TCS Daily


The Unemployment We Need

By Tim Worstall - May 9, 2006 12:00 AM

Editor's note: This is the first of a two-part series.

Surely you've heard of it by now. Charles Murray's book, "In Our Hands," proposes to abolish the entirety of the welfare system and replace it with one simple cash grant to every citizen of 21 or up.

Murray himself describes it as a variant of Milton Friedman's negative income tax ideas and we Europeans would know it as the Citizen's Basic Income. One of the things I love about the whole idea is the way in which just about everyone is going to say it's impossible, immoral, fattening or possibly, horror upon horrors, likely to increase teenage smoking, and doing so for entirely the wrong reasons.

I'll deal with liberal opposition (and why they should, in fact, be screaming at Congress to enact it forthwith) in a later piece. But today I want to look at the various possible objections from the right side of the political spectrum.

The basic plan is so terribly simple. Take all of the money we currently pay out through the tax and benefit system on everything like Medicaid, Medicare, Social Security, food stamps (whatever the current name of that program is) student aid, all the programs which take money from one group to give to another, and abolish those programs. Yes, simply do away with them.

There's a helpful list of some 60 odd programs that would go and they aren't just the ones we conventionally accept as welfare: not unless we are up to date with calling the Farm Bill welfare, the various forms of corporate subsidy as well (which of course all good and true TCS readers will be).

Instead of sucking all this money into Washington DC and then allowing the Congresscritters to parcel it out to favored constituencies, along with the heavy tithe taken for the bureaucracies, simply hand it out as a $10,000 a year payment to each and every adult citizen.

Now who could find this objectionable? Well, of course the purist libertarians will, as well as the followers of Ayn Rand and Lew Rockwell's stormtroopers will be up in arms about it. For The Plan takes as a stipulation that there is going to be redistributive taxation in the US -- whatever the purity of the philosophic arguments against it. I've said here before that I'm something of a practical libertarian, not a philosophic one and when I did I was sent a couple of books (hey, free is good!) by the Ayn Rand Institute. Clearly the intention was that I would be so overwhelmed by the purity of the logic that I would be an immediate convert. Unfortunately this didn't actually happen: I learned two things. One, that Alan Greenspan can actually express himself in clear and elegant prose (hey, who knew?) and two, that I am not an Objectivist and never will be. Purity of philosophic ideal is all very well but I think I'd prefer to work on what is actually achievable in my lifetime, which, unless Glenn Reynolds is correct about the approaching singularity, doesn't leave enough time for humans to be educated out of their humanity.

I'll stick with my basic thought that the reason to oppose statism isn't that redistribution is immoral (although it may be, to your taste) it's rather that the actual way it is done is so hopelessly complicated that it manages not to achieve its stated aims. The Plan, to my mind, neatly sidesteps almost all of these problems. Instead of a web of grants, tax breaks, allowances, subsidies for this or that, there is simply one payment to all. It's not enough to live comfortably on, but it will provide for the basics. As you may or may not know, the federal poverty line for a family of four (two adults, two kids) is a fraction over $18,000 a year. The Plan provides this already, so we could say that, with The Plan, there would be no poverty in America in principle.

Actually, that wouldn't be quite true, for the poverty line for a single adult is slightly more than the $10,000 grant. It's also true that that $18k is before the extra help that is given. The Earned Income Tax Credit (EITC), Medicaid, food stamps possibly, these all raise the actual income of those currently said to be at that poverty line. Then again, the roughly $10,000 a year that working full-time at minimum wage brings in would take an individual or family well above, including The Plan handout, any conceivable income from the current welfare system. Murray's point is that the poor will be immeasurably better off by simply being given the money, without the tender ministrations of the bureaucracies, than they are under the current system. And, to no one's great surprise -- or rather to the surprise of no one with real-world experience of quite how much money those bureaucracies skim off for their own running costs -- the poor will be better off at no extra cost to the nation's taxpayers.

More alleviation of poverty, no greater expense: this has to be a Pareto improvement, where we can make one or more people better off without making anyone worse off (barring taxpayers, of course). This is normally regarded as a good thing in economic circles.

