Monday, February 13, 2012

$8.50 an hour? Why be stingy? What about $85 an hour? $850 an hour?

Once upon a time, the editors of the New York Times used to editorialize against the establishment of the minimum wage, as they appealed to the arguments centering around the Law of Opportunity Cost. However, soon after Paul Krugman joined the NYT team as a columnist, the paper reversed its stance and decided to champion government-set price floors on wages.

Thus, the NYT today has demanded that the state of New York raise its minimum wage to $8.50, a measure the paper says should "not be controversial." Why? Because when it comes to minimum wage, according to the paper, opportunity cost does not exist. The editorial declares:
Gov. Andrew Cuomo supports an increase, as does Mayor Michael Bloomberg. Only Republican state senators are resisting, using the same stale argument that a minimum wage increase is bad for business. The Senate Republican leader, Dean Skelos, argues that the measure “could be a job killer rather than a job promoter.” That contention has been proved wrong time and again.

There is plenty of evidence showing than an increase can actually help the economy, because people with lower incomes spend a larger share of their paycheck immediately on clothes, food and other goods and services. That money often goes right back into the local economy.
I guess that the editors of the NYT think so highly of themselves that they don't have to adhere to the rules of logic; the use of logical fallacies is perfectly acceptable when the fallacies are employed to promote something the editors (and Paul Krugman) support. So, let us take a look at what is being said.

The first is the fallacy of Appeal to Authority. Hey, Mayor Bloomberg and Gov. Cuomo support this, so it has to be good! Now, unless these two men are omniscient and never wrong about anything, it is irrelevant to whether or not they support the measure, and since neither makes minimum wage, neither person has to worry about being priced out of the market.

The second argument -- that Republicans oppose it, so it must be bad -- is another version of the Appeal to Authority. Democrats support it (conversely), so it must be good. Again, this is fallacious reasoning, although I realize that the NYT editors believe that they are incapable of such foolishness. (Yes, this is an ad hominem, and I mean every word of it.)

Republicans, according to the NYT, are using a "stale argument that a minimum wage increase is bad for business." Actually, not. They are saying that raising the minimum wage will jack up the price of unskilled labor, and that at the margin, some workers will lose their jobs. This is not a "bad for business" argument, but rather a "bad for some workers" statement. Nonetheless, why is this argument "stale"? Is mentioning the First and Second Laws of Thermodynamics "stale," or referring to the Law of Gravity? Of course not, but then why is the Law of Opportunity Cost a "stale" argument? Because the NYT says it is.

It gets even better. In the next paragraph, the editors commit the Fallacy of Composition when they declare that raising the minimum wage will raise the income of workers, who then will spend it and make all of us better off. Sorry, but it does not work that way, for the NYT editors (like Paul Krugman) are mistaking a marginal increase in pay for some workers (who don't lose their jobs) as a total increase in pay for all workers currently making minimum wage.

In other words, government by fiat can raise the total real income of all workers just by ordering it to be so. If that is the case -- and one can draw only that conclusion from the editorial -- then why stop at $8.50 an hour? Why not $85 an hour or even $850? If government can make small increases in total income by fiat, then why not large increases?

Now, if the editors wish to say that an increase to $8.50 would not cause economic harm but that an increase to $85 would, what would be the source of their explanation? If the Law of Opportunity Cost is off the table -- and that generally is the case on the NYT editorial page -- then what would substitute?

But what is an editorial from the NYT without piling on more economic fallacies? In the last paragraph we read:
Mr. (Sheldon) Silver (NY Speaker of the House) said he also plans to expand tax reductions for married couples earning less than $30,000 a year as another way to give incomes a boost. But he is starting with a minimum wage increase because, as he puts it, “People who work full time should not be poor.” That makes good sense for working families and their communities.
What is the definition of poor? Furthermore, is Silver saying that work causes poverty? Would a lot of these people be better off not working at all?

One would like to see all occupations being productive enough to where anyone who worked could live comfortably off that pay, but that never has been the case in all of human history, and I doubt seriously that the State of New York by fiat can change economic history, at least for the better. Again, we see the fantasy world that exists at the NYT. It really is the perfect home for Paul Krugman.

128 comments:

Bala said...

They just want to create more unemployment so that they can spend more money on pretending to solve it by doing everything other than eliminating their prior interventions in the labour market.

Major_Freedom said...

"There is plenty of evidence showing than an increase can actually help the economy, because people with lower incomes spend a larger share of their paycheck immediately on clothes, food and other goods and services. That money often goes right back into the local economy."

Why don't they just bypass the middleman and the seemingly unnecessary cost of higher wages, and just let the employers hold or spend this money instead? If the money that goes out to wages just comes right back again to those who pay wages, and that's the ostensible goal, to put more money "back into the economy", then what's the point of increasing wages at all? Indeed, wouldn't the ideal solution be to abolish minimum wage entirely, so that more money can be held and spent by employers, which is the goal? To put more money back into the economy? Or, even better, why not have the central bank cut a check for every employer?

The NYT's readers are morons. The NYT can't tell the truth even in principle or else they'll be labelled as a bourgeoisie/corporate/GOP/Republican rag, and lose the last remaining readers they have.

Anonymous said...

Once again, Mises was right: there is no third way. No combination of a market economy and socialism can exist as a permanent organization of society. We're going to have to choose.

JG said...

I've been visiting this blog on and off for months now and I have yet to see a single article addressing the problem of systemic corruption inherent in our pay-to-play political system. Not a single post about the Citizens United ruling that essentially put our democracy (and therefore, our economy) up for sale. Not a single post about the market distorting effects of lobbyist tainted political actions on the economy BUT you've deemed the problem of raising the minimum wage increases as worthy of speaking up against.

I guess it's OK when the private sector interferes with the functioning of government but if government dares to impose any costs on the private sector some Austrian will rise from his slumber and fight THAT battle. Yeah, your priorities are in the right place.

JG said...

And by the way, whoever said this gem:

"Once again, Mises was right: there is no third way. No combination of a market economy and socialism can exist as a permanent organization of society."

Maybe you haven't noticed, but you've been living in just such a mixed economy for the entirety of your lifetime, assuming you live in the USA, Europe, Canada, Japan or any first-world nation.

Bala said...

"Maybe you haven't noticed, but you've been living in just such a mixed economy for the entirety of your lifetime, assuming you live in the USA, Europe, Canada, Japan or any first-world nation."

Maybe you haven't noticed that he said "No combination of a market economy and socialism can exist as a permanent organization of society.", the emphasis being on the words "can" and "permanent".

JG said...

Nothing is permanent, but if a mixed economy can endure for a over a century and counting I'd say it has staying power.

Rick T. said...

JG: "I have yet to see a single article addressing the problem of systemic corruption inherent in our pay-to-play political system."

Yes, you are correct that it is bad when businesses bribe politicians to use government power to help them counteract the effect of the free market that otherwise might not want their goods or services. Likewise it is bad when unions or any special interest group bribes politicians to get the government to do their bidding and override the free market. Yes, there is systematic corruption in government, that is hardly news to the author of this blog or most of the posters.

I take it though that you think there is nothing wrong with the government having the power to override the free market, your objection appears to be that there is something wrong when businesses bribe the pols, as opposed to when unions, government workers, and various other pressure groups do so. You are right about the business part, but you should generalize: it is wrong when ANYONE bribes the government to overrule the free market. The solution is not to be vigilant against one category of briber but not others, but to remove the government's power over the free market as much as possible, thereby reducing or removing anyone's incentive to bribe the pols. What is the point of bribing them if they can't do anything?

William L. Anderson said...

The critics of Citizens United want us to think that politicians are of a pure spirit, but are corrupted by private interests. In truth, as Fred McChesney of Northwestern University School of Law has pointed out, most campaign contributions are a form of protection money.

The vast majority of politicians are bullies who flout their powers and then demand that people give them political contributions. Remember Microsoft? In the late 1990s, the company did not even have a Washington office and was not known for giving political contributions.

A major antitrust suit later, the company got the message and built a big office near Washington and started giving money to politicians. So, this notion that politicians are corrupted by money is backward; politicians generally are corrupt and they devise ways of being paid off.

Anonymous said...

Because 100 years is, like, forever.

morse79 said...

"this notion that politicians are corrupted by money is backward"

What a foolish and vacuous statement. There are plenty of politicians who have a sense of public service above the material benefit they receive. Besides, why make it easier for such practices to persist? You have merely argued that if a building is on fire we can keep on pouring gasoline on it because it is the wood that is flammable.

Now back to the actual topic of this blog post (and I agree with JG that it is out of place with what is actually going on the world).

First, you are making much ado about a three paragraph op-ed! You claim the op-ed makes enormous fallacies by appeal to authority, but the op-ed actually says that years of economic scholarship have debunked the impact of minimum wages upon unemployment. That is not an appeal to authority but to knowledge.

Second, you have made no argument at all to counter that position. Only appeals to "laws" of opportunity cost that act in some sort of vacuum outside of actual human practice. I suggest reading some actual research on the relationship between minimum wages and employment. Try

http://www.epi.org/publication/briefingpapers_bp150/

Yes, it is a "liberal" think tank, but try tackling these issues -

"When applied to the real world of low-wage work, this model makes several unrealistic assumptions, including:

Workers and employers have many options available to choose from.

Employers do not incur cost when hiring and firing.

Workers can enter the job market, leave the job market, change jobs, or get fired without incurring loss.

All employers have perfect knowledge of the productivity and ability of all workers.

All workers have perfect knowledge of the options available and the tastes and needs of all employers.

Each worker’s productivity is identical and all workers work to their full potential without the need for guidance or supervision.

And don't tell me that all of these issues could miraculously be eliminated if government stopped printing money and inhibiting economic calculation. These are problems fundamental to human nature and reflect what actually happens in practice, and not what simplistic deductive theorizing and iron-clad "laws" tell you.

Anonymous said...

The "Third Way" is just socialism on the installment plan. Intervention begets intervention, as initial intervention causes problems that then require subsequent interventions to "fix." If you accept the use of aggression under any circumstance, you accept the use of aggression under all circumstances.

Major_Freedom said...

morse79:

What a foolish and vacuous statement. There are plenty of politicians who have a sense of public service above the material benefit they receive.

You're a naive idiot. No politician works for free, and almost all of them accept contributions from corporations and unions with the clear expectation of returning the favor later on.

"Sense of public service" is found in innovators and productive civilians who work for the mass market, not the state.

Besides, why make it easier for such practices to persist? You have merely argued that if a building is on fire we can keep on pouring gasoline on it because it is the wood that is flammable.

That's what we have now with the welfare/warfare print and spend our way out of depressions Keynesians in charge.

Now back to the actual topic of this blog post (and I agree with JG that it is out of place with what is actually going on the world).

You only agree with JG on this because you share his corrupt violence advocating ethics.

First, you are making much ado about a three paragraph op-ed!

You moron. Anderson has been reading Krugman or long enough to know his positions. Stop pretending like this blog post is the first time Krugman's articles have been addressed.

Major_Freedom said...

morse79:

You claim the op-ed makes enormous fallacies by appeal to authority, but the op-ed actually says that years of economic scholarship have debunked the impact of minimum wages upon unemployment.

