. In fact, I never even mentioned it. I am talking about buyer market power in the unskilled labor market. Don't try to use a strawman.

Quote :

"why don't the people bargain collectively for better wages?"

Because they are competing against one another.

I honestly find that question almost funny. It's like asking "why don't companies bargain collectively for higher prices?"

It could happen, but you're going to have scabs quickly. Surely you know the game tree of the prisoner's dilemma. People will act in their own immediate self interest rather than their collective best interest. It's a concept as fundamental as scarcity.

Quote :

"The people of the town that need those jobs aren't any more dependent on the mill than the mill is on the people of the town."

But they compete against one another. You've got many sellers and few buyer. This is what market power is. How can you even claim to have graduated with a degree in economics without understanding a concept as simple as this? Either you're lying, or you're making the school of business look bad.

Quote :

"Your problem is that you perceive firms as hugely profitable enterprises, when in actuality, most firms only make positive accounting profits, not economic profits. What that means is that when you raise the cost of production--labor, in this case--they fall to negative economic profits, and even though to the untrained eye it may look like profits, the plant will eventually close down."

Yeah, large corporations have it so tough. They're just struggling to make ends meat. Oh and congrats on yet another strawman.

Quote :

"Also, kudos on using wikipedia as a reliable source for the definition of an economic term."

It is a fairly reliable source. But that's simply ad hominem.

Quote :

"As I began, you are just think it is a market failure because you dislike the outcome."

I don't care about the outcome. Please actually address my arguement!

Quote :

" It is an industry specific demand and supply situation."

I'd say it's a fairly global situation that applies to most any unskilled labor market almost everywhere.

7/21/2006 5:03:02 PM

Quote :

"Are you seriously saying it is better to have them starve to death quickly than go hungry occasionally?"

No. I'm saying my situation would be better than yours. My situation would only be bad IF it was improperly implemented. Your situation would suck almost all the time.

Quote :

"Where do you get the idea that it will be "for a short time"?"

It's a flat amount. Inflation would take care of it even in the worst case. Even still we are talking about IF it were improperly implemented to begin with.

Quote :

"You must demonstrate that labor supply and demand are both perfectly inelastic"

When did I say they were perfectly inelastic?

Quote :

"you must demonstrate that having the poorest of the poor end up on the street is preferable to the better-off of the poor being unable to afford a plasma TV"

What the hell are you talking about?

Quote :

"The problem of the working poor could not be corrected any other way without these side effects"

Why is that on me? You're the one stating that we should get rid of minimium wages.

Quote :

"Failing to prove all three of these renders a market floor on wages immoral."

I don't care in the least if it is immoral.

7/21/2006 5:11:53 PM

Quote :

"So the monopsony occurs not in those poor little towns, with minimum wage employees."

I'm not saying it does or it doesn't. I'm creating a hypothetical situation and examining it economically.

Quote :

"But instead on some of the most highly compensated employees of all. If you're concerned with that market failure, you ought to argue for higher wages for nurses and baseball players. Also, the market failure referred to in monopsony is not the wage paid, but the amount hired..."

All this is besides the point that you didn't know what the hell market power was to begin with, yet you called ME and idiot.

7/21/2006 5:15:05 PM

Quote :

"I'm saying my situation would be better than yours. My situation would only be bad IF it was improperly implemented."

And I'm saying your situation will either not be "properly implemented" or it will have no effect whatsoever. Either way, your wage floor will either cause harm or it will do nothing, even assuming we cannot tell before hand which it will be it should still not be attempted.

Quote :

"When did I say they were perfectly inelastic?"

Quote :

"the lower price on unskilled labor will not cause a shortage in the same that a higher price does not cause a surplus (which I've explained earlier). The market is not elastic."

[Edited on July 21, 2006 at 5:34 PM. Reason : quotes]

7/21/2006 5:32:45 PM

Quote :

"Kris: You could always try to provide an arguement if you like, or you can just keep attempting to argue agianst my creditbility instead."

you've been a member of this board for 4.5 years, and in that time have been reamed over and over again not just by me, but by dozens of other TWWers with vastly more knowledge and competence than you.

after the first year or two, it gets old beating you over the head repeatedly with that cold, hard concept called "reality"...

7/21/2006 5:41:43 PM

Quote :

"And I'm saying your situation will either not be "properly implemented" or it will have no effect whatsoever."

Having no effect is not an option. But still, I'd say any of my cases beats your single one.

