[RD] What is the Point of a Minimum Wage?

[TheMeInTeam]

Tiered exchange systems where one type of commodity money is used for certain kinds of payments, another is used for other kinds, and so on. Ritual money where payments cannot be made without performance of the proper magic. Personalized money where the value of money in a given transaction is dependent on the status of the person offering it. Those are just three examples of major differences.

Like I said, if everything is violence then it's not useful to differentiate violence, even if WHO wants to define it that way.

Your tiered exchange systems appear to be substituting something in an exchange of goods (aka currency) after all, though having some non-transferable aspects would be a complication. What makes you think it would be exactly like this though? I don't see much reason to expect ritual money or personalized money in a modern technological environment.

 

[Lexicus]

What makes you think it would be exactly like this though? I don't see much reason to expect ritual money or personalized money in a modern technological environment.

A "modern technological environment" is also impossible without states, so whatevs

 

[El_Machinae]

No, it's the nature of any system where unemployment is tolerated. The wage of unemployment is zero.
Ah yes, I suppose next we'll be hearing about the mythical "market discipline" that will prevent private companies from hiring people to perform net-loss tasks. Not to put too fine a point on it, but the idea that there isn't enough for the unemployed to do is just straight-up ridiculous. There is too much to do.

I never said that. The market has (at least) a metric trying to prevent first-order net-loss. The capital funding the efforts has constraints. There was no need to be sarcastic. I am asking what metric you will use to determine if it's being wasteful. I don't think the crude metric of 'saved from involuntary unemployment' captures the concern I described. What is the budgetary mechanism to determine if the efforts are wasteful? What's the budgetary mechanism to determine if there isn't more productive activity being crowded out? You have two risks, that you don't know the value of the output and if you're preventing a more valuable output.

The problem with most of your objections is that involuntary unemployment is so wasteful that it is very difficult to design a job guarantee program that would be even more wasteful.

Then it should be pressingly easy to describe a mechanism by which one set of efforts is better than the other. And you will have to watch larger statistics in order to see if the theory is playing out. It's why I am asking for the metric(s) you would be watching. You're the one who's put more thought into this.

Money as we know it cannot exist without a state institution which is sufficiently powerful and legitimate to successfully enforce tax payments. In the absence of such institutions "money" can exist but in forms sufficiently different from our everyday experience with what we call "money" that using the same word makes little sense.

You continue to emphasize that money derives current value from taxes. You also have to remember the psychology of it all. Right now, you'll find that the majority of people find their debt obligations legitimate. In the moral sense. Show someone a VISA bill, and they'll remember that they bought some luxury good. When the bank seizes a truck for late payments, people are more likely to think it's 'deserved'. Now, some people do their very best to borrow and then default in order to keep the surplus. And this obviously undermines the value of the currency. And so, individual lending institutions and the courts are all actively enforcing the value of the currency. And yes, this requires institutions legitimate enough to enforce contracts. But to increasingly use the taxman as the source of valuation is much different. I won't use a currency if I will be taxed in it. And then you'll need to significantly ramp up state intrusion to 'force' me to use the local currency.

An easy way to do that would be to actually declare other forms of currency not legally binding. Contracts written without the use of dollars will not be enforced by the courts. And then you're back to 'debt maintains the value of a currency'. Many people already use cash to avoid paying taxes. But the local currency continues to be the cheapest thing they can use to clear a debt.

 

[Lexicus]

I never said that. The market has (at least) a metric trying to prevent first-order net-loss. The capital funding the efforts has constraints. There was no need to be sarcastic. I am asking what metric you will use to determine if it's being wasteful. I don't think the crude metric of 'saved from involuntary unemployment' captures the concern I described. What is the budgetary mechanism to determine if the efforts are wasteful? What's the budgetary mechanism to determine if there isn't more productive activity being crowded out? You have two risks, that you don't know the value of the output and if you're preventing a more valuable output.

I think these questions are relying on assumptions that I don't necessarily agree with. You need to explain what you mean by "budgetary mechanism to determine...." And you'll need to explain what you mean by "crowding out" in this context.

The market has (at least) a metric trying to prevent first-order net-loss. The capital funding the efforts has constraints.

Can you explain what this metric is and what these constraints are as you understand them?

 

[El_Machinae]

State institutions are not inherently violent (unless we're asserting that humans are inherently violent, though doing so makes the distinction pointless).

They are. It's just hidden. The reason why people don't speed is because the end result of speeding (in a legitimate society) is having your wages garnished or your property seized or being jailed. Now, we have an incredible deterrence, so this is mostly invisible. But, the end, the fact that 'the state' will deprive you of liberty is the enforcement mechanism. And this enforcement is not available to the regular citizen. *I* cannot take your car away. I cannot arrest you for driving without insurance. But, it's what will happen if you decide to not obey the speed limit.

Same with the enforcement of debt. You refuse to pay your mortgage, you will eventually get removed from your house. The bank cannot do it. Your neighbour cannot do it. It's the state that will do it. The state gets to basically never use true violence because of the deterrence effect.