Economic scholarship has in fact debunked the claim that minimum wage has no negative effect on unemployment:

The minimum wage reduces employment.
Currie and Fallick (1993), Gallasch (1975), Gardner (1981), Peterson (1957), Peterson and Stewart (1969).
The minimum wage reduces employment more among teenagers than adults.
Adie (1973); Brown, Gilroy and Kohen (1981a, 1981b); Fleisher (1981); Hammermesh (1982); Meyer and Wise (1981, 1983a); Minimum Wage Study Commission (1981); Neumark and Wascher (1992); Ragan (1977); Vandenbrink (1987); Welch (1974, 1978); Welch and Cunningham (1978).
The minimum wage reduces employment most among black teenage males.
Al-Salam, Quester, and Welch (1981), Iden (1980), Mincer (1976), Moore (1971), Ragan (1977), Williams (1977a, 1977b).
The minimum wage helped South African whites at the expense of blacks.
Bauer (1959).
The minimum wage hurts blacks generally.
Behrman, Sickles and Taubman (1983); Linneman (1982).
The minimum wage hurts the unskilled.
Krumm (1981).
The minimum wage hurts low wage workers.
Brozen (1962), Cox and Oaxaca (1986), Gordon (1981).
The minimum wage hurts low wage workers particularly during cyclical downturns.
Kosters and Welch (1972), Welch (1974).
The minimum wage increases job turnover.
Hall (1982).
The minimum wage reduces average earnings of young workers.
Meyer and Wise (1983b).
The minimum wage drives workers into uncovered jobs, thus lowering wages in those sectors.
Brozen (1962), Tauchen (1981), Welch (1974).
The minimum wage reduces employment in low-wage industries, such as retailing.
Cotterman (1981), Douty (1960), Fleisher (1981), Hammermesh (1981), Peterson (1981).
The minimum wage hurts small businesses generally.
Kaun (1965).
The minimum wage causes employers to cut back on training.
Hashimoto (1981, 1982), Leighton and Mincer (1981), Ragan (1981).
The minimum wage has long-term effects on skills and lifetime earnings.
Brozen (1969), Feldstein (1973).
The minimum wage leads employers to cut back on fringe benefits.
McKenzie (1980), Wessels (1980).
The minimum wage encourages employers to install labor-saving devices.
Trapani and Moroney (1981).
The minimum wage hurts low-wage regions, such as the South and rural areas.
Colberg (1960, 1981), Krumm (1981).
The minimum wage increases the number of people on welfare.
Brandon (1995), Leffler (1978).
The minimum wage hurts the poor generally.

Major_Freedom said...

morse79:

Stigler (1946).
The minimum wage does little to reduce poverty.
Bonilla (1992), Brown (1988), Johnson and Browning (1983), Kohen and Gilroy (1981), Parsons (1980), Smith and Vavrichek (1987).
The minimum wage helps upper income families.
Bell (1981), Datcher and Loury (1981), Johnson and Browning (1981), Kohen and Gilroy (1981).
The minimum wage helps unions.
Linneman (1982), Cox and Oaxaca (1982).
The minimum wage lowers the capital stock.
McCulloch (1981).
The minimum wage increases inflationary pressure.
Adams (1987), Brozen (1966), Gramlich (1976), Grossman (1983).
The minimum wage increases teenage crime rates.
Hashimoto (1987), Phillips (1981).
The minimum wage encourages employers to hire illegal aliens.
Beranek (1982).
Few workers are permanently stuck at the minimum wage.
Brozen (1969), Smith and Vavrichek (1992).
The minimum wage has had a massive impact on unemployment in Puerto Rico.
Freeman and Freeman (1991), Rottenberg (1981b).
The minimum wage has reduced employment in foreign countries.
Canada: Forrest (1982); Chile: Corbo (1981); Costa Rica: Gregory (1981); France: Rosa (1981).
Characteristics of minimum wage workers
Employment Policies Institute (1994), Haugen and Mellor (1990), Kniesner (1981), Mellor (1987), Mellor and Haugen (1986), Smith and Vavrichek (1987), Van Giezen (1994).

But yeah, let's listen to the one or two methodologically flawed papers that actually believe that logic can be turned upside down.
That is not an appeal to authority but to knowledge.

It ALSO appeals to authority. You're ignoring the one, focusing on the other, then pretending Anderson is addressing that instead.

Major_Freedom said...

morse79:

Second, you have made no argument at all to counter that position.

Economic science has already settled the issue a long time ago. You can't expect Anderson to reinvent the wheel every time someone claims to have overturned economic reality.

Only appeals to "laws" of opportunity cost that act in some sort of vacuum outside of actual human practice.

You're ignorant. The law of opportunity costs are so far into human practise that it may very well be THE quintessential economics principle that concerns human behavior.

I suggest reading some actual research on the relationship between minimum wages and employment.

I suggest YOU do some actual research instead of just cherry picking bad studies made by bad economists.

Yes, it is a "liberal" think tank, but try tackling these issues

Funny, they don't address the criticisms, or counter-papers. Interesting.

Major_Freedom said...

morse79:


"When applied to the real world of low-wage work, this model makes several unrealistic assumptions, including:

Workers and employers have many options available to choose from.

Employers do not incur cost when hiring and firing.

Workers can enter the job market, leave the job market, change jobs, or get fired without incurring loss.

All employers have perfect knowledge of the productivity and ability of all workers.

All workers have perfect knowledge of the options available and the tastes and needs of all employers.

Each worker’s productivity is identical and all workers work to their full potential without the need for guidance or supervision.

These are all straw man propositions cooked up by anti-market ideologues who need an unrealistic "pure and perfect competition" doctrine to attack in order to justify their interventions that only makes things worse.

None of the above propositions are in any way a challenge to the fact that enforcing price floors on anything with a price, will generate a surplus of that thing.

And don't tell me that all of these issues could miraculously be eliminated if government stopped printing money and inhibiting economic calculation.

Don't tell me that the state can miraculously improve or solve any of these alleged problems.

These are problems fundamental to human nature and reflect what actually happens in practice, and not what simplistic deductive theorizing and iron-clad "laws" tell you.

None of them prove that enforcing minimum wage has zero or positive effects on unemployment.

Crap, your posts are so incredibly weak. It's hilarious how you actually believe you are in any position to criticize the blog author.

Lord Keynes said...

Economic scholarship has in fact debunked the claim that minimum wage has no negative effect on unemployment:
The minimum wage reduces employment.
Currie and Fallick (1993), etc. etc.


(1) You appear to have just cut and pasted from this site:

http://economicsprinciplesandapplications.blogspot.com.au/2011/05/do-minimum-wages-cause-unemployment.html

(2)
The minimum wage encourages employers to install labor-saving devices.
Trapani and Moroney (1981).


You're saying that higher wages incentivise adoption of productivity-increasing, labour saving machines, making us all richer!! This is a positive effect, not a negative one. And also explains why higher wage nations have better productivity growth as opposed to low wage nations with no minimum wage laws.

(3) Also, it's very interesting that you cite no research after 1995, for all your endless citations. The best, recent research contradicts these earlier studies.

For all your cutting and pasting of citations, I could cut and paste other, better and recent studies that contradict the findings of your list, e.g.,

(i) In the 2006 OECD Employment Outlook entitled “Boosting Jobs and Incomes”, which is based on a comprehensive econometric analysis of employment outcomes across 20 OECD countries between 1983 and 2003. The sample includes those who have adopted the Jobs Study as a policy template and those who have resisted labour market deregulation. The report provides an assessment of the Jobs Study strategy to date and reveals significant shifts in the OECD position.

The OECD found that:

- There is no significant correlation between unemployment and employment protection legislation;
- The level of the minimum wage has no significant direct impact on unemployment; and
- Highly centralised wage bargaining significantly reduces unemployment.


http://bilbo.economicoutlook.net/blog/?p=6833

A much more comprehensive report than your studies examining 20 OECD countries from 1983 and 2003 finds the "level of the minimum wage has no significant direct impact on unemployment".

(ii) Minimum wages do not cause unemployment:

Card, David E. and Krueger, Alan B. 1995. Myth and Measurement: The New Economics of the Minimum Wage, Princeton University Press, Princeton.

Card, David E. and Krueger, Alan B. 1994. "Minimum wages and employment: a case study of the fast-food industry in New Jersey and Pennsylvania," American Economic Review 84.4: 772-784.

(iii) The most recent confirms David Card and Alan Krueger's findings that increased minimum wages do not reduce employment:

http://robertvienneau.blogspot.com.au/2011/03/card-and-kruegers-research-on-minimum.html

Dube, T. William Lester, and Michael Reich. 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," Review of Economics and Statistics 92.4: 945-964.

Hristos Doucouliagos and T. D. Stanley. 2008. "Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis," Deakin University, Australia.

As usual, shoddy and hasty comments. Ignorant of the best, most recent research.

But that's precisely what you would expect from Major_Freedom. He's a shining tribute to the intellectual bankrupcy of internet Austrians.

William L. Anderson said...

Whoa! Card and Krueger! The ULTIMATE AUTHORITY!! By the way, some economists used the same data that Card and Krueger used and found that the Law of Demand actually does hold when it comes to labor.

I have a question for LK and the "politicians are great people" poster: If the Law of Demand indeed does not hold for labor, then why such a stingy minimum wage? Why not $85 dollars an hour instead of $8.50?

You are not free to say that the Law of Demand does not hold at $8.50 an hour but it does hold at $85 an hour. Either laws of economics hold or they don't.

Oh, I forgot. Government through the printing press trumps the Law of Opportunity Cost. Silly me.

Lord Keynes said...

"If the Law of Demand indeed does not hold for labor, then why such a stingy minimum wage? Why not $85 dollars an hour instead of $8.50?

What part of MINIMUM wage, don't you understand, Anderson?

The minimum wage is a floor concept, below which you do not want wages to fall, because this can have deleterious macro effects, and there are also moral issues of labour exploitation.

You set up a ridiculous straw man. What economist has ever advocating pushing what should be a *minimum* to $85? In fact, your demand to know why the minimum wage should not be $85 demonstrates utter, risible, contemptible ignorance of the very concept of minimum wage.

Yes, excessive wage increases can feed into cost push inflation - wages being a big factor in input costs. I won't speak for New Keynesian macro, but Post Keynesianism has always stressed the dangers of wage-price spirals.

That is why it is *minimum* wage in the first place, not *maximum* wage law.

Major_Freedom said...

LK:

If the Law of Demand indeed does not hold for labor, then why such a stingy minimum wage? Why not $85 dollars an hour instead of $8.50?

What part of MINIMUM wage, don't you understand, Anderson?"

What part of "why not $85 an hour minimum wage?" don't you understand?

The minimum wage is a floor concept, below which you do not want wages to fall, because this can have deleterious macro effects, and there are also moral issues of labour exploitation.

Why not a higher price floor?

You set up a ridiculous straw man.

What straw man did Anderson ATTRIBUTE to anyone? He only asked "Why not $85 an hour?"

What economist has ever advocating pushing what should be a *minimum* to $85?

Anderson is asking why AREN'T there economists pushing for $85 an hour minimum wage?

In fact, your demand to know why the minimum wage should not be $85 demonstrates utter, risible, contemptible ignorance of the very concept of minimum wage.

In fact, your claim that the question demonstrates a "risible, contemptible ignorance of the very concept of minimum wage", is ITSELF a risible, contemptible ignorance of the very concept of minimum wage.

What's the matter? The question makes you look like a fool? That asking the question why the government doesn't just prevent wages falling below $85 an hour, puts you into an uncomfortable position of realizing the insanity of the claim that enforcing price floors isn't some mere insurance concept, but is something that because it has to be enforced, is actually altering people's behavior from where it otherwise would have been?

Yes, excessive wage increases can feed into cost push inflation - wages being a big factor in input costs.

He wasn't talking about the fallacious concept of cost push inflation. He was asking why not $85 an hour to ensure that nobody makes less than that.

I won't speak for New Keynesian macro, but Post Keynesianism has always stressed the dangers of wage-price spirals.

Post Keynesians are as clueless and New Keynesians and New Old Post Prior Neo New OMG When Is This Shit Ever Going to Work Keynesians.

In the absence of an increase in the supply of money, a rise in wages will require less spending elsewhere, such as capital goods, or consumption on the part of those who pay wages. It cannot lead to higher AGGREGATE spending, which is what is required to increase aggregate prices.

That is why it is *minimum* wage in the first place, not *maximum* wage law.

LOL, what contemptible ignorance.

Major_Freedom said...

Anderson, I keep trying to post a comment, and it goes through but then disappears from the site.

Is there a filter?

Mike Cheel said...

@LK

"The minimum wage is a floor concept, below which you do not want wages to fall, because this can have deleterious macro effects, and there are also moral issues of labour exploitation."

Explain how you came to the notion that $8.50 is ok but not $8.51. Or perhaps your 'formula' will come up with a higher or lower number. Please expalin your fomrula for determining the floor.

Lord Keynes said...

"If the Law of Demand indeed does not hold for labor, then why such a stingy minimum wage? "

(1) because it's a floor concept, as I said. Excessive wage rises can cause inflation.