Quote :

"you've been a member of this board for 4.5 years, and in that time have been reamed over and over again not just by me, but by dozens of other TWWers with vastly more knowledge and competence than you. after the first year or two, it gets old beating you over the head repeatedly with that cold, hard concept called "reality"..."

I thought we were friends

7/21/2006 6:11:23 PM

Quote :

"You must remember your burden of proof on this issue: #1 You must demonstrate that labor supply and demand are both perfectly inelastic #2 Failing that, you must demonstrate that having the poorest of the poor end up on the street is preferable to the better-off of the poor being unable to afford a plasma TV #3 The problem of the working poor could not be corrected any other way without these side effects Failing to prove all three of these renders a market floor on wages immoral. Unlike you, I don't mind paying for the EITC. As far as government expenditures go we spend more on farm supports (I think). It gives money to those that need it most without at the same time putting families at risk of homelessness (starvation wouldn't happen due to charity organizations)."

1 can be demonstrated, and it is all one needs to demonstrate, but it is a complicated argument that I'm still getting the hang of.

Raising the minimum wage to $6 or $20 doesn't affect the demand for labor. Companies would have to accomodate the same number of employees at the higher price due to economies of scale. Here, if we have the specific statistics of any individual firm, we can show that labor demand is inelastic to within a certain threshold. This is possible, through two side effects: first, most companies have employees with several different wage levels. Raising the lower end simply narrows their distribution: they have to lower the wages of higher earners to cancel it out. The second effect is inflation. Companies can only lower wages to a certain extent, and the rest of it occupies price hikes and loans.

But most of our inflation can be attributed to banks investing deposits that are also loaned.

As always, the answer is complicated. There is a range the minimum wage will operate where it doesn't affect employment or inflation. This is commonly referred to as the 'sweet spot', though really it's just the demand equilibrium of several inelastic demand curves. A $15 for minimum wage workers would definitely trigger inflation. A $6.15 minimum wage definitely wouldn't. It's a drop in the pond.

7/21/2006 6:53:05 PM

Quote :

"Having no effect is not an option. But still, I'd say any of my cases beats your single one."

Do you seriously believe that if the minimum wage was 10 cents we would have a large number of workers earning 10 cents an hour? The historical record disagrees: as the purchasing power of the minimum wage has been eaten away over the past few decades (hasn't kept up with inflation) the percentage of the population earning the minimum has fallen dramatically (even without accounting for decreased black and teenage unemployment). As such, the statistical result of a minimum wage errosion has been positive (assuming you like black people), so let it continue (like you said, if it is set too high inflation will eat it up eventually, so let it continue to do so).

Where did Kris go? Schuchula is a poor substitute.

Quote :

"A $15 for minimum wage workers would definitely trigger inflation"

I don't see how, there really is no mechanism by while a very high price floor triggers prolonged inflation. With a sufficiently high wage floor I could imagine widespread deflation to result: firm failures -> unemployment -> reduced spending -> deflation -> personal and firm bankruptcy -> bank failures -> even more deflation, etc. etc.

Quote :

"Raising the minimum wage to $6 or $20 doesn't affect the demand for labor."

This statement is without a doubt true, but I suspect you didn't realize why. A demand curve is a graph of quantity demanded at a range of prices, such as $6 and $20. Changing the price does not move this curve, the only way to move the curve is to change something else such as introducing new technology.

Quote :

"Companies would have to accommodate the same number of employees at the higher price due to economies of scale. "

We are talking about the "Minimum Wage", not the factory wage. There is very little economy of scale to be found at McDonald's. That said, I don't see how it would matter even if it was; any free enterprise system is going to have marginal firms which are on the verge of shutting down anyway, all it takes is "one last straw" to tip the scale and kill the beast.

[Edited on July 22, 2006 at 12:03 AM. Reason : .,.]

[Edited on July 22, 2006 at 12:07 AM. Reason : .,.]

7/21/2006 11:47:12 PM

Quote :

"Do you seriously believe that if the minimum wage was 10 cents we would have a large number of workers earning 10 cents an hour?"

Employers would certainly attempt to bid the price down to that level, and on a long enough time line, they would do so.

Quote :

"The historical record disagrees: as the purchasing power of the minimum wage has been eaten away over the past few decades"

Exactly why minimium wage must be increased. If the market reflected the actual cost of labor it the price of labor would follow accordingly, yet it is obvious that people continue make minimium wage.