People think of taxes as state violence, but it's not true. Well, in the modern era anyway. Taxes are charged after you've made use of the services provided by the country to earn money. If you go into a restaurant and eat a meal, you don't then claim 'violence' when the bill comes. If you go into a country and earn money by using its infrastructure and citizenry and court protections, then you owe. You owe AFTER you made the money by taking advantage of what's offered by the citizens of the country.

In our modern era, taxes aren't state violence, because they're essentially voluntary. You only owe after you trigger them. But they're sure a good deal when it comes to preventing violence. If the citizens were to say "El_Mac gets no protections from the courts or justice system", I can assure you that it wouldn't be 'the state' that would then deprive me of liberty and property. By analogy, if the bank put the contents of a safety-deposit box outside on the front sidewalk (because the person failed to pay rental fees), it wouldn't be 'the bank' that ended up taking the stuff. I get a pretty good deal for paying taxes, and they're only due AFTER I've earned by taking advantage of the already existing economic infrastructure.

 

[El_Machinae]

I think these questions are relying on assumptions that I don't necessarily agree with. You need to explain what you mean by "budgetary mechanism to determine...." And you'll need to explain what you mean by "crowding out" in this context.

How will you determine if one effort is more worthy than another? How will you encourage people to sort between these efforts according to their comparative advantage? How will you prevent either effort from preventing a more worthy task from being done through opportunity cost?

If I've been hired to dig holes and refill them, but am baller at Alzheimer's research, how will this process result in me migrating towards Alzheimer's research?
Alternatively, if someone else has been hired to dig holes and refill them, but I would like someone to mop and wash glassware in my lab, how will this process result in retasking?

Keep in mind, the person digging holes has HUGE opportunity cost. All the resources spent in doing their labour (instead of just sitting home) AND the opportunity cost on their time.

Can you explain what this metric is and what these constraints are as you understand them?

Yes, running out of money to fund the effort. Money which is owned by someone who desires to keep or grow it. I am not saying it's a perfect system, but it's the mechanism under which it operates.

 

[Lexicus]

How will you determine if one effort is more worthy than another? How will you encourage people to sort between these efforts according to their comparative advantage? How will you prevent either effort from preventing a more worthy task from being done through opportunity cost?

If I've been hired to dig holes and refill them, but am baller at Alzheimer's research, how will this process result in me migrating towards Alzheimer's research?
Alternatively, if someone else has been hired to dig holes and refill them, but I would like someone to mop and wash glassware in my lab, how will this process result in retasking?

Keep in mind, the person digging holes has HUGE opportunity cost. All the resources spent in doing their labour (instead of just sitting home) AND the opportunity cost on their time.

I guess I just don't understand how these questions apply to the job guarantee but not to all economic activity. If you are assuming that the jobs offered by the program are worthless (digging and filling holes) then no answers I can give you will satisfy you. You seem determined to make that assumption (jobs offered by the program will be worthless) so I am not really sure what you want me to say. The idea is not that everyone should work for the job guarantee program forever, the idea is that the program will grow and shrink according to the business cycle: that the private sector can hire out of the program by offering a higher wage or benefits or what have you during the 'boom' phase. Given this fact your questions don't really make sense to me

Yes, running out of money to fund the effort. Money which is owned by someone who desires to keep or grow it. I am not saying it's a perfect system, but it's the mechanism under which it operates.

Banks don't "run out of money", they decide to stop lending if they don't think they can make a profit. That is why I'm trying to tell you: there is no real constraint that applies to the market but that doesn't apply to the government. The most important determinant of whether money is being created by the banks is their own assessment of the profitability of loans. This is why the whole idea of "market discipline" is ultimately incoherent: there is no 'reality' to which firms which fail to act efficiently will be exposed, what matters is the perception of bankers as to the profitability of the enterprise and the system at large.

 

[El_Machinae]

Of course Banks don't run out of money, they create money. But a private lender or a private borrower can run out of money, and that is where budgetary constraints are being applied. I'm not suggesting that it is the only mechanism by which an economy can have value created. I'm pointing out that there is a budgetary mechanism to determine whether or not an activity will generate a return.

I'm also not assuming that all efforts under a jobs guarantee program are inherently wasteful, I'm asking for the mechanism by which we will determine if they are or not. Secondly, how to trim opportunity cost.

 

[Lexicus]

I don't agree that there is an objective definition of 'wasteful'. For example I believe that the portion of global output devoted to cosmetics is wasted but lots of people disagree with me.

 

[El_Machinae]

I see. So basically you have no ability to determine whether a project is a good idea or not, hey?

Your job guarantee basically exists already, it's called Enlistment

You can disagree that Cosmetics are worthwhile, but given that people are willing to work in order to purchase cosmetics, and forgo other consumption, tells us something

I'm not hostile to the underlying idea, because I am a strong believer that the public can purchase assets and services that deliver net value. I'm trying to figure out how this is a better idea than a universal basic income

 

[innonimatu]

I never said that. The market has (at least) a metric trying to prevent first-order net-loss. The capital funding the efforts has constraints.