However, we still haven't addressed the pure libertarian objection that such redistribution shouldn't happen at all. Quite correct. We haven't addressed such an objection, but then in a democracy, ideas that get 0.34% of the popular vote tend not, whatever their ideological purity, to get taken all that seriously when it comes to public policy. The truth is, whatever my or anyone else's thoughts on the desirability of welfare at all (and I'm highly sympathetic to the idea that it shouldn't exist at all), the American people have repeatedly shown that they want it and that just the way it's gonna be. So in discussing what actually to do, we should accept that truth, and then campaign for methods like The Plan that provide it at the least cost and disruption to incentives.

There's another possible set of objections from the conservative side (which I'm sure we're all aware is very different from the libertarian one, although we are often in an uneasy coalition, in politics). You mean that these people are just going to be given money to do nothing? They could just rent a beach house and go surfing for the rest of their lives? Yup. Precisely. Murray uses this as an example objection and it's one that will undoubtedly be levied. For at least some conservatives, you have to actually do something in order to get the basics of life. It's immoral that people should not have to jump through some hoops, like get a job and work hard in order to survive. While I'm less sympathetic to this line of thought, I will admit to there being some truth in it. Thing is, what makes you think that the current welfare system is any better?

In order to get the basics of life people have to jump through all sorts of bureaucratic hoops to get what the current system offers. Yes, it has got better with the welfare reform of the 90s and the introduction and expansion of the EITC but there are still huge disincentives within the system. Quite apart from the bureaucratic complexity and the form-filling (something which the poorest and least educated parts of society are specifically and particularly ill-equipped to deal with) there are still points on the income scale where earning more from working can lead to less income: most specifically at about the points where the EITC and Medicaid are withdrawn and tax begins to be paid.

There is one other possible conservative objection which Murray also addresses: are we sure that this modest income won't just lead to more poor children? If what used to be called welfare mothers were to get that $10K a year, no questions asked, wouldn't they just pump the babies out? To which the answer is that the decline of the family in those slums was actually caused by the economic irrelevance of young men in the first place. In fact, in terms of economic incentives, single women were vastly better off by not having a man living in the place, rather, allowing Uncle Sam to provide. Allowing Uncle Sam to provide again, won't this cause the same problems all over again? Which is to ignore the fact that those young men are also getting that $10K a year.

No, it's not a large sum but it does mean that they're not economically irrelevant any more. A family unit on $20K a year isn't something that we might aspire to personally but it's vastly better than single parenthood on half of it. Plus, the fact that the grant in The Plan isn't either taxed or withdrawn until hugely higher incomes ($50K for two people) means that there is every incentive to work in order to top it up.

As I see it, the two major objections to The Plan from the right side of the political spectrum are or will be that there shouldn't actually be any redistribution going on at all and that if there is, people should have to do something to get it, not just be allowed to loll their way through life. To which I would respond that if we're to deal with a stipulated political reality of redistribution, The Plan reduces the perverse incentives of the current system. And best of all, it will cause mass unemployment amongst bureaucrats.

Tim Worstall is a TCS contributing writer living in Europe.

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131 Comments

Government downsizing lowers inflation pressure
Has anyone written an article addressing how this program and others like it, by downsizing government, could reduce overall inflation pressure (by reducing employment inflation pressure and increasing macroeconomic productivity)?

USA Inc.
“The Plan reduces the perverse incentives of the current system. And best of all, it will cause mass unemployment amongst bureaucrats.”

Another way to “view” Mr. Murray’s plan is as follows:
1) We (the people) view the US as a corporation (USA Inc.), each adult US citizen as a shareholder, and the US Congress as the Board of Directors.
2) We (as owners) stipulate that our Board distribute a portion of USA Inc.’s profits to us each month. Each year in the budget process, the Board would evaluate the firms performance (GDP and tax collections) in the prior year. After all required expenses (Common Defense, Law and Order, etc…) are budgeted for the upcoming year, the surplus (“Citizen's Basic Income”) is distributed as a monthly dividend. Performance (productivity, growth, etc…) and tax policy would determine dividend levels.

Under this approach, we could choose to reduce or eliminate the dividend in the future if conditions warrant and the citizenry accordingly concurs.

with "preferred stock"
...With a class of dividends, like for preferred stock, which gets distributed first, raising those that need it up to a minimum level, before distributing the rest?

inflation
I doubt that any has written such an article, because most economists agree that inflation is caused by monetary policy, not by cost push inflation.