Quote :

"the percentage of the population earning the minimum has fallen dramatically"

If you're going to bring up statistics, you'll have to provide them, I'm sure you know how well they can be misinterpreted, even more so, I'm sure you know the percentage of statistics that are made-up.

Quote :

" the only way to move the curve is to change something else such as introducing new technology."

Wrong. That's one of the ways to move the SUPPLY curve. The demand curve can change due to something as small as food giving people gas.

7/22/2006 2:09:44 AM

The data is not hard to find, Kris.


As one would expect from a well functioning marketplace for labor, due to increasing worker productivity and inflation the percentage of the workforce earning at the minimum wage has fallen over time. In other words, the degree to which the minimum wage was above the equilibrium price for labor has lessenned.

From looking at this graph you can also guess what years the minimum wage was raised (1979-1981, 1990-1991 and 1996-1997), as you would expect if people's wages were being determined by the marketplace and only running up against the price floor when the price floor was set too high.

As such, since the minimum wage is being set above the equillibrium price we can be sure it will cause greater unemployment than there otherwise would have been, potentially rendering some individuals permanently unemployable, landing them and their families on the street until inflation once again catches up.

7/22/2006 9:09:10 AM

Quote :

"The data is not hard to find, Kris."

I know, but I expect if you bring up some data, you provide it. I don't think that's too much to ask.

Quote :

"As one would expect from a well functioning marketplace for labor, due to increasing worker productivity and inflation the percentage of the workforce earning at the minimum wage has fallen over time."

That does not imply a functioning market. You've got a good bit more to prove to make that statement, namely, does it follow inflation?

Quote :

"As such, since the minimum wage is being set above the equillibrium price we can be sure it will cause greater unemployment than there otherwise would have been, potentially rendering some individuals permanently unemployable, landing them and their families on the street until inflation once again catches up."

Once agian, this statement shows a lack of understand of the concept of market power. You fail to see why the price for labor can be set well below equilbrium.

Also I'd just like to clarify, you were wrong about that statement that technology was the only way to effect the demand curve, right? We're getting a little ahead of ourselves if you actually believe that.

7/22/2006 11:58:23 AM

Quote :

"Do you seriously believe that if the minimum wage was 10 cents we would have a large number of workers earning 10 cents an hour? The historical record disagrees: as the purchasing power of the minimum wage has been eaten away over the past few decades (hasn't kept up with inflation) the percentage of the population earning the minimum has fallen dramatically (even without accounting for decreased black and teenage unemployment). As such, the statistical result of a minimum wage errosion has been positive (assuming you like black people), so let it continue (like you said, if it is set too high inflation will eat it up eventually, so let it continue to do so)."

History started before the 1950s. Before FDR enacted the federal minimum wage, getting a decent salary was a lot harder.

Quote :

"I don't see how, there really is no mechanism by while a very high price floor triggers prolonged inflation. With a sufficiently high wage floor I could imagine widespread deflation to result: firm failures -> unemployment -> reduced spending -> deflation -> personal and firm bankruptcy -> bank failures -> even more deflation, etc. etc."

Incredulity is not a counterargument. A gigantic 'all at once' wage increase the market can't sustain forces firms to increase prices or close shop. That should be obvious.

Quote :

"This statement is without a doubt true, but I suspect you didn't realize why. A demand curve is a graph of quantity demanded at a range of prices, such as $6 and $20. Changing the price does not move this curve, the only way to move the curve is to change something else such as introducing new technology."

This is outright false. Increasing the minimum wage increases the demand for a type of job. The supply of potential workers becomes larger. In some monopsony cases, firms use this extra supply to fuel growth, adding more workers, and benefitting from economies of scale (as I mentioned earlier), to partially cancel the expense of the increased wages. To be fair, this is only in certain circumstances.

some articles about the minimum wage that you can ignore

http://en.wikipedia.org/wiki/Monopsony#Minimum_wage
http://129.3.20.41/eps/mac/papers/9805/9805029.pdf
http://www.onlineopinion.com.au/view.asp?article=1389
http://www.umass.edu/peri/pdfs/PS17.pdf

Quote :

"As such, since the minimum wage is being set above the equillibrium price we can be sure it will cause greater unemployment than there otherwise would have been, potentially rendering some individuals permanently unemployable, landing them and their families on the street until inflation once again catches up."

No objective economist would claim that. Many times raising the minimum wage has resulted in better productivity, due to increased consumer spending. 'The rising tide lifts all boats,' didn't you say that once? Or were you just talking about your own wage in particular that time?

