patrick.net

Call it Crazy says

What causes inflation?

Higher wages not based on productivity will definitely add to inflation...."Wage push inflation"

Call it Crazy says

Wow... Very Good!! You get an A+

Yeeaayyyy. I remembered something from Econ 101.

Call it Crazy says

Strategist says

Call it Crazy says

Wow... Very Good!! You get an A+

Yeeaayyyy. I remembered something from Econ 101.

That's exactly what I thought!!

Any chance of teaching that to the brain dead ones here?

Not a chance.

It is in effect what the Davis Bacon act did to contractors that were bringing cheaper labor up from the south to do construction jobs in the north east.

This law said that you had to pay all workers prevailing wages. This meant that only the most skilled workers would be used in order for the contractor to remain competitive.

This stopped all entry level workers from entering the field. Of course automation was a way to get around this problem as well.

Strategist says

Call it Crazy says

What causes inflation?

Higher wages not based on productivity will definitely add to inflation...."Wage push inflation"

Why would that be a bad thing? My guess would be that the effect tapers the higher up the scale you go. Since we are fighting deflation and income/wealth inequality, the effect would be to lower the value of the wealthiest folks while increasing the spending power of the bottom half.

curious2 says

And yet, you opine on economics and specifically the price of labor. You divide the world falsely into "the rich" and "the poor" without even knowing where you fall on that scale

Someone hasn't had their tea. Yawn/yap/yawn.

I know what the minimum wage should be! HIGHER! When you adjust for inflation, Sam Walton paid his employees more than they are paid today. If workers are desperate enough, they will work for a dollar. The business class love their desperation, but that doesn't make for a health economy or a contented working class.

curious2 says

In a rural area with only one major employer, a minimum wage protects workers who would otherwise lack bargaining power. In an urban area with many different employers, competition for jobs and workers tends to provide price discovery indicating the value of labor, which would otherwise be replaced by automation.

You have introduced two very different ideas here: bargaining power, and price discovery. The first is appropriate but it exists in both rural and urban settings. Business has the leverage and will continue to do so for the foreseeable future. It is obvious when you look at corporate profits. And it is why legislation is needed to increase the value of labor w.r.t. the value of capital.

I don't see the issue with price discovery.

Strategist says

Higher wages not based on productivity will definitely add to inflation...."Wage push inflation"

Not necessarily. Price is determined by supply and demand and is INDEPENDENT of cost. That should be obvious looking at corporate profits.

Strategist says

Call it Crazy says

Wow... Very Good!! You get an A+

Yeeaayyyy. I remembered something from Econ 101.

lol. No, you both get Fs.

FFS, that is one of the most basic lessons of ECON 101.

I'll agree that it should be higher, but I'm not sure how much higher. Maybe $10/hour would be reasonable. Anyone who works long term for minimum wage is either mentally retarded or a serious slacker. $10/hour would strike a balance, encourage teens to get jobs, and perhaps lift all boats.

Call it Crazy says

tatupu70 says

Price is determined by supply and demand and is INDEPENDENT of cost.

Sure, right up to the point that you don't turn a profit and close the doors to your business.

tatupu70 says

that is one of the most basic lessons of ECON 101.

Which you know NOTHING about, as all your past posts have shown us!

If your business model is so flimsy that you can't afford to pay your workers a reasonable wage, maybe you should close your doors and leave business to someone with more skill at it.

You mutts are retarded...

Quigley says

If your business model is so flimsy that you can't afford to pay your workers a reasonable wage, maybe you should close your doors and leave business to someone with more skill at it.

Well, an alternative would be to take a dollar or two per hour from all of your employees. Instant profit! Need more? Take 3 or 4!

Employees are customers too.

Wage push inflation has little to do with increased prices in the manner described.

In a competitive market, firms produce goods until marginal cost = marginal revenue. An increase in marginal costs through increased wages leads to an upward shift in the MC curve, in short, the firm produces less. Since the market supply curve is simply a combination of cost curves for all market participants, this leads to a shift upward in the market supply curve. In short, the price iincreases because the market supply is less provided demand remains constant. HOWEVER,

The rub lies within how increasing market wages effects market demand for a particular good. That is, if increased wages do not add qualified demand to a particular good, then supply falls, and profitability falls within that marketplace, ie - Business jet demand is not increased by an increase in minimum wage - no business jet buyers are created through a minimum wage increase.