(2) Anyway, the law of demand is flawed, and even the higher-level neoclassical literature understands this. Demand curves are not necessarily downward sloping:

“Economists can prove that ‘the demand curve slopes downward in price’ for a single individual and a single commodity. But in a society consisting of many different individuals with many different commodities, the ‘market demand curve’ is more probably jagged, and slopes every which way. One essential building block of the economic analysis of markets, the demand curve, therefore does not have the characteristics needed for economic theory to be internally consistent.” (Keen, S. 2001. Debunking Economics: The Naked Emperor of the Social Sciences, Zed Books, New York and London. 2001: 25).

Demand curves can have any shape at all, and the Law of Demand - the idea that demand curves must always be downward sloping - is nothing but a single special case of all conceivable demand curves.

This also applies to the labour market, which also has all sorts of complications. See S. Keen, 2001. Debunking Economics: The Naked Emperor of the Social Sciences, p. 111.

Major_Freedom said...

LK:

"If the Law of Demand indeed does not hold for labor, then why such a stingy minimum wage? "

(1) because it's a floor concept, as I said. Excessive wage rises can cause inflation.

Red herring.

The question is that if raising the minimum wage to $8.50 an hour doesn't cause unemployment, then wouldn't it be the case that raising the minimum wage $85 an hour also wouldn't cause unemployment?

You're trying desperately to switch the goal post to one of price levels and inflation, rather that unemployment as a function of minimum wage which is the original context.

Nobody is making any arguments about the effect of wages on prices. And wage push inflation is a myth. Only with an increase in the supply of money can general prices increase. Without that increase in money supply, a rise in wages will require a fall in demand and hence prices elsewhere.

As Friedman noted: Inflation is always and everywhere a monetary phenomenon.

(2) Anyway, the law of demand is flawed, and even the higher-level neoclassical literature understands this. Demand curves are not necessarily downward sloping:

For labor it is.

"Economists can prove that ‘the demand curve slopes downward in price’ for a single individual and a single commodity."

This source quote isn't even correct. Veblen goods and Giffen goods!

Demand curves can have any shape at all, and the Law of Demand - the idea that demand curves must always be downward sloping - is nothing but a single special case of all conceivable demand curves.

This also applies to the labour market, which also has all sorts of complications.

LOL, all sorts of complications and yet you claim it is as simple as that enforcing a minimum has no effect on unemployment.

Major_Freedom said...

Anderson, I keep trying to post a comment, and it goes through but then disappears from the site.

Is there a filter?

I figured it out. The site filters out direct links to pdf files.

Major_Freedom said...

I figured it out. The site filters out direct links to pdf files.

Nope, I lied. It's gone again.

Lord Keynes said...

(1) Card and Krueger have already addressed criticisms of their work here:

zonecours.hec.ca/documents/H2011-1-2613924.card_krueger00.pdf

(2) Recent research confirms Card and Krueger:

http://robertvienneau.blogspot.com.au/2011/03/card-and-kruegers-research-on-minimum.html

Dube, T. William Lester, and Michael Reich. 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," Review of Economics and Statistics 92.4: 945-964.

Hristos Doucouliagos and T. D. Stanley. 2008. "Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis," Deakin University, Australia.

(3) "Speaking of "cutting and pasting", that site you linked to is a site devoted to a critique of the OECD's report!"

False. Mitchell does not critique the OECD report I quoted. You either lie or are grossly incompetent, failing even to read the post:

http://bilbo.economicoutlook.net/blog/?p=6833

Mitchell disputes a flawed interpretation of another OECD report in the post, not the report I referred to.

Lord Keynes said...

"Nobody is making any arguments about the effect of wages on prices. And wage push inflation is a myth. Only with an increase in the supply of money can general prices increase."

Changes in the level of prices is a complicated phenomenon, caused by both real and monetary factors. Friedman was wrong in saying "Inflation is always and everywhere a monetary phenomenon."

Moreover, Friedman's view is rejected even by Austrians:

“the essence of inflation is not a general rise in prices but an increase in the supply of money, which in turns sets in motion a general increase in the prices of goods and services .... While increases in money supply (i.e., inflation) are likely to be revealed in general price increases, this need not always be the case. Prices are determined by real and monetary factors. Consequently, it can occur that if the real factors are pulling things in an opposite direction to monetary factors, no visible change in prices might take place. In other words, while money growth is buoyant – i.e., inflation is high – prices might display low increases.”

Frank Shostak, “Defining Inflation,” Mises Daily, March 6, 2002.

Anyway, in an endogenous money world the banking system can met rising demand for credit from producers, if factor input costs rise. That is merely an intermediate factor. Cost push inflation is primarily driven by rising factor inputs costs, including labour.

We are talking here about the real world - not some idiot, fantasy, imaginary Rothbardian world.

William L. Anderson said...

It seems that LK is mistaking marginal for total. Of course, being a Keynesian, he does not understand marginal utility, nor does he understand marginal productivity.

Instead, the economy consists of ASAD with a government-created index of "price level" on one axis, and "aggregate supply" as the other. This assumes that all goods in the entire economy are homogeneous, which is a pretty silly concept.

Still, given LK's argument that wages falling below a certain number will cause a depression, it would seem that $85 an hour would give us prosperity. As for cost-push, what LK is saying is that higher costs are caused by higher costs. That is a logical absurdity.

William L. Anderson said...

As for disappearing links, I have no idea how this system works. Sorry, Major. I'm not much of a techie.

Major_Freedom said...

Lord Keynes:

(1) Card and Krueger have already addressed criticisms of their work here:

zonecours.hec.ca/documents/H2011-1-2613924.card_krueger00.pdf

Neumark and Wascher have already responded to that "reply", and more, here:

http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=11659

(2) Recent research confirms Card and Krueger:

http://robertvienneau.blogspot.com.au/2011/03/card-and-kruegers-research-on-minimum.html

Lester and Reich utilized the same flawed methodology as Card and Krueger. Of course they will arrive at the same flawed results!

(3) "Speaking of "cutting and pasting", that site you linked to is a site devoted to a critique of the OECD's report!"

Major_Freedom said...

LK:

Changes in the level of prices is a complicated phenomenon, caused by both real and monetary factors. Friedman was wrong in saying "Inflation is always and everywhere a monetary phenomenon."

No, Friedman was right. The ONLY explanation of a sustained general increase in prices is increase in the money supply.

Moreover, Friedman's view is rejected even by Austrians:

“the essence of inflation is not a general rise in prices but an increase in the supply of money, which in turns sets in motion a general increase in the prices of goods and services .... While increases in money supply (i.e., inflation) are likely to be revealed in general price increases, this need not always be the case. Prices are determined by real and monetary factors. Consequently, it can occur that if the real factors are pulling things in an opposite direction to monetary factors, no visible change in prices might take place. In other words, while money growth is buoyant – i.e., inflation is high – prices might display low increases.”

The price inflation from 1913 to the present is monetary. In the short run, sure, supply could fall, but to explain what has actually occurred, requires an increase in money supply.

Price inflation as I treat it is a sustained general increase in prices.

Anyway, in an endogenous money world the banking system can met rising demand for credit from producers, if factor input costs rise.

Factor input costs are a function of the money supply.

That is merely an intermediate factor. Cost push inflation is primarily driven by rising factor inputs costs, including labour.

Cost push inflation is a myth. In the absence of an increase in the supply of money, should costs rise, then what must be happening is the demand for everything else not factors of production must be falling. Hence prices elsewhere have nowhere to go but down. Cost push inflation cannot explain a general sustained increase in prices.

We are talking here about the real world - not some idiot, fantasy, imaginary Keynesian world.

And you are still dodging the crucial point:


The question is that if raising the minimum wage to $8.50 an hour doesn't cause unemployment, then wouldn't it be the case that raising the minimum wage $85 an hour also wouldn't cause unemployment?

You're trying desperately to switch the goal post to one of price levels and inflation, rather that unemployment as a function of minimum wage which is the original context.

Lord Keynes said...

Still, given LK's argument that wages falling below a certain number will cause a depression, it would seem that $85 an hour would give us prosperity.

No, it wouldn't, for reasons already explained. The rise in prices of many export commodities would make them uncompetitive on international markets as well, though minimum wages often apply to non-tradable goods and services, of course.

As for cost-push, what LK is saying is that higher costs are caused by higher costs. That is a logical absurdity.

Higher prices are caused by higher factor input costs. If the price of, say, my 2 primary factor inputs rises enough, I must raise prices to cover production costs, plus whatever profit markup I want.

There is a vast research literature, especially in price theory and marketing departments, showing the empirical reality of this.

Major_Freedom said...

LK:

"Still, given LK's argument that wages falling below a certain number will cause a depression, it would seem that $85 an hour would give us prosperity."

No, it wouldn't, for reasons already explained. The rise in prices of many export commodities would make them uncompetitive on international markets as well, though minimum wages often apply to non-tradable goods and services, of course.

If the rise in the price of something due to legislative means makes it less attractive to prospective buyers such that they buy fewer of those things, then you are admitting that a rise in the price of labor brought about by legislative means makes it less attractive to prospective buyers such that they buy less labor!

It seems like you want to have it both ways. A rise in the price of commodities makes people buy less of it, but that principle does not apply to labor for some magical reason such that you only have ignorant references to studies you clearly don't even understand.

"As for cost-push, what LK is saying is that higher costs are caused by higher costs. That is a logical absurdity."

Higher prices are caused by higher factor input costs.

Higher factor input costs are a function of higher input prices you idiot. If the demand for factors of production keeps going up thus pushing input prices higher and higher, then in the absence of an increase in the money supply, the demand for everything else other than factor inputs must fall, and hence prices elsewhere must fall.

Cost push cannot explain a GENERAL sustained increased in prices.

If the price of, say, my 2 primary factor inputs rises enough, I must raise prices to cover production costs, plus whatever profit markup I want.

Not whatever markup you want. It is constrained by the demand for output. But if the demand for input rises, then in the absence of an increase in money supply, the demand for everything not input must fall, including possibly demand for output.

Lord Keynes said...

"Factor input costs are a function of the money supply."

LOL.. the OPEC oil price hike in the early 1970s (which was clearly political in nature) was just a ... "function of the money supply," was it.

If your statement was supposed to be a universal statement, it is already falsified.

Lord Keynes said...

"But if the demand for input rises, then ..."

Demand "for input" would not rise - just prices.

...in the absence of an increase in money supply, the demand for everything not input must fall, including possibly demand for output.

Again, we are talking here about the real world - not some fantasy, imaginary Rothbardian world, where there is a gold standard, no fractional reserve banking, no ability to create fiduciary media.

Major_Freedom said...

"Factor input costs are a function of the money supply."

LOL.. the OPEC oil price hike in the early 1970s (which was clearly political in nature) was just a ... "function of the money supply," was it.

The demand for oil in the 1970s was a function of the money supply. I didn't say it was the sole determining factor.

Suppose that an oil embargo took place in 1890, when the money supply was far smaller. The prices almost certainly could not have reached 1970s prices. This is what is meant by "a function of". If we supposed F(X,Y), then we can say F is a function of X. We're not denying it is also a function of Y.

"But if the demand for input rises, then ..."

"Demand "for input" would not rise - just prices."

Prices cannot rise unless there is an increase in demand or a reduction in supply.

In the aggregate, over time, input prices that rise cannot be explained by falling supply, since supply tends to rise over time. It is due to money supply increasing.

"...in the absence of an increase in money supply, the demand for everything not input must fall, including possibly demand for output."

"Again, we are talking here about the real world - not some fantasy, imaginary Rothbardian world, where there is a gold standard, no fractional reserve banking, no ability to create fiduciary media."

Again, that is the real world, not some fantasy, imaginary Keynesian world, where there the quantity theory of money doesn't apply, where economic principles are ignored due to political anti-free-market ideology.

Major_Freedom said...

LK:

"Again, we are talking here about the real world - not some fantasy, imaginary Rothbardian world, where there is a gold standard, no fractional reserve banking, no ability to create fiduciary media."

It's funny you said that, because it proves my point. The fact that we live in a world of fractional reserve banking and banks creating credit money ex nihilo, is monetary inflation, and explains why there are asset bubbles, and general sustained increases in prices over time.

Nothing what I argued requires the assumption of gold, or absence of FRB.

American Patriot said...

