Oh, sure. I never said MW wasn't zero-sum between the employer and the employee. It certainly is. My points have been that these dollars don't come from lower-wage employees, and they don't need to raise prices for any businesses where the value of the employee was more than their pay. (and the rise in MW does cause unemployment for those whose jobs don't warrant the pay bump)
It leads to demand-side inflation. It can also cause losses in supply due to lower returns-to-scale.
Ah, I misunderstood what you meant earlier then.
Holding this truism leads to a weird conclusion. We could give increasing amounts of money to the rich, so that they can create everymore low-paying employment? Naw, that just doesn't work.
You're right that it doesn't hold true everywhere. If things aren't balanced, and the upper class gains too much income, you end up with another, also problematic situation.
What I am saying, however, is that raising the minimum wage won't fix either problem. It won't lead to greatest investments and savings on the part of the lower and middle classes (the latter probably won't gain much from the deal anyway). It also won't stem the tide of money flowing to the upper class.
It's also classist. The lower and middle class are just as capable of investing in new productivity as the rich. Even moreso, if the marginal utility of those investments justify individualized spending. I'll grant that many people don't self-invest as much as they can (or even should). A large part of this is because there's nearly no reward for self-investment. Any productivity gains from my self-investment will be captured by my employer, if the person competing for my job makes those same self-investments. Now, those increases in productivity cause economic growth overall (in the long run), but it doesn't matter who captures the profit of those productivity gains (the employer or the employee) for that growth to occur.
I'm not saying that the lower and middle classes are
incapable of making sound investments. I'm saying that the lower and middle classes
save less than the upper class, which means both end up having to borrow from the upper class anyway.
I don't think an industry-wide self-investment campaign that leads to increase productivity for everyone is necessarily bad either for the employees either. If a country only has two industries, Apples and Coats, and there is systematic increases in productivity for workers working in the Apples industry, they should still see an increase in real wages assuming the falling price of apples increase demand for those apples.
You're right, though, in that if productivity gains are high enough, the supply of the good of service they produce will start to outpace rising demand from falling prices, at which point things get weird.
With the rise in student debt, it's obviously untrue that the low- and middle-income earners don't self invest.
This isn't self-investment borne out of need, or even want. This is self-investment stemming from the idea that the only way to a comfortable life is a college degree: any college degree. Student debt would not be a problem in the United States, in the sense that there is fear it can be paid off, if earners were taking out loans to invest in high-demand skills that are cheaper to attain.
Instead, how much of the student debt is being used to purchase skills low in demand/high in supply already?
This isn't the fault of people borrowing money of course. When you're fresh out of high school and going to college, I'm sure you've had (and I'm using the "general" you, not you specifically) every school counselor and teacher over the last four years that the secret to a good life is a college degree while hearing skills the economy actually demands, such as welding, fought against.
Well, and he'll drop the wages of other welders. It's the paradox of education (I mentioned upthread). The more people who become educated, the less your education earns you. How can a people become poorer as knowledge spread?!? Well, not 'poorer', but the spread of knowledge ends up harming the people with the education.
I agree. The more people attain a skill, and the more widespread the skill is, the less an individual with that skill will be able to command. However, the overall productivity gains would benefit everyone in the economy. The wages of existing welders fall, but the wages of somebody shifting from fast food to welding would increase.
Of course, if the education and skills attained is attained on the back of debt, falling wages might be a problem, but that might be a different discussion.
Don't get me wrong, I agree with you on many points (and I don't like minimum wage as a way of decreasing poverty vis a vis the alternatives). We'd rather people filter into high-demand jobs, since that's what leads to economic growth. BUT, the incentives to do so already exist. The government could certainly help streamline the efforts. But we need to beat this system of ever-increasing productivity being coupled with stagnant wages for an ever-more-productive population.
Yeah, I agree with you too, and I don't want this to come across as me disagreeing with you in any fundamentally significant way.
However, while wages may be stagnant, I don't believe compensation is. If a fast food worker is earning the same amount of money today the one would earn in 1995 when adjusted for inflation, but the fast food worker today has access to goods and services (at cheaper prices too!) that the 1995 worker did not have, and those goods and services exist because of an overall increase in the technical knowledge of the country thanks to education, than the fast food worker today is "better off" in a real sense than one from 1995.
