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Discussion: (95 comments)

  1. morganovich

    so, i’m a little curious about this fed study.

    if you work 40 hours a week, 50 weeks a year, that’s 2000 hours.

    how does a $1/hr wage hike then create $2800 in additional spending? are they running up debt?

    to get an additional $2800 in pretax income from a $1/hr hike, a worker would need to work 58 hours a week.

    sorry, just not buying that that is typical for the population.

    somehting about this fed study smells pretty fishy.

    it also ignores the other effects of the wage hike. increase worker spending is only part of the picture.

    this is not mana from heaven. that money has to come from somewhere.

    it can come from reduced business profits or from raised prices.

    the former reduces the spending of others as well as business investment. the latter just hikes prices and keeps real income from rising. it’s just an inflation spiral.

    1. Very vague but I think he means $1.00 an hour, or $2,000.00 annually leads to a $2800.00 spending increase.

    2. wallace krells

      If the Washington DC clowns are going to raise the minimum wage [which apparently they will try] every so often; they should index it. Instead of a 2% they are doing 20%. They really want to screw the little guy. It’s inflationary. Employers will – raise prices or CUT jobs. And the treadmill will continue while DC clowns TRY to ignite inflation to get rid of some of the Federal debt. :[

    3. m

      I suspect Mr. Nader is relying the “velocity of money” in the equation MV = PT to account for that mysterious $800.

      Mr. Minwageworker pays each of his two kids an allowance of $8/wk that accounts for the extra $800/yr in household spending.

      :)

      1. That extra $800 comes from Mr. MinWageWorker renting out his ObamaPhone to his neighbors…

  2. PeakTrader

    Higher prices will harm low income workers much more than affluent investors or high income workers, who may benefit at the expense of low wage workers.

    1. PeakTrader

      Producers already benefit from low wages. If they can also benefit from high prices, that’ll be great.

      1. Consumers, especially the poor people you claim to want to help, benefit from low wages as well.

        1. PeakTrader

          Yes, there’s a net effect.

        2. Consumers, especially the poor people you claim to want to help, benefit from low wages as well.

          Peak isn’t at all interested in poor people, he’s only interested in defending his mathematical model that produces an upward sloping demand curve for labor.

    2. morganovich

      if you hike minimum wages, that also leads to higher prices for goods as producers need to raise prices to pay workers and demand from workers goes up, bidding up goods.

      this is why you cannot get real gains for workers from arbitrary wage hikes.

      if you hike wages but not productivity, all you get is unemployment and a price spiral.

      1. PeakTrader

        If you hike the minimum wage 10%, you may increase prices only 1%.

        1. PeakTrader

          Of course, the increased demand, from low wage workers, who have the highest marginal propensities to consume, may increase prices a little more than 1%, along with increasing nominal growth, which includes real growth.

          1. morganovich

            on what basis do you claim that peak?

            if employees making minimum wage get paid more, that money has to come from somewhere.

            it will either result in higher prices or less investment.

            and it does not increase growth. it’s zero sum at best.

            you pay a worker more (arbitrarily without increased productivity), so you pay an owner less. he invests less, which has a higher multiplier.

            is this going to be another of your endless claims that demand curves slope up?

          2. PeakTrader

            Morganovich, it’s based on economics, which is something you don’t seem to know, given you continue to circle your comments around one simple partial equilibrium model. I’ve explained the economics to you several times before. So, what good what it do to explain it again?

          3. morganovich

            no peak, it’s not.

            it’s based on bad inconsistent thinking masquerading as an eduction.

            you toss around terms like “in n space” that you do not seem to really understand and try to hide behind purported expertise that you clearly have no idea how to apply.

            it’s magical thinking.

            so workers having more money drives demand for goods, but increased cost of workers does not reduce demand for labor?

            reduced investment does not reduce future supply and productivity?

            this is just bad, socialist drive keynsian dogma that has driven economy after economy into a ditch.

            you are just talking nonsense and trying to hide it with terms you do not understand.

            you are the one hiding behind partial equilibrium. you cite a jump in consumer spending from higher wages and ignore everyhting else.

            seriously, do you even listen to yourself?

            so where does all this magic additional spending and growth come from?

            surely you do realize that raising wages by fiat must come at the expense of something else, right?

            you seem to think that the money just arrives on the backs of unicorns galloping up your upward sloping demand curves.

            you ignore substitution, marginal cutoffs for employment, the effects on prices, the effects on investments, and the entire rest of the system, then accuse ME of using a partial equilibrium?

            you are as economically illiterate as you are disingenuous.

        2. Nice hedging with the word “may”.

          Of course, some businesses “may” not be effected that much. You mention your comments are based in economics, but they aren’t. If you’re not thinking at the margins, which you aren’t, then you aren’t think in terms of economics.

          Just because some businesses and consumers “may” not be greatly affected in no way translates to “no one will be greatly affected”. In fact, knowing how margins work, we know some businesses, consumers, and workers will be greatly affected.

          1. PeakTrader

            Your assumptions are false. The net effect will reflect significant changes, although the net effect will likely be small.

          2. PeakTrader

            My comments are all based on economics, i.e. mathematical and empirical models in n-space.

          3. What assumptions am I making that are false? That margins exist? This is definitely not false.

            Also, economics is not mathematical and empirical models in n-space. Many people like to fool themselves that this is true, but it isn’t. Models attempt to model economics. That’s why they’re called “models”. If you observe an actual event that doesn’t fall out of your equations in n-space, do you claim economics is wrong or your equation?

