"Nospam"
example.com> wrote in message
news:105582992.d6xdt7NNND@example.com...> Les Cargill wrote:
>
>> It will not make any difference whatsoever. As soon as the minimum
>> wage rises, the stuff people who make minimum wage buy goes up
>> proportionally.
>
> 1. Yes, they will rise since the demand increase. But not "as soon".
> Prices do have an inertia often called "stickiness". The period betwen
> the
> rise of the wages and the rise of the prices it is a net gain for
> people.
> That period, will count with a less disparity in income, fueling up
> the
> economy.
This period is a net gain for minimum wage earners. To get an idea how
sticky prices are, observe how long it took for gas prices to rise at
the commencement of the war in Iraq. Once prices start to rise, this
translates directly into lower real income for people working above
minimum wage, whose wages were unaffected by the hike. This period is a
net loss for those people, who account for at least 80%% - 90%% of wage
earners in America.
Wages are far stickier than prices. After all, isn't your whole argument
in favor of raising the minimum wage based on the fact that it's going
to require government coercion? And in general, the people arguing in
support of minimum wage hikes are also arguing that the wages of *all*
workers are lagging behind profits. Therefore, I feel completely
justified in taking it as a given that the wages not mandated for
increase by minimum wage will take far longer to rise than the prices
do.
So, you want to pay for a short-term and transitory minor benefit to a
relatively small class of workers with a long-term and persistent cost
to nearly all the rest of the workers. The net effect will be higher
corporate profits during the extended adjustment of the labor market.
Promising to raise the minimum wage is an excellent way for politicians
to mobilize the masses to vote for making the rich richer.
>
> 2. Yes, they will rise since the demand increase. But not as much.
> You were correct here, they rise proportionally but the
> proportionality
> coefficient it is less than 1 since the minimum wages are not the
> single
> component into the disposable income. The people living out of
> dividends
> will get a bit less, while the wave that will make all the bigger
> wages to
> grow proportionally with the minimum wage increment will take quite
> some
> time.
Ah, so I have your own explicit expectation that the wage level will be
slow to adjust. I'm glad there won't be any controversy over that point,
then.
>
> 1.+2. =
>
> Increasing minimum wage will be helpfull for the economy how long it
> is done
> slowly and steadily and not waiting too much to be required a big step
> to be
> taken, that can quake the businesses.
Rather than "will be helpful", say "will not be noticeably hurtful."
This is the best endorsement economists are willing to give --
*including* the 5 and the 650.
>
> I propose an increment on yearly basis, at least with the inflation
> for the
> year.
Pegging wages to prices has the potential -- not guaranteed, but
certainly not negligible -- to cause an inflationary spiral. Every time
wages go up, prices have to go up somewhere. If prices going up is
sufficient to cause wages to go up, a positive feedback linkage occurs.
>
> But now, since it lag for long, it have to be increased a bit harder
> and
> this might generate some adjustment troubles.
>
> But that is a lesson important to be learned by the businesses:
> When the idiot radical right wingers get the power, they always do
> harm to
> people, to businesses and to the nation.
>
It doesn't matter *who* is in power. It matters that the plan is
inconsistent and unpredictable. If your carpool had to change drivers at
every intersection regardless of what color the light is, and the
drivers had vastly different opinions of the best route to take -- and
didn't even necessarily have the same destination in mind, for that
matter -- then your morning commute would be very interesting. It's
possible that either party, given uninterrupted control of the tools of
fiscal policy for a very long time, could achieve remarkable goals that
everyone would laud. It's also possible that either party could end up
causing monstrous ruination due to an unquestioned but dangerously false
belief about economic reality. What's certain is that as long as there
are frequent changes, each camp will spend most of its tenure at the
reins trying to undo whatever progress the other has made toward its
goals. This is why we really ought to tell the government to keep its
nose out of economic policy. It's not because they are ruinously inept,
it's not because they are evil on either side, but because as a nation
we have no clear concensus on where we'd like to go or how to get there.