7/22/2006 1:24:07 PM

Quote :

"Many times raising the minimum wage has resulted in better productivity"

That's right. Productivity is "value produced" over "hours worked"

By forcing wages up firms will fire the least productive workers, reducing "hours worked", even though "value produced" then fell (less work was being done) it will have only driven the least productive out of work, so on average productivity will have increased, although GDP, employment, income equality, and life expectancy fell.

As for Kris: changing technology sure as hell does move the demand for labor. The computer has eliminated large swaths of middle managers from corporations and backrooms at banks and the like. The information revolution has dramatically increased the demand for computer literate employees at all pay scales. Just as the industrial revolution dramatically increased the demand for urban labor.

Quote :

"You fail to see why the price for labor can be set well below equilibrium."

I do, because you have failed to explain how that would happen in an functionally competitive market. Because the supply of labor and the demand for labor is not perfectly inelastic, by setting the price too low there will not be enough workers to fill all the available positions for all firms. The firms left unmanned will have a strong incentive to raise wages because without labor they cannot operate, and there is no mechanism by which manned firms can prevent them from doing so.

So, please, tell me the mechanism, or quote yourself telling others, because I didn't find it. And without it you must concede that the market is functionally competitive.

[Edited on July 22, 2006 at 1:54 PM. Reason : .,.]

7/22/2006 1:53:29 PM

Quote :

"By forcing wages up firms will fire the least productive workers, reducing "hours worked", even though "value produced" then fell (less work was being done) it will have only driven the least productive out of work, so on average productivity will have increased, although GDP, employment, income equality, and life expectancy fell."

Except that every time Congress has raised the national minimum wage, unemployment decreased in the following years, and GDP increased. Specific states have different minimum wages. Some range as high as 7.15, and these states show no outstanding unemployment trends.

http://129.3.20.41/eps/mac/papers/9802/9802015.pdf

A higher minimum wage attracts more-qualified workers to a position. It provides more people with more income, and the resulting increases in consumption increase the size of the economy overall. The people that get laid off, which represent a smaller proportion than those that experience higher wages, are generally teenagers in middle-class and upper brackets, while the people that gain positions and income are generally the ones that need it: 24-35 year old, single, lower class citizens.

7/22/2006 2:43:35 PM

Quote :

"changing technology sure as hell does move the demand for labor."

But is it the only thing, like you said it was? Generally technology effects the supply of product, moreso than the demand for labor. It can shift what labor is demanded, but in most cases, it doesn't have a huge impact.

Quote :

"I do, because you have failed to explain how that would happen in an functionally competitive market."

I've explained it, and it's market power. Plenty resources have been provided, and I have explained the concept several times. There are more sellers than buyers, this allows the buyers to set the price well below equilibrium.

7/22/2006 2:47:42 PM

Kris, I'm not after "the concept." I'm after reality. Now, what mechanism is there for manned firms to prevent unmanned firms from raising wages?

A made up example would suffice. Is Wal-Mart sending out mafia types to prevent an unlucky Target from raising wages? Are all the employers getting together at KFC and providing cash support for firms that are unable to operate due to the shortage of labor? Are a few large labor employers subsidizing the capital investment of smaller firms so they economize on labor to a greater extent than is warranted by prevalent wages?

Quote :

"Except that every time Congress has raised the national minimum wage, unemployment decreased in the following years, and GDP increased."

You are missing cause and effect. Most governments don't raise the minimum wage during recessions (the 1980s excepted). As such, there is a self filtering behavior here: governments tend to raise the minimum wage during periods of economic expansion, therefore any study of the effects of a minimum wage will be blinded by already increasing employment and GDP figures. Correlation does not prove causation.

When researchers do take such effects into account they do find a negative result for employment.
http://www.epionline.org/studies/sabia_05-2006.pdf

But even if they didn't, there is no logical mechanism for there not to be a negative result from an excessive minimum wage. We would need to rewrite much of economic theory if we could set price floors above market equillibrium and not cause even a small surplus.

7/22/2006 4:33:50 PM

Wait, something isn't right here:

Quote :

"Increasing the minimum wage increases the demand for a type of job. The supply of potential workers becomes larger."

and

Quote :

"There are more sellers than buyers, this allows the buyers to set the price well below equilibrium."

seem to be very much at odds with eachother. If the market failure is too many sellers (workers) and not enough buyers (companies) and increasing the number of workers is caused by upping the minimum wage, then why would you up the minimum wage to solve the failure? Won't that exasperate the problem?