On the other hand, freeing up all those people who now work for the various welfare agencies to start doing productive work, will improve the overall productivity of this country.

the big danger with such a scheme is not the ones listed in the article
It is the problem that once the population gets used to the idea that they are entitled to money from govt, just because they manage to keep breathing, it will be a very small step for them to get the idea that they are equally entitled to large increases in this stipend every year.

For the vast majority of people, why not? They aren't the ones paying for it. The evil rich are.

Right now, welfare is regarded, in the popular perception, as something only for the poor. This program starts with the idea that everyone is entitled to welfare.

Several Major Objections

It sort of seems like thi is just a joke, but I wll address it as a real proposal.

1. If you give everyone an equal raise, won't the money simply be worth that much less? If I handed out $10 million to every citizen, inflation would reduce this to zero.

2. Why tax it in the first place? The vast majority who have paid some in taxes could have kept the money and the rest could have gotten check to make it up - eg the EITC. That is how we do it now, why take the money, hold onto it so that it doesn't earn interest and then give it back. It is supposed to be simpler, but you have not done away with the IRS, only the major programs - which is good but not good enough. You still have an absurd system - maybe te point is to make it so absurd as to make nnecessary its inveitable end.

3. The idea of abolishing federal programs does not only get 3% of the vote, or whatever Badnarik got; dumb one-issue third partyy candidates with no funcding get only 3% of the vote. A large portion of republicans and a sprinkling of independants, democrats and Libertarians that vote otherwise or don't vote all agree with the idea. But more impirtantly, the idea has to be well presented and sold to the people. Enough people might sway in favor that Bush spent some of his "capital" trying to convince Americans to begin privatizing social security as has been done in some other countries. It takes time and requires a good salesperson, but that is the way to go.

-- My biggest objection is just that. The right way to do it is to slowly privatize the system and flatten the tax code at the same time. Many people are in favor of a flat tax. Many people support some privatization of programs. Many also support pushing the programs to the states. The programs are actually unconstitutional. So, over time, we must work to privatize all of the major social programs and eliminate subsidies, and those other welfare programs, and in time the people will forget that they were ever federal programs - at the same time, they will be deemed unconstitutional (as they are) and the tax ill be flat and low (and we will recieve no welfare checks for a flat $10k in the mail). Then we can go on to repeal the 16th amendment if we like, making the only tax a slaes tax.

It may not seem possible right now, but that is no reason not to fight for it - and there are a nice handful of senators who agree and a good portion of the republican party that would back it up. We just need to sell the rest of America.

Horrified
There is no justification, pragmatic or otherwise, for this "idea." I want to vomit. The principles of Liberty I guess just doesnt matter anymore so long as the system is less oooky than the current one. Its still IMMORAL!

People already believe that, unfortunately, Mark
But they don't always get that--the "raise", that is. They might think it's "owed" to them but that's their problem.

I agree with the author that while welfare should not exist, the fact of the matter is that it does and hordes of people desire for it to be so. If someone thinks they deserve a raise, under this Plan they'll have to give it to themselves by going to work.

Inflation
Inflation is not caused by more poor people having more money. It is caused by an increase in the physical money supply. Increased wealth in and of itself has zero effect on inflation.

one good effect
One good effect would be that working married mothers who don't net much more than this could stay home and take care of the kids. Maybe home school.

equal opportunity
"One good effect would be that working married mothers who don't net much more than this could stay home and take care of the kids. Maybe home school."

or fathers!

Nice idea - but you missed the fatal flaw
Inevitably many, if not most, recipients will quickly blow their $10,000 on wine, women, song, drugs, bad investments, fast cars, vacations in Aruba, etc.

Those folks will soon be starving in their apartments, and eventually sleeping in the streets once their landlords boot them out for burning the furniture to keep warm.

The media will highlight a few truly hard luck photogenic cases and the out of work former welfare bureaucrats will be only too happy to provide juicy quotes about why there needs to be a soft landing cushion for those who have unfortunately fallen through the safety net through no fault of their own.

Congress will then pass emergency legislation to provide food aid, housing subsidies, free medical care, free cable TV, cigarette money, etc. for truly essential needs.

