That is such a ridiculous gross simplification that I can't believe you can even take yourself seriously. Welfare operates on the assumption that statistically, supporting members of society when they need it will give them the ability to become productive again later. You assume that "if you were going to be productive in future, somebody would lend you money" - yeah that gets RIGHT into the ins and outs of motivational psychology. Oh wait, no it doesn't, it just assumes that anybody would be immediately able to prove their future worth and that they are motivated solely by achieving the highest income-to-work ratio, which obviously occurs when work is zero and income is anything above zero. Welfare at the moment IS doing its job IMO - most people who get some kind of payment from Centrelink go on to become productive members of the economy and of society. A small percentage just bludge for most of their lives, but even they are forced to at least pretend they're trying to find work.
not at all. i never mentioned highest income to work ratio at all. i simply mentioned being able to pay back money lent/owed. way to beat a non-existent straw man.
also, please watch the following two videos.
http://www.youtube.com/watch?v=gGgjU-h_xQw
http://www.youtube.com/watch?v=-FSoXKapKQs&feature=related
now these are U.S statistics yes, but that doesn't make the point invalid. just look at the trend. how do you think this is all going to be paid for?
Actually it doesn't "ensure" job loss, far from it. It encourages a higher output per worker, which in turn pushes technological advances, process improvements and economic efficiency. Increased economic efficiency = increased productivity per unit labour time, which in turn brings the cost of living down and pushes the value of the individual up. There is not a direct correlation between minimum wage (or any wage) and cost of living in this context. When minimum wage goes up, people don't just get sacked willy nilly; you seem to believe that just because you state your belief in a hypothesis that it must be true!
no it doesn't. short of productivity being negotiated and coming to fruition it encourages NOTHING of the sort. it just means that all those performing below it are sacked. also, if such a thing was to occur (that companies could negotiate with worker representatives for productivity increases) then no minimum wage would need to be in effect - the negotiations for pay level X would occur regardless. if such an outcome could not be achieved then raising the wage is not an economical decision. and no people don't just get sacked willy nilly. but they do get sacked, or companies end up having to move operations offshore because they can't afford to operate anymore. the entire workplace is fucked then.
here's an extract from a piece i wrote last year.
The 2008-2009 financial year saw Australia’s national inflation rate hit an 8 year high of an average of 4.4% (Trading Economics), peaking at a full 5% for the September quarter. Coming after a Reserve Bank drop in the cash rate to just 3%...
Now that the inflation rate has dropped to just under 3% for the March-June quarter of this year, the Gillard Fair Work Australia panel has increased the minimum wage by $26 a week to an equivalent $15.00 per hour even...However, that doesn’t tell the whole story. This increase doesn’t just apply to the 100,000 or so workers on the minimum wage, but extends all the way up the awards structure to those earning close to $100,000 per year, covering some 1.5 million workers (Stutchbury, M). This has come at a point just when the Reserve Bank of Australia is considering raising interest rates in order to try and put a cap on and stabilise Australia’s inflation rate... Unsurprisingly, these figures correlate to Unemployment rates. In 2008 the ACTU (Australian Council of Trade Unions) made a claim for a $26 per week minimum wage rise and in 2009 it made a claim for a $21 per week rise. It received nothing in either year. The result was that through the “Global Financial Crisis” of 2008 and 2009, Australia’s unemployment rate increased from 4.6% to a peak of just 5.8%. The United States meanwhile increased their minimum wage some 11.9% in 2008 from $5.85 to $6.55 per hour and 10.6% from $6.55 per hour to $7.25 per hour in 2009.
The United States then went from a 5% unemployment rate in January of 2008, to some 10% in December of 2009 (Trading Economics). In two years, an incremental increase of minimum wage by 24% was followed by a doubling of the unemployment rate. Taking the Australian figures, proportionately the United States unemployment rate increased some four times that of Australia’s. (no S, i am not suggesting that this is the only cause. rather, just one of the contributing factors). Like the U.S, Australia also went through a period of negative growth (technically, a recession is defined as two quarters of negative growth) - at the end of 2008 we had a period of -0.9% growth (ABS). Previous to that was almost twelve months of a decrease in growth trend. , a blunt rephrasal might be “current minimum wage implies that labor worth less than $15 per hour is essentially worthless. If you can’t produce at a rate greater than $15 per hour, your job isn’t worth having”. The reason that this results in some jobs being lost is that business face a law of diminishing marginal utility. Each person it employs does not necessarily provide it with as much benefit as the one before or after them - you can only fit so many people in a workshop before it becomes crowded for example. The result, is that there is a lot of productivity and both consumer/producer supluses missed out on because these jobs are priced out of the market. In other words, a deadweight loss.
There is a third alternative which was not mentioned by Stigler in his original thesis, and that is the increase in the prices of whatever goods/services the industry produces. However, this is not always viable due to demand elasticity and an increase in minimum wage can in fact cause businesses to close their doors (Anderson, P). Economically, this is simply drawn as a graph with the cost curve outside of/above the demand curve. Peter Anderson, chief of the ACCI (Australian Chamber of Commerce and Industry) also stated that the most recent increase “Will be a dangerous setback to economic recovery in the small business sector” for precisely that reason.
The more sinister motivation behind union proponents of minimum wage I postulated earlier was summarised perfectly by Sukrit of the Australian Libertarian Society. He states as follows;
“In fact, minimum wages do help certain people. In particular they help the members of trade unions, many of whom are already earning wages above the minimum wage. By making it illegal for employers to hire at market rates (the rate that is deemed mutually suitable to both employer and employee) they minimise competition for the jobs of organised labour and keep their salaries higher than would otherwise be the case in an open and free labour market.”