7/22/2006 5:20:05 PM

The EPI report is not without criticism. Independant verifications support Card and Krueger's findings that state increases in minimum wage caused no statistically significant unemployment.
http://www.epinet.org/briefingpapers/minimumw_bp_1996.pdf

Quote :

"seem to be very much at odds with eachother. If the market failure is too many sellers (workers) and not enough buyers (companies) and increasing the number of workers is caused by upping the minimum wage, then why would you up the minimum wage to solve the failure? Won't that exasperate the problem?"

That isn't the market failure. You're patching together two different arguments from different people and claiming they supplement each other.

[Edited on July 22, 2006 at 9:54 PM. Reason : .]

7/22/2006 9:52:23 PM

That's the point. You both seem to be arguing roughly the same thing (minimum wage is good, or at least not bad) but the arguments you're using are contrary to eachother.

You seem to be making the argument that minimum wage is good because it increases the supply of workers for a given job, while Kris seems to be arguing that minimum wage is good because it solves the problem of too many workers and not enough jobs.

7/22/2006 11:02:03 PM

Quote :

"Kris seems to be arguing that minimum wage is good because it solves the problem of too many workers and not enough jobs"

You misunderstand my arguement. I'm not saying there's too many workers and not enough jobs. Look at it this way, you've got one company that is going to buy 1,000 units worth of labor. You've also got 1,000 people selling one unit of labor each. Now these people selling the labor are competing agianst 999 other people in order to set their price while the company is competing agianst no one to set their price. It's not that there's more supply that there is demand, it's simply that you've got few individual entities buying labor while you've got many more times more individual entities competing agianst one another to sell labor. This disparity of competitioncreates market power for the buyer which in turn creates an imperfectly competitive market in which the buyer can put the price below the equilibrium price. Minimium wage accounts for this market failure, as it's fairly obvious that it will exist in any labor market with large corporations.

7/23/2006 2:56:19 AM

Quote :

"while the company is competing against no one to set their price"

Kris, the ratio of sellers to buyers does not matter. A monopoly is when there is only one seller, a monopsony is when there is only one buyer. When you have a monopoly it doesn't matter what the ratio is, 1/3 or 1/3000, the market will function practically the same (in either case the prevalent price will be the same). Monopsonies probably did exist in some factory towns back in the 19th century, possibly requiring some form of regulation, but Raleigh has probably over 10,000 employers. That would be something like a ratio with employees of 1:10. Compare that to the ratio of car manufacturers to buyers which is closer to 1:5000. If the 40 or so car manufacturers selling into the N.C. market have a ratio-driven monopoly, then why are so many of them in financial difficulty?

Now, what mechanism is there for manned firms to prevent unmanned firms from raising wages?

A made up example would suffice. Is Wal-Mart sending out mafia types to prevent an unlucky Target from raising wages? Are all the employers getting together at KFC and providing cash support for firms that are unable to operate due to the shortage of labor? Are a few large labor employers subsidizing the capital investment of smaller firms so they economize on labor to a greater extent than is warranted by prevalent wages?

[Edited on July 23, 2006 at 8:57 AM. Reason : .,.]

7/23/2006 8:46:45 AM

Quote :

"Kris, the ratio of sellers to buyers does not matter."

Yes it does. A larger number of buyers or sellers creates market power. It creates imperfect competition. This is a fairly basic economic concept and market failure. I'm not making it up.

Quote :

"If the 40 or so car manufacturers selling into the N.C. market have a ratio-driven monopoly, then why are so many of them in financial difficulty?"

That's a much more complex answer because the market for cars is much different from the market for labor. It is generally accepted that the market power of buyers over sellers in the unskilled labor market creates a monosponistic situation. This is the justification for minimium wage. I'm not trying to argue this point, it's an economic truth.

7/23/2006 11:06:49 AM

Quote :

"You misunderstand my arguement. I'm not saying there's too many workers and not enough jobs. Look at it this way, you've got one company that is going to buy 1,000 units worth of labor. You've also got 1,000 people selling one unit of labor each. Now these people selling the labor are competing agianst 999 other people in order to set their price while the company is competing agianst no one to set their price. It's not that there's more supply that there is demand, it's simply that you've got few individual entities buying labor while you've got many more times more individual entities competing agianst one another to sell labor. This disparity of competitioncreates market power for the buyer which in turn creates an imperfectly competitive market in which the buyer can put the price below the equilibrium price. Minimium wage accounts for this market failure, as it's fairly obvious that it will exist in any labor market with large corporations."