But of course, the NYT, Prof. Krugman, or any other progressive have never heard of the shining example of how raising the minimum wage affects everything else; namely the case of Tuna canneries in the American Samoa following the 2007 increase to the minimum wage and the congress' wisdom to force Samoans to adhere by it so that their living standards could be raised as well:
http://www.acton.org/pub/commentary/2011/07/06/minimum-wage-law-backfires-american-samoa

But hey, maybe all Samoans can play football in the NFL as an alternate to the thousands of jobs they lost. That failing, there is always the food stamp program you know.

American Patriot said...

One more thing....
LK etal do not ever mention studies conducted by firmly leftist outfits like the World Bank that just concluded for the nth time that there is a negative correlation between government size and economic growth (and lets not forget the recent OECD study that finds that the U.S. has the most progressive tax system in the OECD).

It is wonderful to live in a fantasy world.

Scott D said...

JG:

"I've been visiting this blog on and off for months now and I have yet to see a single article..."

That's really weak. This blog is called "Krugman in Wonderland" for a reason. Criticizing Krugman's fallacious arguments are the main focus, general economics is secondary, with political commentary a distant third.

As an aside, I don't think that the Citizens United ruling is a particularly huge deal. We know that politicians are corrupt. We know that they use propaganda to manipulate the masses. Setting (or in this case, reversing) a few arbitrary limits to when and how they can do that must sound profound to you, I suppose. To me, it's business as usual, and more of the same.

"I guess it's OK when the private sector interferes with the functioning of government..."

If your local judge is accepting bribes from criminals, do you pass laws to try to limit bribery, or do you arrest the judge? Government itself is the problem. Government's reach over the economy and the lives of private citizens creates a huge incentive for corruption, and the democratic process is the means that special interests use to achieve that corruption. If you aren't going to get rid of democracy, then you need to take a hard look at reducing the power of government.

callahan auto said...

LK - that is brilliant. you think that a rise in prices of commodities would make those commodities less competitive but a rise in the cost of labor does not make that labor less competitive? Tough to make this stuff up.

morse79 said...

Oh where to begin!!!

@Major Freedom - do you have anything to cite from your cut-and-paste from say the past 20 years?

Then there is this gem -

"Sense of public service" is found in innovators and productive civilians who work for the mass market, not the state."

Why? Because you say so? Has there never been a politician who actually cared about public service? Can you credibly say that? And as I mentioned (and you failed to address), why make it easier for corruption to happen by allowing such easy access to money?

I like this one too -

"Economic science has already settled the issue a long time ago. You can't expect Anderson to reinvent the wheel every time someone claims to have overturned economic reality."

Clearly it has not settled the issue, or else we would not be having a debate!

"You're ignorant. The law of opportunity costs are so far into human practise that it may very well be THE quintessential economics principle that concerns human behavior."

But means nothing to actual economic analysis unless it is placed in context. The law does not just exist, but operates through mechanisms and different contexts. Just stating "opportunity cost" says nothing about when and how they might matter.

"These are all straw man propositions cooked up by anti-market ideologues"

The natural defense of a conspiracy theory minded individual. Why are they strawmen, because you say so? You have again failed to actually address the points. In theory, a rise in minimum wage would lead to a rise in unemployment. In practice, we know this is quite different because of those points.

"Don't tell me that the state can miraculously improve or solve any of these alleged problems."

Again, sidestepping the issue in favor of an ideologically charged statement. I argued that a marginal rise in minimum wage does not lead to immediate or even substantial employment effects because of the limitation of human interaction (information, power etc...). I DID NOT say that the state can SOLVE these problems only that the STATE did not CAUSE them.

Still not ready for the big leagues non-military major

morse79 said...

"Whoa! Card and Krueger! The ULTIMATE AUTHORITY!!"

Ha! You are out of the loop there in Frostburg! Somehow I knew you would jump at the citation, like all ideologues do. In fact, in the link I posted from the EPI they explicitly discuss Card and Krueger and the supposed study that debunked it (Neumark and Wascher). You need to start reading economic analysis after 1973.

mosre79 said...

"Either laws of economics hold or they don't"

What a ridiculous assertion unless you believe that laws governing human and social interaction are iron-clad like gravity. And even gravity only works a certain way under certain conditions.

An old adviser of me once put it this way - it is difficult to ascertain causality in social science. In natural science you throw a ball up and you are pretty certain you can predict that it will come down (again, given other conditional variables). In the social world you throw an individual up in the air, we are less certain they will come back down. Throw a group of people in the air, and it is even more difficult. That is not to deny the possibility of a positive social science but to realize its difficulty. Your approach is merely to assert abstract laws with no reference to actual human interaction.

Mike Cheel said...

@LK

Your formula please.

Major_Freedom said...

morse79:

Oh where to begin!!!

How about where you always do? Backwards and easily refuted?

Major Freedom - do you have anything to cite from your cut-and-paste from say the past 20 years?

Are you saying economic laws of the universe changed in the year 1992? What happened in that year?

Then there is this gem

"Sense of public service" is found in innovators and productive civilians who work for the mass market, not the state.

Why? Because you say so?

Oh I'm sorry, I thought you said politicians have a sense of public service because you say so.

LOL, you ask me why? OK, I'll do what you didn't do and explain why.

Those who seek profitable investment opportunities, and avoid unprofitable investment opportunities, are those who are seeking to produce what willing buyers want. Those willing buyers can be anyone who is able and willing to pay, i.e. the mass market, i.e. "the public."

Steve Jobs produced iPhones because he wanted to A. Give what he thought the public wanted at the individual human level, and B. Make a profit while doing it.

The fact that B. is present, doesn't mean that A. is not present.

With politicians on the other hand, their conception of the public good is based not on giving with the individual wants. The individual is made to obey and pay the politicians through force. It's mandatory. Steve Jobs' iPhones are NOT mandatory. You don't have to buy them if you don't want to.

Thus if there are anyone who are more concerned with the sense of public service, it's innovators and entrpreneurs, not politicians.

"Has there never been a politician who actually cared about public service?"

Truly? No. Partially? Yes.

Can you credibly say that?

Yes. I am credible when it comes to my own convictions.

And as I mentioned (and you failed to address), why make it easier for corruption to happen by allowing such easy access to money?

I didn't "fail" to address it, because it wasn't in the posts that I wanted to address.

Corruption is made easy when initiating violence is made legal.

I like this one too

"Economic science has already settled the issue a long time ago. You can't expect Anderson to reinvent the wheel every time someone claims to have overturned economic reality."

Clearly it has not settled the issue, or else we would not be having a debate!

LOL! The fact that there are people who still want to "debate" whether the Earth is flat, doesn't mean it's not settled.

You should work for Fox News. They love it when already settled debates are reified and treated as if it's not settled. "Where there WMDs in Iraq? Coming up next, two panel experts will debate this issue, you don't want to miss it!"

You're ignorant. The law of opportunity costs are so far into human practise that it may very well be THE quintessential economics principle that concerns human behavior.

But means nothing to actual economic analysis unless it is placed in context.

Does that mean you accept the law? Yes, it must be put into context. That's where thymology comes into play. But you have to at least admit the existence of the law structure.

The law does not just exist, but operates through mechanisms and different contexts.

No, the law exists. It is manifested through history.

Just stating "opportunity cost" says nothing about when and how they might matter.

Word of advice: Don't mistake your ignorance on the subject as Anderson failing to explain it properly. Austrians know exactly the whole story behind it every time Anderson points it out in the context of Krugman's articles.

Sorry if that's too inside joke for you, but the obligation to educate yourself is you, not others.

Major_Freedom said...

morse79:


These are all straw man propositions cooked up by anti-market ideologues

The natural defense of a conspiracy theory minded individual.

It's not sinister. Well maybe it is, but it does originate from anti-capitalist ideologues. No free market economist (meaning Austrian economist) believes in the above "pure and perfect competition" doctrine.

Why are they strawmen, because you say so?

Stop being so ignorant. It's because they are constantly used by statists to attack the free market, as if the free market is "supposed" to be consistent with these propositions, and wherever it is not, it somehow justifies state intervention.

You have again failed to actually address the points.

You have failed to explain or defend ANY of your points. You're just making freely floating assertions and you're not telling a compelling story.

In theory, a rise in minimum wage would lead to a rise in unemployment. In practice, we know this is quite different because of those points.

No, that's false. Those points, like I said before but which you ignored (and then accused me of failing to address, which is it's own special kind of hypocrisy), the above propositions are not related to the economic law of price floors generating surpluses.

Even if workers and employers did not have many options available to choose from, even if employers did not incur cost when hiring and firing, even if workers could not enter the job market or leave the job market or change jobs or or get fired without incurring loss, even if all employers did not have perfect knowledge of the productivity and ability of all workers, even if all workers did not have perfect knowledge of the options available and the tastes and needs of all employers, even if each worker’s productivity is not identical and all workers did not work to their full potential without the need for guidance or supervision, even if all these hold, then a price floor on wages will STILL generate unemployment. Not because I said so, but because it is ultimately grounded in irrefutable non-hypothetical logic based on axioms that also cannot be refuted without contradiction.

If that makes you mad, if that prevents you from believing in a pie in the sky world where raising the minimum wage doesn't harm worker's interests, especially those who become unemployed as a result, is your problem that you have to deal with.

Major_Freedom said...

morse79:

Don't tell me that the state can miraculously improve or solve any of these alleged problems.

Again, sidestepping the issue in favor of an ideologically charged statement.

LOL! It's the same statement you made, only the subject is the state, not the market.

You made an ideological charge against individuals in the market, of what it can't do, and I say the same thing about individuals in the state, and you're saying I'm spewing ideologically charged statements? Are you a hypocrite or are you retarded?

I argued that a marginal rise in minimum wage does not lead to immediate or even substantial employment effects because of the limitation of human interaction (information, power etc...).

This is such a sloppy argument that has no business in an economics debate. "Because of limitation of human interaction, minimum wage laws do not generate unemployment" is like saying "Because the sky is blue, wars bring prosperity."

It's not the case that humans have to be omniscient deities before the law of demand applies to labor prices.

Define "marginal." Why $8.50 and not $8.51? Why $8.50 and not $85?

It is clear that the foundation upon which you rest your arguments shatter by the smallest criticism. You want to pretend to yourself that raising the minimum wage above the market rate doesn't generate unemployment at $8.50, but will generate unemployment at $85, is fallacious. Economic laws don't change for different prices. It either generates unemployment to put wages above market by force, or it doesn't.

If it doesn't, then $85 shouldn't. But you're not so stupid to believe that $85 won't generate unemployment. But then you are stupid enough to believe $8.50 won't, because "Oh come on, the greedy capitalists can afford to pay more what with the lavish lifestyles!! ARGH!"

I DID NOT say that the state can SOLVE these problems only that the STATE did not CAUSE them.

I did not say that the market caused the above limitations, only that the market is SUPERIOR at solving them than the state.

Still not ready for the big leagues non-military major

Just so you know, every time you say crap like this, I laugh my ass off, because it truly reveals the astonishing level of obliviousness and ignorance that is required to believe the things you believe. It's like you're suffering from Dunning-Krueger.

"Whoa! Card and Krueger! The ULTIMATE AUTHORITY!!"

Ha! You are out of the loop there in Frostburg!

He already knew that study! You must like to resort to ad hominem rather than address the arguments!

Major_Freedom said...

morse79:


Somehow I knew you would jump at the citation, like all ideologues do.

Somehow I knew you would jump all over Card and Krueger like white on rice, as all progressive ideologues are doing.

In fact, in the link I posted from the EPI they explicitly discuss Card and Krueger and the supposed study that debunked it (Neumark and Wascher).

Card and Krueger's supposed evidence that minimum wage does not generate unemployment, and their reply to critics, is addressed by Neumark and Wascher. The flawed methodologies that they keep using prevent them from carrying out an adequate study that can compete with the myriad of studies that show minimum wage does lead to unemployment.

Then there is the logical necessity of it, which is the actual foundation for the proposition of surpluses being generated by price floors, and you progressive ideologues stand no chance. It's over. The debate is over.

You need to start reading economic analysis after 1973.

Because economic laws have changed in 1973? There was a fundamental rift in the cosmic time continuum?

Newer doesn't necessarily mean better. Just look at the state of the economy and the economists in charge today, compared to 1973.

