The minimum wage debate

[Duel of Fates]

So what do you get with hyper inflation?

[Darth Crater]

-snip-

Thank you for explaining!

So, there is a theoretical optimum minimum wage which will minimize unemployment, then? I suspect it's not the same as the minimum wage which would prevent poverty, though. Especially since it seems like it would vary according to labor supply, while cost of living largely wouldn't. Therefore, politicians basically have a choice between people getting angry over wages, or getting angry over unemployment. I guess the latter's less obvious, though, which would be why politicians like talking about raising wages.

I think this provides evidence for the idea that as robots become cheaper and more capable, and replace many unskilled or manual-labor jobs, the whole system of employment might break down. That is, there will be a growing class of people who are literally unable to get jobs that will support them. Do you agree, or have an opinion on this?

So what do you get with hyper inflation?

Have some fun images of hyperinflation!

Weimar Republic, circa 1923.

Zimbabwe, circa... 2009. Yes, that is a logarithmic chart. Yes, their inflation follows an exponential curve on a logarithmic chart.

[Mandalore]

If the minimum wage had been tied to inflation during the 60s the minimum wage would be somewhere between $10 and $11.

Frankly, the minimum wage should be set at a value that keeps up with the cost of goods for essentials as well as paced for inflation. Then you wouldn't have useless [female dog]. Should you have nice things on the minimum wage? No. Should you be able to feed yourself? Yes. Either way you go with this argument though you're going to be draining from the same pot more or less. Either you want it to come from the companies directly or from the government's funds after taxing the companies or borrowing it to feed these people. The better question is: How do we increase social mobility?

The even better question is: How does our economy transition when almost the entirety of no skill/low skill positions are taken over by computers due to their incredibly high efficiency?

[CommanderOtto]

-snip-

Thank you for explaining!

So, there is a theoretical optimum minimum wage which will minimize unemployment, then? I suspect it's not the same as the minimum wage which would prevent poverty, though. Especially since it seems like it would vary according to labor supply, while cost of living largely wouldn't. Therefore, politicians basically have a choice between people getting angry over wages, or getting angry over unemployment. I guess the latter's less obvious, though, which would be why politicians like talking about raising wages.

I think this provides evidence for the idea that as robots become cheaper and more capable, and replace many unskilled or manual-labor jobs, the whole system of employment might break down. That is, there will be a growing class of people who are literally unable to get jobs that will support them. Do you agree, or have an opinion on this?

Exactly, there is a theoretical optimum minimum wage. But if you think about it, the minimum wage by law is very likely to be above the "optimum" because we do see illegal immigrants working for less than the lawful minimum wage so it would be a very poor salary (so economically optimum might actually be bad lol). And it is exactly as you said "politicians basically have a choice between people getting angry over wages, or getting angry over unemployment." This is the thing with economics... there is always a tradeoff, never a perfect solution.

regarding robots, I had not thought about it... but now that you mention it, it does make some sense. I keep thinking of those jobs that were cut by airlines because human beings were substituted by ticket machines at airports. There are a few real people that will help you, but much less than before. However, it is hard to tell because mechanization has cut jobs of people throughout history (like mega tractors that pick up wheat that used to be picked by human beings). Mechanization/technology might cause some people to loose their jobs, but in most cases the economy gains much more wealth in total surplus, increasing the amount of spending on new things, and thus supposedly creating more jobs in newer areas. Think of the example of computers. They were invented and they do many things for us, but now we need computer scientists... a type of career that did not exist before. On the other hand, maybe new technology is becoming so advanced that it is causing inequality (rich getting richer because they own the technology and poor getting poorer because they lost their jobs to machines). So, it is hard to tell. There is a good article in the magazine The Economist about that subject:

http://www.economist.com/news/briefing/21594264-previous-technological-innovation-has-always-delivered-more-long-run-employment-not-less

[Mandalore]

You don't need an article when you can compare manufacturing job loss with its production. It's a pretty picture on a theoretical level, just the practical transition will be an utter [female dog]. Also, it's important to bear in mind that "economic gain" many times just means an increase in product and GDP. There are plenty of people today talking about economic gains but don't seem to mention that the wealth inequality in America is approaching or has surpassed the wealth inequality of France prior to the 1789 revolution. This alludes to my post earlier about most sectors of the economy not performing anywhere near the level of the stock market. We saw a huge destruction of all levels of wealth in 2008/9 and really only the top 10% have come out well since then.

[CommanderOtto]

You don't need an article when you can compare manufacturing job loss with its production. It's a pretty picture on a theoretical level, just the practical transition will be an utter [female dog]. Also, it's important to bear in mind that "economic gain" many times just means an increase in product and GDP. There are plenty of people today talking about economic gains but don't seem to mention that the wealth inequality in America is approaching or has surpassed the wealth inequality of France prior to the 1789 revolution. This alludes to my post earlier about most sectors of the economy not performing anywhere near the level of the stock market. We saw a huge destruction of all levels of wealth in 2008/9 and really only the top 10% have come out well since then.

On the other hand, maybe new technology is becoming so advanced that it is causing inequality (rich getting richer because they own the technology and poor getting poorer because they lost their jobs to machines). So, it is hard to tell.

I am also inclined to agree with you that there is a bubble coming, but that is related to other things that have happened in these years after the great recession... I dont see it as something related to the very long term issue of technology versus wages.