The General Economics Thread

Effectively, the taxes that support social programs now would need to be donated voluntarily by the population as a whole and channeled through vast networks of private charities with God knows what kinds of corruption and inefficiency rather than the way we do it now.

Private charities tend to be more efficient than the government at service provision in some sectors. The health care environment would have to drastically change for charities to be able to do any real heavy lifting, however, as the bulk of charitable healthcare in this country is usually for targeted things (specific diseases that might target the less well-off, or treatments for preventable diseases to prevent their spread), not for generalized care.

The libertarian counterargument i've heard is that if the government weren't levying taxes for those 2 trillion dollars, enough of that money would indeed voluntarily go to charity to see that the truly unfortunate would get what they need (with the unspoken caveat that a lot of the people who get welfare but shouldn't would just have to get a job in the minarchist utopia).

DISH Network and DirecTV in talks for a possible merger.

MONOPOLIES ARE FUN AM I RIGHT

they've talked about it before. That one would be harder to slip past the antitrust folks, though, because the nature of satellite means these guys do compete directly on a per-customer basis. Plus Dish is usually the downmarket one, so they could easily demonstrate loss of consumer choice.

'Big six' face competition inquiry

The CMA also has the power to break the firms up.

edited 27th Mar '14 12:26:24 AM by Greenmantle

Except, as I pointed out earlier, we've tried that. It's called most of human history before the 1940s, and anyone who believes that the poor could "gumption" their way out of that situation in the era of debtor's prisons, poorhouses, and the like, is kidding themselves.

Without specific and deliberate remedies, wealth and privilege always flow to the top.

Why is that? Is it biological, or is it connected to how humans relate to each other?

Power begets power, wealth begets wealth. It's a self-reinforcing cycle. I'm sure there's lots of research into the precise mechanisms for it — economic and political monopoly power, cronyism, etc. — but empirically, it's blatantly obvious.

edited 27th Mar '14 7:33:09 AM by Fighteer

It's a consequence of the fact that you need money to make more money, and the more money you have, the more opportunities you can get to acquire more of it. It's an economic effect.

edited 27th Mar '14 7:33:19 AM by DeMarquis

It's pretty simple actually. When someone has a privilege or wealth, they don't want to let go of it. That, combined with the natural urge to one-up your peers, makes it so that the people at the top are likely to try and amass more wealth and privilege because it's a natural human impulse. When money gets that high, it doesn't come back down unless a third party forces it.

edited 27th Mar '14 7:34:06 AM by Zendervai

I'll take that as Biological then.

...and related to this is this article in The Economist: Names and wages: Being Brad ain't bad — it's based on this paper.

edited 27th Mar '14 8:04:29 AM by Greenmantle

The causality there is fairly weak, and is admitted as such in the article. There is undoubtedly prejudice against the "unusual" in the job market, but to what degree it constitutes a serious issue has not been established.

For example, right now, one of the largest factors in getting a job (or even an interview) is the length of time you've been unemployed prior to your application. Long-term unemployed individuals face tremendous hurdles in getting hired.

Perhaps you wernt being serious, but the whole point was that it had nothing at all to do with biology...

An argument I am hearing a lot against raising the minimum wage, is that it creates less incentive to work higher-paying jobs. I agree it shouldn't be raised too much, though it does need to go up to compensate for higher cost of living, inflation, etc.

That says to me that those "higher paying jobs" don't pay enough if they have to worry about competing with minimum wage workers. I'm also confused by the idea that no one will ever take more prestigious or higher paying jobs. Maybe some people won't but that just frees those jobs up for other people. Unemployment among college educated professionals is kind of a problem right now.

Bonsai Forest, you really need to learn to distinguish between "what people say" and actual facts.

A higher minimum wage in no way reduces the incentive to work; it increases it, by making work confer less of a marginal tax penalty over receiving welfare.

A person making a higher wage will continue to make that wage; in fact, upwards price pressure from increased minimum wages should cause a trickle-up effect, because all of a sudden that $10/hr office job doesn't look so attractive next to a $8/hr fast food job. The office has to offer higher wages in competition.

Even if all wages remain identical save for the ones that are below the new minimum wage, you still haven't changed the number of jobs or the number of people seeking them.

As Kostya noted, if someone ditches a higher paying job because they feel they'd be happier working at McDonald's or Wal-Mart, that merely leaves the job open for someone who does want it.

edited 27th Mar '14 11:58:27 AM by Fighteer

in fact, upwards price pressure from increased minimum wages should cause a trickle-up effect, because all of a sudden that $10/hr office job doesn't look so attractive next to a $8/hr fast food job. The office has to offer higher wages in competition.

Yes, I'd heard that argument too. What guards against inflation then?

I can see the positive though. With so many filthy rich CEOs making many hundreds of times what their average employee makes, wages being driven up could reduce income inequality.

But what about smaller businesses? Even Warren Buffett said that he believes a "small" number of jobs will disappear as a result.

Yes, a small number of jobs will disappear, but overall, wages should increase. Right now our economic malaise is overwhelmingly the result of wealth hoarding by the top one percent. A higher minimum wage compels them to shift some of their corporate profits to wages.

There may be a minor inflationary effect but studies in countries and localities where the minimum wage has been increased show that the effect is minimal. Doubling the wages of McDonald's workers might cause their prices to increase by 10-15%.

Also, we want inflation to happen right now. The consequence of secular stagnation is deflationary pressure, which holds down both prices and wages and encourages people to hold cash rather than spend it. We need money to be spent, which means we need some reason for people to want to spend it. Inflation provides that reason.

edited 27th Mar '14 11:55:19 AM by Fighteer

There will be a temporary loss of jobs, but more people having more money to spend, and needing to spend it to live means that demand rises which means that the number of jobs increases after the initial loss.

Competition still keeps the prices down- if Mc D's increased prices too much, they would start competing with restaurants where you get an actual waitress- that wouldnt work out well for Mc D's.

Or actual food.

Could you point me to these studies on countries that have raised minimum wage? I'd like to know more.

They've been done. I'll have to look them up, but here's a NY Times article on the subject that I dug up just now.

Ah, here we go. Australia is a country with a $14.50 minimum wage. France has a $12 minimum wage, and McDonald's is more profitable there despite labor making up a greater proportion of its costs than in the U.S.

Automation is one reason, but really, who envies people their french fry flipping occupations?

edited 27th Mar '14 12:15:29 PM by Fighteer

So, seriously folks, what do you think about Thomas Piketty's work here? Because I really think it's worth talking about.

We've been talking about it for a while.

Well, I'd personally rather not see minimum wage raised too much. There would be price increases at Wal-Mart, McDonalds and similar enterprises to go with it and my welfare check wouldn't increase to match it

All kidding aside, though, McDuck's really can't afford to raise their prices too much because the main power of their business model is in selling cheap 'n tasty refried crap. But as noted, paying your workers a living wage is, counterintuitively, a good investment because minimum wage is seen as something to get off of as soon as possible, and it certainly doesn't encourage company loyalty from employees.

Hell, Wal-Mart is desperately short of employees right now, in this job market, which is causing delays and lost sales as people don't want to deal with the hassle of fifty people checking out at two registers.