  3. Nader also forgets that the money to pay the higher wage had to come from somewhere.

    1. PeakTrader

      Nader isn’t an economist. Yet, the money can come from profits, high wage earners, productivity (including attracting people with higher reservation wages), etc.. Prices will rise much less than the rise in the minimum wage. I suspect, a $10 minimum wage is roughly optimal.

      1. This is not economics, it is math. If an employer pays one group more for the same work, then that employer has less money to spend elsewhere. Therefore, there is no net economic gain from raising the minimum wage.

        1. PeakTrader

          You ignore the economics, both the mathematical and empirical models. I stated before (based on a mathematical model, and I could also show some empirical models):

          A rise in the minimum wage can increase real economic growth.

          The higher wage attracts better workers, with higher reservation wages, to increase productivity.

          Minimum wage workers have high marginal propensities to consume. So, a higher minimum wage increases consumption.

          Only a portion of the higher minimum wage may be passed along in higher prices, because portions will be absorbed by “excess” wages of other workers and “excess” profits.

          Weak or poorly managed firms will lose business or fail. However, stronger or better managed firms will gain their business, and also gain from the increased demand.

          Also, I may add, a combined increase in higher wages and unemployment benefits (if unemployment rises) can facilitate a virtuous cycle of consumption-employment.

          Or, the income effect may be stronger than the employment effect. to have a net positive effect on growth and employment.

          1. morganovich

            um, no peak, you are the one ignoring economics.

            stop and listen to yourself: “optimal minimum wage”?

            optimal for what? optimal prices for goods and services or capital and labor are set by a market, not by fiat.

            you seem to think labor is somehow magic.

            would you accept an imposed “optimal’ price for landscaping or house cleaning?

            if not, then why is the price for hiring a snack bar worker or a toy assembler somehow different?

            your whole argument here is absurd and inconsistent.

          2. PeakTrader

            Optimal can mean the lowest price and the highest quality, simultaneously, or the maximum (positive) income effect and the minimum (negative) employment effect.

            I’ve already shown the 19th century economy was much more suboptimal than the 20th century economy.

          3. morganovich

            peak-

            oh please. that’s nothing like an answer. it’s just drivel.

            it does not even make sense.

            lowest price and highest quality? that’s not even a real condition.

            quality and price are usually a trade off.

            you pay more, you get better, you pay less, you get lower quality.

            the point on that that is “optimal” can only be arrived at by taking the preferences of all the market participants into account, not by setting a price by fiat and guessing.

            you seriously do not have even the slightest idea what you are talking about.

            you have some sort of economic tourettes.

          4. (based on a mathematical model, and I could also show some empirical models):

            Oh, by all means! Let’s see them!

          5. “The higher wage attracts better workers, with higher reservation wages, to increase productivity.”

            If minimum wage was raised, how exactly does this attract better workers? Are these individuals currently employed at other minimum wage jobs? Is there a supply of workers that will enter the workforce after the minimum wage has increased?

          6. PeakTrader

            Sam, do you know what’s a reservation wage? There must be an explanation why the teen labor force participation rate fell, which coincides with the falling real minimum wage. Chart:

            http://research.stlouisfed.org/fred2/series/LNS11300012

          7. Sam, do you know what’s a reservation wage? There must be an explanation why the teen labor force participation rate fell, which coincides with the falling real minimum wage.

            Yes, there’s no doubt an explanation, but “reservation wage” just isn’t it.

            Do you seriously claim, based on your chart, that compared to the 1970s, 1/3 of all teens now refuse to work at all because they value themselves at more than $7.25/hr but would eagerly accept some entry level shit job at $9/hr?

            Perhaps the low paying but low effort job of living in their parents basement, or living an idyllic life on a tree shaded college campus using borrowed money seems like a better deal.

  4. Seattle Sam

    If you pay a group of people more to do produce the same output, there must be a group of people that now have less money to spend. If the former group adds to economic activity, why doesn’t the latter group subtract from economic activity?

    1. PeakTrader

      High income earners or wealthy investors have higher marginal propensities to save than low income workers. Do you want to stimulate spending or saving in this depression?

      1. Seattle Sam

        So when they save, that money doesn’t get spent by someone else who utilizes those savings?

      2. Do you want to stimulate spending or saving in this depression?

        Do you understand the effects of these two activities?

        Saving means lower interest rates and more investment, i.e., more economic growth.

        Spending means more consumption, with a corresponding drop in savings, meaning higher interest rates and less investment, i.e., less economic growth.

        The choice is obvious that stimulating savings in a depression is the correct course of action.

        1. PeakTrader

          Ken your limited and make believe “economics,” like Morganovich, makes no sense. It seems to be some type of upside-down “economics.”

          1. Peak, anyone like you, who can use the terms “stimulus” and “aggregate demand” with a straight face and produce an upward sloping demand curve for labor, just isn’t to be taken seriously.

          2. PeakTrader

            Ron, when you figure out the difference between wages and prices, let me know.

        2. Ron, when you figure out the difference between wages and prices, let me know.

          There is no difference, you pretend economist, a price and a cost are the same thing, depending on your reference.

  5. How about we finally secure the border and make E-Verify mandatory? That would raise wages at the low end and reduce the welfare burden on taxpayers.

    1. Che is dead

      Ditto.