Within 10 years we will have an inflation adjusted $10,000 per person program plus a new welfare system as large as the old one it was meant to replace.

If you doubt this reflect on the fact that my home county now has a program to provide medical care to pregnant "undocumented" (non)workers." That program is being paid for by a special Federal government program which provides money for just such purposes.

wage inflation
There is only one thing that causes general inflation. That is when the money supply (multiplied by the velocity of money) exceeds the growth of the supply of goods.

The tricky thing is that as the economy picks up steam, the velocity of money increases. Velocity of money measures the number of times a given dollar changes hands during a set time period.

Since the actual velocity of money is difficult to measure, economists use various proxies to estimate how it is changing.

Wage inflation can be a usefull proxy, indicating that the economy is really starting to heat up.

So it can be said that wage inflation can indicate that the velocity of money is speeding up, which in turn indicates that the fed needs to reduce the supply of money, in order to prevent inflation.
But it cannot be said that wage inflation causes general inflation.

In other words, wage inflation is a symptom, not a cause.

raises
they can also give themselves a raise by voting for politicians who promise to increase the handout from $10K to $11K.

I'm saying that it is more likely for people to vote to increase welfare, when they are benefiting from welfare, than it is for them to vote to increase it, when someone else benefits.

objections
1) With the $10M, the only way to get the money would be to monetarize the expense. (IE, print the money, which would indeed cause inflation.)
Smaller amounts can be covered with current taxes, or with small increases in taxes.
The claim is that the $10K is the same amount that we are currently spending on welfare, plus the administration of welfare. As a result, we wouldn't even need to raise taxes to pay for the checks.

2) Handling it through the IRS would reduce overhead costs.

3) Eliminating some programs has a very small constituency. Agreed. But I think this type of program would have a much larger constituency. Because it promises to get rid of multiple, very large programs, and because it promises everyone free money.

I'd rather go for a sales tax, but a flat tax would still be a major improvement over the fiasco we got going now.

it would be very difficult to end
The justification for ending it would be to lower taxes.
But since the rich pay almost all of the income taxes, you would have everyone voting to cut their handouts, so that the evil rich guy could keep some more of their ill gotten booty.

True, the money supply would stay the same if government doesn't print more
It would just be giving back the money taxed, with some redistribution.

My other points still hold.

But privatization is better than free money
Since free money is a lie anyway.

People would be taxed and then have the money returned. This is better than being taxed and having the money wasted - true. Its like a tax break, in effect, for most people.

So, I would prefer it to the current situation by a lot. But are we such little babies that we need government to take our money and then give it back, rather than face the issue head on?

If we privatize the programs, we can avoid taxing and redistributing, we can simply have a low flat tax and those in need can use the private charitable programs.

Exactly!
Since this program does nothing to end unconstitutional programs - just replaces them with "free money", and since the problem is not actually addressed head-on, it would do nothing to help end the fiasco, unless everyone realized how absurd it is. But nobody has so far noticed the absurdidty in any of our programs - be they redistributional or like Euopean programs, costing everyone and provided to everyone (like "free money", paid for by taxes).

So, the programs is just a cash version of the in-kind benefits we have today. An improvement, but still a fiasco.

And crack moms could buy more crack
Some will do good with it, many will remove themselves from the labor force, try to get black market jobs, cash only tips jobs, and do quite well doing little and enjoying "free money" paid for by honest working people's taxes.

The Unemployment We Don't Need
I am not sure how the IRS would tax this income and what they would call it but i asure you the IRS would take most of this and more.
The Best and most Fair plan for America is the Fairtax Bill H.R.25 that is now in the Senate.
The Fairtax will pay a prebate of $180.00 per Month to any American that has a legal S.S.card. The family of five would recieve up to $750.00 per Month.
The working man and woman would take home all the money they earn. NO With Holding from your pay. This will save your boss and he or she may help you with a better retirement plan. Now you and your boss may be able to put back for you $100.00 per week and both of you will still be better off. Now you will have $5200.00 per Year in a pentition plan or Xmas fund.
Your Bank will have more money to loan out because you are taking more money to the Bank, not the IRS.
You won't recieve a Income tax return because you will not send the IRS any money Because they will not be in bussiness any longer.
The Fairtax repeals the 16th Amendment and removes the IRS. How much can I say here and not get any Help.
Please go to www.fairtax.org and get smart.
Larry Melton
District Director
Missouri 7th

Indeed
This is true, and knowing the pandering Democrats out there like John Kerry and Al Gore who have no problem using class warfare, how long before we have politicians who claim that the poor need bigger raises in their annual stipends than the rich, while the rich need to get thier stipends cut?

