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Will raising the living wage really help anything? watch

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    (Original post by tomfailinghelp)
    I cannot see that because encouraging consumption is a waste of resources when readily-existing demand exists to be satisfied. How can you not see that creating demand for the sake of satisfying it is a pointless and destructive exercise?
    First, you need to differentiate between investment demand and consumption demand. Consumption demand already exists: people need food, and clothes and housing. Shifting real terms wealth away from the rich to the genuinely hard up means that less of this consumption is frivolous and unnecessary (and ultimately pointless).

    The government's job is not to encourage consumption demand (because as you say, so much consumption is frivolous), but to encourage investment demand because it fulfils the twin goals of reducing unemployment AND creating additional capital for the nation. When the private sector is capable and willing to make that investment, then the government should enable them, when they are not, as in a recession, then the government should make up the short-fall.

    Does that help?
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    (Original post by cole-slaw)
    A minimum wage incentivises a shift along the production curve to a higher capitalisation level and greater labour productivity, leading to increased efficiency and an expanded economy as real terms wealth is transferred to those with the greater marginal propensity to consume. This is basic economics, how can you not see that?

    I can't be arsed with him, he thinks he is smarter than he is, lacks application of his ideas and I don't fancy chasing my own tail which is akin to carrying on this conversation with him



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    (Original post by cole-slaw)
    First, you need to differentiate between investment demand and consumption demand. Consumption demand already exists: people need food, and clothes and housing. Shifting real terms wealth away from the rich to the genuinely hard up means that less of this consumption is frivolous and unnecessary (and ultimately pointless).

    The government's job is not to encourage consumption demand (because as you say, so much consumption is frivolous), but to encourage investment demand because it fulfils the twin goals of reducing unemployment AND creating additional capital for the nation. When the private sector is capable and willing to make that investment, then the government should enable them, when they are not, as in a recession, then the government should make up the short-fall.

    Does that help?
    Not really?

    You seem to be assuming that the minimum wage is shifting money away from a group of wealthy people who are wasting their money on what is 'frivolous and unnecessary', but apart from the fact that the government is not really well-placed to make specific value judgements of this type, presumably that isn't true in many cases because employers are largely not rich. Even those who are can only spend so much money on what is 'frivolous and unnecessary' by anybody's standards, and must invest consistently in lucrative enterprises to remain as such - thereby being productive with their money.

    More significantly, it seems odd to promote redistributing money from those who have demonstrated themselves capable of satisfying demand toward those who have not. This is even to ignore the problems of inequality and unemployment created by the wage itself.
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    (Original post by paul514)
    I can't be arsed with him, he thinks he is smarter than he is, lacks application of his ideas and I don't fancy chasing my own tail which is akin to carrying on this conversation with him

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    Whatever the disparity between how smart I think I am and how smart I actually am, it seems a little pathetic to say this without actually challenging my arguments? Criticise me if you want, but please don't just imply that I am stupid when you have shown yourself unwilling even to engage with the argument I am making.
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    (Original post by tomfailinghelp)
    Not really?

    You seem to be assuming that the minimum wage is shifting money away from a group of wealthy people who are wasting their money on what is 'frivolous and unnecessary', but apart from the fact that the government is not really well-placed to make specific value judgements of this type, presumably that isn't true in many cases because employers are largely not rich. Even those who are can only spend so much money on what is 'frivolous and unnecessary' by anybody's standards, and must invest consistently in lucrative enterprises to remain as such - thereby being productive with their money.

    More significantly, it seems odd to promote redistributing money from those who have demonstrated themselves capable of satisfying demand toward those who have not. This is even to ignore the problems of inequality and unemployment created by the wage itself.
    A minimum wage is redistributory by nature. This is an established fact.

    Of course the government is placed to make value judgements. Its not exactly rocket science to see that a rich person buying on a new yacht is not as socially beneficial as a poor person being able to buy their kids a new pair of shoes.

    A minimum wage incentivises investment.

    "those who have demonstrated themselves capable of satisfying demand" is just meaningless nonsense.

    The wage itself does not create inequality or unemployment.
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    (Original post by cole-slaw)
    A minimum wage is redistributory by nature. This is an established fact.