    2. I wouldn’t secure the border too tight, from what I’m seeing Mexicans are the only ones working these days. We’ve got a crew of 3 busting it, getting our roof done while 4 unemployed anglos ( 3 have been unemployed since we moved here 3 years ago) sit across the street drinking beer watching them all day. The minimum wage could be raised to $20 and these guys probably still wouldn’t want to work when they can sit around drinking all day. It would be comical if it weren’t so pathetic.

      1. Moe,

        Sure they’re working, but what you aren’t seeing is how they are probably dipping into at least one of the multitude of government assistance programs. They’re taking more cookies out of the cookie jar than they are putting in, especially if they have kids.

        See table 4: http://www.cis.org/immigrant-welfare-use-2011

      2. Che is dead

        “… while 4 unemployed anglos ( 3 have been unemployed since we moved here 3 years ago) sit across the street drinking beer watching them all day.”

        Your friends and family are not representative of “Anglos”.

        One question. If Mexicans are so industrious, why is Mexico such a shit hole?

        1. PeakTrader

          Maybe the most “industrious” Mexicans move to the U.S.. How many of those “Anglos” would move to North Dakota to work in the fracking boom?

          1. Che is dead

            “North Dakota was the nation’s fastest-growing state in the past year. U.S. Census Bureau data show that North Dakota’s population grew 2.2 percent to 699,628 in the year ending July 1, as the oil boom drew workers to the Bakken fields in the western part of the state.” — Star Tribune

            Any other questions?

          2. “Maybe the most “industrious” Mexicans move to the U.S.”

            Yes, because it was a thriving economic powerhouse before the best workers mysteriously decided to hit the road and sneak into the US….

            In truth, the Mexican government actively encourages illegal immigration. Why would they send off their most prized workers?
            According to the Center for Immigration Studies, 74.7% of Mexican households with children receive some sort of welfare. And the Hispanic illegitimacy rate is over 50%. Oh, but they’ll mow your lawn for $4 an hour so I guess that makes it worth it.

        2. Do you have any siblings that lived?

          Reread my post and tell me where I made this “every anglo is lazy” reference? Don’t hold me accountable for your reckless conclusion-jumping.

          If you use that grey matter between your ears for more then stuffing, you may be able to deduct a lack of jobs in Mexico is what drives them here.

          1. Che is dead

            “Deduct”?

            Having a little grey matter problem?

            I think that you mean “deduce”.

          2. Che is dead

            “Reread my post and tell me where I made this “every anglo is lazy” reference?”

            Oh, sorry, that wasn’t you drawing a juxtaposition between the Mexicans “busting it” on your roof and the 4 unemployed anglos sitting across the street drinking beer watching them all day.

            That was some moron named Moe.

          3. Che,

            Yes, “deduct” as in “take-away”, perfectly fine usage – thanks for trying.

            Che may think like an idiot and write like an idiot but don’t let that fool you folks, he really is an idiot.

          4. Moe,

            “If you use that grey matter between your ears for more then stuffing, you may be able to deduct a lack of jobs in Mexico is what drives them here.”

            Then they should agitate against the corrupt Mexican government (who actively encourage them to leave) for better economic policies instead of becoming our burden.

            It’s a no-lose for the Mexican government because if you take away remittances these same illegals send home, the Mexican economy would collapse.

        3. One question. If Mexicans are so industrious, why is Mexico such a shit hole?

          1. Corrupt government

          2. US war on drugs.

          To what would YOU attribute Mexico’s shit-hole-ness? Do you really believe Mexicans are just genetically less industrious?

          1. “To what would YOU attribute Mexico’s shit-hole-ness? Do you really believe Mexicans are just genetically less industrious?”

            That is actually a hard question I don’t to which I don’t know the answer. There have been alot of independent studies on national IQ’s across the planet that would argue yes, but I don’t claim to be an expert. See the works of Arthur Jensen and also Richard Lynn, for example.

            However, there are definitely alot of cultural differences that don’t just disappear the moment an illegal crosses the border. That could explain why the Hispanic illegitimacy rate is so high, or why 1 in 4 live in poverty. Again, the CIS study demonstrates welfare usage highly correlates with country of origin.

      3. Here in south Texas the oil field is booming and if you want a job and can pass a drug test a decent paying job is there for the taking. To expand on this a national restaurant chain declined building a restaurant in the Karnes City/Kenedy area because their studies indicated they would not be able to retain staff needed to run the restaurant.
        But, go across town to the projects and look at all the beer drinkers sitting on the front porch day after day after day unemployeed but firmly attached to the goverment teet.

      4. Che is dead

        “Census Bureau data reveals that most U.S. families headed by illegal immigrants use taxpayer-funded welfare programs on behalf of their American-born anchor babies.Even before the recession, immigrant households with children used welfare programs at consistently higher rates than natives, according to the extensive census data collected and analyzed by a nonpartisan Washington D.C. group dedicated to researching legal and illegal immigration in the U.S.