"Either laws of economics hold or they don't"

What a ridiculous assertion unless you believe that laws governing human and social interaction are iron-clad like gravity.

What a SUPREMELY ignorant assertion to believe that economic laws do not hold.

You have obviously never read a single Austrian textbook.

And even gravity only works a certain way under certain conditions.

Is THAT a law? LOL

An old adviser of me once put it this way - it is difficult to ascertain causality in social science.

Your imaginary adviser should have known that constancy in human action is incoherent to human structure of thought.

In natural science you throw a ball up and you are pretty certain you can predict that it will come down (again, given other conditional variables). In the social world you throw an individual up in the air, we are less certain they will come back down.

In the social world we can't know a priori that people will choose to throw others into the air, when, and where.

Throw a group of people in the air, and it is even more difficult. That is not to deny the possibility of a positive social science but to realize its difficulty. Your approach is merely to assert abstract laws with no reference to actual human interaction.

False. Only the Austrians even consider the HUMAN CHOICE element. All other schools implicitly or explicitly depend on mechanistic views of humanity, and constancy in their behavior. As usual, you are entirely wrong about everything.

Zachriel said...

Major_Freedom: Only the Austrians even consider the HUMAN CHOICE element.

Keynes: Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits – a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.

Major_Freedom said...

Zachriel:

"Major_Freedom: Only the Austrians even consider the HUMAN CHOICE element."

Keynes: Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits – a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities

Animal spirits != Human choice. It is a direct rejection of human choice.

Thanks for digging up that quote for me. It serves my argument very nicely.

Now try Monetarism!

Zachriel said...

Major_Freedom: Animal spirits != Human choice.

Keynes: our decisions to do something

Decide = to make a {final} choice

In any case, there is no action without passion.

Major_Freedom said...

Zachriel:

"Major_Freedom: Animal spirits != Human choice."

Keynes: our decisions to do something

Keynes: our decisions to do something...can only be taken as the result of animal spirits – a spontaneous urge to action

That is not an argument of choice, but an urge, an animalian spontaneous urge.

In any case, there is no action without passion.

Except rational ethics.

Zachriel said...

Major_Freedom: Except rational ethics.

There is no activity without desire. Why did you consume calories over the last few days?

Major_Freedom said...

Zachriel:

Major_Freedom: Except rational ethics.

There is no activity without desire.

Activity is by definition behavior according to desire.

Why did you consume calories over the last few days?

I already answered this in the other thread. It's best to keep the thread topics separate.

Zachriel said...

Major_Freedom: Activity is by definition behavior according to desire.

And so, rational thought is a slave to your passions, a tool you wield to get what you want. You had said,

Major_Freedom: Only the Austrians even consider the HUMAN CHOICE element.

All economists recognize desire and choice. It's the basis of all market transactions. To set your price, or haggle. To take it or leave it. What economists try to do is draw generalizations about how such transactions will work, such as the relationship between supply and demand.

JG said...

@ Scott D -

"I don't think that the Citizens United ruling is a particularly huge deal."

Then you don't understand what it means.

"Setting (or in this case, reversing) a few arbitrary limits to when and how they can do that must sound profound to you, I suppose."

I would say that the ability to purchase an election is a pretty serious situation. Certainly more profound than one state raising its minimum wage a few bucks. But hey, that's just my opinion.

"Government itself is the problem."

No, power is the problem. And even if you got rid of the government those with power (and the money to buy power) will still be around. And they will find a way to corrupt whatever form of society exists in a post-goverment world.

JG said...

@ Rick T -

"Yes, there is systematic corruption in government, that is hardly news to the author of this blog or most of the posters."

Corruption isn't news but the Citizens United case, which faciliates and cements corruption, certainly is news. And my point was that the author of this blog has chosen to ignore THAT news while he rails against something as immaterial as New York State proposing to raise its minimum wage a few bucks.

JG said...

@ Major Freedom -

"You moron. Anderson has been reading Krugman or long enough to know his positions. Stop pretending like this blog post is the first time Krugman's articles have been addressed."

I like how everytime someone points out an instance of Anderson putting words in Krugman's mouth either you or one of the other fan-boys on this blog immediately come to his defense with this sorry excuse. Usually something to the effect of "well, maybe he didn't say that exactly but we've read enough of Krugman's work to know what he REALLY means".

Bala said...

"No, power is the problem"

And Government is power. Hence, government is the problem.

" And even if you got rid of the government those with power (and the money to buy power) will still be around."

One more Statist who does not understand the different between economic power and political power. Economic power is the power of persuasion while political power is the power of the gun.

Tel said...

MF: "You want to pretend to yourself that raising the minimum wage above the market rate doesn't generate unemployment at $8.50, but will generate unemployment at $85, is fallacious. Economic laws don't change for different prices. It either generates unemployment to put wages above market by force, or it doesn't."

To be fair on LK (and let's face it, he needs every chance he can get) the curve could be highly non-linear. Too many people presume that economic response is linear, simply because of the convenience of drawing it that way.

However, I've yet to see anyone support their chosen position with a theory of what makes it non-linear, nor do they produce empirical evidence to support the choice of one price over another. It's either just one of those "guess so" values, or it's a political bidding game, to see what they think they can get away with and find out who moans and who cheers when they float the idea.

Anonymous said...

It might be somehwhat illuminating to recall that minimum wage laws have their genesis in early American eugenics. The idea was to deliberately price dysgenic stocks (the pathologically destitute) out of the labor market. There's an excellent overview of this in Thomas C. Leonard's "Retrospectives: Eugenics and Economics in the Progressive Era" - http://www.princeton.edu/~tleonard/papers/retrospectives.pdf

- Sauros.

Major_Freedom said...

Zachriel:

"Major_Freedom: Activity is by definition behavior according to desire."

"And so, rational thought is a slave to your passions, a tool you wield to get what you want."

False. I put reason above passions, even ethics. The field of rational ethics inquiry puts reason above the passions. To say that rational ethics is itself a "passion ruling rational thought" is a contradiction.

"Major_Freedom: Only the Austrians even consider the HUMAN CHOICE element."

"All economists recognize desire and choice."

There is a difference between casually recognizing it, and making it integral in one's models and theories.

"It's the basis of all market transactions."

Tell that to every economist except Austrians.

"To set your price, or haggle. To take it or leave it. What economists try to do is..."

Not all economists approach economics the same.

Mike Cheel said...

@Lk (third request now)

You said:

"What part of MINIMUM wage, don't you understand, Anderson?

The minimum wage is a floor concept, below which you do not want wages to fall, because this can have deleterious macro effects, and there are also moral issues of labour exploitation."

I am asking for you to give me the formula that determines what the floor should be (and a ceiling too if there is one in your logic).

I have a feeling this will go under the rug with questions like "Why is it ok to destroy my savings?"

Major_Freedom said...

Tel:

"To be fair on LK (and let's face it, he needs every chance he can get) the curve could be highly non-linear. Too many people presume that economic response is linear, simply because of the convenience of drawing it that way."

It doesn't require a linear assumption nor does it require a theoretical "curve" construct. It has to do with the issue of force and what we can logically infer to be the counter-factual that otherwise would have taken place in the absence of the force.

The first thing that has to be made clear is that minimum wage laws do not improve the productivity of any workers. A worker is productive or not independent of wages. A worker who is more productive tends to make more wages, and workers who are less productive tend to make less wages.

The second thing that has to be made clear is that employers will not willingly incur long term losses. Short run, perhaps, but only if they expect to make gains in the long run that could not otherwise be made if they refused to tolerate short run losses.

Now, if minimum wage laws have to be enforced, and not merely "on the books", it means that it MUST be affecting employer actions at and around the price floor. Minimum wage laws coerce employers into NOT hiring potential employees below a certain minimum price floor. Since the law is enforced, it means that the ONLY counter-factual possible is one where the employer considers a wage price, and then chooses hiring the employee at a wage that takes into account the worker's productivity, i.e. marginal revenue considerations.

Since employers will not hire workers whose marginal revenue product is below that of the minimum wage price floor, it means hiring them would incur the employer with losses. So, the employer simply doesn't hire them when they otherwise would have in the absence of the enforced wage price floor.

Major_Freedom said...

JG:

"You moron. Anderson has been reading Krugman or long enough to know his positions. Stop pretending like this blog post is the first time Krugman's articles have been addressed."

I like how everytime someone points out an instance of Anderson putting words in Krugman's mouth either you or one of the other fan-boys on this blog immediately come to his defense with this sorry excuse.

First, you haven't shown Anderson to be putting words into Krugman's mouth. Second, you are still too ignorant to make an informed judgment about what Krugman writes when he writes it. You want to strip each instance of Krugman's articles away from all the rest - because you are not informed of them all - and then you want to play the silly game of insisting that each article be viewed as a comprehensive whole that cannot be put into a context that includes the other articles.

I like how every time Anderson points out errors Krugman's articles, Krugman's fanboys like you come running to his defense with the above sorry excuse.

Usually something to the effect of "well, maybe he didn't say that exactly but we've read enough of Krugman's work to know what he REALLY means".

Context context context. This cannot be stressed enough.

Major_Freedom said...

Anonymous @ February 15, 2012 9:01 AM:

Thank you for posting that. It is very important that today's "bleeding heart" progressives learn the actual intellectual origins of their worldview.

One of life's great lessons is knowing that very often what the common "good" man believes is moral and just, have their roots in immoral and unjust ideas that persist down the years and yet are treated as moral and just.

Another group of people who need to learn the intellectual roots of their worldview are monetarists. Too many are like Milton Friedman and consider the creation of central banks as if they were somehow devised by benevolent individuals who just had the good of the whole economy in mind, who thankfully came up with an "optimal" rational outcome to a "social" problem that would otherwise hurt the common man. Little do they know that central banks were actually a solution to a "problem" that powerful bankers and the government had, which is how to make more money than what the "stringent" gold standard and taxation would allow. They were only serving themselves. They weren't trying to "help the economy." The onset of central banks enables powerful bankers and the government to gain AT THE EXPENSE of the common man.

Only Austrian economists seem to be able to understand these things, and there is a very good reason for it. The reason is that Austrians only view the economy according to individual action. We view each individual as a distinct entity acting to further their own ends. The introduction of systematic violence into social life is then adapted around by every other individual actor, and the only thing that can stop it is an informed populace. An uninformed populace cannot understand why violence originating problems arise, and so they continue to seek help from those who wield the physical force that caused the problems in the first place. Monetarists are by and large uninformed in this way.

Zachriel said...

Major_Freedom: I put reason above passions, even ethics.

You are confused on the nature of passion. With bare reason, there is no reason to do anything, no reason even to eat. It's because you are hungry, because you want to live, because you want, that you find nourishment to continue living.

Major_Freedom: There is a difference between casually recognizing it, and making it integral in one's models and theories.

As desire is fundamental to demand, all economists recognize both desire and choice.

Major_Freedom: Not all economists approach economics the same.

No, but all economists of note recognize haggling and choosing to buy or walk. They are observations of human behavior.

Major_Freedom said...

Zachriel:

"Major_Freedom: I put reason above passions, even ethics."

"You are confused on the nature of passion. With bare reason, there is no reason to do anything, no reason even to eat."

I didn't say bare reason. I said I put reason above passions. It is reason that underlies my knowledge that eating will enable me to continue living and satisfy my hunger pangs.

"It's because you are hungry, because you want to live, because you want, that you find nourishment to continue living."

You just agreed with my point. Wanting to live comes from my reason as well.

"Major_Freedom: There is a difference between casually recognizing it, and making it integral in one's models and theories."

"As desire is fundamental to demand, all economists recognize both desire and choice."

Not when demand is treated mechanically, and divorced from choice, as the models do.

"Major_Freedom: Not all economists approach economics the same."

"No, but all economists of note recognize haggling and choosing to buy or walk."

Again, recognizing it in passing, and utilizing it and making it integral in one's theorizing.

"They are observations of human behavior."

The mere money changing hands doesn't tell the whole story, and the whole story is paramount to distinguish wasteful spending from productive spending.

Zachriel said...

Major_Freedom: It is reason that underlies my knowledge that eating will enable me to continue living and satisfy my hunger pangs.