Two things:

1) If there are equal jobs to equal workers then there should be no competition between the workers (assuming the company needs to fill all the jobs)

2) So rasing the minimum wage stops the bid down process but at the same time because it adds more to the worker field (hire wage, more workers willing to work) doesn't that also make it that much more likely that you will be bid down to the minimum wage?

7/23/2006 5:02:11 PM

Quote :

"It is generally accepted that the market power of buyers over sellers in the unskilled labor market creates a monosponistic situation."

By whom? I already showed you, using your own source, that unskilled labor is generally NOT monopsonic. The skilled workforce is more monopsonic.

Why can't you simply admit you want to raise the wage because you think poor people deserve more money. At least I can respect an argument like that. Masquerading it as economics, when it clearly is not, is just ridiculous.

[Edited on July 23, 2006 at 6:01 PM. Reason : typo]

7/23/2006 6:01:25 PM

Quote :

"By whom? I already showed you, using your own source, that unskilled labor is generally NOT monopsonic. The skilled workforce is more monopsonic. Why can't you simply admit you want to raise the wage because you think poor people deserve more money. At least I can respect an argument like that. Masquerading it as economics, when it clearly is not, is just ridiculous. "

That the unskilled workforce isn't very monopsonic is true. My primary argument dealt with inelasticity. Monopsony was more of a side point.

And I don't want to get too much into this, but economics is not a homogenous field. There is not 'one right way' to analyze the way people act and its aggregate effect. The neoclassical method you spent the last few years studying (presumably) can be used to defend and reject the minimum wage depending which models an economist favors. And that's not even considering competing schools that have stronger defenses for certain types of price floors.

I will continue to argue that there is historical precedent that validates a minimum wage, because ultimately the economic arguments are a complete deadlock without a real context to put them in.

7/23/2006 8:51:33 PM

Quote :

"If there are equal jobs to equal workers then there should be no competition between the workers"

You don't seem to have any understanding on how the market works do you?

Quote :

"So rasing the minimum wage stops the bid down process but at the same time because it adds more to the worker field (hire wage, more workers willing to work) doesn't that also make it that much more likely that you will be bid down to the minimum wage?"

You would only be bid down to minimium wage in the short run if you would have been below it.

Quote :

"I already showed you, using your own source, that unskilled labor is generally NOT monopsonic."

Where was this?
And wikipedia is not "my" source. It's a commonly used open internet encyclopedia. If you have never heard of it, you must be living under a rock.

Quote :

"Why can't you simply admit you want to raise the wage because you think poor people deserve more money."

I don't care what they "deserve". I know they need to get equilbrium price for the economy to function at it's best. This is economics, I'm sorry if you don't like it. Maybe you should admit that you don't think businesses should pay poor people equilibrium price because you're an asshole.

7/23/2006 9:57:55 PM

Quote :

"Yes it does. A larger number of buyers or sellers creates market power. It creates imperfect competition. This is a fairly basic economic concept and market failure. I'm not making it up."

You have presented NO evidence that the market is failing in this way or any other. You have freely admitted that both the demand and supply of labor are not perfectly inellastic and I have demonstrated that there is no labor shortage. Without perfect inellasticity any "market power" allowing actors to bid the wage artificially low MUST result in a labor shortage, but all the evidence points to a labor surplus, which means the wages must logically be considered too high.

Not to mention you have failed to explain the mechanism by which the market is failing. Just because we have 10,000 buyers and 100,000 workers does not demonstrate failure, you must explain the mechanism by which 10,000 independent entities start acting like a monopoly. What mechanism is there for manned firms to prevent unmanned firms from raising wages?

A made up example would suffice. Is Wal-Mart sending out mafia types to prevent an unlucky Target from raising wages? Are all the employers getting together at KFC and providing cash support for firms that are unable to operate due to the shortage of labor? Are a few large labor employers subsidizing the capital investment of smaller firms so they economize on labor to a greater extent than is warranted by prevalent wages?

7/24/2006 8:58:09 AM

Quote :

"You have presented NO evidence that the market is failing in this way or any other."

I don't see any reason for me to prove a basic economic concept. Market power exists, so do externalities. I don't have to prove they exist, just check an econ book.

Quote :

"You have freely admitted that both the demand and supply of labor are not perfectly inellastic"

I have not.

