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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: neolib who wrote (761831)	1/6/2014 6:20:53 PM
From: TimF	Read Replies (2) \| Respond to of 1573857

The exceptional models still model supply and demand as undifferentiated, or at least largely so, usually totally so when your talking about macroeconomics. In microeconomic terms its less accurate to describe the situation as a closed loop. Experiments can be more useful in theory, but in practice often are not useful, as you they can't be adequately controlled, and can't be precisely repeated. Economics is more like astronomy, an observational science, then it is like chemistry where you can put the same chemicals under the same conditions, and get the same reaction again and again. Chemicals don't have a mind of their own, people do. That having been said, frequent enough observation, can tell you something. One thing that's been shown again and again is that price controls are usually harmful. (In some situations they can be the worst of bad options, but generally they aren't even that). Minimum wages are a form of price control. Of course that's oversimplifying as well, and a lot of the controversies in economics are not the basic principles (price controls generally being negative is a widely accepted general principle) but about the exceptions to the general rules (and the exceptions to the exceptions, and so on) Another point is that the variable you care about can be easily overwhelmed by other variables (so that you can still have high growth with high taxes, and high regulations, price controls etc.); so anyone saying "increase the minimum wage and things will be horrible", or "increase it and the lot of the working poor will improve", is either not considering the other factors at the time, doesn't have a general understanding that there are a bunch of other possible factors, or is being dishonest, or is being unclear in talking about horrible or positive end results when they really mean the net result from changes in the one variable. Still the general economic history of price controls, to a lesser extent the study of minimum wages, and just common sense tells you that if you charge more for something you sell less of it. (There are exceptions, but Veblen goods are not the norm, and its unsure if we have had any goods that act as Giffen goods for the whole market for that good.) The main question is really whether the harm done by the higher prices for labor, in terms of reduced demand for labor, might be made up for in other ways. There are special cases where you might not even have that direct harm (in aggregate, you still will have harm for some current low skilled workers), for example if the market for low end labor was a monoposny market, with employers using their market power to keep wages down to the point where there was an undersupply of low end labor, with many choosing not to work for such low wages (something enabled by welfare and other transfer payments, but possible if unlikely even without them if wages are extremely low). But it seems unlikely that the national or most regional markets for low end labor are monopsonies, there are too many potential employees. Perhaps in small local markets it might be. Also currently there doesn't seem to be any general shortage of low end labor. Local shortages in boomtowns in northwest North Dakota, and places like that maybe, but then in those places low end labor earns far more than the national minimum wage, in fact typically more than most proposals for living wage. If you can earn in the mid to high teens per hour working low end retail, and in the high f to low six figures working in the oil fields, then minimum wages are unlikely to affect your area much.