Johnny Triangles

Dependents Depend on Survivor Benefits
Survivors Benefits
Social Security Online, May 2004

The loss of the family wage earner can be devastating, both emotionally and financially. Social Security helps by providing income for the families of workers who die. In fact, 98 of every 100 children could get benefits if a working parent dies. And Social Security pays more benefits to children than any other federal program. Many people think of Social Security only as a retirement program. But some of the Social Security taxes you pay go toward providing survivors insurance for workers and their families. In fact, the value of the survivors insurance you have under Social Security is probably more than the value of your individual life insurance.

http://www.ssa.gov/pubs/10084.html

---------------------

Taxation of Social Security Benefits
The Motley Fool, March 15, 2002

...Also remember that, in the case of disability and survivor benefits, many of those BENEFITS ARE PAID TO DEPENDENT CHILDREN. While you may deposit those funds and use them for the benefit of the kids, those benefits will not be treated as your benefits for tax purposes. They are actually benefits paid to the children. If you don't believe that, check the form you receive from the Social Security Administration at the end of the year (Form SSA-1099). You'll receive separate statements for yourself and your children. And the kids' benefits will be reported under their separate Social Security numbers. So, whatever you do, don't include the kids' Social Security benefits in the computations you do to determine your taxable benefits.

http://www.fool.com/taxes/2002/taxes020315.htm

Brant_David, You Are Correct
The present welfare system penalizes people for trying to move up or get ahead. This is an incentive for them to remain within the system, and work off the record, with payment under the table, unreported, and taxes not paid.

At least, this system provides SOME incentive to work.

There are a lot of hard-working people who never can get paid enough to "get ahead", and who wreck their health working hard for little financial reward. I am one of those. Once the health is used up, the employee is dismissed as unproductive. Others don't want to hire him or her because they will be a drain on the company's resources by costing more in insurance, etc., and possibly, lower productivity than younger, healtier employees.

Some one needs to care about this problem.

Furthermore, the bureaucracy that administers these welfare benefits is self-serving. The less that they help you, the more that you need to return seeking their help, which assures the bureaucrat of employment. Conversely, the more that they help you, the less that you need them, and the more likely that they will work themselves out of a job!

Horrified by helping those in need?
BridgetB, are you horrified about helping people in need?

People who are healthy and/or wealthy have a hard time understanding that some folks are too sick to work, some folks spend their entire lives trying to claw their way out of poverty--many unsuccessfuly--and some folks just plain can't figure out how to "rise to the top", as it were.

I was reared in poverty, and worked hard (as I was taught as a child) to rise above it. Unfortunately, I had many bosses who took advantage of my naive willingness to do hard physical labor, and some who then kicked me out of their companies once I was no longer able to perform the work due to a worn-out body.

What good is liberty if there is no compassion?

Evil Rich Guy?
And we're going to vote, instead, to end the current welfare system???

Evil rich guys? If we had more benevolent rich guys, maybe folks would not be so upset with the evil rich guys.

In many past societies, the wealthy felt a responsibility to assist the less fortunate. In our society, that burden has been shifted to the government through taxation. If we had more benevolent rich guys, maybe we would not need so many taxes and welfare plans? What about compassionate middle-income guys? What if we became our brother's keeper instead of adopting the attitude that it's every man for himself? Maybe the need for a federal welfare system would go away on its own!

You think they're not doing this already?
It's already happening under the current system!

The proposal that I read was to simplify the existing system in a way that would be more effective and efficient.

Of course it is
But with another proposal - privatization of all current welfare programs and a flat or sales tax, recognition of unconstitutionality of redistribution and welfare - that would stop.

It is less useful to keep the disincentive effects and all the negative social effects of the welfare programs by making an in-kind program into a cash program. It may save money, but it remains an economic indignity.