        The results, published this month in a lengthy report, are hardly surprising. Basically, the majority of households across the country benefitting from publicly-funded welfare programs are headed by immigrants, both legal and illegal. States where immigrant households with children have the highest welfare use rates are Arizona (62%), Texas, California and New York with 61% each and Pennsylvania (59%). The study focused on eight major welfare programs that cost the government $517 billion the year they were examined.” — Judicial Watch

        1. morganovich

          oh come on guys, this is a really stupid argument.

          if you have a government that protects the rights of its citizens, their industry in unleashed.

          if you have a government that suppresses those rights, then it is suppressed. corruption and bureaucracy further suppress such industry.

          what, the chinese just suddenly got more industrious when they abandoned communism?

          so did the columbians?

          the Venezuelans suddenly got less industrious under chavez due to some coincidental shift in national character?

          getting rid of an entrenched bad government is not easy.

          sure, there may be some variances in national character than make some places more productive etc, but the fact is that most of the differences arise from differences in incentives provided by governance.

          a government that protects rights and stays out of the way enables and breeds industrious folks. a government that suppresses rights or provides a massive safety net that is prone to freeloading and or takes over a huge swath of the economy breeds indolence and dependency.

          1. PeakTrader

            Morganovich says: “oh come on guys, this is a really stupid argument.”

            Given your experience, you must be an expert :)

          2. Morganovich,

            “if you have a government that suppresses those rights, then it is suppressed. corruption and bureaucracy further suppress such industry.”

            If you have a government that actively encourages their poorest, least skilled laborers to emigrate, you reduce social unrest and thus the need for that government to reform itself.

            “..a government that suppresses rights or provides a massive safety net that is prone to freeloading and or takes over a huge swath of the economy breeds indolence and dependency.”

            And how does that safety net get enacted in the first place in a democracy? Have you looked at the polls detailing the Hispanic view of government’s role?
            http://www.pewresearch.org/daily-number/hispanics-favor-bigger-role-for-government/

            Say goodbye to your libertarian dreams if this amnesty bill goes through.

            “what, the chinese just suddenly got more industrious when they abandoned communism?
            so did the columbians?
            the Venezuelans suddenly got less industrious under chavez due to some coincidental shift in national character?”

            All I care about is how those workers perform in the United States. So take a look at figure 5 in the link and then tell me it’s simply a matter of the government policy: http://www.cis.org/immigrant-welfare-use-2011

            From where should we be encouraging legal immigration?

            Illegal immigration is a net loser for the US taxpayer, no way around it.

          3. morganovich

            yes peak, i have a great deal of experience with your arguments.

            they are virtually the platonic form of stupid.

            compared to what you are claiming, the argument i called stupid is worth of attention from the nobel committee.

          4. morganovich

            paul-

            but that’s not the point i was making. my point is that it’s stupid to argue about mexicans or anglos or chinese or lithuanians being diligent or lazy or whatever. they respond to systems and incentives. it’s Darwinian.

            i did not say anyhting about immigration. you seem to be arguing with someone other than me.

            fwiw, i believe in open borders. it’s really simple. you let people in, give them a guest worker/resident permit, and then you tax them. you do not give them welfare or free social services.

            the problem is with the social safety nets, not with the notion of immigration.

            if you stop giving out free stuff, people stop coming to take it.

            unfortunately, free stuff is ALWAYS the result of too much democracy. people start voting themselves goodies and it just never stops. this is why rights need to trump democracy.

            this worked very well for the us for 150 years until fdr wrecked it. we had largely open borders and attracted folks that built this place. they showed up, worked, saved, and did not leech off the state.

            immigration was not and is not a problem, it’s the welfare state.

          5. Morganovich,

            “my point is that it’s stupid to argue about mexicans or anglos or chinese or lithuanians being diligent or lazy or whatever. they respond to systems and incentives. it’s Darwinian.”

            And yet those Chinese, Lithuanians, Mexicans, etc, all have very different welfare usage rates when they emigrate to the United States. Perhaps it has something to do with the quality of the individuals who are coming over here. Example: talented Latinas from Colombia like my wife usually don’t sneak into the United States because she has other opportunities.

            “fwiw, i believe in open borders.”

            That is national suicide.

            ” it’s really simple. you let people in, give them a guest worker/resident permit, and then you tax them. you do not give them welfare or free social services.”

            Leaving aside the fact that there are currently millions of unemployed US citizens who could use those jobs, that plan is not on the table.

            “unfortunately, free stuff is ALWAYS the result of too much democracy. people start voting themselves goodies and it just never stops. this is why rights need to trump democracy.”

            And once they can vote, the current bunch of illegals are going to vote themselves all the goodies they can get until we have an economic collapse. They can always go back to Mexico, or wherever. I can’t and wouldn’t want to go.

          6. Paul

            Leaving aside the fact that there are currently millions of unemployed US citizens who could use those jobs, that plan is not on the table.

            I don’t really believe that argument flies, Paul. I’m not aware of any barrier to US citizens taking jobs that immigrants are willing to take. I think the unions promote that narrative.

            As far as I know, my gardener will hire anyone willing and able to work hard. He just doesn’t get many offers from unemployed US citizens.

            And just anecdotally, I’ve never spoken to an unemployed citizen who expressed any interest in picking lettuce for a living.

            The problem I have is with the welfare system, not immigrants. I can’t think of any reason money should be taken by force from productive people and given to others who don’t have enough. Any type of assistance should, IMO, be purely voluntary.

            I agree with morganovich that anyone who receives government assistance shouldn’t be allowed to vote. That seems like an obvious first step toward preventing an otherwise unavoidable collapse.

          7. Hey Ron!

            “I don’t really believe that argument flies, Paul. I’m not aware of any barrier to US citizens taking jobs that immigrants are willing to take. I think the unions promote that narrative.”

            The unions are all aboard the amnesty train now. I get AFL-CIO updates promoting this nonsense quite often. They know the future Democrat voters will seal in a government where unions rule with an iron fist.

