No, perfect competitive supply and demand predicts disemployment. We know that monopsony is the norm. We don't even have to refer to the notion of one buyer. Indeed, job search models predict greater underpayment in apparently more competitive industries The thread is about the limited value of the minimum wage. Whilst it can reduce the inefficiencies associated with monopsony, it cannot solve working poverty. Your error is in using supply & demand incorrectly
... Of course it does, very few goods are perfectly employed. All that matters is the MVPL for any firm in competitive industries labor will be paid up to this amount. ... How exactly? If you think that someone is using supply and demand incorrectly while advocating for price controls, then you've really got some explaining to do.
Monopsony informs us that wage will be set below productivity criteria. You've shot yourself in the foot Already said. Your whole position (which is really just spamming the thread) is reliant on perfect competition. If we took every assumption used in perfect competition and just relaxed the assumption of perfect knowledge we'd deliver conditions consistent with the 'higher wage, higher employment' result. You've effectively ignored the difference between an upward sloping labour supply at the market level and one at the firm level
congresses raises should be tied to the same system as the min wage and social security cost of living increases .
Monopsony is a rare phenomenon, and it's talked about specifically because it's the one case where minimum wage could actually raise wages. In the case of monopsony things are more complicated than simple supply and demand (although ultimately practically everything is reducible to these components) When you're making claims as ridiculous as the minimum wage increases employment, when this is contrary to basic economics, then bringing that to the forefront of the discussion is not spamming the thread. A firm will employ additional units of labor to that point where employing additional units of labor does not increase revenue. This drives the prices of labor to its MRP, period.
If the min wage corrects for market failure and yields the competetive equilibrium, and that wage still isn't enough to bring workers out of poverty, there has to be something wrong with the market... or the theory
An efficient outcome can still be highly inequitable. We see that with the concept of pareto efficiency. We just can't use underpayment as a means to explain the severity of working poverty
You continue to make crass error. Monopsony only requires the existence of job search frictions. We know its the norm as the law of one wage, as predicted in the case of the inanely silly perfectly competitive result (that you're completely reliant upon), is rejected. Get back to me when you know the basics. In the mean time stop with the spam. Find yourself a minimum wage thread based on making ludicrous claims about perfect competition
If you will allow me to switch to a less economic language. In the words of Rawls and Dworkin, it's an obvious case of society needing to be more 'endowment insensitive'. Given that the market will reproduce inequalities even though we redistributed resources initially, some form of continous redistribution will be neccesary.
Redistribution, although the primary objective is arguably the defence of capitalism, can generate numerous positive externalities. The interesting aspect, however, is how economies have been able to manipulate their social wages (I.e. An increased tendency to see illusionary redistribution where worker benefits are substantially paid for with worker taxes).
Is it a result of manipulation, or just a loss of faith in the welfare state? The reality of the globalized world reduces us to taxing income instead of wealth and business. We would need some form of supranational authority on tax in order to prevent defection from the collective rational taxlevel. I'm not sure how I feel about that...
I'd suggest that the issue is focused on the social institutions required to ensure economic stability. Take Britain. There has been an increase in economic turmoil generated by deindustrialisation and a deliberate skewing of resources to low wage labour (encouraged by the curtailing of union power). However, this hasn't had the knock-on effects into workers militancy because of aspects such as harnessing the housing tenure decision (e.g. Thatcher's selling of the social housing stock, creating a new class of owner occupiers who look for housing investment to replace genuine social welfare redistribution)
Obviously because you're not ranting with your Caps lock on in agreement with his Epeen, you must be against his core argument. >.<
So a welfare state? Universal health care, education etc. so that everyone ends up over the poverty line despite income. Not a new, revolutionary idea exactly. Or is there something I'm not getting?
I haven't referred to my stance, merely the mundane reality of capitalism as it uses some redistribution systems in order to ensure the reproduction of inefficient economic rents. Within capitalism we can typically refer to a 'stable' poverty rate and that will undoubtedly include high working poverty with illusionary redistribution policies used primarily to maintain wage differentials (by ensuring worker militancy is kept in check). Now I'd go with market socialism, ensuring a level of choice that empowers both the institution (through more democratic ownership) and the individual's tacit knowledge (and self-employment). But that isn't on offer. A living wage at least can be used (which is more akin to social regulation within a liberal democratic regime)
What are you refering to when you speak of 'working poverty'? I've always perceived poverty as more of an 'outsider-problem', e.g. single parents on the sick-list, whereas "modern day working people" are quite well off. The problem seems to be how to guarantee a basic standard of living for all, without damaging incentives for work. I'm all on board with soacialism of course, avoiding knowledge- and information-problems and striving for a more participatory form of democracy, but I don't see how a transition to an economy of labour managed firms would be feasible without an alreadfy high degree of self-employment and co-op businesses already present in the economy. How do we get there?
Its less of a problem in social democratic and some liberal democratic countries. However, especially for the UK and its low skilled equilibria, there is a tendency to offer jobs that are insufficient for escaping poverty (be it relative poverty measure or the updated absolute methodologies that employ consensus methods to determine the minimum basket of goods) We don't need high self-employment now. Indeed, self-employment in capitalism is often a sham (with employers using it a means to escape non-pecuniary benefits associated with permanent employment or ex-employees using it for pin money after being made redundant). What we need is genuine choice so that self-employment is an option. That would require a one-off substantial grant paid to all adults (and subsequent benefits then made even more conditional)
Yes, some form of ex ante redistribution like 'the stakeholder society' would probably be preferable. My concern however lies with the problem of moving from a system of passive wage-workers to one of entrepeneuarial firm managing workers. It seems to me that a culture of entrepeneurial spirit and self employment would have to be present in order for the one-time wealth redistribution to make any sense. Even given a large lump sum of money, I suspect most people would still choose wage-employment because it of the lower risk and the way we're used to doing things. Abolishing (or limiting) wage labour would of course be a step in the process but such a policy would be impossible to implement without first making self-employment a real, major alternative to wage labour. And sorry for the slow reply, been busy...
The distinction between actual self-employment and desired self-employment (the consequences of restricted resources and risk aversity) suggests that it is. Given economies of scale in complex production, compensated labour (through co-operates or employee ownership) isn't a bad thing. All we need is sufficient firm creation. The individual's tacit knowledge delivers that. A celebration of individualism no less!