    Of course the government is placed to make value judgements. Its not exactly rocket science to see that a rich person buying on a new yacht is not as socially beneficial as a poor person being able to buy their kids a new pair of shoes.

    A minimum wage incentivises investment.

    "those who have demonstrated themselves capable of satisfying demand" is just meaningless nonsense.

    The wage itself does not create inequality or unemployment.
    Perhaps the wage itself does not create unemployment (although a majority of papers says it does, apparently) but it does create inequality. Most of those working on minimum wage are not earners for poor families and therefore they do not largely benefit, but the increase does hit the budgets of the poor, widening the gap. The wage also means that undesirable workers are locked out of jobs because they cannot offer competitively cheap labour - exaggerating inequality by forcing them into unemployment.

    No nonsense there. The only way anybody can make money is by satisfying a demand for some service. Therefore it is unusual to want to redistribute money from those people to people who are clearly not as capable at doing such a thing.

    Picking particular examples like that misses the point. It is more desirable that a poor person's child is clothed than that a wealthy person has a new yacht, but the two occurrences are not unconnected. There are certainly menial workers involved in creating yachts, for instance. By redistributing the money involved in the yacht creation process, you could quite plausibly be depriving some menial worker in that industry of the ability to provide his child with shoes through the wages he might have earned making that yacht. In that situation, the rich man doesn't get his yacht, and the young boy doesn't get his shoes - does this not matter because a different poor boy does get his shoes? Clearly the former is desirable to the latter, and also does not prevent whoever employs the menial workers from ultimately decreasing their prices.

    In any case, the only reason that exchange is possible is because people disagree about the value of things. I do not understand how you can support free exchange if you disagree with this? Surely then you believe that some people are inevitably exploited in any Capitalist arrangement?

    Since that is an extremely vague statement, it may well be, but it is also trivial.

    (Hope the response order isn't confusing, lol, it just goes backward)
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    (Original post by tomfailinghelp)
    Whatever the disparity between how smart I think I am and how smart I actually am, it seems a little pathetic to say this without actually challenging my arguments? Criticise me if you want, but please don't just imply that I am stupid when you have shown yourself unwilling even to engage with the argument I am making.
    Already done it


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    While I have sympathy for small business I'm convinced that most listed companies can (real profits have risen in excess of real wages for decades) and also that we can in the context of our international competitors (there are countries with a higher minimum than the UK).
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    It's by no means a definitive truth that the NMW has increased unemployment and there is a significant body of research and evidence that claims the relationship between legally/government mandated minimum wages and unemployment is negligible and significant (just as there's a body of evidence to claim the opposite)
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    (Original post by tomfailinghelp)
    Perhaps the wage itself does not create unemployment (although a majority of papers says it does, apparently) but it does create inequality. Most of those working on minimum wage are not earners for poor families and therefore they do not largely benefit, but the increase does hit the budgets of the poor, widening the gap. The wage also means that undesirable workers are locked out of jobs because they cannot offer competitively cheap labour - exaggerating inequality by forcing them into unemployment.

    No nonsense there. The only way anybody can make money is by satisfying a demand for some service. Therefore it is unusual to want to redistribute money from those people to people who are clearly not as capable at doing such a thing.

    Picking particular examples like that misses the point. It is more desirable that a poor person's child is clothed than that a wealthy person has a new yacht, but the two occurrences are not unconnected. There are certainly menial workers involved in creating yachts, for instance. By redistributing the money involved in the yacht creation process, you could quite plausibly be depriving some menial worker in that industry of the ability to provide his child with shoes through the wages he might have earned making that yacht. In that situation, the rich man doesn't get his yacht, and the young boy doesn't get his shoes - does this not matter because a different poor boy does get his shoes? Clearly the former is desirable to the latter, and also does not prevent whoever employs the menial workers from ultimately decreasing their prices.

    In any case, the only reason that exchange is possible is because people disagree about the value of things. I do not understand how you can support free exchange if you disagree with this? Surely then you believe that some people are inevitably exploited in any Capitalist arrangement?

    Since that is an extremely vague statement, it may well be, but it is also trivial.