But for the majority of businesses who rely on minimum wages - like fast food - a minium wage increase will help them. This is because their employees are their customers - and an increase in their income translates to an increase in their qualified demand for fast food. Less of the aggragate national income is being sucked to the top, where the demand for fast food in not increased with minimum wage increases. Therefore price increases are driven by increased demand shifting their Marginal Revenue curves upward MORE than their marginal cost curves were shifted upward.

At higher sales, same fixed costs, more sales and same average marginal profit margin per unit = more profit.

control point says

minium wage increase will help them. This is because their employees are their customers -

Not true this is the Henry Ford meme

indigenous says

control point says

minium wage increase will help them. This is because their employees are their customers -

Not true this is the Henry Ford meme

Do you think your customers are not someone else's employees? Golden rule time ...

So who are the employees? What do they do with they earnings? Do they eat air and not spend their income? Why do they work?

Quigley says

Do you think your customers are not someone else's employees? Golden rule time ...

Why do I get the feeling you hang out with errc?

thunderlips11 says

So who are the employees? What do they do with they earnings? Do they eat air and not spend their income? Why do they work?

At the lower quintile they are not wasting money on fast food. How many fast food restaurants do you see in predominately Mexican areas?

indigenous says

control point says

minium wage increase will help them. This is because their employees are their customers -

Not true this is the Henry Ford meme

Gotta love the internet. Someone can make a supported argument - I could draw a few graphs that illustrate the point, show some examples of when it was observed in the past, and provide a general explanation of inflation affecting different goods in different ways and how it can be beneficial to certain businesses.

The only neccesary counterargument on the internet is "Not True" followed by a shit eating grin and sense of accomplishment. Ignorance truly is bliss.

control point says

The only neccesary counterargument on the internet is "Not True" followed by a shit eating grin and sense of accomplishment. Ignorance truly is bliss.

http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/

My bad I forgot about your ignorance to this FACT

indigenous says

http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/

My bad I forgot about your ignorance to this FACT

You are, literally, the king of thinking something relates when it does not.

How does increasing aggregate demand via increasing the minimum wage (which applies to every firm who employs minimum wage labor) relate whatsoever to paying above the prevailing wage to lower turnover costs?

control point says

How does increasing aggregate demand via increasing the minimum wage relate whatsoever to paying above the prevailing wage to lower turnover costs?

It doesn't which is the meme

indigenous says

It doesn't which is the meme

Then why did you use to as support for a counterargument against my argument showing how increasing the minimum wage will increase demand for things those who make a minimum wage buy?

control point says

Then why did you use to as support for a counterargument against my argument showing how increasing the minimum wage will increase demand for things those who make a minimum wage buy?

Because what you are saying is a trope. It will not increase the demand, as the price for those things will just go up in price.

indigenous says

Because what you are saying is a trope.

Using obscure words incorrectly makes you look like a fucking retard.

indigenous says

It will not increase the demand, as the price for those things will just go up in price.

In the real world, prices are determined by the marketplace. You don't understand this. Prices will not increase in a vacuum - that is, without either an increase in demand or a decrease in supply, prices will not increase.

Again, you are getting a world class macroeconomic education for free but you refuse to learn.

Call it Crazy says

Man, if they just increased their wages to $15/hr, their sales would be booming!

You honestly think that a struggling middle and lower class is not a factor in why McDonalds sales are off?

Total fast food sales have increased on average 1.2% annually since 2004. The largest YOY increase since 2004 was in 2010, 6 months AFTER the last time the minimum wage was increased. (2.9% that year, 2.5 times the average)

http://www.statista.com/statistics/196614/revenue-of-the-us-fast-food-restaurant-industry-since-2002/

CL says

Strategist says

Call it Crazy says

What causes inflation?

Higher wages not based on productivity will definitely add to inflation...."Wage push inflation"

Why would that be a bad thing?

It does not create any real wealth, but can cause an inflationary spiral which will end up being costly. What might be more beneficial for modest inflation is "demand pull inflation" caused by demand exceeding supply, resulting in more production, more hiring and more corporate taxes.
CL says

Since we are fighting deflation and income/wealth inequality, the effect would be to lower the value of the wealthiest folks while increasing the spending power of the bottom half.

We already do that with progressive taxes. Higher taxes in a weak economy is suicide.

Strategist says

Call it Crazy says

What causes inflation?