Quote :

"Without perfect inellasticity any "market power" allowing actors to bid the wage artificially low MUST result in a labor shortage"

I've already explained this. Due to the oppurtunity costs for unskilled workers of not working, the labor market is fairly inelastic. Thus they are able to bid wages down.

Quote :

"Not to mention you have failed to explain the mechanism by which the market is failing."

I've explained it several times in this thread. Imperfect competition.

Quote :

"Just because we have 10,000 buyers and 100,000 workers does not demonstrate failure, you must explain the mechanism by which 10,000 independent entities start acting like a monopoly."

I've explained it several times. There is less competition between these firms than there are between these workers, thus the firms are able to bid the price down lower.

7/24/2006 9:33:12 AM

Quote :

"I don't see any reason for me to prove a basic economic concept. Market power exists, so do externalities."

I didn't ask you to prove they exist ever, which would be simple, but to demonstrate that they are taking place in this particular market, particularly since all the evidence points the other way: there is a labor surplus which means the current price is too high.

Quote :

"Due to the opportunity costs for unskilled workers of not working, the labor market is fairly inelastic."

Again, the presence of middle-class high-school students in the workforce disproves this assertion. They do not "need" to work, they work because they feel a better stereo system in their car outweighs the opportunity cost of spending 20+ hours a week stocking shelves.

And I'll say it again, even if there were no middle-class teenagers in the workforce it only requires one side to be semi-elastic. Even if the supply of labor is perfectly inelastic the demand for labor is not perfectly inelastic thanks to imports, outsourcing, automation, and substitution. It only requires one of the curves to slope such that lowering wages produces a shortage and raising wages produces a surplus, thus securing a market equilibrium.

Quote :

"There is less competition between these firms than there are between these workers, thus the firms are able to bid the price down lower."

Stop making assertions without any evidence. Fuck, if you thought about it in the least you would quickly see the obvious flaw: most workers already have jobs, they aren't looking, thus they are not competing. If the wage was too low the resultant labor shortage would produce a market with many firms desperate for labor and few workers seeking employment. Which would necessitate a mechanism for manned firms to prevent unmanned firms from raising wages, which does not appear to exist in a market as large and diverse as the city of Raleigh.

You have presented NO evidence, NO data, nothing to suggest a monopsony market failure is occurring beyond the fact that such failures have probably existed in other markets. Just because a market can be monopsonistic does not mean that it is, the second assertions requires evidence which would be obvious and forthcoming if in fact the labor market was monopsonistic.

7/24/2006 11:20:53 AM

Quote :

"Is Wal-Mart sending out mafia types to prevent an unlucky Target from raising wages?"

Target isn't going to pay a higher wage if they can get labor for a lower price.

Quote :

"Are all the employers getting together at KFC and providing cash support for firms that are unable to operate due to the shortage of labor?"

A shortage would indicate that supply is lower than demand, once agian, this isn't the case. This concept doesn't have as much to do with supply and demand as it does competition between buyers versus competition between sellers.

Quote :

"I didn't ask you to prove they exist ever, which would be simple, but to demonstrate that they are taking place in this particular market"

I'm not cuncerned with this particular market, I'm justifying the existence of minimium wage, who's purpose you don't seem to understand.

Quote :

"And I'll say it again, even if there were no middle-class teenagers in the workforce it only requires one side to be semi-elastic."

There is no such thing as "semi-elastic". A market is elastic if E>1, inelastic if E<1 or unitarily elastic if E=1.

Quote :

"Stop making assertions without any evidence."

This is a fundemental concept. I don't need evidence.

Quote :

"most workers already have jobs, they aren't looking, thus they are not competing"

That is idiotic. Just because I may be employed does not mean I am not competing for a job. If you were working, and you found a higher paying position, are you telling me you wouldn't switch? Competition still occurs.

Quote :

"If the wage was too low the resultant labor shortage would produce a market with many firms desperate for labor and few workers seeking employment."

That's true in a perfectly competitive market, obviously this is niether the case now, nor normally. You don't seem to understand that supply can slope downward due to market power of buyers. When you have more buyers than sellers or vice versa, you deal with an imperfectly competitive market in which either supply or demand is artificially sloped rather than the normal 45 degree line in a perfectly competitive market.

Quote :

"Just because a market can be monopsonistic does not mean that it is"

I've explained why unskilled labor is always (impractical cases excluded) going to have monopsonistic market power. There are always going to be more selling entities than buying ones, thus there will always be imperfect competition, and market power for the buyer.

7/24/2006 1:27:56 PM

Quote :

"in which either supply or demand is artificially sloped rather than the normal 45 degree line in a perfectly competitive market."