            “As far as I know, my gardener will hire anyone willing and able to work hard. He just doesn’t get many offers from unemployed US citizens.”

            Ask your gardener how many of his illegals are getting some form of welfare to supplement the wages of this job Americans allegedly won’t do. Statistically, most illegals won’t do those jobs either without you and me kicking into the kitty against our will.

            “And just anecdotally, I’ve never spoken to an unemployed citizen who expressed any interest in picking lettuce for a living.”

            And like your gardener, those large corporate farms in places like California are able to pay peasant wages for unpleasant work because you and I are subsidizing their employees with EBT, Medicaid, etc. Close the border and gut welfare ->wages go up->more Americans become interested in a career in lettuce picking.

            Incidentally, when I was a kid in the 80’s, we lined up for detassling corn jobs because the pay was great, for a kid.

            “The problem I have is with the welfare system, not immigrants.”

            Do you have a problem with the Mexican government actively outsourcing their poorest, least skilled peasants onto the backs of the US taxpayer? I am pro-skilled immigration, but that’s mostly not what we’re getting from Latin American countries. Again, take a look at this study by CIS and notice the differences in countries of origin: http://www.cis.org/immigrant-welfare-use-2011

            ” I can’t think of any reason money should be taken by force from productive people and given to others who don’t have enough. Any type of assistance should, IMO, be purely voluntary.”

            Totally agree.

            “I agree with morganovich that anyone who receives government assistance shouldn’t be allowed to vote. That seems like an obvious first step toward preventing an otherwise unavoidable collapse.”

            But that ain’t gonna happen. Ever. I’m concerned with what Rubio and Obama are cooking up right now. This amnesty, if it passes, is going to create millions of the same kinds of voters who just elected Maduro in Venezuela. Say goodbye to any chance of implementing libertarian policies. Say hello to America the newest third world nation.

          8. Paul

            The unions are all aboard the amnesty train now. I get AFL-CIO updates promoting this nonsense quite often. They know the future Democrat voters will seal in a government where unions rule with an iron fist.

            Then I stand corrected. I didn’t know that. the unions want voters, but not low wage workers. what a dilemma for them.

            Ask your gardener how many of his illegals are getting some form of welfare to supplement the wages of this job Americans allegedly won’t do. Statistically, most illegals won’t do those jobs either without you and me kicking into the kitty against our will.

            I imagine most of them are getting assistance if they can, but so are low skilled unemployed citizens. I don’t see how that would account for illegals working and citizens in the same income brackets not working.

            And like your gardener, those large corporate farms in places like California are able to pay peasant wages for unpleasant work because you and I are subsidizing their employees with EBT, Medicaid, etc. Close the border and gut welfare ->wages go up->more Americans become interested in a career in lettuce picking.

            But why are only immigrants willing to do the work? low skilled citizens are also getting EBT, medicaid etc., and could just as easily work for low wages.

            Do you have a problem with the Mexican government actively outsourcing their poorest, least skilled peasants onto the backs of the US taxpayer?

            I have no more use for the Mexican government than I do for the US government, but consider that it’s the US government that puts those people “on our backs”.

            I am pro-skilled immigration, but that’s mostly not what we’re getting from Latin American countries. Again, take a look at this study by CIS and notice the differences in countries of origin: http://www.cis.org/immigrant-welfare-use-2011.

            I looked at the study earlier, and I believe the take away message is that poor people tend to use welfare benefits when they’re available to them. If welfare usage rates for US citizens were controlled for income levels, i wouldn’t expect to find much difference from immigrant usage rates. The average US citizen is much better off than an average immigrant from a poor Latin American country, so to find that more of those folks get some kind of assistance as a percentage of their population shouldn’t be surprising.

            Again, it’s US government policies and programs I have trouble with, not people who want better opportunities for themselves and their families. If I’m going to be upset that illegals take free stuff when it’s offered to them, then I have to be upset that anyone does – and I am, except I’m upset with those who take the money out of my pocket, not those who receive it.

            But that ain’t gonna happen. Ever. I’m concerned with what Rubio and Obama are cooking up right now. This amnesty, if it passes, is going to create millions of the same kinds of voters who just elected Maduro in Venezuela. Say goodbye to any chance of implementing libertarian policies. Say hello to America the newest third world nation.

            I see a collapse as inevitable without a major change. The tiny silver lining – at least for you – is that illegal immigration won’t any longer be a problem. :)

          9. Ron,

            “I imagine most of them are getting assistance if they can, but so are low skilled unemployed citizens. I don’t see how that would account for illegals working and citizens in the same income brackets not working.”

            Why should we be paying for citizens AND illegals? We’d be better off kicking out the illegals ->wages go up ->more Americans start doing those jobs->welfare costs go down.

            “But why are only immigrants willing to do the work? low skilled citizens are also getting EBT, medicaid etc., and could just as easily work for low wages.”

            But not all these jobs are traditionally the sole province of illegals. The construction industry was once a middle class job for American citizens. As for the more menial labor, I grew up in the ’80’s in Iowa where the only Mexicans I knew spoke as much Spanish as I did(almost none.) Somehow, the lawns got mowed and the crops were picked.

            “I looked at the study earlier, and I believe the take away message is that poor people tend to use welfare benefits when they’re available to them. ”

            That’s one takeaway. Another is there are different levels of immigrant success stories depending on country of origin. We should be tailoring who we let in here based on that data.