It's hunger that motivates your action, your reason allowing you to satisfy your hunger. Your reason is slave to your hunger.

Major_Freedom: Wanting to live comes from my reason as well.

You forgot the reason part. There is no logic to wanting to live. You desire to live, you want to draw your next breath, eagerto see what happens next.

Major_Freedom: Not when demand is treated mechanically, and divorced from choice, as the models do.

Well, that's a better made point. It's not that such economist don't recognize desire and choice, but you claim they have abstracted it away, and lost sight of the underlying dynamic.

Consider something simple, the demand curve. This is an abstraction. We know it is based on individual decisions, yet we can make predictions and match those predictions to observation. Sometimes, as Bala did recently, people can confuse the abstraction for the thing itself. Is that what you mean?

JG said...

Bala,

"One more Statist who does not understand the different between economic power and political power. Economic power is the power of persuasion while political power is the power of the gun."

Right. I guess when Carnegie and other industrialists sent strike breakers to bust open the heads of striking mill workers they were using "persuasion". I guess a club to the skull can be pretty persuasive.

Power is power. Those with economic power have never been above using coercion or violence when it suited them.

JG said...

Bala,

"First, you haven't shown Anderson to be putting words into Krugman's mouth. Second, you are still too ignorant to make an informed judgment about what Krugman writes when he writes it."

I have, several times on different articles here and every time I do you just deny it or ignore what I say. And yes, I'm pretty familiar with Krugman's writings and I am also pretty familiar with Anderson's pathetic straw-man attacks against Krugman. The following is the typical progression:

(1) Krugman says the GM bailout turned out well and helped turn around the auto industry.

(2) Anderson posts an inflammatory post claiming that Krugman supports nationalization of all private industries.

(3) You and the rest of the fan-boys pile on the bandwagon with commets like "when will Krugman learn that Communism is bad".

(4) I point out how you're distorting Krugman's actual message.

(5) You claim that I just don't know enough about Krugman's "real agenda" and how all of this other writings clearly endorse communism even if this particular one doesn't.

Sound familiar?

Major_Freedom said...

Zachriel:

"Major_Freedom: It is reason that underlies my knowledge that eating will enable me to continue living and satisfy my hunger pangs."

"It's hunger that motivates your action, your reason allowing you to satisfy your hunger. Your reason is slave to your hunger."

Hunger is a biological response to a biological necessity. Reason is of course subservient to all biological necessities. But all the hunger in the world will not give me the knowledge in knowing how to eat or knowing that eating cures hunger pangs. It's reason that motivates me to wanting to live that motivates me to doing something about my hunger pangs.

"Major_Freedom: Wanting to live comes from my reason as well."

"You forgot the reason part."

I just said reason.

"There is no logic to wanting to live."

Oh yes there is. The fact that you can't see it, and don't know it, doesn't mean there isn't any.

"You desire to live, you want to draw your next breath, eager to see what happens next."

My desire to live - and by live I don't just mean remain biologically alive, but to live what is possible for man to live - has a rational foundation. Knowledge that the social order is an indispensable prerequisite for man's well-being and happiness, is a statement of fact, not the passions. But the social order is simply not possible unless man learns what it is, what its benefits are, and know how to establish norms that are necessary for its preservation, which is the realm of justice. Justice is a product of reason, not the passions. The passions are thus the slave of these rational norms of justice, not the other way around.

Even David Hume, the founder of the thesis that reason is a slave of the passions, was compelled to reintroduce reason as a cognitive ethical factor in human interactions. Hume wrote:

"The remedy, then, is not derived from nature, but from artifice; or more properly speaking, nature provides a remedy in the judgment and understanding, for what is irregular and incommodious in the affections."

In other words, reason is superior the passions.

Major_Freedom said...

Zachriel:


"Major_Freedom: Not when demand is treated mechanically, and divorced from choice, as the models do."

"Well, that's a better made point. It's not that such economist don't recognize desire and choice, but you claim they have abstracted it away, and lost sight of the underlying dynamic."

Ergo the conflations of unproductive government taxation and spending, with productive business activity spending. A dollar spent is a dollar spent, regardless of the underlying choices or lack thereof.

"Consider something simple, the demand curve. This is an abstraction. We know it is based on individual decisions, yet we can make predictions and match those predictions to observation. Sometimes, as Bala did recently, people can confuse the abstraction for the thing itself. Is that what you mean?"

Close. What Bala is describing is called hypostatization, or the reification fallacy.

What I am describing is derived from what Aristotle called the "reaffirmation through denial" fallacy. The act of "spending" does not have meaning and reality unless its supporting premises, its logical roots, that make "spending" and meaningful and real action, themselves have meaning and reality. What is spending? Spending is the payment of money in exchange for goods and services. What is exchange? Exchange is the switching of two private property titles between two property owners.

Keynesians in their course of providing justification for government activity, strip "spending" away from its logical roots, and treat "spending" as a freely floating abstract that only has existence in the mechanical movement of money from one party to another, regardless of the human choices, regardless of the preferences, regardless of the values gained or lost. Government "spending" is therefore treated economically equal to private property spending.

Major_Freedom said...

JG:

"One more Statist who does not understand the different between economic power and political power. Economic power is the power of persuasion while political power is the power of the gun."

Right. I guess when Carnegie and other industrialists sent strike breakers to bust open the heads of striking mill workers they were using "persuasion".

Oh you mean when the striking workers were busting open the heads of "scabs"? Or does that violence not count?

And nice deflection by the way. You are pointed out the inherent violence of government activity, and you redirect the focus to an example of citizens using violence, as if violence characterizes all business activity.

It's like someone shows that one of your family members is a serial killer, and you say "Oh yeah? Well this one time there was this murder across the country, and he had nothing to with it, so there!"

I guess a club to the skull can be pretty persuasive.

That's how the government operates de jure.

"Power is power."

Not all power is derived from the same impetuses. Some power is derived from a peaceful foundation, such being a role model, being persuasive, being intelligent, and being productive. This is what characterizes free market "power." Other power is derived from a violent foundation, such as scaring people, threatening people with initiations of force, stealing. This is what characterizes state "power."

"Those with economic power have never been above using coercion or violence when it suited them."

Those with political power ALWAYS use coercion and violence in order for it to be political power in the first place.

But yeah, let's ignore the legalized state violence and instead focus on the illegal violence carried out by civilian thugs. That will turn mommy and daddy government into peaceful and benevolent angels.

Stop treating government like your mommy and daddy, who protects people.

Zachriel said...

Major_Freedom: Reason is of course subservient to all biological necessities.

To hunger for anything.

Major_Freedom: Knowledge that the social order is an indispensable prerequisite for man's well-being and happiness, is a statement of fact, not the passions.

So you hunger for well-being and happiness, and your reason sees that the social order is a prerequisite for satisfying this hunger.

Major_Freedom: What Bala is describing is called hypostatization, or the reification fallacy.

No. What Bala did was confuse the abstraction of the demand curve for labor with unemployment, which is defined as someone wanting to work, but not being able to find a job.

Major_Freedom: Other power is derived from a violent foundation, such as scaring people, threatening people with initiations of force, stealing.

And other power is derived through the democratic process and the consent of the people.

JG said...

Bala,

"And nice deflection by the way. You are pointed out the inherent violence of government activity, and you redirect the focus to an example of citizens using violence, as if violence characterizes all business activity."

I didn't deflect anything. I just pointed out an example of economic power being used to wield violence, which according to your position never happens. And I noticed you didn't bother to address that point at all, choosing rather to pretend that those violent strike breakers were just individual citizens choosing to beat up striking workers on their own and not hired goons paid by their corporate master. Nice job side-stepping that one.

JG said...

"Some power is derived from a peaceful foundation, such being a role model, being persuasive, being intelligent, and being productive. This is what characterizes free market power."

Except when it isn't peaceful or persuasive. Like when those persuasive free-market darlings use bribery or corruption to "persuade" others to commit acts of violence on their behalf. History is full of examples of private enterprise using money to pay for hired guns to do awful things. But go on, tell me how that never happens and only the government is capable of bad things.

Bala said...

" But go on, tell me how that never happens and only the government is capable of bad things."

There is this old joke about how the meaning of a sentence changes when you change the position of the word "only". Here's an example.

" But go on, tell me how that never happens and the government is capable of bad things only."

Do you see the difference? No? I guess your Statism blinds you to it.

macroman said...

Anderson, A while back Krugman wrote explicitly about whether lowering wages would increase employment (in the present situation, and possibly in general). Wouldn't it be better to respond to that blog rather than what the NYT says. My apologies if you did respond at the time Krugman wrote.

Tel said...

MF: Not all power is derived from the same impetuses. Some power is derived from a peaceful foundation, such being a role model, being persuasive, being intelligent, and being productive. This is what characterizes free market "power."

I think it is best to characterize power by looking at the consequence of resistance. If you refuse to pay your tax you tend to get hurt, and lost everything. If you refuse to drink Coca Cola you then have to drink water or something else that you maybe don't enjoy quite as much.

Tel said...

Zac: "And other power is derived through the democratic process and the consent of the people."

You mean, consent of 51% of the people, and those typically don't have much visibility into the process that their consent is given to. I think that modern Western democracy falls a long way short of what was showing on the sales brochure.

macroman said...

Tel, I know what i am about to say is outrageous by US standards, but

1) Australia has "compulsory" voting so there are simple things you can do to increase participation in the political process. To calm you down a bit, note that it is not compulsory voting, but compulsory turning up at the ballot box and putting your ballot paper in the ballot box. No one can force you to actually make a valid choice on your ballot ballot paper. The inconvenience and infringement on your freedom is comparable or less than that associated with the citizen's duty to sit on juries when necessary. The fine for not turning up is about $50 and is rarely enforced, plenty of excuses I understand.

2) On the participation argument: the important thing is not that every citizen can decide policies directly or participate directly in the process of law/decree making, but that citizens can rid themselves of oppressive governments by the peaceful method of the ballot box, rather than revolution.

3) The 51% argument works both ways. All you or anyone has to do is convince 51% of the people. It is not as though there is nothing you can do to get this blog's principles into operation.

4) Since people do have to turn up and submit their ballot paper, in practice they do make a choice (the informal/invalid vote rate is small). They may not make fully informed choices, by your standards, about intricate technical issues, but they can spot a charlatan and can and do remove bad or incompetent governments, or even just "try the other side to see how that goes".

Zachriel said...

Tel: You mean, consent of 51% of the people, ...

Well, no. In most modern democratic states, the vast majority of citizens peacefully consent to the results of elections—even when they lose.

Tel: I think that modern Western democracy falls a long way short of what was showing on the sales brochure.

No doubt, but the vast majority of people reject tearing down the existing democratic system and starting over, much less replacing it with anarcho-capitalism, or somesuch.

Major_Freedom said...

Zachriel:

"Well, no. In most modern democratic states, the vast majority of citizens peacefully consent to the results of elections—even when they lose."

So do the vast majority of theft at gunpoint victims.

"No doubt, but the vast majority of people reject tearing down the existing democratic system and starting over, much less replacing it with anarcho-capitalism, or somesuch."

The vast majority used to believe in witch burning and flat Earth.

Who cares what the vast majority think? The vast majority's beliefs are not the definition of truth.

Zachriel said...

Major_Freedom: So do the vast majority of theft at gunpoint victims.

The claim in question was Tel's suggestion that the minority 49% do not consent. While you might reasonably argue that consent of the people is not the same as unanimous consent, it is clearly the fact that the vast majority of people in modern democracies accept the results of a fair electoral process, even when they lose.

Kyle P. said...

"That contention has been proved wrong time and again."

I cant express the frustration I feel when I see this statement, or one analogous, used to argue against some policy.

Apparently, mainstream columnists have a massive database of "time and again" which they can readily access at any time, which demonstrates that every single market based policy has been implemented and failed.

The chief culprit in this respect is definitely P.B.O., who is always eager to remind us of the conclusions of some non-existent empirical study which proves George W. Bush to be the epitome of classical liberalism, and that his radical libertarian economic policies demonstrably created an economic disaster.

Major_Freedom said...

Zachriel:

"Major_Freedom: So do the vast majority of theft at gunpoint victims."