Higher wages not based on productivity will definitely add to inflation...."Wage push inflation"

I think so too. Costs will rise to absorb the additionally generated income.

tatupu70 says

Strategist says

Higher wages not based on productivity will definitely add to inflation...."Wage push inflation"

Not necessarily. Price is determined by supply and demand and is INDEPENDENT of cost. That should be obvious looking at corporate profits.

If it costs more to make something, but you cannot pass it on to the consumer then production i.e. supply will fall, leading to higher prices. Corporations exist to make a profit. Let them.

indigenous says

control point says

minium wage increase will help them. This is because their employees are their customers -

Not true this is the Henry Ford meme

Yup, sounds nice but does not work in practice. If McDonald's gives the flippers an 80% raise are they gonna eat more hamburgers? They'll just booze more.

You are arguing with someone whose position basically boils down to "everyone should have equal stuff".

And that's an entirely emotional position...one that decides that fairness is equal distribution regardless of effort and ability...fairness that at first blush appears to be the epitome of fairness, but at second glance you realize that it fails to take into account who produces what and by what means they do so. Put any real thought into it and you realize it's actually entirely unfair.

And as an emotional position...one that screams everyone should have the same stuff...akin to a 3 year old crying because another kid had ice cream...it is nearly impossible to argue against. You'll be met with stomping feet and ears covered by hands.

It goes further than that.

The only rational reason for a minimum wage is to guarantee a permanent entitled voting block.

Tats either an emotional simp or a corrupt politician(or lackey thereof).

Unless irony consumes you first!

control point says

Using obscure words incorrectly makes you look like a fucking retard.

Not understanding a common word used correctly is making You look like a retard.

control point says

In the real world, prices are determined by the marketplace. You don't understand this. Prices will not increase in a vacuum - that is, without either an increase in demand or a decrease in supply, prices will not increase.

Again, you are getting a world class macroeconomic education for free but you refuse to learn.

What you fail to understand is that the very simple and accurate definition for inflation is an increase in money supply.

control point says

Again, you are getting a world class macroeconomic education for free but you refuse to learn.

I realize you believe that is true, but you fail to understand that I really do know which way is up on this subject.

No matter how much you are sarcastic, no matter how much Jon Stewart you watch, It won't change how incorrect Karl Marx was.

sbh says

dodgerfanjohn says

Unless irony consumes you first!

DAMN RIGHT! If the layabouts can demand $200 bucks an hour to flip a burger then the corporations can demand to pay them nothing! Zip. Nada. Nix. Bupkis. Once the prevailing wage is ZERO there will be a job for everyfuckingbody and the lazy layabouts will find themselves overwhelmed by the rising taxes on their welfare. They'll have to move to Ireland to beat the burden, but with full employment back in the good old USofA we won't ever let 'em back in. PROBLEM SOLVED! With the cost of production at NADA goods and services will be free and everyone will be rich.

If the working poor knew what was good for them they'd asked to paid NOTHING!!!!!!!

Welfare is easy street. Why work at all? If minimum wage is too low, people will come to the same conclusion. Even teenagers won't work for $7.25/hour. When I was 17 I worked at mcdonalds for $4.75.
Progress...

sbh says

control point says

indigenous says

Because what you are saying is a trope.

Using obscure words incorrectly makes you look like a fucking retard.

aaaannnddd CUT!

I think we all have plentiful a posteriori knowledge that indigenous is a psuedo intellectual..

I could have just said evidence, but doesn't a posteriori make me sound intelligent, and automatically make my argument more powerful ? That's what my "Arguing for Dummies" book suggested anyway.

Strategist says

If it costs more to make something, but you cannot pass it on to the consumer then production i.e. supply will fall, leading to higher prices. Corporations exist to make a profit. Let them.

Again--not necessarily. If a company is making 35% profit on an item, they won't cut production just because they are now only making 33% profit on it.

And like others pointed out already--if a higher minimum wage increases demand, which it will for many things, who's to say where the new equilibrium between supply and demand will be.

dodgerfanjohn says

You are arguing with someone whose position basically boils down to "everyone should have equal stuff".

Nice strawman.

dodgerfanjohn says

Tats either an emotional simp or a corrupt politician(or lackey thereof).

Or someone who understands macroeconomics much, much more clearly than you.

sbh says

Oh, yes. Anyone who comes to an anonymous forum grovelling for validation...."it was a 700 page book!".....has more personal need than intellectual undertaking.

I don't grovel with tranny illiterate tree fuckers.