            “If welfare usage rates for US citizens were controlled for income levels, i wouldn’t expect to find much difference from immigrant usage rates.”

            Instead, they’re controlled by country of origin, demonstrating a big difference. Should taxpayers be encouraging more Mexicans or Koreans to come to America?

            ” If I’m going to be upset that illegals take free stuff when it’s offered to them, then I have to be upset that anyone does – and I am, except I’m upset with those who take the money out of my pocket, not those who receive it.”

            But polls say those who receive it are overwhelmingly likely to expect it and demand even more of it from our democracy. They’re like the guy who asks for an office potluck, but then brings nothing but a knife and fork.

            “I see a collapse as inevitable without a major change. The tiny silver lining – at least for you – is that illegal immigration won’t any longer be a problem. ”

            Well, I agree there. But why make it even worse when the collapse comes? Perhaps we can rebuild in the aftermath, but it’s going to be more difficult if you add in millions more low skilled mouths to feed.

          10. Paul

            Why should we be paying for citizens AND illegals? We’d be better off kicking out the illegals ->wages go up ->more Americans start doing those jobs->welfare costs go down.

            I’ll see you and raise you one:

            Why should we be paying for citizens AND illegals welfare recipients? We’d be better off kicking out the illegals welfare recipients ->wages go up ->more Americans start doing those jobs->welfare costs go down.

            By the way, if you favor higher wages (prices), do you also favor tariffs and other restrictions on imported goods so that consumers must pay more to support higher domestic employment?

            Instead, they’re controlled by country of origin, demonstrating a big difference. Should taxpayers be encouraging more Mexicans or Koreans to come to America?

            Taxpayers should neither encourage nor discourage anyone from anyplace, and shouldn’t pay for anyone from anyplace including from the US, unless they do so willingly and voluntarily.

            Actually, there shouldn’t be any taxpayers, but that’s a different issue.

            But polls say those who receive it are overwhelmingly likely to expect it and demand even more of it from our democracy. They’re like the guy who asks for an office potluck, but then brings nothing but a knife and fork.

            If you don’t allow the guy who shows up with a knife and fork to participate, it doesn’t matter what he wants or expects.

            Actually I’ve had that experience. My wife’s sister and brother-in-law’s shiftless 45 year old son and his girlfriend live with them – hey, it’s their business, I guess – but these two ne’er-do-wells would show up for family gatherings at our house with nothing but their appetites. We finally told them they were no longer welcome. It’s rough on family relations.

            Well, I agree there. But why make it even worse when the collapse comes? Perhaps we can rebuild in the aftermath, but it’s going to be more difficult if you add in millions more low skilled mouths to feed.

            I don’t think that will be a problem. It’s not likely that a safety net will be the first social structure rebuilt after the collapse.

          11. Ron,

            “Why should we be paying for citizens AND illegals welfare recipients? We’d be better off kicking out the illegals welfare recipients ->wages go up ->more Americans start doing those jobs->welfare costs go down.”

            Sure, but we are stuck with current citizens who are freeloaders. We’re under no obligation to allow illegal immigrants anything other than a ride back over the border.

            Unless Rubio’s amnesty goes through.

            “By the way, if you favor higher wages (prices), do you also favor tariffs and other restrictions on imported goods so that consumers must pay more to support higher domestic employment?”

            No.

            I support the market rate for wages, not distorted by government handouts and illegal immigrants.

            “Taxpayers should neither encourage nor discourage anyone from anyplace, and shouldn’t pay for anyone from anyplace including from the US, unless they do so willingly and voluntarily.”

            But reality is the quality of immigrant varies, generally speaking, depending on the country of origin.

            “If you don’t allow the guy who shows up with a knife and fork to participate, it doesn’t matter what he wants or expects.”

            So then you must be against the Rubio/Obama amnesty bill. Good!

            “Actually I’ve had that experience. My wife’s sister and brother-in-law’s shiftless 45 year old son and his girlfriend live with them – hey, it’s their business, I guess – but these two ne’er-do-wells would show up for family gatherings at our house with nothing but their appetites. We finally told them they were no longer welcome. It’s rough on family relations.”

            Oh man, that had to be awkward.

            “I don’t think that will be a problem. It’s not likely that a safety net will be the first social structure rebuilt after the collapse.”

            But those unskilled mouths to feed will still be here making trouble. Unless we kick them out first.

  6. Che is dead

    Artificially raising both wages and prices has already been tried with predictable results. The National Industrial Recovery Act was the center piece of FDR’s failed “New Deal” and it’s result was to make the Great Depression, Great.

    1. PeakTrader

      There’s no comparison with raising the minimum wage and FDR’s program to show a higher minimum wage would worsen this depression.

      1. Che is dead

        You’re delusional. Artficially raising wages above current market rates reduces the demand for labor. It’s just that simple.

        1. PeakTrader

          You’re in a vacuum.

          1. Che is dead

            Yes, a vacuum being created by the air rushing to fill that giant empty skull of yours.

          2. morganovich

            che-

            what’s funny about peak is that he believes that the demand for products goes up if workers are paid more but that the demand for workers does not go down if they cost more.

            in his bizzaro world, it appears that demand curves slope both up and down or perhaps that workers are some sort of veblen good.

            it’s really pretty amazing to watch.

          3. PeakTrader

            Morganovich, it may be time to add another economic model.