"The claim in question was Tel's suggestion"

I was just responding to your claim that "In most modern democratic states, the vast majority of citizens peacefully consent to the results of elections—even when they lose."

I only wanted to say the same thing is true for the vast majority of theft at gunpoint victims.

Not really interested in what you have to say in response to that.

Zachriel said...

Major_Freedom: In most modern democratic states, the vast majority of citizens peacefully consent to the results of elections—even when they lose.

Most people willing accept the results of a fair electoral process. They do not willingly accept being robbed, and will resist or retaliate when it is safe to do so.

Major_Freedom said...

Zachriel:

"Major_Freedom: In most modern democratic states, the vast majority of citizens peacefully consent to the results of elections—even when they lose."

"Most people willing accept the results of a fair electoral process. They do not willingly accept being robbed, and will resist or retaliate when it is safe to do so."

That explains taxation theft, and every other law a majority elected state creates and enforces on the minority.

macroman said...

It is very odd that MF cannot see all the important differences between an election, or even paying taxes, and being robbed at gunpoint, which makes gunpoint robbery far worse. To argue as though they were the same, this lack of discrimination, is weird. I am starting to see why this blog is called "in Wonderland".

Bala said...

"It is very odd that MF cannot see all the important differences between an election, or even paying taxes, and being robbed at gunpoint, which makes gunpoint robbery far worse."

What are the important differences and what makes them "important"? How can you even talk about it without talking of the definition of "violent exchange"? And how can you do this by adopting Popper's approach to definitions? We are in the realm of discussing concepts, you see, and it is impossible for people who reject the role of definitions in such a discussion to participate meaningfully. And that means YOU.

Zachriel said...

Major_Freedom: That explains taxation theft, and every other law a majority elected state creates and enforces on the minority.

In this case, it is the people levying taxes on themselves.

macroman: I am starting to see why this blog is called "in Wonderland".

Quite.

Bala said...

"In this case, it is the people levying taxes on themselves."

Ha! Ha! Ha!! I can see how you delude yourself. Those in government take money away from everyone irrespective of their consent or the lack of it. You Statists are truly hilarious.

Major_Freedom said...

macroman:

"It is very odd that MF cannot see all the important differences between an election, or even paying taxes, and being robbed at gunpoint, which makes gunpoint robbery far worse."

The only reason guns aren't actually pulled out with taxation is because people pay them. If they don't, then the guns are pulled out.

The fact that taxation ultimately enforced at gunpoint (if you don't pay), and theft at gunpoint, are two seemingly separate phenomena, this doesn't change the fact that both are backed by gunpoint, not consent. You stop paying taxes, and the friendly government will turn into the street thug.

"To argue as though they were the same, this lack of discrimination, is weird."

Why is it weird? Is it as weird as saying a rapist who threatens a woman with violence against her children if she fights back, thus she capitulates and we observe no struggle, is the same violation of rights as a rapist raping a woman at gunpoint, that both are based on the same thing, namely violence?

Yes, rape at gunpoint can be "worse" than rape with the verbal threat of violence that will turn into physical violence if the woman resists, but that doesn't mean it is wrong to say rape is rape.

"I am starting to see why this blog is called "in Wonderland"."

The blog is called Krugman in Wonderland.

Major_Freedom said...

Zachriel:

"Major_Freedom: That explains taxation theft, and every other law a majority elected state creates and enforces on the minority."

"In this case, it is the people levying taxes on themselves."

HAHAHAHAHA

What's next? The German Jews in WW2 holocausted themselves?

The "people" don't tax themselves. Some people (those in the state) tax other people (those not in the state).

I am not taxing myself. I am being taxed, and those taxing me, aren't being taxed by me. It's one directional.

Your usage of the words "the people" is sloppy, not correct, and betrays what is actually going on.

You need to read "Anatomy of the State" by Rothbard.

"macroman: I am starting to see why this blog is called "in Wonderland"."

"Quite."

I'm starting to see how this blog attracts those in Wonderland like Krugman.

Major_Freedom said...

Anyone else hating the new security "prove you're not a robot" word verification?

Can it be any more difficult to make out what the heck the words say?

macroman said...

Can we have a vote please? How many here would prefer (a) to pay taxes or (b) to be robbed at gun-point, I mean really robbed by an armed robber, next time you travel home at night say? I don't mean in some pretend abstract sense, I mean really robbed (which most of you probably have to imagine) or really pay your taxes which I guess you know about first hand. I still can't believe the implied assertion by so many here in wonderland that they they can't see any difference.

Bala said...

strawman,

Strawman question as usual. Why not a third option "Not be robbed at all"?

MF,

I hate it too for the same reason.

Zachriel said...

Major_Freedom: What's next? The German Jews in WW2 holocausted themselves?

Because passing a two-penny tax on bubble gum through an elected legislature and under a democratic constitution is the same as murdering millions of Jews.

macroman said...

These are some reasons why I say armed robbery is worse than taxation. These reasons support my contention that the comparison of taxation with armed robbery is a dodgy appeal to emotion rather than a straightforward appeal to reason.

With armed robbery or burglary, even if your resistance is minimal,
1. you may be killed
2. you may be beaten or subject to cruel and unusual punishment
3. what is taken from you may have no relation to what you can afford to pay
4. the armed robber is not required to follow due process, or treat you with respect, or explain his actions to you
5. You have no power of appeal over the armed robbers decisions
6. you have no avenue of appeal about the manner in which the armed robber treated you
7. you cannot arrange to meet the robbers demands in an orderly timely way that minimizes the loss to you
8. you have no way of voting the armed robber out of from his position of control over you
9. The robber gives you nothing in return. The robber does not give you a police force and a court system by which you can seek justice and compensation from the robber.
10. The robber does not use the money taken from you to give you roads, bridges, tunnels, water supply, sewerage, weather service, army, air force and navy and coast guard, lighthouses, beach protection, national parks, diplomatic relations with foreign countries making it easier for you to travel, and other things.

These things the government gives you are worth something even if they are not the best use of your money or not how you would like to spend your money. The armed robber gives you nothing and so is worse than taxing government, which does gives you something.

I am not saying that you should stop calling for the abolition of taxes. I am saying that you guys should ditch that appeal to emotion over reason. Forget rape, robbery, truncheons, jack boots, bloodthirstiness and so on when referring to taxation.

macroman said...

@MF: "You stop paying taxes, and the friendly government will turn into the street thug."

Actually, what happens is that the government asks you to explain why you haven't paid. You can challenge the assessment. You can maybe reduce the tax demands by various shady moves or perfectly legal moves. You are given time to pay, you may be able to pay in small installments. If you insist on going to jail you will probably be sent to a minimum security facility, where you will make endless appeals to the courts, and you will probably not be the most mistreated prisoner in the prison system.

I suppose I must mention that the street thug, on the contrary, won't give you all these chances and harm minimization avenues. The street thug is likely to kill or main you, and leave you with long-term psychology harm. This and other things listed in a previous post, make the street thug much worse than the government.

(But I understand the paying taxes seems to induce long term psychology damage on some people so perhaps we should just stick with other differences).

Major_Freedom said...

macroman:

Can we have a vote please? How many here would prefer (a) to pay taxes or (b) to be robbed at gun-point

LOL at the statist so brainwashed by statism that he assumes that people not only MUST be violated of their property rights and pay "someone" against their will, such that our only "choice" is whether we will be robbed by those in the state, or those not in the state, but also that this question must be settled by majority vote, as if the right not to be raped or aggressed against can be voted away by the majority mob.

How about (c) not be violated of one's property rights by anyone, period?

I mean really robbed by an armed robber, next time you travel home at night say? I don't mean in some pretend abstract sense, I mean really robbed (which most of you probably have to imagine) or really pay your taxes which I guess you know about first hand. I still can't believe the implied assertion by so many here in wonderland that they they can't see any difference.

I'd rather not have the state rob me or coerce me, and fend for myself against petty criminals. I can handle petty criminals a lot easier than I can a state.

But unlike statists, I don't want to IMPOSE what I want for myself, on others as well. My rights extend out only as far as another individual's rights begin, and I choose this rather than a "do whatever I can possibly do physically" because A. It is the only logically defensible position, and B. It has the best outcomes.

Instead of trying to force the same thing on everyone, why not let people choose for themselves as long as their choices don't include forcing others into it?

Major_Freedom said...

macroman:


"Major_Freedom: You stop paying taxes, and the friendly government will turn into the street thug."

Actually, what happens is that the government asks you to explain why you haven't paid.

You're not thinking far enough ahead. Suppose the government asks me all these "peaceful questions", and suppose that I CONTINUE to peacefully resist.

At some point, the state is going to turn into the same petty street thug that you're claiming is different from how the state does their business.

I can turn this around. Suppose the petty street thug behaves similar to how the state behaves in terms of escalation and threats. Suppose the petty street thug initially asks me for my wallet with the threat that if I don't, he'll send me a letter telling me his intentions to use physical force against me. Then when I refuse he asks me why I refuse. Then he escalates and says if I don't give him my wallet, he will make good on his letter and threaten me with physical force. Then when I refuse once more, he then gives me a "final warning." Then I resist again, and at some point, he points a gun at me. Then in defense I point my gun at him, and he opens fire.

Are you saying that the street thug's initial threats were not present until he actually used physical force against me?

You can challenge the assessment.

In which court? The state's? That's like saying I can challenge a rape in a court run by the rapist.

You can maybe reduce the tax demands by various shady moves or perfectly legal moves.

And if I can't?

You are given time to pay, you may be able to pay in small installments.

Who cares? The point is that one is force by violence to pay. I don't care if the street thug "allows" me to pay him "in instalments." It's still theft.

If you insist on going to jail you will probably be sent to a minimum security facility, where you will make endless appeals to the courts, and you will probably not be the most mistreated prisoner in the prison system.

If I insist on going to jail? Who the hell insists on themselves going to jail? It's the state that insists people go to jail, not the people being sent to jail.

Being presented with the choice "your money or we will kidnap you and throw you into a cage" cannot EVER result in one "insisting" that they themselves be kidnapped and thrown into a cage.

"I suppose I must mention that the street thug, on the contrary, won't give you all these chances and harm minimization avenues."

I must mention that I have a better chance defending myself against street thugs, than I do the state.

The street thug is likely to kill or main you, and leave you with long-term psychology harm.

The state is responsible for more murders and maims than any other institution in the history of mankind. The state is by far the most likely source of whatever murders and maims that take place.

And you're wrong that a street thug is likely to kill you or maim you. Most street thugs are cowards. The reason why you believe otherwise is because only those few street thugs who commit egregious violence make it to the 6 o'clock news. For the majority of street thugs, they're weak minded cowards who are most likely easily handled by a single pistol armed potential victim.

Those in the state are also cowards, but unlike the street thug they have far more resources at their disposal.

This and other things listed in a previous post, make the street thug much worse than the government.

Not. Even. Close.

(But I understand the paying taxes seems to induce long term psychology damage on some people so perhaps we should just stick with other differences).

Just look at the average voter and who they vote for if you doubt it.

Major_Freedom said...

macroman:

This is why taxation backed by gunpoint is worse than no taxation and no gunpoint:

1. you may be killed

2. you may be beaten or subject to cruel and unusual punishment

3. what is taken from you may have no relation to what you can afford to pay

4. the armed state robber is not required to follow due process, or treat you with respect, or explain his actions to you

5. You have no power of appeal over the armed state robbers supreme court decisions

6. you have no avenue of extra-state appeal about the manner in which the armed robber treated you

7. you cannot arrange to meet the robbers demands in an orderly timely way that minimizes the loss to you

8. you have no way of voting the armed state robber out of from his position of control over you since the problem isn't who is in control of the state, it's that there are people in control of a state.

9. The state robber gives you nothing you want in return. The state robber does not allow you a private police force and a private court system by which you can seek justice and compensation from the state robber.

10. The state robber does not use the money taken from you to give you the roads people want, bridges people want, tunnels people want, water supply people want, sewerage people want, weather service people want, army people want, air force and navy and coast guard people want, lighthouses people want, beach protection people want, national parks people want, diplomatic relations with foreign countries for the travel that people want, and other things that people want. Instead, they give people the roads they don't want, bridges people don't want, tunnels people don't want, water supply people don't want, sewerage people don't want, weather service people don't want, army people don't want, air force and navy and coast guard people don't want, lighthouses people don't want, beach protection people don't want, national parks people don't want, diplomatic relations with foreign countries for the travel that people don't want, and other things that people don't want.