    (Hope the response order isn't confusing, lol, it just goes backward)
    I'm going to pick chunks to respond to.
    "By redistributing the money involved in the yacht creation process, you could quite plausibly be depriving some menial worker in that industry of the ability to provide his child with shoes through the wages he might have earned making that yacht"



    The idea that it is ok for rich people to consume yachts because it provides work for people in the yacht industry who may themselves be poor (or a similar argument) is a well-known economic fallacy.

    The ultimate truth of the matter is that HUGE amounts of capital and labour is being diverted towards yacht manufacturing that could otherwise be being used to create food, shelter, clothing and basic amenities for the poor.

    Don't get sucked into trying to follow the money around in circles - that way confusion and fallacy lies. Focus on the real economy and what really matters: capital and labour; leisure and consumption.

    "Most of those working on minimum wage are not earners for poor families and therefore they do not largely benefit, but the increase does hit the budgets of the poor, widening the gap. "


    I didn't understand this part. Surely minimum wage workers are earners for poor families? They're certainly not earners for rich families.

    "The wage also means that undesirable workers are locked out of jobs because they cannot offer competitively cheap labour - exaggerating inequality by forcing them into unemployment."

    This is not the case. I already explained this. The economy will always require labour. A higher minimum wage will simply shift the production curve to higher levels of capitalisation and higher productivity.

    Colloquially, the employer will still employ these people, he will just have to invest more in training and equipment to get the most of our them. Currently he is incentivised to underinvest in his company and allow his workers to remain unproductive because he only has to pay them peanuts. This situation is bad for everyone.
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    to be honest this government is all about making people stand on their own two feet and be less dependant on the taxpayer, with people now expected to fund their own retirement, university education, and cuts to other safety nets that the previous generation took for granted.

    so on that basis its about time businesses started standing on their own two feet instead of paying poverty wages to workers that need to be on benefits in conjunction with a job to live. the problem is the new higher wage in 2020 will only apply to those over 25 and inflation will reduce the real value of that wage to that comparable to the pittance minimum wage workers currently earn.

    wages have been suppressed since the financial crisis due to employers taking advantage of a scared work force. unfortunately the only way to get businesses to pay a fair wage in this climate is through government intervention.
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    Living costs are really expensive here, we are being ripped off anyway via VAT. Housing is also expensive, I think rent prices must be regulated more just like they do in Germany.
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    Nah we just need to build about 4 million homes in a decade and limit Imigration


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    I do agree that workers should be paid the living wage (which is more than Osborne's 'Living Wage') but I worry that if prices increase whilst benefits are being frozen (and cut in many cases) it will leave those unable to work much worse off.
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    (Original post by SmallTownGirl)
    I do agree that workers should be paid the living wage (which is more than Osborne's 'Living Wage') but I worry that if prices increase whilst benefits are being frozen (and cut in many cases) it will leave those unable to work much worse off.
    Possibly but the benefits will raise in future to deal with issues like that


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    (Original post by paul514)
    Possibly but the benefits will raise in future to deal with issues like that


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    IDS has said not for 4 years.

    http://www.bbc.co.uk/news/uk-politics-33440315

    (And note that when it says 'disability benefits' will not be frozen that doesn't include ESA which is for those who can't work due to disability or illness - and in many cases will be reduced for new claimants from April 2017.)
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    I think it's important to note that this applies only to 25 years old + people. With this in mind, it's great news for the young as their ability to compete for jobs will increase.
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    It's chill, if you let out properties just demand a little extra when this comes into force and everything is the same.
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    (Original post by SmallTownGirl)
    IDS has said not for 4 years.

    http://www.bbc.co.uk/news/uk-politics-33440315

    (And note that when it says 'disability benefits' will not be frozen that doesn't include ESA which is for those who can't work due to disability or illness - and in many cases will be reduced for new claimants from April 2017.)
    Yea I've seen that too I'm talking about the medium to long term


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    Of course it will help. It will mean that workers really do get rewarded for working and can actually afford to live semi-comfortably.
    It will mean we are less reliant on benefits and charities.

    And as another poster said, if your company can't afford to pay people a wage which they can afford to live on, they shouldn't be in business.
 
 
 
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