Not this market. How much economic growth does a dollar in new debt create there? I think it crosses over to less than one already. The problem is not one of lack of capital, it has become one of lack of demand. The US does not actually have a market economy according to the theories of economics. Lots of companies are already now operating at a loss with no real plans to become profitable just because debt is cheap. It is capitalism all right, deals are made with an aim at multiplying capital and they do it so long as the music keeps playing. But it is no longer a market economy.

On the present eituation of the US caused by the current rules regulating capital, you can read this piece by Pettis. Mind you, this is not caused by lack of rules. rather, it is caused by the existing rules that deliberately made it easy what one had been impossible, the quick mobility of capital across borders. It took a hell of a lot of legislation, harmonization, grantees, international treaties and enforcement to allow this to happen.

 

[Lexicus]

I see. So basically you have no ability to determine whether a project is a good idea or not, hey?

That is a pathetically dishonest/simpleminded interpretation of what I actually said. The implication of what I said is that whether the project is a good idea or not is a matter of political contention, not of objective fact.

 

[El_Machinae]

That is a pathetically dishonest/simpleminded interpretation of what I actually said. The implication of what I said is that whether the project is a good idea or not is a matter of political contention, not of objective fact.

It's not dishonest, I'm getting frustrated.

I'm not asking for the defense of the objective definition of value. I'm asking for a metric that is worth watching that will determine whether or not any given project is wasteful or is preventing a better use of the invested resources.

I don't see a feedback mechanism.

 

[Lexicus]

I'm not asking for the defense of the objective definition of value. I'm asking for a metric that is worth watching that will determine whether or not any given project is wasteful or is preventing a better use of the invested resources.

That is exactly what you are asking by asking for these questions. If a metric can determine whether something is wasteful or if resources could be used better, that necessarily means that both 'wasteful' and 'better' are defined in a quantitatively-objective sense.

 

[El_Machinae]

That is exactly what you are asking by asking for these questions. If a metric can determine whether something is wasteful or if resources could be used better, that necessarily means that both 'wasteful' and 'better' are defined in a quantitatively-objective sense.

You are both insisting that the idea can deliver value, and insisting that there is no way to decide if it's true or not.

You still need a metric. When my doctor suggests a specific medication, there are a constellation of indicators that we watch, and we judge success based on the sum of the metrics.

I just don't see the usefulness of the idea compared to a universal basic income. What is the difference between your idea and the current military industrial complex? It hires people to do stuff, with no real mechanism of determining value, preventing the retasking of people, and creating Lobby groups and voter blocks that prefer the paycheck to the benefit to society

 

[Arwon]

Current thinking is changing the perception and trying to equate minimum wage with a living wage that is sufficient to support a person.

Current thinking, but also this landmark court decision in 1907 that

declared that "fair and reasonable" wages for an unskilled male worker required a living wage that was sufficient for "a human being in a civilised community" to support a wife and three children in "frugal comfort", while a skilled worker should receive an additional margin for their skills, regardless of the employer's capacity to pay.

 

[Arwon]

I do. That's why I literally qualified things in the previous sentences.

A minimum wage doesn't help the teenager who's supporting the family, because the teenager living at home can outcompete him to get the job. Unless you're hoping that the rich kid is too lazy to get the minimum wage job.

The minimum wage is the wrong tool for the job. It has nothing to do with Jason Kenney. A high minimum wage, if put to a 'living wage' destroys every single lower-productivity job. That's a huge loss of potential employment and output.

It's a very regressive intervention. It hurts one poor person in order to help another poor person. A single mother cannot afford a babysitting service in order to take advantage of a spare shift, because the babysitting service (while hiring teenager in their spare time) is not allowed to charge the single mother less than what she's making by pulling extra shift hours. It wouldn't matter if the babysitting service could offer a cheap service, it's not allowed to exist.

It's the wrong tool for the job. If you want young people to have enough money if they need it, then use a progressive taxation to help them. You don't give teenagers an advantage by forcing their employer to pay an adult wage, you use a wage-match program paid for out of progressive taxation. You don't help handicapped people by forcing employers to pay them the same as an able-bodied person, you wage-match out of progressive taxation.

The employer won't hire a low-skill worker if the cost (to the employer) is too high. It's just fundamental. It's the wrong tool for the job.

Allow me to introduce you to junior wages wherein there's a lower minimum wage for teenagers than adults

 

[El_Machinae]

They absolutely mitigate some of the harm that I'm describing. In Alberta, they are considered heresy in the left-wing voting Bloc.

 

[Arwon]

Needs to be coupled with good protections against unfair dismissal, which I suspect a historically tory dominated like Alberta probably doesn't quite have (I'm also not sure how strong Canadian trade unions are or how good its industrial law protections). It needs to be explicitly illegal and enforceable to fire people because of their age advancing.

 

[El_Machinae]

Why?

You are then destroying positions that are suitable at a lower wage. If a teenager is worth it, but the adult is not, then a laid-off adult is actually a new teenager hired