Absurd, no curve is ever sloping at a perfect 45 degree angle, that is not required. The curves can be slopping at 1 degree, it doesn't matter, there is still an equillibrium price/quantity, and by setting prices too high you are still causing unemployment, reduced production, and poverty (sacrificing the lives of the few for the comfort of the many). That the slopes might be as small as 1 degree merely means the suffering would be small, it doesn't eliminate it, and in an economy with 115 million workers this "small suffering" would still be tens of thousands of people.

7/24/2006 1:43:03 PM

Quote :

"Absurd, no curve is ever sloping at a perfect 45 degree angle, that is not required."

I never said that the 45 degree angle was sloped. I said the line was sloped rather than at a 45 degree angle.

Quote :

" it doesn't matter, there is still an equillibrium price/quantity"

But it isn't what the price should be, it is only that price due to market failure. Thus to achieve the price that it should be, we need a price floor, thus why we have minimium wage. I think you're only like one or two steps away from getting it now!

Quote :

"nd by setting prices too high you are still causing unemployment, reduced production, and poverty (sacrificing the lives of the few for the comfort of the many)"

We'd have similar problems if the price was set artificially too low due to market failure. At least this method fixes or reduces the impact of the problem some of the time, instead of failure all of the time. One of the best advances in this was in recent history by a president who's known for economic success, Bill Clinton. He set it up so states could increase their own minimium wages as they see fit above the federal price floor.

Quote :

"That the slopes might be as small as 1 degree merely means the suffering would be small, it doesn't eliminate it, and in an economy with 115 million workers this "small suffering" would still be tens of thousands of people"

So let's see, you accuse me of having no data, which I admit I have none, nor do I need any. However I certainly didn't do what you're doing right now and simply pulling the numbers right out of my rectum. Where did this one percent come from? What does it refer to? Where did this 115 million come from? What the hell are you talking about?

[Edited on July 24, 2006 at 1:55 PM. Reason : ]

7/24/2006 1:54:11 PM

Quote :

"So let's see, you accuse me of having no data, which I admit I have none, nor do I need any. However I certainly didn't do what you're doing right now and simply pulling the numbers right out of my rectum. Where did this one percent come from? What does it refer to? Where did this 115 million come from? What the hell are you talking about?"

You said the market was not very elastic, my point was that it doesn't matter how inelastic it is, the demand/supply curves could have a slope as small as 1 degree, it doesn't matter, the market will still produce an equillibrium price where quantity offered equals quantity demanded. For some reason, you keep calling this equillibrium price a "Market Failure" which is absurd. The "Market Failure" is that the supply of labor is exceeding the demand for labor, which is because of the government imposed Minimum Wage.

If you want to fix the Market Failure you need to abolish the minimum wage. You freely admit that the labor supplied exceeds the labor demanded, yet you fail to draw the obvious conclusion: The price being paid is too high! Lower wages so employers will economize less and high-school students will quit working, restoring market equillibrium and getting the homeless off the streets.

If, instead, you honestly want to fix the humanitarian issue of market wages being below that required to feed a family then address that directly with government subsidies, don't sacrifice the lives of the few for the comfort of others.

And if you ever actually bring me a real-world example of a market monopsony then we can talk about the potential need for price floors.

[Edited on July 24, 2006 at 2:26 PM. Reason : .,.]

7/24/2006 2:23:59 PM

Quote :

"You said the market was not very elastic, my point was that it doesn't matter how inelastic it is, the demand/supply curves could have a slope as small as 1 degree, it doesn't matter, the market will still produce an equillibrium price where quantity offered equals quantity demanded."

You're right, and I never disagreed with that. Even a one firm monopoly will produce demand and supply curves that will meet. This does not mean, however, that the market is properly functioning.

Quote :

"If you want to fix the Market Failure you need to abolish the minimum wage."

No, that will only create the market failure.

Quote :

"You freely admit that the labor supplied exceeds the labor demanded"

I've never agreed, I've said several times that it is, for the most part, irrelevant to what we are discussing.

Quote :

"If, instead, you honestly want to fix the humanitarian issue of market wages being below that required to feed a family"

I don't care about that stuff. I care about the market working effeciently.

Quote :

"And if you ever actually bring me a real-world example of a market monopsony"

I've already explained several times why this is inherent in unskilled labor. You just stick your fingers in your ears and your head in the sand.

7/24/2006 5:24:07 PM