          4. morganovich

            peak-

            i am terribly pleased to hear that you will be getting a new economic model.

            it really is high time.

            the one you have now is farcical.

          5. morganovich

            it’s really pretty amazing to watch.

            Indeed. I never get used to it.

        2. Che

          Artficially raising wages above current market rates reduces the demand for labor. It’s just that simple.

          Absolutely right. And yet, elsewhere on this thread you agreed with a proposal to artificially raise wages above market rates by eliminating the importation of Mexican labor.

          1. Ron,

            I would say those wages are artificially lowered below market rates by government handouts and competition from non-citizens.

          2. I would say those wages are artificially lowered below market rates by government handouts and competition from non-citizens.

            I don’t think you really believe that, Paul, labor is a commodity just like any other. What other commodity or what other input to production would you favor import restrictions on? A market wage rate is one freely agreed to by employee and employer without interference by government. A true market wage rate – in fact a true market rate for anything – would require unrestricted trade across borders.

            That’s not suicide, the welfare state is suicide.

            Let me ask you: If a non US citizen legally crossed the border to work in the US each day and then returned home at night, perhaps to Mexico, where he spent all or most of his earnings supporting his family, would you have a problem with that?

          3. Ron,

            ” labor is a commodity just like any other.”

            See, I disagree there. You and I can engage in a mutually advantageous commerce all day long but at the end of the day you don’t have to let me raid your refrigerator and sleep on your couch. You can consume, save, or toss out a commodity. You can’t do the same with the guy who you voluntarily pay to mow your lawn, but forces you to pay for his Medicaid and EBT for his out-of-wedlock kids who are highly likely to join a gang: http://www.nationalgangcenter.gov/Survey-Analysis/Demographics

            ” What other commodity or what other input to production would you favor import restrictions on?”

            None, unless there was a legitimate national security argument.

            ” A market wage rate is one freely agreed to by employee and employer without interference by government.”

            You can have that and a secure border.

            “A true market wage rate – in fact a true market rate for anything – would require unrestricted trade across borders.”

            It would also require dismantling the welfare state. The existence of it lures illegal immigrants to come here and drive down wages at the low end, making it harder for current poor citizens and non-citizens to climb out of the hole. This is why Cesar Chavez was actually fiercely opposed to illegal immigration.

            Besides, as Thomas Sowell just pointed out, we have immigration laws for the benefit of American citizens.

            “Let me ask you: If a non US citizen legally crossed the border to work in the US each day and then returned home at night, perhaps to Mexico, where he spent all or most of his earnings supporting his family, would you have a problem with that?”

            No, depending on the unemployment rate in the US. I’d rather a job in, say construction, went to an American citizen if possible.

          4. Ron,

            Also, regarding your question: I’m all in favor of bringing in more STEM workers. We should be raising the curve, not lowering it.

          5. See, I disagree there. You and I can engage in a mutually advantageous commerce all day long but at the end of the day you don’t have to let me raid your refrigerator and sleep on your couch.

            Correct. But, I can’t stop you from accepting government assistance for which I’ll be forced to pay. That’s possible whether we have any business relationship or not, and it’s that theft I’m interested in stopping.

            You can consume, save, or toss out a commodity. You can’t do the same with the guy who you voluntarily pay to mow your lawn, but forces you to pay for his Medicaid and EBT for his out-of-wedlock kids who are highly likely to join a gang:

            I can accept or refuse to use his labor. I have no control over the money that’s stolen from me to cover his Medicaid and EBT. He isn’t forcing me to spend the money, my government is robbing me at gunpoint. The two activities aren’t directly connected, and the problem isn’t exclusive to immigrants. I face all those problems and more when I hire anyone no matter what their citizenship.

            I don’t actually feel more of an obligation to, or responsibility for someone who is labelled “citizen” by virtue of where they happened to be born than I do for someone who crosses an arbitrary political line in the desert, hoping to improve their lives. It makes no more sense than denying jobs in Arizona to citizens of New Mexico.

            None, unless there was a legitimate national security argument.

            As I thought. I DID correctly remembered your previous comments on the subject.

            It would also require dismantling the welfare state.

            Yes! Please!

            The existence of it lures illegal immigrants to come here and drive down wages at the low end, making it harder for current poor citizens and non-citizens to climb out of the hole.

            Absolutely! Let’s get rid of it.

            This is why Cesar Chavez was actually fiercely opposed to illegal immigration.

            IIRC Cesar Chavez was mostly interested in Cesar Chavez. Like any other organizer he didn’t want competition from others outside his group.

            No, depending on the unemployment rate in the US. I’d rather a job in, say construction, went to an American citizen if possible.

            I generally shop for the most bang for my buck. This often means the lowest priced provider of a good or service. That could be an American citizen. In fact that could be my neighbors teenage son mowing my lawn if he was more reliable, and didn’t have such a sense of entitlement, and didn’t whine all the time about hard work and low pay.

            Incidentally, paying less for gardening services leaves me with more money in my pocket to spend on other things – perhaps eating out more often and helping support some local waiter who IS a citizen. Who knows?

          6. Paul

            Also, regarding your question: I’m all in favor of bringing in more STEM workers. We should be raising the curve, not lowering it.

            I’m in favor of the market determining how many workers of every kind are needed, and attracting them them from wherever they are now, including the US.

          7. Ron,

            Correct. But, I can’t stop you from accepting government assistance for which I’ll be forced to pay.”

