Mr Khan said:
sc94597 said:
Mr Khan said:
That's not the fault of wages, that's the fault of the shrunken market. Shrunken market is what forces out the less skilled (over time. Companies do hate turnover and they're not going to fire someone explicitly because they can get someone more skilled to work for the same pay. That would happen with attrition) and pushes everyone with skills down a notch, as fewer opportunities at all levels mean that all kinds will have to work "beneath their station". A higher minimum wage sparks demand by forcing money downward from corporate profits into the hands of minimum wage workers who then create demand due to marginal propensity to consume, which can help lead to a trickle-up effect better than other stimulus packages which have an expiration date on them. Eventually these gains become negligible due to inflation, but inflation is at long-term lows right now (again, the market wants to deflate and the Fed is the only thing standing in the way), so there would be quite enough time for some gains to work into the economy.
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What? When you make a minimum wage law, you are creating a price-floor. One learns in economics 101 that a price floor above the equilibrium price creates a deadweight loss by shifting the supply curve (or demand curve, depending on how you want to look at it.) You keep espousing macro-economic rhetoric involving thrift when we're talking about a microeconomic question.
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that's because Microeconomic models only ever function under ideal macro conditions. You can't talk about a supply-demand gap when the supply-demand gap in employment is huge for much larger reasons than minimum wage.
This is why they should teach Macro first. Teaching micro first makes people think that micro models are how the economy "should" work.
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Unfortunately macro-economics is too far behind to do that. It is arguable whether or not micro economics is scientific, and the amount of conflicting hypotheses and data found in macro is so much greater, at least micro-economics has a deductive basis to make up for the insuffiecient inductive basis, macro seems more like a bunch of competing philosophies: neo-keynesian, new-keynesian, (blanket label) keynesian, neo-classical, monetarism, austrian, etc, etc. There was a time when keynesians encompassed all of macro-economic thought as being correct for instrumental reasons, it worked (at least seemingly), but then it started to not work during the many crises of the 70's and ever since. Ultimately, it seems better to just use deductive logic until something empirical can be resolved (if it can be resolved, maybe the austrians are right with the economic calculation problem.)