You are right
about the effect on deflation of wages, but there's a catch. There's a looming shortage of huge proportions in highly skilled and professional labor. I suspect that compared to the 10k, the overall upward pressure on skilled wages will be enormous. It's simple demographics; the boomers are retiring.

evil rich guys
It was meant as a sarcastic comment.
Though I'm not surprised that some take it seriously.

Have you ever considered the possibility that it is the fact that we place onerous taxes on the rich that cause them to be less generous?

If you're already having 40 to 50% of your income taken, involuntarily, to support the poor, I'd be surprised if many people feel overly generous when the poor come by asking for more.

Secondly, you are not entitled to the rich guys money. You seem to feel that if rich people don't give you enough, then you are entitled to take.

That's theft. Regardless of how hard you work to convince yourself of the righteousness of your deeds.

getting ahead
You get ahead by working smart, not by working hard.
If you think you are entitled to something just because you show up every day, or almost every day, then you are wrong.

The only thing you are entitled to is the wage you and your employer agreed on.

to properly evaluate any program
you have to look not just at the affects of the program, but how it affects the incentive structure of those involved in the program and of those forced to support the program.

won't happen
Wages are ultimately set by what the job is worth. That is unaffected by outside income.

Not quite
it's affected by the available labor supply. A shortage of workers means a large rise in wage rates.

some jobs are eliminated
but many new ones are created

those 200,000 new jobs being created each month are coming from somewhere.

such a rise is temporary
until management can figure out how to do with less, or until the higher salaries cause an increase in the supply of workers.

Pertubations can push wages away from marginal utility, but they always return to marginal utility.

Lump of Labor Fallacy
Joanie, I hearand understand your concerns. However, I should tell you that it’s a well known set of thoughts called the "Lump of Labor Fallacy".
That there are only so many jobs around. I’m sorry but it just isn’t true. Much to small a space here to explain but try googling for that phrase for an explanation.
The other matter you raise, that wages will fall, also isn’t true. It’s a standard part of analysis that wages (in a competetive market) on average are set by the productivity of the workforce. It doesn’t matter how much money the workers are getting from elsewhere, none or a lot.

I agree
that a rise is temporary unless steps are taken to restrict any rise in the labor supply. This happened in the middle ages with the guild system. Another example of a long term labor shortage was the Black Death of the 14th century. It restricted labor supply for so long that it fundamentally destroyed the manorial economy. I suppose what I am saying is that you are correct in your contention that if the market forces are allowed to work, supply and demand are always brought into alignment. However, there is some reason to believe that the labor market is heavily impaired by special interests seeking protection as it has been in the past.

I could
give you a bunch of stuff about economies in transition, but that's all it would be, platitudes. However, when you say that there's no need for stenographers the way there used to be, you are correct. However, there is now and will be in the future a growing demand for highly educated skills, a massive coming shortage of professions like engineers, doctors, professions that require a high degree of technical and scientific training. Problem is, those regions in the country losing jobs are not the same as those where labor is or will be in short supply.

The most job-hungry place in North America right now? Fort McMurray, Alberta, by far.

you aren't looking very hard
All category of jobs are rising.
I work in computer programming, and finding people to hire in this city is like searching for hen's teeth.

that stuff happens
is not proof.

If a person with half your skill is being paid more, then either the labor market changed dramatically while you were there, or you did not do a very good job in negotiating your wage.

Will a company do everything in it's power to hire labor for as little as possible? Of course. They have to look out for the owners interests. Likewise, it's your job to find out what the going rate for your skill set is, and not settle for less than that.

I've been on several interviews where the company was ready to hire me on the spot, but when they told me the salary, I told them to increase to what I was asking for, or I would walk. Sometimes they came up, sometimes I walked.

not proof?
Your anecdotal evidence is no more "proof" than hers.

Are you calling Joanie a liar?

Economically speaking, businesses that ask the kinds of questions Joanie got asked, may not do so well, as workers with a sense of dignity will not accept the jobs they are offering, and therefore will have lower quality labor, which will disadvantage them.

But you seem to be denying that an employer would ever ask that or consider it, even as she gives you a personal example. Are you not aware that idiots and assholes open businesses too? And they conduct business inappropriately and ask inappropriate questions.