            Statistically, immigrants are more likely to get that assistance than American citizens. Just pointing out again that we can’t do much about American citizens right now. We can however still stop the Rubio amnesty that will end up flooding the welfare rolls even more, despite his promises to the contrary.

            I have no control over the money that’s stolen from me to cover his Medicaid and EBT.”

            So let’s send him back where he came from so you don’t have to worry about it. You will pay more for your lawn service, but taxpaying schmucks will have less of a welfare burden.

            “.. and the problem isn’t exclusive to immigrants. I face all those problems and more when I hire anyone no matter what their citizenship.”

            I’m probably not putting this very well, but there’s simply a difference a business transaction and a low skilled peasant who lives in your neighborhood/country. Statistically, he’s going to remain poor even if he becomes a citizen. He’s going to vote for all the things a libertarian abhors. He’s going to act out the same cultural deficiencies that help make Mexico such a hellhole.

            “I don’t actually feel more of an obligation to, or responsibility for someone who is labelled “citizen” by virtue of where they happened to be born than I do for someone who crosses an arbitrary political line in the desert, hoping to improve their lives.”

            I guess that’s where I get off the libertarian bus. I would rather build up an America, with the traditional American culture, than just allow the entire third world to wander in and swamp us. If they want to improve their lives, they should agitate against their corrupt government. Instead, their corrupt government encourages them to leave, gives them a map, and makes it easy for them to wire billions in remittances back to the homeland.

            “Absolutely! Let’s get rid of it.”

            Then oppose amnesty. The beneficiaries of it are going to vote for even more of it.

            “I generally shop for the most bang for my buck.”

            Your buck extends beyond what’s in your wallet at the present time. There are social costs and, once again, costs of welfare that make the cost of an illegal immigrant more expensive than you realize. That said, I don’t blame you for hiring an illegal that’s already here. I’ve done it myself, might as well get something since you’re going to be paying for the other stuff I mentioned anyway.

            “Incidentally, paying less for gardening services leaves me with more money in my pocket to spend on other things – perhaps eating out more often and helping support some local waiter who IS a citizen. Who knows?”

            Totally get that. But there are other “unseen” costs to keep in mind, as Bastiat would point out.

          8. Paul

            I suspect we’ll never agree on this subject, but I do appreciate and enjoy your thoughtful and honest comments.

          9. Ron,

            Likewise. I always respect your intelligent and witty remarks.

  7. Globalization is good – for the entire planet – but not so much for the developed nation worker.

    I view food stamps, earned income tax credits, even “Obama phones” as necessary subsidies to support worker wages until global wages equalize.

    Others will dispute this, but it is clear to me that China is the cause of much of our economic malaise. With a labor force that is nearly 2x (I’m guessing) the size of the USA/Japan/Europe combined, China is simply too large to engage in mercantile economics to the degree they have. Developed nation economies simply are unable to grow other sectors of their economies rapidly enough to offset the China effect – particularly in light of their demographic (aging) shifts and the resultant decline in growth-related economic output & consumption.

    1. morganovich

      that analysis is wrong in virtually every particular.

      by your logic, someone wanting to sell you cheap goods harms you and the economy.

      did wal mart destroy the us economy? no it freed up buying power and increased real demand for goods.

      china is just the same. they did not “take our jobs”. trade cannot do that. it’s always a net positive.

      the current “malaise” is due to demographics intersecting with horrendously stupid monetary policy over the last 15 years and bureaucratic growth/redistributionist agendas driving bad wealth and investment incentives and keeping unemployment high.

      and if you think it sucks now, wait until the fed tried to get out of the corner into which it is painted by zirp and qe. then you will see some malaise.

    2. Seattle Sam

      How is the developed nation worker worse off for being able to purchase much more per hour worked than,say, twenty years ago before “globalization”?

      Why is it that any worker should be subsidized to support a wage above the value of what he produces? And where would that subsidy come from? Only place I can see is by reducing the wages of others to below what they produce.

      And what is it you expect to “equalize”? Aren’t falling wages part of the equilibrium process you would expect from a larger addressable labor supply? Do you think that Apple should be subsidized until the price of tablets rises to a level they’re comfortable with? Or is it more likely that the price premium that Apple is able to charge will be reduced?

      1. Now that both of you have responded with your “fast brain” intuition, I hope you will carefully think through the consequences of adding 800 million workers at < $2.00 per hour to the global work force. Just perhaps this is contributing to the decline in real wages and the high unemployment rates both here and in Europe.

        1. Now that both of you have responded with your “fast brain” intuition, I hope you will carefully think through the consequences of adding 800 million workers at < $2.00 per hour to the global work force.

          Heh. No intuition involved. You have just read two well thought out and well written responses to your ill-informed comment, based on actual economics. You should try it sometime.

        2. Seattle Sam

          Consequences of adding workers to the global workforce? And the alternative you would suggest is what? Forcing those people to continue digging in the dirt rather than work in factories for higher incomes? How do you plan to do that? Who’s going to tell people in Indonesia that they can’t pursue higher living standards because you don’t like the competition?

  8. Jon Murphy

    Hm…48 comments…I guess I’m a little late to this party.

    Anyway…

    This is the same illogic employed by the FDR Brain Trust during the Great Depression: raise prices, and everyone will be more profitable! Unfortunately that plan (predictably) backfired, and the US was in a depression for another 8 years.

    1. Peak Trader still believes that brain Trust gem.

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