To summarise that statement further, unions are proponents of minimum wage because it eliminates competition for jobs, jobs held by their members.
Whilst this may appear particularly cynical to the outside reader, they should note that there was not a single mention of the calculated 12,000 jobs that would have been lost (in the Fair Pay Commissions modeling) should the proposed minimum wage increase requested by the ACTU in 2009 in any of the news articles, statements made by members of or by the ACTU or even anywhere buried in the ACTU website.
). Perhaps the most recent and relevant example of this is the closure of Blundstone’s manufacturing operations in Tasmania to move to an offshore location. The reason for the move? To quote Blundstone itself; “We are no longer able to compete in a high labor cost environment” (Gunn, S).
The result? 300 jobs lost. Taking away the unskilled workers ability to compete in the labor market (which by definition they have little ability to compete in due to having no skills) effectively leaves them completely disenfranchised
hahah jesus. It's an AVERAGE living standard! It isn't handed to you on a plate, it's the average that's made achievable by your surrounding environment (if we are to assume that levels of human natural aptitude and motivation are roughly equal everywhere in the world). Norway's unemployment rate is 3.4 percent. People clearly aren't having trouble finding work there, despite the fact that pay rates for entry level jobs are typically over $3000au per week... weird hey? You are wrongly applying the idea that I am claiming correlation implies causation, and ignoring the fact that your hypothesis doesn't generate the predicted results in the real world, and therefore can be largely seen as falsified - funny given your claim of being into Austrian economics, which is largely denounced as being unfalsifiable and therefore not of any scientific merit.
but you don't factor in purchasing power. a dollar here is not a dollar there is not a dollar somewhere else etc.
i also never said that raising minimum wage precludes the possibility of a low unemployment rate, far from it. way to make another straw man. i'm simply saying, perhaps those countries could be EVEN BETTER OFF than they are.
also, why go on about the U.S's ultra-capitalism (not that it has this but whatever) producing the highest GDP but still leaving some people mega poor and then changing your argument to average living standard? which is it, lowest living standards or average living standards?
Where did I ever discuss demand? Insurance doesn't follow supply and demand predictions, it's not a commodity! You also falsely assume that I am implying causation, and ignore the fact that outcomes of applications using free market theory and those using highly regulated economies DO NOT MATCH what you state "would" happen.
demand for medicine. median demand that health insurance increases. i would also say that it increases the average demand because whilst the insurance industry has to be profitable (and therefore the money people would have spent on medicine has to have a margin that the insurance companies keep) there is the entirely likely scenario that a person has say, 50-90% (or can borrow this much) of the necessary money they need for surgery or procedure X, that they ultimately end up NOT purchasing. ergo said money is not spent, even though it is factored into what demand could (would) be. i would have to do some more research on this to be sure however.
i've given you an example of what DOES happen previously (blundstone). there are plenty like it.
BTW, you get paid well below minimum wage when you're on the dole in Australia - in fact the dole is less than half of what you get on a full time minimum wage. There is plenty of monetary gap there to prod anyone to work, and IMO you can only JUST get by on the dole - which I too believe is the way it should be. $240 a week will cover rent and food alone if you're frugal.
so what about the guy that has labour valued at only $14.99 an hour that just lost his job. he's just been given a pay cut to $240 a week instead of the $569 he was earning earlier. and don't say this doesn't happen. i've linked you to blundstone and there are PLENTY of other companies that have offshored in the past couple of years. BONDS off the top of my head for example.
Nope, you're simply assuming that I am claiming that the countries with the highest standards of living in the world are that way specifically because of their economic policies; I am not. I am simply pointing out that your hypothesis that entirely free market economies provide both the best economic conditions and the best quality of life for the people who live there, does not reflect the real world outcomes of various states and their economic management systems. If you were to put it forward as a scientific theory, it would be rejected on those bases alone.
so let's get this straight. my "hypothesis that entirely free market economies provide both the best economic conditions and the best quality of life for the people who live there does not reflect the real world outcomes" and yet just your previous post you used the example of the united states to show that "whilst the most capitalism produces the highest GDP it doesn't preclude people from poverty". you have contradicted yourself.
I would say the more you learn about your field, the more you start to assume that money alone is the only thing that motivates people to actually want to work rather than sit on the dole
rubbish. i have never made that assumption and never said it either., and that unbridled competition is actually a good thing for society
it's a good thing for the economy it's up to you whether you think this is a good thing for society, but i do.- you haven't paid ANY attention to crime rates or quality of life in any manner other than income and cost of living.
this is a whooooole new argument (but not an irrelevant one). however, quality of life is entirely subjective if you don't simply count the numbers, so it's not something that we could ever come to a conclusion of. one could also argue that crime is not necessarily a bad thing in all circumstances either. you can't tell me off for being objective with the numbers and then try and use them in your own argument with different examples. that is once again hypocrisy.
"Would" it now? Reality begs to differ. In places where it's been left to do just that, it hasn't. The countries with the most unregulated economies are, at this point in time, mostly NOT shining beacons of economic stability let alone high standards of living, whereas by some amazing coincidence of excuses and reasons unrelated to economic policy, numerous countries with highly regulated economies seem to largely be doing pretty well for themselves!
then these economies have not been deregulated enough. also, have you thought that the economies with both higher regulation and higher per capita GDP could possibly be EVEN BETTER OFF without regulation? regulation and taxes are not the only determinants.