These things the government gives you are worth something even if they are not the best use of your money or not how you would like to spend your money. The armed robber gives you nothing and so is worse than taxing government, which does gives you something.

You're presenting a false choice. You're saying people have to choose being robbed by a state, or being robbed by a street thug. How about not being robbed by the state, and not being robbed by street thugs?

Zachriel said...

Major_Freedom: You're not thinking far enough ahead. Suppose the government asks me all these "peaceful questions", and suppose that I CONTINUE to peacefully resist.

In a lawful society, if you flout the law, then you will probably be charged and punished. In democratic societies, though, you can work to change laws you don't agree with, and have the right to due process.

Aussie said...

@ Macroman

Taxation is not voluntary, at least in my case. Therefore, it is a zero-sum game. Taxation is theft as my property, i.e. money, has been expropriated from me without my consent and should I resist, I will ultimatelty be thrown in jail etc. If I were in a hardcore socialist or totalatarian society, I could expect worse consequences.
If the mafia come to my restaurant and extort me for $500 a week, how is that not dissimilar from what government does? The exchange was not voluntary but could perhaps be argued by the mafia it was implied by the mere fact that I opened up a restaurant in a certain Italian neighbourhood etc. The mafia may grant more time to pay and discuss my situation, but again I will most likely end up in hospital or my shop destroyed. The mafia may also help fund community events and activities (most common amongst triads), which you argue I may get some utility from in the way government spends on parks etc. Although different scenarios of theft occur, thus warranting varying degrees of penalty, theft is still theft. I struggle to comprehend how after giving this some scholarly thought, one would feel differently. Oh well...

macroman said...

You're presenting a false choice. You're saying people have to choose being robbed by a state, or being robbed by a street thug.

I said no such thing. I merely showed why the emotional claim that taxation is the same as armed robbery is a bad way to "argue".

And in answer to your question. Hmmm, let me see, I think not being robbed is better than being robbed.

Zachriel said...

Aussie: Taxation is not voluntary, at least in my case.

Because if you live in Australia, then you live in a democratic society and have a say in how taxes are raised and spent.

Aussie: The mafia may also help fund community events and activities (most common amongst triads), which you argue I may get some utility from in the way government spends on parks etc.

You're first and foremost paying for security. As for the quality of the governance, that varies considerably. Typically, you won't have much say in the matter.

Major_Freedom said...

Zachriel:

"Aussie: The mafia may also help fund community events and activities (most common amongst triads), which you argue I may get some utility from in the way government spends on parks etc."

"You're first and foremost paying for security."

It's not security to be robbed by the very people allegedly claiming to protect, and claimed to be protecting, those very same people.

It's only true protection when the protector themselves aren't an aggressor.

Zachriel said...

Major_Freedom: It's not security to be robbed by the very people allegedly claiming to protect, and claimed to be protecting, those very same people.

The mafia is a private security force. If you don't pay, your business burns down.

Major_Freedom said...

Zachriel:

Major_Freedom: It's not security to be robbed by the very people allegedly claiming to protect, and claimed to be protecting, those very same people.

The mafia is a private security force. If you don't pay, your business burns down.

Not all private police security forces are mafias. You don't pay them, and you can hire a protector to stop the mafia.

ALL states are mafias. You don't pay, and you end up in a cage and your business taken over, and you can't hire a private security to stop the state.

It's hilarious watching the depths of absurdity statists will go to justify the state. Everyone is evil in your depraved worldview.

Zachriel said...

Major_Freedom: Not all private police security forces are mafias.

That's right. Many modern security forces work under and in conjunction with lawful governments.

Major_Freedom: You don't pay them, and you can hire a protector to stop the mafia.

Sure, but sometimes it's more cost effective to simply work out an arrangement.

Major_Freedom: ALL states are mafias.

Democratic states have a mechanism for people to exert some measure of control over government. Mafias are traditionally more of a family business where they exert monopoly control over criminal activity in a neighborhood.

Major_Freedom said...

Zachriel:

Major_Freedom: Not all private police security forces are mafias.

That's right. Many modern security forces work under and in conjunction with lawful governments.

No, that's not what I meant. Nice straw man though.

Not all private security are mafias, and not all private security work in conjunction with illegal and unlawful states.

Major_Freedom: You don't pay them, and you can hire a protector to stop the mafia.

Sure

We can't do that with the state.

Major_Freedom: ALL states are mafias.

Democratic states have a mechanism for people to exert some measure of control over government.

So do mafias. Mafia Dons are elected.

Mafias are traditionally more of a family business where they exert monopoly control over criminal activity in a neighborhood.

I am not talking about bloodlines, I am talking about what they are doing. "Protection racket" describes both mafias and states.

Zachriel said...

Major_Freedom: Not all private security are mafias, ...

Surely.

Major_Freedom: and not all private security work in conjunction with illegal and unlawful states.

Another one of your 'special definition'? What is your idea of an illegal and unlawful state? Do you have examples of such private security forces?

Major_Freedom: Mafia Dons are elected.

So's the Pope, but not by popular suffrage.

Major_Freedom: "Protection racket" describes both mafias and states.

In modern democracies, the people have a say in how taxes are raised, and how the money is spent.

Major_Freedom said...

Zachriel:

Major_Freedom: Not all private security are mafias

Surely.

All states are mafia protection rackets.

Major_Freedom: and not all private security work in conjunction with illegal and unlawful states.

Another one of your 'special definition'?

I didn't give a "special definition" the first time, I couldn't have done such that it can be labeled "another."

What is your idea of an illegal and unlawful state?

Any group of people who use violence or the threats of violence to confiscate property from their just owners, just owners being those who homesteaded, produced, or freely traded the property.

Do you have examples of such private security forces?

Every individual citizen for one thing.

With regards to private security institutions, there are MANY across the country.

http://www.privatemilitary.org/private_security_companies.html

Major_Freedom: Mafia Dons are elected.

So's the Pope, but not by popular suffrage.

The difference is that the Pope's authority doesn't extend over those who don't give him money and don't support what he's doing.

Contrast that with the state mafia.

Major_Freedom: "Protection racket" describes both mafias and states.

In modern democracies, the people have a say in how taxes are raised, and how the money is spent.

Which people? Certainly not those in the minority, and certainly not anarchists.

And even if only 40% of the people voted for anyone, while the other 60% did not, and out of the 40% who do vote, 51% determine the victors, it means that in the US, typically only 21% or so of the population actually voted for the state. And out of those, many of them vote not because they support the state, but because they want the state to be the least destructive, so even voting doesn't display a preference.

The fact that the US population hasn't risen up into a civil war doesn't mean that the state is supported, any more than a beaten spouse not having risen up against their attacker doesn't mean they abuse is justified.

Zachriel said...

Major_Freedom: Any group of people who use violence or the threats of violence to confiscate property from their just owners, just owners being those who homesteaded, produced, or freely traded the property.

In other words, any democratic government. You really ought to consider moving to an island somewhere.

No man is an island entire of itself; every man
is a piece of the continent, a part of the main;
if a clod be washed away by the sea, Europe
is the less, as well as if a promontory were, as
well as a manor of thy friends or of thine
own were; any man's death diminishes me,
because I am involved in mankind.
And therefore never send to know for whom
the bell tolls; it tolls for thee.

Major_Freedom said...

Zachriel:

"Major_Freedom: Any group of people who use violence or the threats of violence to confiscate property from their just owners, just owners being those who homesteaded, produced, or freely traded the property."

In other words, any democratic government. You really ought to consider moving to an island somewhere.

You really ought to move to an island? Slave owners said the same thing to those against slavery.

No man is an island entire of itself; every man
is a piece of the continent, a part of the main;
if a clod be washed away by the sea, Europe
is the less, as well as if a promontory were, as
well as a manor of thy friends or of thine
own were; any man's death diminishes me,
because I am involved in mankind.
And therefore never send to know for whom
the bell tolls; it tolls for thee.


Every man is an island entire of itself; every man
is a whole in his own country, a whole of himself;
if a clod be washed away by the sea, Europe
is unchanged, as well as if a promontory were, as
well as a manor of thy friends or of thine
own were; any man's death does not diminish me,
because I am involved with nobody without their consent.
And therefore always send to know for whom
the bell tolls; it tolls for me.

Zachriel said...

Major_Freedom: You really ought to move to an island? Slave owners said the same thing to those against slavery.

Yes, democracy is slavery. Work means freedom.

Major_Freedom: if a clod be washed away by the sea, Europe is unchanged, as well as if a promontory were

That's obviously not true.

Major_Freedom: any man's death does not diminish me,

Only if you are already so diminished that no further diminishment were possible.

Major_Freedom: And therefore always send to know for whom the bell tolls; it tolls for me.

Yes, it does.

ALima said...

The cost is imposed on the employee that never gets any job.

ALima said...

I think he means setting the minimum wage at $85.

Major_Freedom said...

Zachriel:

"Major_Freedom: You really ought to move to an island? Slave owners said the same thing to those against slavery."

Yes, democracy is slavery. Work means freedom.

Democracy doesn't change the hostility being waged against the individual.

"The principle that the majority have a right to rule the minority, practically resolves all government into a mere contest between two bodies of men, as to which of them shall be masters, and which of them slaves; a contest, that -- however bloody -- can, in the nature of things, never be finally closed, so long as man refuses to be a slave." - Lysander Spooner.

"Major_Freedom: if a clod be washed away by the sea, Europe is unchanged, as well as if a promontory were"

That's obviously not true.

Obviously it is. Europe is by definition a changing concept, that presupposes weather erosion, plate tectonics, and export/import of goods, and movements of people.

"Major_Freedom: any man's death does not diminish me,"

Only if you are already so diminished that no further diminishment were possible.

I can neither be diminished nor not diminished by what happens outside me. I am me regardless. Nothing can diminish me except initiations of force against my person or my justly possessed means of life, i.e. my property.

The fact that you are trying to smear me as somehow lacking in some emotional attribute, only further reinforces the fact that you don't argue according to logic and evidence, but your fallacy ridden emotions.

I will never feel diminished even if a million people died. My life is far too precious and important for that. My future will almost certainly be less prosperous, but I will be the same person.

I will never demand that others feel sad every time someone in the world dies. Millions of people die. If individuals had to feel sad for everyone who died, then life for those who live would be one of moral and intellectual degradation, much like yourself. I do NOT want to be anything like you. If I were anything like you, I'd probably join one of the millions above voluntarily.

"Major_Freedom: And therefore always send to know for whom the bell tolls; it tolls for me."

Yes, it does.

The bell tolls for all individual humans. I accept my mortality. I don't get sad because of it.

And I don't have to accept John Donne's poetic thesis in its entirety. He was suffering when he wrote. I am not suffering. I am thriving. It does not apply to me.

Zachriel said...

Major_Freedom: I will never feel diminished even if a million people died.

Just listen to yourself.

Major_Freedom said...

Zachriel:

"Major_Freedom: I will never feel diminished even if a million people died."

Just listen to yourself.

OK, now what?

I still don't feel the slightest bit diminished. My entire physical body remains intact. My thoughts remain my own.

There is nothing that is diminished.

Every moment you feel happy, you are doing exactly what I am doing all the time, when it comes to thinking and doing in a world full of those less fortunate.

You see, I don't feel unhappy or happy over something I have no control over.

Zachriel said...

Major_Freedom: I will never feel diminished even if a million people died.

Major_Freedom: I still don't feel the slightest bit diminished.

Major_Freedom said...

Zachriel:

"Major_Freedom: I will never feel diminished even if a million people died."

"Major_Freedom: I still don't feel the slightest bit diminished."

Repeating what I say without even addressing it, isn't even a proper argument.

I still don't feel the SLIGHTEST bit diminished.

You are scared of that because it means you are being told by someone that they won't feel diminished if you die. That is something that is too hard for you to accept.

You pretend that you're just speaking on behalf of others you aren't even aware of who are actually dying, but in reality, you're just scared for yourself. How could anyone not care about your life like that? Easy, you represent no value to me other than being debate fodder that you dime a dozen violence advocating statists really are.