You seem to be rejecting her contention for no reason except that it doesn't fit nicely into your tidy, economic catagorization.

the first step to any solution
is properly defining the problem.
If you keep blaming your low wages on your bosses, then you will always have bosses that aren't paying you enough.

If you feel your first boss isn't paying you enough, start shopping your resume. If nobody is willing to pay more than your current boss, then you start looking into improving your skill set.

touchy
Just where or how did I imply that Joanie said anything that wasn't true?

I did point out that her example did not prove the point she was trying to make. That doesn't make her a liar, just, in my opinion, wrong.

I know that when referencing a president (or at least Republican presidents) there is no difference between wrong and lying. But most of us feel differently.

My tidy economic categorizations have been proven by multiple economic research projects and multiple real world studies.

Joanies examples are just that.

no, just questioning
Well, then, you need to explain that a little more thoroughly.

Joanie suggested that employers will push down their wages to prospective employees who are receiving a welfare payment.

You stated that ultimately, employers will pay what the job is worth.

You were wrong.

Colin pointed out another factor and Joanie also gave you anecdotal evidence that employers will shoot for the lowest possible wage, even if it's NOT the market rate.

You yourself said some employers have refused to pay you the market wage for the job you interviewed for. They offered something lower and you refused. That directly contradicts your statement that employers will pay what the job is worth.

...Unless if we consider that the worth of the job is going to depend on the labor force and who is on welfare and some of these economic factors, in which case, your point is moot.

So which is it?

And it's all fine to boast about your economic knowledge in general, but I'm asking you to show how the priniciples apply in this case. You haven't properly refuted her argument. You may have shown her how her evidence is not proof, but you haven't proven your point either. Her evidence shows that your point isn't always correct and so does Colin's.

part time vs. full time
Part timers are always valued less than full timers.
Fact of life.

I'm waiting
for you to say something that proves I'm wrong.

One or two anecdotes, that don't even support the tellers point are not proof.

I'm waiting too.
Your statement that "Employers ultimately pay what a job is worth" is either wrong in the sense of putting the carriage before the horse...

...OR, what you're really saying is that what the job is worth is based on the negotiation. The market value of a given thing is determined according to where the demand curve meets the supply curve, right? And, as has been mentioned, the size of labor force factors in, as well as other production costs on the employer, and a minimum wage affects what wage the job is worth too.

With all that taken into account, what I am seeing you say is something meaningless. It's like if we were discussing HOW to get the rocket to break through the atmosphere, and all you have to say is that the rocket has to break through somehow in order to fly into space. Well, duh. What an uninteresting observation.

Joanie states that employers will snoop around and try to find out non-job-related things about a potential new-hire, and gave examples of that, and I've had employers ask inappropriate questions as well. Up until now, it never occurred to me that these questions might be a determining factor in what kind of wage he offers me.

Your statement does not effectively refute her statement that her employer hired another person with half her skills, for twice her pay. My answer is that the employer is an idiot, and many employers are. Not all of them have a degree in ecomonics and make sound decisions. Many employers cut corners, skim off the top, cook their books, etcetera.

You also haven't addressed her other example of an employer asking how much her husbund made. These things suggest that the employer is trying to pay something other than what the job is worth.

And the reason I'm jumping into this conversation, other than my own experiences with employers doing things or saying things that are inappropriate, is because she originally suggested that a cash handout to the poor could drive wages down.

You insist that this would not happen.

I would like you to explain WHY her point is wrong. Your statement about "ultimately paying what the job is worth" is meaningless when we're talking about an undefined economy, and it also does not explain why an employer would deliberately hire someone with half the skills as the former, and pay an extra $5 an hour just so the worker could have daycare.

If your statement has meaning, I'd like you to explain it.

WHY would the cash handouts NOT drive wages down?..or, to put it in a different way, WHY would cash handouts NOT affect what wages the job is worth?


still not explaining...
That still doesn't explain why her employer would not give her a raise to use her extra skills, but would still hire someone else with half her skills, but for $5 an hour more.


If the skills are of no use to an employer
then it's not surprising that he won't pay for them. How many employers are willing to pay extra for someone who can speak, say, Icelandic?

Joanie's replacement was willing to work full time. I've already stated that such arrangements are more valueable to employers.

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