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#1
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In fact, many intro econ course don't teach advance econ logic, mostly just basic supply and demand / utility curves. [/ QUOTE ] There's an interesting reason for this. I'll see if you can figure it out. Think hard. |
#2
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[ QUOTE ] In fact, many intro econ course don't teach advance econ logic, mostly just basic supply and demand / utility curves. [/ QUOTE ] There's an interesting reason for this. I'll see if you can figure it out. Think hard. [/ QUOTE ] Why so nasty? It's pretty obvious. But how did your post contribute? What I was saying is that OP's villain is not advanced enough to know anything on econ, do you get it? |
#3
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I'm an econ major at Princeton, where it is widely held that the department has a fairly liberal tilt. However, any intro econ class has only 1 way of teaching the effects of a minimum wage. With upward sloping supply and downward sloping demand for labor, an effective minimum wage would set a price floor above the intersection point of the 2 curves, thus creating a greater amount of labor supply than labor demand which = unemployment. The student you talked to probably did fairly poorly on his intro to micro/macro exam.
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#4
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However, in econ, there are usually at least 3 sides to every story, and you can almost always create some sort of cause/effect chain to demonstrate a point. But I just can't seem to put one together to demonstrate how higher min. wage would creat less unemployment in the short term. Maybe something to do with high wages causing higher prices which cause inflation, thus mitigating the debts of impoverished nations? I'm not even sure that can take you anywhere. Maybe someone smarter than me can chime in. In the long run, increasing minimum wage should have no effect, as price levels should simply just adjust accordingly. Of course, this is all economic theory, which in the real world not reliable.
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#5
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However, in econ, there are usually at least 3 sides to every story, and you can almost always create some sort of cause/effect chain to demonstrate a point. But I just can't seem to put one together to demonstrate how higher min. wage would creat less unemployment in the short term. Maybe something to do with high wages causing higher prices which cause inflation, thus mitigating the debts of impoverished nations? I'm not even sure that can take you anywhere. Maybe someone smarter than me can chime in. In the long run, increasing minimum wage should have no effect, as price levels should simply just adjust accordingly. Of course, this is all economic theory, which in the real world not reliable. [/ QUOTE ] I'm pretty far left leaning politically and I also happen to have a degree in Statistical Economics and even I can't make up an intelectually honest story about how a minimum wage would increase employment. You can't just create benefit out of nothing...as one of my old econ profs used to say "it's like Maaaaaanaaa frrooom Heeeaaven" |
#6
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I'm pretty far left leaning politically and I also happen to have a degree in Statistical Economics and even I can't make up an intelectually honest story about how a minimum wage would increase employment. You can't just create benefit out of nothing...as one of my old econ profs used to say "it's like Maaaaaanaaa frrooom Heeeaaven" [/ QUOTE ] Dont you see? Once all those poor people have extra monies they will spend it on more consumer goods which will create more jobs for poor people! Easy Monies LOL!!! [img]/images/graemlins/laugh.gif[/img] |
#7
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I'm pretty far left leaning politically and I also happen to have a degree in Statistical Economics and even I can't make up an intelectually honest story about how a minimum wage would increase employment. You can't just create benefit out of nothing...as one of my old econ profs used to say "it's like Maaaaaanaaa frrooom Heeeaaven" [/ QUOTE ] It doesn't seem that hard to me to create this story: Let's say that there are 10 potential workers, and all are capable of producing $10/hour worth of labor for the firm for the firm. 5 of these workers are willing to work for $5/hour, and the other 5 will only work for at least $9/hour. The firm can hire as many workers as it wants, but cannot price discriminate as to salary. Thus, without a minimum wage, the firm chooses to hire 5 workers at $5/hour, making $25/hour in profit, rather than 10 workers at $9/hour, which would yield only $10/hour in profit. If you raise the minimum wage to $9.50, then the firm now maximizes it profits by hiring all 10 workers at $9.50...they still all create marginal profit for the firm. Yes, the firm is now only making $5/hour in profit, as opposed to $25/hour without the minimum wage, but its now has incentive to hire more workers. Minimum wage only reduces employment if there are workers whose total value to the firm is less than the new minimum wage. |
#8
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[ QUOTE ] I'm pretty far left leaning politically and I also happen to have a degree in Statistical Economics and even I can't make up an intelectually honest story about how a minimum wage would increase employment. You can't just create benefit out of nothing...as one of my old econ profs used to say "it's like Maaaaaanaaa frrooom Heeeaaven" [/ QUOTE ] It doesn't seem that hard to me to create this story: Let's say that there are 10 potential workers, and all are capable of producing $10/hour worth of labor for the firm for the firm. 5 of these workers are willing to work for $5/hour, and the other 5 will only work for at least $9/hour. The firm can hire as many workers as it wants, but cannot price discriminate as to salary. Thus, without a minimum wage, the firm chooses to hire 5 workers at $5/hour, making $25/hour in profit, rather than 10 workers at $9/hour, which would yield only $10/hour in profit. If you raise the minimum wage to $9.50, then the firm now maximizes it profits by hiring all 10 workers at $9.50...they still all create marginal profit for the firm. Yes, the firm is now only making $5/hour in profit, as opposed to $25/hour without the minimum wage, but its now has incentive to hire more workers. Minimum wage only reduces employment if there are workers whose total value to the firm is less than the new minimum wage. [/ QUOTE ] The hole in this is that most companies will not drop marginal profits down below certain thresholds. Even if the company could ramp up production to accomodate the 5 extra employees and sell all that production, they will still look for some minimum return on the cost of the inputs. |
#9
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Minimum wage only reduces employment if there are workers whose total value to the firm is less than the new minimum wage. [/ QUOTE ] Which is almost always the case with minimum wage workers. Again virtually no one works for minimum wage. The only people that do are in "warm body" type jobs and are nearly always worth less than they are payed. This will only become more true when you force companies to pay them even more than they are worth. |
#10
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Maybe something to do with high wages causing higher prices which cause inflation, thus mitigating the debts of impoverished nations? [/ QUOTE ] [img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/confused.gif[/img] |
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